At $150 million, IFC's investment in South African platinum producer Lonmin Plc is its largest to date in Sub-Saharan Africa. The extensive advisory services package related to the investment could well make IFC's best in the region. IFC will work with Lonmin to deepen the development impact of the company's platinum mining operations in South Africa. The goal is to build a long-term relationship with local communities and demonstrate the effects of sustainable development across Africa and worldwide.
"IFC has a tremendous track record and excellent programs and expertise in capacity-building inside communities and developing local supplier solutions," said Lonmin's Chief Executive Officer Brad Mills, who was in Johannesburg on Tuesday to sign the deal. “So they bring a real technical dimension to community development that we felt would be very valuable to have, supplementing our skills."
The deal consists of a $100 million standby senior loan provided by IFC, together with the option for IFC to buy up to $50 million in Lonmin shares. Lonmin will use most of the cash to help black South Africans increase involvement in their operations. With IFC's help, the company is aiming to improve social and economic conditions of communities near their operations. These efforts will help Lonmin comply with and exceed South Africa's mining charter, which requires mining companies to prove they are helping the country's black majority increase involvement in the sector after being excluded during apartheid.
IFC and Lonmin have already set high goals to ensure they do just that. With IFC's guidance, Lonmin aims to create 5,000 jobs over the next three years in the Northwest region of South Africa. Some 1,000 of these will be at small and medium businesses and black-owned enterprises in and around Lonmin's operations. The company also plans to add 20 new black-owned suppliers to those that it currently uses. It will also raise the number of women in its work force to 10 percent over the next two years from 4 percent currently, fully integrating those women into its operations.
The program doesn't stop with creating jobs and empowering women:
- Lonmin will construct 6,000 new houses and convert all its hostels into family-living flats.
- The company will allocate at least 40 percent of the construction work to locally owned black-owned businesses.
- Lonmin is aiming for 40 percent voluntary HIV testing among its workers in the next two years.
- Through a process that involves consulting with stakeholders, building the capacity of traditional authorities and the facilitating multi-stakeholder planning, Lonmin is aiming to jointly implement 48 community development projects at a cost of approximately $9.5 million to improve the lives of people in the community.
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All-in-all, the combined programs are expected to reach some 350,000 people living in and around Lonmin's operations in South Africa.
Working to implement best practices and deliver tangible development impact to local communities has always been central to IFC's strategy in the mining sector. IFC's investment strategy now increasingly looks at the sustainability of mining operations and looks to ensure that the activities of mining companies contain a social component to benefit local communities.
"This is to emphasize not just our investments, our money, but to take a more comprehensive approach," said Rashad Kaldany, IFC's director for oil, gas, mining and chemicals, who was also in Johannesburg to sign the Lonmin pact.
For more information contact:
Houtan Bassiri
Communications Officer
Johannesburg, South Africa
Tel: +27 11 731 3179
E-mail:
hbassiri@ifc.org
Published March 19, 2007
