This article first appeared in Moneyweb.
The modern era of deal-making requires an army of lawyers.
It’s been more than a year since Sibanye-Stillwater announced its proposed R5.17 billion all-share buyout of Lonmin.
Since then the company has been in and out of court, fighting cases on multiple fronts, not all of them related to the Lonmin deal. It’s also had to deal with a particularly nasty pay strike by 15 000 workers affiliated with the Association of Mineworkers and Construction Union (Amcu) that has resulted in the deaths of nine workers. The strike has dragged on for five months. Other unions accepted the pay offer from management and returned to work. Amcu held out for a better deal, launching one of the ugliest strikes in years.
This week the SA Human Rights Commission sent a fact-finding mission to the mines, and met with union representatives and police. Last month the Labour Court ruled that the wage agreement reached between the company and three other trade unions could be extended to Amcu, and will approach the Labour Court again within the next few days to force Amcu members back to work.
Again at war
Two weeks ago Sibanye-Stillwater was again at war with Amcu – this time in front of the Competition Appeal Court, defending an appeal brought by the union to set aside a 2018 decision by the Competition Commission greenlighting the merger with Lonmin.
Amcu claimed the merger would result in massive job losses, citing a figure of 13 000 merger-related retrenchments, which far exceeds the roughly 3 200 projected by the Competition Tribunal last year. The union asked the court to extend the six-month moratorium on retrenchments (a condition of the merger imposed by the commission) to 24 months. The result of this appeal is still being awaited.
James Wellsted, senior vice-president of investor relations at Sibanye-Stillwater, says should the Competition Appeal Court rule in the company’s favour, the Lonmin merger should be wrapped up within the first half of this year.
“The Amcu strike at our gold operations is obviously not directly related to the Lonmin merger, although some argue that there is a link between the strike and Amcu’s opposition to the Lonmin transaction.”
Lonmin has also had to fight in court
Lonmin has also had its share of court action. In October last year, it successfully defended an attempt by the Mining Forum of South Africa to have its mining licences suspended on the grounds that it had ducked its Social and Labour Plan (SLP) obligations, which are a precondition of every mining licence.
The forum is a non-profit organisation set up to ensure that mining companies adhere to the conditions of their licences, and was appointed by the Bapo Ba Mogale Traditional Council to represent its interests and ensure compliance with the mines’ SLP commitments. Lonmin argued that the proper forum for complaints of this nature is judicial review in terms of the Promotion of Administrative Justice Act (Paja). The forum also asked the North West High Court to interdict Lonmin from transferring or disposing its shares to Sibanye-Stillwater on the grounds that this was an attempt to shirk its SLP obligations, and there was a pre-existing agreement to sell two of its shafts to the local community.
Justice Leeuw ruled against the forum, and dismissed its case with costs, saying it had followed wrong procedure in approaching the high court when it should have taken the matter under judicial review in terms of Paja.
Muddying the waters
All of this muddies what has been a determined bid by Sibanye-Stillwater to sweeten its portfolio of platinum group metal assets. Its platinum assets share boundaries with Lonmin, so it makes sense to consolidate operations and reduce capital outlay. One of the primary targets of the deal is Lonmin’s metallurgical processing complex, including smelting, base and precious metals refining facilities.
Lonmin’s processing facilities will allow Sibanye-Stillwater to smelt and refine ore from its existing Rustenburg operations, thereby improving the economics of those operations. Lonmin’s balance sheet is in tatters after several bad years. The deal offers its shareholders a dignified exit, as they will now hold Sibanye-Stillwater stock.
But before that happens, there are few more court hurdles to be cleared.