SA Mining May/June 2022

US$270/oz to US$2 000/oz: gold price rise in 20 years

6.6 million: global EV sales in 2021

SA MIN NG MAY / JUNE 2022

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SUPPLIERS GUIDE

Joy Global’s (part of the Komatsu Mining Corp. Group) transformation director Dinah Williams

Mining Indaba Round-up

GOLD IS BACK IN FASHION!

■ End-to-end safety ■ Funding for junior miners ■ PGMs and sustainability

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CONTENTS

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MAY / JUNE 2022

16

Gold has once again come to prominence as a sound investment.

Turning precious metals green.

26

IN BRIEF 6

SOLA Group and Tronox sign 200MW wheeling power purchase agreement.

New SEIFSA COO wants SA’s operating environment to be more business-friendly.

FEATURES 12

Finance and legal There are various options open to mines seeking protection against non-performance by a contractor, and contractors seeking protection against non-payment by a client.

16

Is gold coming back into fashion as an investment?

With war breaking out in Europe and the attendant economic fallout, gold has once again come to prominence as a sound investment.

24

Turning precious metals green Looking at how the drive towards sustainability through electric vehicles may positively affect South Africa’s platinum group metals (PGM) sector.

26

32

End-to-end safety Safety, driven by the principle of zero harm, lies at the core of the mining industry. Digital technologies now offer innovative ways to improve safety in this arena.

Funding for junior miners The lack of funding from traditional capital sources has made it necessary for junior mining companies to discover and access alternative funding opportunities.

Better safe than sorry.

US$270/oz to US$2 000/oz: gold price rise in 20 years

6.6 million: global EV sales in 2021

SA MIN NG MAY / JUNE 2022

www.samining.co.za

R39.90 (incl VAT) International R44.50 (excl tax)

INCLUDES:

SUPPLIERS GUIDE

Mining Indaba Round-up

Joy Global’s (part of the Komatsu Mining Corp. Group) transformation director Dinah Williams

GOLD IS BACK IN FASHION!

■ End-to-end safety ■ Funding for junior miners ■ PGMs and sustainability

NEWS IN NUMBERS

KOMATSU MINING CORP.

REGULARS

SUPPLIERS GUIDE 2022

16 24 4 40

US$270/oz to US$2 000/oz: gold price rise in 20 years 6.6 million: global EV sales in 2021 Out of Africa Column by Peter Major

COVER STORY: PAGE 8

READ WHAT REALLY GOES DOWN IN SADC

Working to transform the sector

PAGE 19

Joy Global transformation director Dinah Williams says it is imperative to transform the industry and improve the lives of miners and those in local communities.

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FROM THE EDITOR

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THE RISE AND RISE

OF GOLD AND PGMs

T

“

Rodney Weidemann Tel: 062 447 7803 Email: rodneyw@samining.co.za

ONLINE EDITOR

Stacey Visser Tel: 011 280 3671 Email: vissers@businessmediamags.co.za

Rodney Weidemann

he invasion of Ukraine by Russia earlier this year shocked the world and led to a massive move to block Russian access to its foreign monetary resources. Coupled with an array of sanctions, the invasion saw the rouble tank and many of the country’s investments lose significant value.

This scenario has led to a renewed interest in investing in gold, which is now being viewed as a more stable option than stocks, bonds and even cash.

In this issue, we look at just what makes this precious metal such a strong long-term investment.

As for the broader platinum group metals (PGMs), there can be little doubt that the growing drive for sustainable, environmentally friendly solutions, most notably the increasing uptake of electric vehicles, offers hope for this market segment, as this will provide the PGM sector with new avenues from which to turn a profit.

As we head into the Junior Mining Indaba, we take a look at the important issues raised at the recent Indaba in May, and consider the challenges faced by these junior miners in obtaining the necessary funding for their operations.

Safety continues to be a massive concern within the industry, as mining operations seek to meet the goal of “zero harm”. In this issue, we look at several different aspects of mine safety. This includes a unique approach to safety training that leverages digital technologies like virtual reality to place workers in specific threatening scenarios, to test their reactions and develop new safety processes.

In this same feature, we also walk readers through the adoption of wearable technologies, which use

EDITOR

internet of things solutions to keep individuals safe during work, and consider safety measures in the post-closure phase. Here, technologies can be implemented to keep the site – and those who may accidentally stray onto it – safe once the mine has been closed for good.

We also get the views of several industry experts on key issues, including the importance of publicprivate partnerships in the maintenance of the Bakwena Platinum Corridor, and how enterprise resource planning can bridge the gap between advanced technologies and legacy systems in optimising mining operations.

