Legal & General Investment Management, Employee rights and relations
We have been engaging with the mining company Lonmin on sustainability and governance issues for a number of years. Our dialogue with the company has increased since the Marikana tragedy (which resulted in over 40 deaths during impromptu wage negotiations) and the subsequent change of management during 2013. In South Africa, multiple socio-economic challenges are contributing to the climate of social unrest within the local population of mine workers. These challenges include: equal opportunities, education, rising inflation, increasing personal debt, immigration pressures and lack of adequate housing. They are exacerbated by falling global commodity demand, which is impacting the country’s exports. These factors are further aggravated by the lack of a central bargaining system for wage negotiation within the platinum industry. In addition, the change in majority union representation, from the NUM (National Union of Miners) to the AMCU (Association of Mineworkers and Construction Union), created a volatile environment for companies to engage with employees.
In September 2013, we visited Lonmin’s mine in Marikana in order to better understand the company’s relationship with its employees and local communities and its attitude to broad sustainability issues. We met the new CEO, as well as most of the senior executives. The conversations focused mainly on the relationship with the newly formed and dominant union, AMCU, with respect to the latest pay negotiations. We also had the opportunity to meet mine workers directly in order to understand their perspective. We talked at length about the safety, community programmes and socio-economic backgrounds impacting the company’s operations. Many of the issues faced at Lonmin are applicable to other mining companies operating in South Africa. We continue to engage with them to strengthen employee relations, accelerate housing improvements and work collectively with other mining companies to address community concerns to encourage more effective processes for wage negotiation.