Ben Magara: Investors need clarity about where we’re going as a country

Lonmin CEO, Ben Magara joined Alec Hogg for a catch up at the Mining Indaba in Cape Town. 

Ben, I think you learned something in Davos, with what you have just been talking about, regarding stakeholders.

Indeed, it’s about how we work together.  For me, the focus was to realise that every stakeholder wants businesses to succeed, that they want to be heard and yes, that’s what Davos taught me.

Listening to you was interesting because with a Mining Indaba, at this point in time, there’s a lot of pessimism around.  Yet, you were showing the way in a longer-term future.  Do you think your message is being heard?

I would hope that it is heard because when you look at the mining industry in the entire world, when the world is in a boom, everybody’s overoptimistic.  When the world is down, everybody is pessimistic.  The reality is that we have seen these cycles come and go, so it is important that we have a long-term view and focus on the real, tangible building blocks that we need to put in place, to deliver over a sustainable period.

Stakeholders versus shareholders…

I believe that it’s about all stakeholders, including shareholders, realising shared value together putting down their plans and expectations, because if you compare the two, they are competing for the same value.  They may have different needs, so we need to find the best challenge for us, as leaders.  How do we ensure that that value is shared equitably amongst all those stakeholders and shareholders?

Ben, on Sunday, President Zuma had a few editors together and he was talking about the mining industry.  His view was that it’s unlikely that we’re going to see another labour unrest, as we had last year.  Has he been talking to you?  Has he been getting insights from you or is he just hoping?

We do engage with all our partners, including Government.  Our real focus is how we are working together with unions in order to ensure we have a relationship that is transparent, respectful, and that looks at the realities of our business so that we have a sustainable future.

Are we winning in that relationship?  Are you making progress there?

It takes two to tango.  We have been very proud of the efforts we’ve made at Lonmin with our majority union (AMCU) and the minorities, as well.  We have seen a record First Quarter production.  We have seen 15 months of safety, without a fatality.  We looked at one shaft that we needed to close, which is Hossy, and the unions have come on board and said ‘we will work harder’.  That shaft is currently producing well.

The perception that one has from the outside is that unions always cause trouble, that they’re not part of the solution, but part of the problem.  Are you finding it different?

It’s hard work.  We have to continue to find each other, and there are times when we are not there yet.  We have 38,000 employees and contractors and sometimes, we miss it.  I think that the best efforts of wanting a successful Lonmin are clear from the eyes of all leaders who are stakeholders of Lonmin.

You met a lot of people at the Mining Indaba.  How many of them share your view?

There’s a lot of sharing.  The challenge I’m seeing in reality is that it doesn’t matter whatever level of technology, mechanisation, or modernisation we do; it comes back to people.  It comes back to relationships.  That is still the step in which, we need to tangibly, show progress.  I spoke to you in Davos and talked about the ‘just do it’ approach.  It is important that we take tangible action, so that we can show progress.

I want to go back to what President Zuma was telling us on Sunday.  He said there’s still a problem with conservatism from management, in the mining industry.  Clearly, he wasn’t talking about you and Lonmin.  Are you seeing that this is still a situation, which needs to be addressed?

South Africa has its challenges.  As a country and as a mining industry, we are not homogenous.  Our aspiration is to be one family.  Indeed, there are challenges in achieving that.  It may be that it’s in management, unions, or civil society.  We all have to work much harder to find each other.

So you think we are making progress.

Indeed.  I am very optimistic because I really think we’re taking the right steps.  We need to continue on the path.  For example, the National Development Plan has to be tangible actions on the ground.

It’s a long journey, but we are seeing some positives, such as the Chinese investment into Village.   Of course, they have the platinum prospect there as well.  Has there been any knocking on your door from Chinese potential investors/ potential partners?

I think partners come and go.  We are a listed company and therefore, everybody comes and goes in their own manner.  I can’t quite touch on the Chinese specifically, as we are a listed company.

Ben, tell us about the Mining Indaba this year, compared to last year, for you.  Last year, those wounds would still have been raw.  They might be a little less open.

Indeed.  Last year, we were two weeks into the strike when I spoke.  This year, we are 15 months into good, safe production.  We’re going on with our unions.  We’ve signed a relationship charter with our unions and we recognised our minority unions.  Indeed, things are shaping up.  We still have a lot of hard work to create the transparency and respect for a sustainable environment, which is stable, for us to do our business.

You’re getting it right inside.  What about externally?  What are the investors saying to you?

Investors remain concerned about regulatory certainty and clarity of purpose.  Mining is a long-term business with lots of capital, so you can’t change regulations often.  We need to ensure we give them the clarity of where we’re going as a country and as an industry.  Clearly, the platinum industry has supply challenges.  We need to assure customers out there that we are going to ensure a stable supply and our relationships are improving.

Have you had a chance to talk to Minister Ramatlhodi?  I see he is here.  He is circulating and talking to various people.

I’ve been talking to him since Sunday, when I was part of the African Ministerial Symposium.  We continue to engage on the issues of all the energy challenges that we have and really, how he has come to the party with his department to make sure we collaborate and find each other.

He’s come to the party.  He certainly does appear to have a good reputation amongst even the foreign investors who are coming here, to the Mining Indaba.

It is some fresh air from the Minister.  It’s great to hear him comment about what we can do and that in the end, there is actually, a Constitution to uphold what we do in the country.

Are you feeling more optimistic when you leave the Mining Indaba, than when you arrived?

I think that it’s back to business.  The platinum prices are still down and if you look at the market ahead, the market fundamentals seem to implore that the prices must come right, but market sentiment remains.  Until the Euro Zone improves, we still have a challenge.

Ben Magara is the CEO of Lonmin.

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