20111203
Reuters
(Reuters) - Life is about to get a lot better for people like Christopher Mocwane, a worker at one of the world's largest iron ore mines outside this dusty town in the middle of the Kalahari desert.

Thanks to an employee share ownership scheme, the 47-year-old, who earns 7,000 rand ($835) a month, is about to receive a 576,045-rand ($68,700) windfall.

"I'm going to buy myself a house. The one where I live now, I'll fix it and give it to my mother," he told Reuters, wiping the sweat off his forehead in the scorching heat. "She was very happy when I told her."

"My children are still small, but I will now be able to send them to school when they grow up," he added with a nervous smile.

Mocwane is one of 6,200 workers at Kumba Iron Ore due to benefit from the plan aimed at ensuring all its workers share the profits of the iron ore producer over the past five years.

A unit of global miner Anglo American, Kumba has already paid out 279 million rand in dividends to the same employees, an average of 55,000 rand per person over five years.

The lump sum to be paid out between December 15 and 17 is linked to the share price on November 17, and comes to around 345,000 rand per employee after taxes. Those who have not been with Kumba for the full five years will get less.

"I've tried to fix my house. We had a problem with water, and now we have water," said Mocwane, who has worked at the open-pit mine for 17 years, first as a cleaner and now driving trucks.

"For many years I didn't have a car, but I have one now. I can see a lot of difference in my life," he said.

A SUCCESS FOR EMPOWERMENT SCHEME

Kumba's "Envision" program has become a poster child for South Africa's much-maligned Black Economic Empowerment scheme aimed at giving blacks a stake in the economy after apartheid was dismantled in 1994.

Under the scheme, companies are required to meet quotas on black ownership, employment and procurement. Many have invested millions to build houses, hospitals and schools, but unions say Kumba's solution is unique.

"Every benefit the company is earning, (the workers) are part of it ... and it's not just a one-off," said Tebogo Chakapedi, a shopsteward at the National Union of Mineworkers.

"We would like that at a national level all companies adapt this," Chakapedi added.

Kumba's scheme was established when the iron ore assets of then Kumba Resources were unbundled in the Sishen Iron Ore Company (SIOC) in 2006.

Luckily for the employees, the company's share price has since soared thanks to rising prices of iron ore -- a core ingredient in steel -- from 120 rand in 2006 when the scheme was launched to 502 rand on Friday.

Many empowerment schemes have been criticized as only benefiting a small and politically-connected elite in a country where millions of black South Africans still live in poverty and more than a quarter of the workforce is jobless.

Critics, including some in South Africa's ruling African National Congress calling for the nationalization of mines, also contend that mining houses have done little for the communities that sit atop the minerals.

This has sparked a drive by unions and the government to push for more broad-based deals like Kumba's.

GOOD BUSINESS SENSE

Kumba chief executive Chris Griffith said Envision made business sense as well.

"We haven't had a strike in years. Employees are thinking all the time about how to continue to deliver what we are expected to deliver ... that also brings a lot of comfort for investors," he said.

Kumba today boasts one of the lowest staff turnover rates in the industry at around 3 percent and has launched another 5-year scheme bringing more dividends and another lump sum in 2016 as an incentive to stay on instead of cashing in and leaving.

Aware of the potential negative effects of sudden windfalls, the company has organized workshops, industrial theatre performances and distributed comics over the past year to teach workers about how to pay off debt and invest in housing.

They were also taught how to pay taxes -- a new experience for some given their incomes range between 5,000 and 20,000 rand a month, excluding benefits.

The arid Northern Cape province all around Kathu is sparsely populated and impoverished, a sprawling rural area where carts are still drawn by donkeys.

But there is lots of building activity in Kathu and new businesses like hair salons and car washes are springing up, partially supported through programs organized by Kumba.

In a country with one of the world's highest crime rates, there are concerns that the next pay day will be a magnet for criminals. Kumba said it was working with the local police to make sure people would not be targeted by thieves.

"I'm afraid (you) will see people knocking on your door saying 'oh, I'm selling this...', maybe coming to rob us," said Patricia Andries, a health and safety officer at the mine.

For now workers are just counting the days.

"It's like a kid waiting for Christmas ... my wife can't wait," said Ian van den Heever, a boiler maker at the mine. ($1 = 8.3800 South African rand)