Furthermore, our experts discuss what is missing in the environmental, sustainability and governance landscape, take a look at how the current licensing regime appears to discourage small-scale miners, and – from a finance and legal perspective – we look at performance and payment security in the mining industry.

Lastly, in our cover story, we chat to Joy Global about the company’s broad-based black economic empowerment level 1 status, how this was achieved, and how it takes transformation seriously, by focusing on that of both the organisation itself and its supplier base.

Joy Global also talks to its focus on socioeconomic development for local mine communities, how this is further encouraged through upskilling programmes, learnerships, apprenticeships and bursaries, the benefits of diversity to the organisation, and how these efforts are helping to transform the industry and improve the lives of miners and those in local communities. ■

Safety continues to be a massive concern within the industry.

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OUT OF AFRICA

ACCELERATING

Lagos, Nigeria.

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peaking recently at the Smart Energy Forum in Lagos and Abuja, senior energy experts from Wärtsilä presented the latest results of an in-depth study that models the most cost-effective and reliable energy mix that can be built each year in Nigeria.

The study, 2022 to 2040 Analysis of Nigeria’s National Power System, uses the advanced Plexos modelling tool to quantify the system level benefits of different technologies in the Nigerian power system.

The model is used to analyse and identify the optimal capacity expansion for the country.

It shows that the country requires more aggressive capacity additions than the current situations, referred to as the business-as-usual scenario, in order to achieve the country’s stated 30-30-30 vision. This vision is to add 30GW of power generation capacity, with 30% coming from renewable sources, by 2030.

But looking beyond 2030, and by mapping the country’s solar and wind potential for renewable energy, together with transmission data from five major regions, an advanced 30-30-30 scenario can be envisaged that would generate additional power and significant cost savings.

This advanced scenario recommends the installation of 45GW of low-cost renewables in the north and west of the country by 2040, while concentrating 43GW of gas-fired

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internal combustion engine (ICE) power plants in the southern regions with access to low-cost locally sourced gas. Strengthening the transmission capacity between north and south will greatly benefit the central regions as well.

As more capacity is added to the system, the cost of electricity is predicted to fall drastically within the first few years, as locally sourced gas fuels more costefficient gas power generation to overtake expensive diesel. With the advanced scenario, cumulative saving to 2040 of up to $430-billion can be achieved when compared to the business-as-usual scenario.

For Wärtsilä, the choice of power generation technology is as important as the choice of fuel. In a system that maximises the use of low-cost renewables, being able to rely on flexible power technologies becomes paramount.

In this context, ICE power plants become the technology of choice because they are flexible by design. They have a high operating efficiency, even at partial load, and are made to cope with regular starts and stops.

On the other hand, combined cycle gas turbines (CCGT) lack the flexibility to match the fluctuations in electricity demand. They rely on a consistent and pressurised gas supply and are most efficient when operated close to full capacity. They are not suited to offset the intermittent supply of renewables.

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Detailed technology comparison between CCGT and ICE power plants show that for an equivalent 350MW plant running 8 000 hours per year, Wärtsilä’s solution saves between US$11-million and US$17m a year compared to the CCGT solution, thanks to its better performance in hot climates, better part-load efficiency and lower investment cost.

But there is more. Flexible ICE power plants offer several other advantages relevant in Nigeria. Thanks to their modular design, ICE power projects are easy to construct, fully scalable and can be deployed in phases. They can be ramped up or down quickly to adjust to demand, and also provide a great hedge against fuel supply risk, as the engines can be operated on natural gas, diesel, HFO or biofuels. They require little water to operate: their water consumption is less than 1% compared to the CCGT technology.

Today Nigeria’s electricity system faces a perfect storm. Small, inefficient, expensive and polluting diesel generators are widely used to compensate for weaknesses in the country’s grid capacity. Despite recent improvements, the gas supply system is not fully stable, which places additional strain on the country’s still-fragile electricity network.

Wärtsilä is convinced that building flexibility into the system by investing in gas engine power plants can provide a stable and reliable long-term solution to Nigeria’s energy challenges. ■

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NIGERIA’S 30-30-30 VISION

IN BRIEF

SOLA GROUP AND TRONOX

SIGN 200MW WHEELING POWER PURCHASE AGREEMENT

© ISTOCK – Thinnapob

Tronox Holdings, an integrated manufacturer of titanium dioxide pigment, has entered into a long-term power purchase agreement with the SA independent power producer SOLA Group to provide 200MW of solar power to Tronox’s mines and smelters in the country.

