JOHANNESBURG (miningweekly.com) – Only months after inking a landmark deal that sees the Bapo ba Mogale traditional community gaining a R564-million, or 3.6% stake, in platinum miner Lonmin, the platinum belt community’s leadership is being forced to defend its decision to enter into the equity agreement on behalf of the 40 000-strong local population.

The 2014 black economic-empowerment (BEE) deal, which had been in the pipeline for several years, would also see the Bapo receiving additional cash flows of R100-million payable over five years, while procurement opportunities worth at least R200-million would be provided on a preferential basis to Bapo community members over an initial 18-month period.

In additon, a Bapo Community Trust had been created to hold 0.9% of the shares in Lonmin’s operating companies, entitling it to 0.9% of the profits achieved by the miner in any given financial year, irrespective of whether a dividend was paid to other shareholders.

However, public interest law firm the Legal Resources Centre (LRC) confirmed to Mining Weekly Online last week that it was representing members of the Bapo community in an application to the High Court to have the agreement between the community and the platinum miner reviewed and, ultimately, set aside.

In a September letter to Lonmin CEO Ben Magara, the LRC outlined that it represented several members of the Bapo community who argued that the decision by the Traditional Council of the Bapo ba Mogale to enter into the transaction on behalf of the Bapo community was unlawful.

According to arguments made by the applicants, the meeting constituted on July 29, 2014, at which the decision to accept the Lonmin offer was made, “did not have the power to make such [a] decision”, while the traditional council also did not enjoy such a power.

The applicants argued further that the members of the Bapo were not adequately consulted or informed about the transaction and, thus, did not consent to the agreement as required in terms of the Interim Protection of Informal Land Rights
Act and customary law.

LRC attorney Avani Singh told Mining Weekly Online this week that the centre would file a High Court review application in this regard “in a couple of weeks”.

The Bapo traditional council, however, reaffirmed its commitment to the transaction, telling a media roundtable last week that the deal would see a reduction in the community’s reliance on “inevitably declining” royalty payments from Lonmin, as well as the stimulation of economic development and self-reliance in the region.

“Holding shares in Lonmin, which is listed in London and Johannesburg, has the potential to deliver future annual revenues that will persist as long as the company remains in business.

“Even though mining operations will move off Bapo-owned land, the community will continue to benefit from mining operations on the western side of Lonmin’s operations which has a life expectancy of some 40 years.

“Our benefits will, therefore, be sustained for more than 30 years after mining on our land – and, therefore, an entitlement to a royalty – would have ceased,” Bapo traditional community spokesperson and member of the Bapo royal family Vladimir Mogale told journalists.

Defending the legitimacy of the decision, he stated that the “team” that negotiated the transaction with Lonmin was informed and mandated by the legally constituted Traditional Council of the Bapo ba Mogale, as gazetted by the provincial government of the North West.

According to Mogale, the Bapo community “overwhelmingly” endorsed the transaction at a kgotha kgothe – a formal gathering of the community – in July last year.

Subsequent to the kgotha kgothe, the Rural Development and Land Reform Minister reviewed and then approved the transaction, as did the Department of Mineral Resources.

However, he revealed that, of the 40 000-strong community, only about 900 community members voted on the decision to accept or reject the transaction at the meeting, with 91% voting in favour of the deal during a process overseen by the Independent Electoral Commission.

Mogale noted further that the council would oppose any legal application to review the deal, adding that any such application would be baseless.

“[It] would be a severe injustice to the Bapo community were a small minority with vested interests to succeed in blocking a transaction that promises to make a material and positive difference to the lives of this community,” he commented.