Business Maverick


It’s a done deal, Sibanye tells mining communities challenging R5bn Lonmin merger

Sibanye says the merger with Lonmin would be ‘practically impossible’ to reverse. (Photo: EPA / Jon Hrusa)

Sibanye-Stillwater is opposing a Constitutional Court application launched by six mining communities to have the company’s merger with Lonmin reversed. The mining communities said they were excluded from merger talks. However, Sibanye-Stillwater said the merger is ‘practically impossible’ to reverse as it has been implemented.

Simply put, it would be impossible for the egg now to be unscrambled.”

This is how precious metal miner Sibanye-Stillwater has responded to a Constitutional Court application by six North West mining communities to have the company’s R5.4-billion merger with Lonmin reversed and declared unlawful.

The Greater Lonmin Community, which represents six mining communities on the platinum belt of Rustenburg, wants to appeal a Competition Appeal Court judgment that paved the way for the merger to be approved because directly affected communities were allegedly excluded from merger talks. The six mining communities are Marikana, Mooinooi, Majakeng, Tornado, Nkaneng, and Bapo Ba Mogale.

In a responding affidavit submitted on 31 July, Sibanye said the merger with Lonmin, which created an enlarged entity that will become one of the world’s leading sources of platinum group metals, has been implemented and it would be “practically impossible” for it to be reversed.

Richard Stewart, Sibanye’s executive vice-president for business development, said there are several aspects of the merger that cannot be reversed after Sibanye and Lonmin shareholders voted overwhelmingly in favour of it on 10 June 2019.

Since the vote, Stewart said former Lonmin shareholders had received Sibanye shares, which are now freely tradable on the JSE.

That cannot be reversed. It would be impossible for the shareholding of Lonmin to be recreated as it existed prior to the [merger] transaction since Sibanye has no way of knowing who owns those shares,” said Stewart in court papers.

Sibanye also cannot reverse Lonmin’s delisting from the JSE and London Stock Exchange, and the decision by employees who voluntarily resigned from Lonmin after the merger was approved by shareholders.

Stewart said “no purpose would be served” if South Africa’s apex court grants the Greater Lonmin Community’s wishes as its court application is “irregular, incompetent and lacking in merit”.

Relief asked by communities

The Greater Lonmin Community’s Constitutional Court application adds another twist to the Sibanye-Lonmin merger, which has been bedevilled by regulatory hurdles and fierce opposition from the Association of Mineworkers and Construction Union since it was initially announced on 14 December 2017.

Before the Greater Lonmin Community approached the apex court on 18 July 2019, it raised its objections about the merger to the Competition Commission, Competition Tribunal and Competition Appeal Court.

The Competition Appeal Court turned down its application on 17 May 2019 to oppose the Sibanye-Lonmin merger and its request to be admitted as an appellant during merger talks. In his judgment, Judge Dennis Davis read section 17 with section 13 (a) of the Competition Act in ruling that the Greater Lonmin Community wasn’t a key party of merger proceedings.

Louwi Mogaki, the legal representative for the Greater Lonmin Community, wants the Constitutional Court to declare that section 17 read together with section 13 (a) of the Competition Act is unconstitutional as it excludes communities that are directly affected by mergers and mining activities.

The communities also accused Lonmin of not complying with its social and labour plan to uplift mining communities since 2008. Mogaki said Judge Davis approved the Sibanye-Lonmin merger despite the Competition Commission’s “lack of competence” to “conduct a proper investigation of Lonmin’s failure to comply with its social and labour plan”.

Sibanye hits back

Lonmin is now a subsidiary of Sibanye and the latter has taken over the former’s obligations to mining communities.

Sibanye’s Stewart has hit back, saying the Greater Lonmin Community failed to ask the Competition Appeal Court to declare that sections 17 and 13 (a) of the Competition Act were unconstitutional, but now wants the Constitutional Court to make a determination when “no case” has been made for direct access to the top court.

Reading section 17 with section 13 (a) of the Competition Act is of purely academic interest, and would have no practical effect on the merger, which has been implemented in a manner that cannot be reversed.”

He further argued that the Greater Lonmin Community’s appeal application against the Competition Appeal Court judgment didn’t raise a constitutional issue as its arguments about Lonmin’s social and labour plan had no relation to the merger or the Competition Act. The reason is that social and labour plans are governed by the Department of Mineral Resources under the Mineral and Petroleum Resources Development Act.

The GLC [Greater Lonmin Community] seeks merely to relitigate questions of fact that have already been considered by the [Competition] Tribunal and the CAC [Competition Appeal Court]. The GLC has no reasonable prospect of success when it comes to overturning the CAC’s decision.”

Stewart said Lonmin had complied with its two social and labour plans, which have a duration of five years, since the Mineral and Petroleum Resources Development Act (MPRDA) came into effect in 2008. Since then, two of Lonmin’s social and labour plans had been renewed and approved by the government after the company consulted with affected mining communities, he added.

On 20 July 2018, Lonmin submitted a new proposed social and labour plan, which would be effective from 2019 to 2024, to the Department of Mineral Resources. The plan is yet to be approved.

Lonmin conducted extensive consultations with the affected communities in developing SLP3 [the third-social and labour plan] and adhered to the obligations to consult under the MPRDA.”

The Constitutional Court is yet to announce whether it will hear the matter. BM


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