The energy will be provided to Tronox through wheeling agreements, which allow Eskom to be paid for the maintenance and upkeep of its infrastructure to transport the energy.

“Tronox’s renewable energy project with SOLA Group will reduce our global carbon emissions by approximately 13% compared to our 2019 baseline and has the full support of our board of directors and senior management,” says Melissa Zona, Tronox Holding plc’s senior vice president, external affairs and chief sustainability officer.

The projects will be majority owned and operated by SOLA Group and will deliver around 540GWh of energy to five mining operations through long-term power purchase agreements. The developments make use of the government’s recent relaxation of licensing requirements which exempt projects up to 100MW in size from requiring a generation licence.

“We are delighted to see that large-scale energy consumers like Tronox are making use of the opportunity to convert to clean and cost-effective energy,” says Chris Haw, director and co-founder of the SOLA Group.

“These types of projects are the fastest way to bring newgeneration capacity online and not only contribute to closing the electricity supply gap in our country, but also support the much-needed transition to clean energy and modernisation of our electricity grid.”

The execution of the agreements comes at a time when South Africa is faced with further load shedding and desperately needs extra capacity to be added to its electricity network. The projects are expected to start construction in Q3 2022, and be fully implemented by the fourth quarter of 2023.

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NEW SEIFSA COO

WANTS SA’S OPERATING ENVIRONMENT TO BE MORE BUSINESS-FRIENDLY Tafadzwa (Taffie) Chibanguza will have his work cut out for him returning to the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) as chief operating officer just as the global pandemic gives way to war in Ukraine.

He returns to SEIFSA and joins CEO Lucio Trentini to help lead the federation that represents and supports 18 independent employer associations in the metals and engineering industries while lobbying the government for policies to improve South Africa’s business environment.

Chibanguza has the necessary educational pedigree, with a BCom in economics and econometrics from the University of Johannesburg, a BCom (honours) in economic policy from the University of Witwatersrand, and an MComm in economic policy from the University of Witwatersrand. He is scheduled to complete an MSc in mining engineering with Wits University in 2022.

Following a stint at the Minerals Council South Africa, he is excited to be back at SEIFSA where he was an economist. “The steel and engineering sector is important in any economy and will play an important role in the current South Africa and whatever the future holds for the country,” he says.

At the moment that future is filled with uncertainty as the world digests Russia’s invasion of Ukraine. “Any war is terrible, but from an economic perspective war always breeds uncertainty across the board,” he says.

Some of the issues South Africa may have to face include the disruption of supply chains, which will threaten supply, and will then feed into inflationary pressures. The war, he says, has come at the worst time as the economy is already under pressure, and this will choke recovery.

There may be some silver linings though, notably that gold miners may benefit as they reap the rewards of a higher gold price due to the war-charged demand for the safe-haven asset.

“From our point of view, we feel government’s focus should be on kicking in a set of policy objectives that make the operating environment more business-friendly and ensure that the cost of production is less. The environment must be more conducive to business,” says Chibanguza.

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EQUIPMENT COVER STORY

DRIVING

DIVERSITY to transform the economy

Joy continuous miner.

“

To be a level one contributor is to demonstrate that the organisation has taken transformation seriously, transforming both the organisation internally, as well as its supplier base. In this way, they can achieve their goal of more accurately reflecting the demographics of South Africa, according to Dinah Williams, transformation director at Joy Global.

“From a supplier perspective, it is crucial to transform this arena by identifying new suppliers, particularly those that are black-owned businesses, and bringing these new players into the supply chain, to help diversify the market. The goal is to nudge your existing suppliers towards greater levels of transformation, while also exposing new

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A

s a BBBEE level one contributor, Joy Global (part of the Komatsu Mining Corp. Group) understands how imperative it is to transform the industry and improve the lives of miners and those in local communities.

The benefits of transformation in the mining industry are legion, according to Joy Global, a broad-based black economic empowerment (BBBEE) level one contributor and part of the Komatsu Mining Group.

A global leader in the supply of mining, construction, earthmoving and utility equipment, Joy Global has long recognised the big picture behind the country’s transformation drive.

The goal is to nudge your existing suppliers towards greater levels of transformation.

Joy shuttle car.

suppliers to your business,” she says.

“You should also play a role in upskilling previously disadvantaged employees through learnerships, apprenticeships and bursaries. By providing these individuals with access to hard and soft skills, you will be able to make your organisation more representative of the national demographics.”

She suggests that mining firms also make longer-term plans around what critical skills the industry needs and then cater for this by helping to upskill the local community.

