Categorized | B-BBEE Act, Mining

Lomnin’s contentious BEE deal divides a North West village

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The high profile court case in the North West has underlined the significance of chiefs seeking the consensus of members of their communities first before entering into agreements. Members of the Bapo ba Mogale Community are divided over a black economic empowerment deal with Lomnin.

In December 2014, Lomnin pushed a R644-miillion empowerment deal with the Bapi chief in a desperate bid to reach the Department of Mineral Resources’ 26% black ownership threshold. According to terms of the transaction, 8% is to be sold to black investors.

A press statement from Lomnin released last week indicated that the community would receive a payout from Lomnin’s profits, or Lomnin would pay the community R5 million a year. More to the point, R200 million would be available for procurement of services and products from small businesses in the community.

However, some members of the community have opposed the deal as “a day light robbery”. They say that they will end up owning only 2.4% of Lomnin, in essence selling their birthright cheaply.

Kholisile Dingiswayo, a representative of the aggrieved members of the community who is pursuing the court case, lamented that the real beneficiaries of the deal would only be the chief and his next of kin. “They are the only one who will get the money…at the end of the day,” he said.

Cases of communities going up in arms after chiefs make unilateral decisions on black economic empowerment (BEE) transactions have increased in the past 18 months. Even worse, some chiefs have been helping themselves to funds belonging to communities.

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