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A Rough Tough Job

On July 1, Ben Magara begins arguably one of the toughest jobs in world mining. That will be his first day as CEO at the battered platinum miner Lonmin.

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When you talk to Ben Magara, the fifth child in a family of nine children from rural Zimbabwe, you can’t help but think that the open and friendly person smiling at you may be just too nice to be taking on a tough and thankless job.

Magara takes up the role as CEO of the world’s third-largest platinum miner, Lonmin, on July 1, and a rocky road lies ahead.

Worker relations at Lonmin and across the South African platinum sector are a bubbling cauldron. On June 3, a National Union of Mineworkers (NUM) official working at Lonmin’s Western Platinum operation, 120km north west of Johannesburg was shot dead. It led to talk of a peacekeeping force for the mines, which would have been unthinkable just two years ago.

It is a sign of troubled times. There was mistrust even before the Marikana tragedy in August. Between August 11 and 16, clashes between police and striking workers led to the deaths of 44 miners. More than 70 people were injured and around 250 people were arrested.

A public inquiry into the deaths and the reasons why the strike had been so violent will continue this month. It will also ascertain why police, security guards and miners, who did not strike, were killed. The hearings are slow and findings may only emerge next year.

What seems clear from the inquiry, so far, is that a breakdown in NUM leadership and failure by unions to direct their members, may have contributed to the massacre. Government, police and mining companies are also likely to shoulder the blame.

Since August, the unpredictable South African mining industry has been plagued by wildcat strikes. At Lonmin, the majority of the unionized workforce belongs to the Associated Mineworkers and Construction Union (AMCU), around 70%, according to management. AMCU has been around for some time, but last year came to the fore as a rival to NUM, which is accused of being out of touch with its members. At the platinum sectors two other major employers, Impala Platinum and Anglo American Platinum (Amplats), AMCU members also make up the majority of unionized employees, leaving NUM on the back foot.

This has made South Africa’s platinum mines a political battleground as NUM struggles to regain its power base. There is much on the line for both unions and the ANC. To a degree, the platinum sector wage talks that will be held in July will be as much about the politics of the country as they will be about miners looking for wage increases.

In May, Lonmin caught  up on lost production after last year’s violence, but lost even more production as infighting between NUM and AMCU supporters led to strikes. The company’s share price has fallen 33% year-on-year on the London Stock Exchange, where the company has its main listing.

“We have to make sure the assets are working optimally. We will be rising from a low base and need to keep the cash flow running,” says Magara.

Forty-six-year-old Magara is just as imposing now as when he was elevated to CEO of Anglo Coal South Africa seven years ago. He rises at 4AM to go to the gym and appears to have lost none of his verve and enthusiasm.

We meet at the Melrose Arch hotel, in Johannesburg. Magara is keen to talk about his hopes for Lonmin and the South African mining industry.

Magara says that the mining industry has to work together in communities around mines. And referring to a long running area of contention between miners and companies, he says the industry cannot merely apologize for silicosis. The debilitating lung disease can cause premature deaths. It is caused by crystalline silica dust inhaled by miners with inadequate protection. Today, the protection has improved and many of those suffering from the disease contracted it years ago. South African mining companies have been shying away from paying decent compensation to miners who contracted the disease.

“We have to deal with it,” he says.

Magara, who has a mining engineering degree from the University of Zimbabwe, acknowledges he will have his work cut out at Lonmin. His last job was executive head of engineering and capital projects at Amplats. He clearly knows the platinum business; while his job at Amplats was an executive one, at Lonmin the buck will stop with him.

Heads of resources companies in the 21st century need broad skills, it is no longer just about getting the ounces out of the ground, it also requires political poise.

“Everyone wants to have skin in the game,” says Magara.

He is a good communicator and as the quote above suggests he gives the impression that he is unlikely to be an immoveable object when it comes to negotiations. He knows his ability to communicate is a key attribute. Asked why he was selected as the person for the Lonmin job, he says much of his work at Amplats involved community relations. He had to help the company secure mining licenses.

At Amplats’ Mogalakwena mine, near Polokwane, two communities had to be relocated, often an uneasy task. When Magara took up his position with the company, the people were refusing to move. He went to the communities each week, meeting with 17 sub-committees to discuss their grievances.

“In six months we had the licence,” he says.

It is Magara’s view that on occasions mining companies may be too quick to revert to the law.

“Actually, it is about building relationships. It’s about respect,” he says.

Magara has always been close to the ground and early to rise. Back home, in Bikita, Masvingo, he would rise at 4AM to tend vegetables with his siblings and father, before heading off to school. In those days, Magara dreamed of being a bus driver.

Now as head of Lonmin, Magara steers a company with a market capitalization of $1.97 billion, albeit carrying significant debt, where he has to unite the divided. Already, as part of the South African Chamber of Mines collective bargaining process for wage talks in the gold and coal sector, NUM has tabled a demand of 60% for entry-level workers, with the overall demand about a 15% increase. Taking into account that unions aim high in wage negotiations, even an agreement to a fraction of these demands could prove ruinous. Wages make up half of mining costs.

Magara knows what he has to do with the operations at Lonmin.

“It’s all about efficiency… Lonmin has an excellent resource base,” he says.

That is just one aspect of what might be called the Lonmin success equation. If Magara steers the Lonmin bus onto the clear highway, he will have to have all the parties with “skin in the game” on board. Before he can settle into the driver’s seat, he will have to pull off quite a feat; an entente with labor that should lead to increased productivity and efficiencies.

Given the country’s history, NUM’s loss of footing and rivalry with AMCU, the trauma mining communities have suffered in the last year, it is a job that could drive an angel to drink.

Magara, though, as an African with significant experience in South Africa and Zimbabwe, some believe, is better equipped to negotiate this rough tough job than most.

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