“This can be done via learnerships, apprenticeships and bursaries, with the company in a sense ‘planting its own trees’, by inculcating skills in the community and creating employment opportunities through this.

“At the same time, they should focus on consistently hiring skilled black managers, in order to have diversified control in management, and to effect true change. The other aspect here is to focus on the retention of these managers, as they will, of course, be sought after by the competition.”

THE STEM CHALLENGE

Ultimately, transformation is a key driver in helping the local communities to break the poverty cycle. Companies should play intimate roles in the communities in which they operate, she says.

“When we talk of socio-economic development, we don’t mean handouts, but rather having the community identify income-generating projects. It’s basically teaching them to fish, rather than simply giving them a fish.”

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EQUIPMENT COVER STORY

Joy Global approaches such community programmes from two angles, she says – the Foundation Trust and its internal socioeconomic development unit.

“For example, we sponsor the Jumping Kids Project, which assists with the manufacture of prosthetics for children. Then we also offer bursaries to teens from destitute backgrounds, with the overarching goal of improving the pool of engineering skills in SA.” Williams says it’s worth noting that the lack of science, technology, engineering and maths (STEM) skills in SA means companies should seek to influence their growth and development.

“This is why the Komatsu Foundation Trust sponsors a STEM project in a number of schools, designed to encourage the uptake of these subjects among children, in order to grow the STEM base further.”

Williams indicates that the company also understands clearly that success is a team effort, which is why it has an employee voluntary scheme whereby staff are asked to identify community NGOs that need assistance. In this way, help is delivered

“

directly to relevant communities, through Joy Global, working in tandem with these NGOs. “We feel having what is essentially a partnership with our employees, where they point us in the right direction as to where additional assistance is required, provides for wonderful and targeted engagement, and allows everyone to play a role in the broader transformation agenda.”

BENEFITS OF DIVERSITY

“Transformation is also not merely a compliance issue; it holds significant benefits for the organisation as well. Today, transformed businesses attract talent much easier, as few people want to work for untransformed businesses.

“It also has a business impact on your customers, as if your company is diverse and transformed, they will also benefit on their scorecards,” she says.

“We believe it is a business imperative to be rated at BBBEE level one, and we have had to work hard to maintain this status. We recognise it as being attractive to employees and customers, and thus we always remain motivated to retain this status.”

Transformation is not merely a compliance issue; it holds significant benefits for the organisation as well.

“

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DEVELOPMENT PROGRAMME The Joy Global South Africa Foundation Trust was established in February 2014 to advance the development of black people in South Africa through education, training and business development programmes.

Beneficiaries include, but are not limited to charitable organisations, community trusts, enterprises needing development and persons in need of bursaries/scholarships.

Beneficiaries of the trust must be at least 85% black and 30% black female.

She is quick to point out that Joy Global, while focused on transformation, continues to also strive to achieve greater gender balance across all levels of the business. The Africa leadership team is reflective of this gender balance, with four women directors on a team of nine, with a fifth senior female leader – responsible for safety and quality – also sitting in, creating a genuine balance.

This is vital, as women are able to bring new ideas and approaches to what has, for so long, been a male-dominated industry.

“And it’s not just their new ideas that have changed things: women coming into male-dominated industries have created the need for a huge rethink around many things.

These range from how to manufacture overalls designed for women, to how to accommodate women with ablution facilities or the various maternity issues that may arise.”

Asked about the broader mining sector, she explains that although there are pockets of effective transformation, for many there remains a long way to go, although most are taking steps towards greater levels of transformation. Williams adds that transformation is crucial in this sector, because it will inevitably have a downstream effect that could help to transform the broader economy.

“Ultimately, a mine is an engine of the economy and so it must play a role in transforming its local communities. In addition, since mines have huge downstream impacts, transformation is crucial for many of its partners and suppliers as well.”

She says without transformation, there won’t be enough diverse managers to manage a diverse workforce, suppliers won’t be properly transformed, and this will simply skew the economy further in the wrong direction.

“Joy Global understands that we cannot keep perpetuating an unequal economy, and transformation is the key to improving the lives of miners and those in local communities,” says Williams. ■

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COLUMN EQUIPMENT

PERFORMANCE AND PAYMENT SECURITY IN THE MINING INDUSTRY AN ALTERNATIVE APPROACH

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WEBBER WENTZEL COVER STORY

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The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.

