Centre for Environmental Rights – Advancing Environmental Rights in South Africa

The Centre for Environmental Rights’ September 2015 report, Full Disclosure: The Truth about Corporate Environmental Compliance in South Africa, revealed that over the period assessed (2008-2014), many of South Africa’s biggest listed companies, including Lonmin plc, committed serious breaches of environmental laws. The report also revealed that the level of disclosure of these breaches to shareholders was in most cases extremely poor, and that investors, in particular South Africa’s large institutional investors, are failing to recognise red flags in company reports and are not asking nearly enough questions about the environmental compliance of the companies in which they invest. In light of these findings, shareholders are called upon to exercise their powers at Lonmin’s upcoming AGM on the 28^th of January and ask management questions on the following key issues:

1. Compliance with environmental laws

As highlighted in Full Disclosure, there is limited publicly available information regarding Lonmin’s compliance with environmental laws. What little information is publicly available, in Lonmin’s annual reports and elsewhere, reveals an apparent significant number of serious non-compliances with environmental laws and permits, including incidents causing harm to the environment at and around Lonmin operations, a failure to meet air quality permit requirements, repeated exceedances of dust emission limits, poor water management systems and non-functional sewage systems.

No mention is made in Lonmin’s annual reports of compliance inspections undertaken by regulatory authorities at Lonmin’s operations. Shareholders should accordingly ask:

• How many times have Lonmin’s facilities been inspected by regulatory authorities for compliance with environmental laws and permits? What have been the results of these inspections?

2. Financial provision made to satisfy closure obligations

Lonmin’s 2015 annual report details the company’s plans to close certain shafts. Shareholders should accordingly ask:

• What is the estimated cost of environmental rehabilitation at the locations where the closure of shafts is set to occur?
• What assessments were done to determine this estimated cost?
• What financial provision has been made to satisfy the company’s rehabilitation obligations at these locations?

3. World Bank complaint by the women of Marikana

As highlighted in Full Disclosure, in 2015 the women of Marikana lodged a complaint with the ombudsman of the World Bank in relation to the International Finance Corporation’s investment in Lonmin. The International Finance Corporation is the private sector investment arm of the World Bank. The complaint centres on Lonmin’s failure to comply with the social and environmental conditions attached to the investment, and alleges that the air and groundwater in local communities has been polluted by the mine. Shareholders should accordingly ask:

• What is the status of this complaint? Has any action been taken by the International Finance Corporation against Lonmin in relation to this complaint? If action has been taken, what are the relevant details? What steps, if any, has Lonmin taken to deal with the allegations in this complaint?

ENDS

About the Centre for Environmental Rights (CER)

The CER is a non-profit organisation and an environmental rights law firm that helps communities defend their right to a healthy environment. It does this by advocating and litigating for transparency, accountability and compliance with environmental laws. For more information, visit http://cer.org.za/.