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8 months ago
Lonmin promises housing plan after S. Africa's Zuma threatens to revoke permit
December 12, 2016 / 4:05 PM / 8 months ago

Lonmin promises housing plan after S. Africa's Zuma threatens to revoke permit

* Zuma says Lonmin must file compliant plan or risk losing permit

* Warning puts pressure on Lonmin to spend on workers' housing

By Tiisetso Motsoeneng

JOHANNESBURG, Dec 12 (Reuters) - South Africa-focused platinum miner Lonmin is confident of submitting a plan to build workers' housing that meets government requirements, it said on Monday, after President Jacob Zuma threatened to revoke its mining permit if it failed to do so.

Zuma's warning on Sunday piles pressure on the company to spend more on workers' housing at a time when it is cutting costs after being saved from the brink of collapse last year by a deeply discounted $400 million equity cash call.

To secure a mining licence, mining companies must submit a plan for housing and living conditions for their workers, many of whom come from former "homelands", far from the mines, where blacks were forced to live in South Africa's racist past.

An inquiry into the death of 34 striking miners, shot by South African police outside Lonmin's Marikana mine in 2012, criticised Lonmin in 2015 for failing to comply with its social and housing obligations.

The 2015 report, chaired by retired judge Ian Farlam, said the mines department should take steps to enforce the rules.

After South Africa's Department of Mineral Resources asked for revisions to Lonmin's housing plan in September, "the company is currently reviewing its plan and is confident that it will submit a plan that is compliant," Lonmin said in a statement.

Lonmin's employee housing plan includes building apartments and converting crowded men-only hostels on mine property into bachelor apartments and family units.

Lonmin said in the statement it had completed the conversion of all hostels into 1,908 single and 776 family units.

Zuma said on Sunday his government would consider taking sterner measures that include revoking or suspending Lonmin's mining permit if the company failed to present a housing plan with clear timelines.

"A compliant housing plan will be requested from Lonmin, failing which immediate action in the form of suspension or cancellation of the mining right will be taken," Zuma said in statement.

Last month, Lonmin reported earnings before interest and tax (EBIT) of $7 million for the year ended Sept. 30 versus a loss of $134 million a year earlier and said it would continue closing inefficient production in 2017 to cut costs.

Shares in the company, which are also listed in London , closed 1.7 percent lower at 24.28 rand in Johannesburg, largely in line with peers. ($1 = 13.6436 rand) (Reporting by Tiisetso Motsoeneng; Editing by Adrian Croft)

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