An overview of the Mining sector in South Africa
The South African mining industry is going through a time of change. Gold and platinum mines are under pressure because of global price fluctuations and the cost of doing business. Safety issues are to the fore and national mining policy is the subject of heated debate.
The body that has represented mine owners since 1889 has undergone a re-branding, a strong symbol that change is under way. What used to be the Chamber of Mines is now the Minerals Council South Africa. The Minerals Council wants to reposition the South African mining sector so that it regains its place as the country’s “foremost industrial sector”. It aims to double real investment in mining by 2030. The council wants to assist in obtaining the objectives of the National Development Plan (NDP) regarding economic growth, development and transformation.
The gold sector has shed several thousand jobs in the last five years and in mid-2018 a large cutback in platinum sector employment was announced. A proposed new mining charter (Mining Charter 3) did not go down well with mining companies, and the new President of South Africa, Cyril Ramaphosa, appointed a new mining minister to come up with a better arrangement. Both Ramaphosa and Minister Gwede Mantashe have held the post of Secretary-General of the National Union of Mineworkers so there is no shortage of first-hand knowledge of the sector in the upper echelons of government.
The level of black ownership and whether that percentage must be “topped up” every time a black shareholder sells are two of the contentious issues that must be resolved. A court ruling in favour of “once-empowered, always-empowered” will probably not be the end of the debate. The Minerals Council says that the value of BBBEE deals since the year 2000 is R205-billion.
Guided by the Zambezi Protocol, the Minerals Council wants mining to be more positive and constructive, working better with the communities in which it operates. New CEO, Mxolisi Mgojo, is simultaneously leading his company, Exxaro Resources, on a programme to make mining sustainable through water sharing with local communities and finding ways to help communities gain access to energy.
Access to energy is something that mining concerns and related industries are working on. Many mines are putting plans in place to go “off-grid” as far as possible. Steel producer ArcelorMittal South Africa has asked the National Energy Regulator of South Africa (Nersa) for a negotiated price agreement (NPA) to help it cope with the volatility in exchange rates and lower domestic demand. Silicon Smelters, which has plants in Mpumalanga and Limpopo, has asked for a two-year negotiated price agreement (NPA) on electricity, which would allow it to resume production. Nersa has the power to grant such exemptions in a strategic industry.
Investments
Limpopo Province is the site of two new Special Economic Zones which will have a mining focus. Mineral beneficiation is a key component of the newly accredited Musina-Makhado Special Economic Zone (SEZ) in the far north of Limpopo. In 2018 nine Chinese companies committed to investing more than $10-billion in projects related to the zone’s four main areas of activity: a coking plant, a power plant, an alloy factory and the manufacture of steel. Shenzhen Holmor Resources Holdings, as the manager of the Energy and Metallurgical Cluster within the SEZ, will invest about R40-billion to create infrastructure.
The planned Tubatse Platinum SEZ (for which accreditation has been submitted) will focus on platinum group metals beneficiation. According to the Limpopo Economic Development Agency, 17 new mines were established in the greater Tubatse/Burgersfort/Steelport area between 2001 and 2016, and a further 22 new mines are planned. The completion of the large new De Hoop Dam makes these plans possible. A Mining Supply Park is envisaged which will be a big boost for local businesses and suppliers. Getting local small businesses supplying to the mining sector is a goal of the provincial authorities.
Impala Platinum (Implats) has created Tubatse Platinum, a vehicle in which local businesses hold a nine percent stake in the Marula platinum mine which is located north of Burgersfort. Two other empowerment partners are involved.
A black empowerment deal in the Northern Cape recently reported good returns. Hotazel is the site of a relatively new manganese mine, Tshipi é Borwa. Tshipi e Ntle Manganese Mining (Tshipi) is a joint venture between Pallinghurst Co-Investors and a black empowerment company representing several groups called Ntsimbintle Mining. A number of non-government organisations (NGOs) such as the Black Sash have a 2.2% stake in the mine through Ditikeni Investment Company. Indications are that Tshipi can produce about 2.2-million tons of ore per year, for about 60 years. Engineering News reported in 2017 that Ntsimbintle celebrated a R300-million dividend pay-out in July, with a further R500-million agreed on for disbursement in September.
Australian miner Orion is putting considerable resources into investigating the possible revival of the Prieska Zinc-Copper Project in the same province. A maiden mineral resource estimate was published in February 2018 and 14 drill rigs (above and below ground) are at work looking into the site’s prospects.
Vedanta Zinc International’s nearby Gamsberg zinc and lead project is the biggest current mining project in South Africa. The mine, near Aggeneys, has resources and reserves of 214-million tons. The mine is already having a significant impact on employment. In the first phase, 4Mtpa of ore will be mined, producing 250 000tpa of zinc concentrate.
Aggeneys is responsible for approximately 93% of South Africa’s lead production, and 12% of all world lead exports. Zinc is less abundant, but the province is still responsible for about 43% of South Africa’s overall zinc production.
Afrimat, a listed construction materials supplier and industrial minerals group, has added open-pit mining to its portfolio with the R322-million acquisition of the Diro mine (Northern Cape), which had been in business rescue. Production was on track for the target of one-million tons per year, but a problem on the railway line that delivers iron ore to the port of Saldanha led to production being scaled down. Afrimat had a transport deal with Transnet and is selling iron ore in China.
Anglo American is investing R2-billion to expand production at its Venetia diamond mine near the town of Musina in Limpopo. The project to convert the open-pit mine to a vertical-shaft mine will substantially extend the life of the mine.
Ivanplats has started sinking shafts at its new mine near Mokopane south-west of Polokwane. If the mine achieves the projected production rate of 12Mtpa with 1.2-million ounces of PMG, it will rank as the biggest PGM mine in the world. Northam Platinum has invested R900-million on a smelter expansion project at its Zondereinde mine south of Thabazimbi.
A R1.6-billion processing plant is being built at Cullinan by Petra Diamonds, with a throughput capacity of 6Mtpa. The mine’s orebody contains a diamond resource of 194Mcts which is why Petra is expanding with a goal of annual production of 2.2Mcts by 2019.
Nkomati Anthracite in Mpumalanga has been revived after an investment from Unicorn Capital Partners, formerly Sentula Mining. The Mpumalanga Economic Growth Agency (MEGA) and local communities are also shareholders. The mine has proven resources of 8.7-million tons and upwards of 400 jobs were created over the last two years. The high-grade anthracite that the mine will produce is suitable for the ferro-metals industry because it has low phosphorus and sulphur levels and high fixed carbon percentages.
Coal giant Exxaro has committed R3.8-billion to its Belfast project, an investment that will create 1 160 jobs and have an impact on the GDP (over the life of the mine) of R39-billion. Exxaro is also extending the life of its Leeuwpan Mine by another 10 years. The mine has 1 200 permanent employees.
