Lonmin/IFC Partner to Support Black Economic Empowerment


A truck leaves the portal at the Avebury mine, where underground mining began in January 2007.
Lonmin, the third largest producer of platinum group metals, has formed a partnership with the International Finance Corporation (IFC) to facilitate sustainable community development and black economic empowerment (BEE) in South Africa. The agreement breaks into three parts: a standby debt facility of $100 million that can be used to facilitate BEE participation in Lonmin’s projects in South Africa; an option for the IFC to invest up to $50 million in Lonmin equity; and a joint Lonmin/IFC $5.9-million technical assistance and advisory services program. The standby debt facility is available to facilitate the participation of any BEE partner selected by Lonmin in any Lonmin project. In addition, Lonmin can draw on the facility to fund any of its current or future expansion projects. The loan will be repayable in six equal installments, with the first due seven years after first draw down, and will attract interest at 1.5% above LIBOR. IFC has the option to acquire new Lonmin shares up to a value of $50 million. Lonmin will issue new shares to the IFC following exercise of the option at a discount of 5% to the market price prevailing on the London Stock Exchange at the time of exercise. The option can be exercised at the IFC’s discretion in tranches of a minimum of $10 million. The option remains valid for two years from March 13, 2007, the date of the signing of the partnership agreement. Lonmin has committed to invest the first $15 million received from the IFC under the equity option in projects benefiting communities that host Lonmin’s operations in South Africa. Lonmin and the IFC will design and implement a three-year comprehensive technical assistance and advisory services program. Included in this program will be a supplier-development program to expand Lonmin’s BEE and local supplier base by identifying new suppliers and to increase the competitiveness of BEE companies through training and co-operation with other regional mining operators. The IFC will assist Lonmin with fine-tuning of its gender mainstreaming strategy and will help the company implement mechanisms for increased participation of women within its operations. Lonmin and the IFC will work together to jointly design and implement comprehensive HIV/AIDS prevention programs to enhance existing programs operated by Lonmin. The IFC will help Lonmin facilitate local stakeholder dialogue, particularly assisting Lonmin to develop further its working partnerships with local municipalities and tribal authorities to increase the capacity to effectively plan and implement community development projects.