NEAL FRONEMAN: Reflections on four years at Marikana

August is always a time of reflection. However, as it is the 10th anniversary of the formation of Sibanye-Stillwater — now a globally important SA-based mining company — this is perhaps an even more symbolic time. 

It is 11 years since the Marikana massacre, a week in which police action caused the deaths of 34 people on August 16, preceded by another 10 deaths as a consequence of violent industrial action in the lead-up to that fateful day. And it has been four years since Sibanye-Stillwater acquired Lonmin. 

The Marikana history weighed heavily on Sibanye-Stillwater’s decision-making in 2019 as it considered the acquisition of Lonmin. As part of conducting our due diligence we were obliged to ask ourselves whether the acquisition could have positive longer-term consequences not only for our shareholders but also for those employees, surviving families and community members still then suffering the traumas of that week. 

Ultimately, it is for those stakeholders to make the assessment whether our presence has brought positive returns for them, but I would offer these reflections. 

In assessing these questions at the time we needed to take account of the fact that the dominant labour organisation at Lonmin had done a great deal to make the operations — and much of the sector — unmanageable. This included the six-month platinum wage strike in 2014.

It had taken important effort by Lonmin management to ensure the company’s survival. And even then, by the time of the acquisition Lonmin was in effect bankrupt. Achieving what we have done since then has necessitated a firm and strategic management approach. 

One can only speculate what might have happened had the acquisition of Lonmin by Sibanye-Stillwater not gone ahead.  There is a strong probability that the company would have gone out of business due to the financial distress it was under.  This nightmare scenario would have resulted in a huge amount of distress for all stakeholders, with 30,000 possible job losses and a community devastated by the loss of the main part of its economy.

This would have rippled through the region, affecting the supply industries and particularly the small business suppliers that were dependent on the Lonmin operations. The failure of Lonmin would have significantly reduced tax revenues and foreign exchange for the fiscus, and disrupted the global supply and demand balance for platinum group metals. 

Whether a business rescue could have salvaged the situation and allowed the mines to continue operating is questionable.  Even if someone else had stepped in, it would have been on unfavourable terms with reduced likelihood that the investment in projects such as the new K4 shaft, which has replaced those jobs that were lost due to the initial necessary restructuring, would have been forthcoming. 

Our assessment of the situation also persuaded us of the need for an intensive process of healing for the widows and other dependants of the 44 men who died in 2012, including providing housing for the widows and the funding of education of their children among other things.

Our presence enabled us to play a critical part in the management of the Covid-19 pandemic both at the operations and in the community. And we are working hard in co-operation with all stakeholders to co-create and rebuild the local economy. 

These kinds of efforts are not limited to our work in Marikana. Our approach to stakeholder capitalism and its goal of shared value is, we hope, beginning to change the nature of capitalism and the role of business in society. 

Shared value is the recognition that all stakeholders should experience the benefits that accrue from the conduct of our activities.  While shareholders should receive a fair financial return on the capital they have invested to enable the business to operate, all stakeholders that contribute other forms of capital required for the business to operate should be rewarded. And that could be through flows of financial value or other means. 

We believe business should be a main component of the socioeconomic ecosystems in which we operate as the economic partner. A well-functioning ecosystem creates superior value and sustainability for all participants in the ecosystem. Rather than the participants in the ecosystem squabbling over their share of value, we aim to form part of ecosystems where stakeholders working together can create exceptional value that is shared equitably.   

One of the critical success factors is improved levels of trust and transparency among stakeholders, which is something we are working on by holding ourselves to exacting standards and being faithful to core values and principles. It is important to have regard for the health of the entire ecosystem in our values-based decision-making, rather than a narrow parochial focus on the health of our business. We are steadfast in our belief that on a long-term basis this will generate superior returns from our activities due to the increased ease of doing business. 

Ironically, the dire state SA has fallen to gives me greater hope for the future (“Business can make a difference, says Sibanye’s Neal Froneman”, August 13). Two years ago I saw us headed for the abyss of a failed state. However, the state is now emasculated, and as such through public-private partnership the private sector now has the ability to make a difference. The two big examples are that we are now generating electrical power on an increasing scale, and we are working in real partnership with the public transport system.

Business now needs to look beyond the present and think about relationships with the government in future. The relationships being put in place right now are essential. But we also need to consider the possibility of a change in government leadership, whether after the 2024 election or the one thereafter.

We need to start paying attention not only to working with the governing party of today but also to the parties that might become part of a governing coalition in future. We need to begin offering them support and giving them direction in the spheres that will continue to be of interest to us, whoever the government of the day might be.

Not only in SA but elsewhere in the world, business is becoming an increasingly trusted part of civil society. This is thanks to the change in our business model, where shared value and stakeholder capitalism is the new way forward, for ourselves and our society.

Business has the opportunity to step up to play its part. Now is the time to do so. 

• Froneman is CEO of Sibanye-Stillwater.