T

of self-insurance. They could set here are various aside a separate fund in the event options open to of default, which could be called mining companies on in the worst-case scenario, but seeking protection if not called upon could be rolled against nonover and used for other projects. performance by a contractor, and contractors seeking PAYMENT SECURITY protection against nonPayment security is often a risk for payment by a client. contract miners engaged by junior In the mining and miners that do not have access to construction industries, capital or a large balance sheet, the non-performance of a particularly when they are in startcontractor or non-payment up phase and before they have by a client to a contractor are achieved steady state mining and potential risks that both parties

By Tyron Theessen and Megan Jarvis payment via offtake agreements. need to consider in the early Partners at Webber Wentzel Often the contract miner will stages of their relationship, seek security for payments to be made to it by the client. Performance using performance bonds, insurance and various forms of payment security in the way of a bond is often not feasible as the required capital security. is simply not available.

Various forms of security are available to a contractor wishing to PERFORMANCE BONDS minimise its exposure. A combination of various forms of security is Performance bonds, which are issued by a contractor to its contracting often necessary. Contractually, the contractor ought to include a right client, are commonly used in capital projects. However, they can place of suspension where payment is not made timeously. Although this is a a significant financial burden on the contractor, especially smaller good stick to have, a contractor is often reluctant to suspend the contract emerging construction firms, and their call-up by the client can lead to as this may harm the relationship and put the project at risk. costly and lengthy legal disputes.

Also, the contractor must be mindful of the fact that its exposure can This can be especially problematic for smaller businesses, without be for a three-month period (or longer, depending on the contractual access to substantial litigation budgets, and it is impossible to know payment terms) if it begins work in month one, then renders an invoice how many smaller operations have quietly collapsed as a result of at the end of month one which is payable at the end of month two. If frequently overly conservative drawdowns on performance bonds. payment is not made, the contractor may need to give 30 days to remedy It is questionable whether performance bonds, which add to the breach. Usually, it is only then that the contractor would be able to the costs of projects for the client (because the contractor will suspend performance. factor the costs into the tender), are the best way for clients to The contractor should also include as security for the client’s secure performance. The mining industry, which is required to performance the right to a lien over the site where it conducts assist emerging black entrepreneurs, may find that the costs of a operations. A right to use the client’s property onsite in the event of an performance bond render new entrants less competitive in tendering. exercise of the lien may be specified. This may allow the contractor to A performance bond or guarantee may require the contractor to set exercise its security and continue rendering its services, should it choose aside cash equivalent to 10% to 20% of the value of the contract, pay to do so. high premiums – in instances where cash security is not available – As lien holder, the contractor would need to remain in continuous and expose their assets as further security. possession of the site and exercise effective control over it. The lien is a As an aside, where the mine has secured traditional bank funding, useful tool and, if it is exercised, has the effect of making the contractor the rights of the contractor are secured by way of a bank guarantee, as a secured creditor. Ultimately, if the client goes into business rescue or part of the funding package made available to the mine. In return for liquidation, being ranked as a secured creditor is preferable to being a this “bank guarantee”, all rights to security would be ceded in favour contingent creditor. of the bank.

In South Africa, we have seen contractors taking out insurance to One possible solution is contractor default insurance, which is cover payment they are due by the client in terms of the contract. Care relatively common in the United Kingdom, Europe and other mature must be taken to ensure that the insurance is properly crafted. Often markets – but not yet in South Africa. this is crafted as trade debt insurance, which is not the most appropriate Contractor default insurance covers the contracting company in instrument. Contractor default insurance is required. the event that the contractor defaults, for any reason. It is a threeIt is important to ensure that the insurers are wholly apprised of the way contract between the insurance company, the client and the nature of the contract and the risks associated with it. This is particularly contractor. The cost is borne by the contracting party, rather than the relevant when this type of insurance is not commonplace in the market contractor, but the advantage of this is that the cost of the protection and the insurers may not be well-versed in the mining industry. is not a hidden cost in the project and becomes one that the client has In the end, a combination of one or more of these forms of security more control over. is suitable for helping to minimise the contractor’s exposure to nonAn alternative approach, which may be more appropriate for payment by the client. ■ large mining companies with strong balance sheets, could be a form

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CORPORATE PROFILE MENAR

EAST

MANGANESE A welcome addition to Northern Cape mining sector

L

ong renowned for its strong focus on operations that genuinely uplift and empower local communities, Menar expects a similar impact from its maiden manganese mine.

The commissioning of the East Manganese mine in Hotazel, Northern Cape, marks a new chapter for the Menar group and the country. East Manganese is expected to produce approximately 30 000 tonnes per month of run-of-mine manganese ore, once at peak production.

Sitatunga Resources, whose major shareholder is investment company Menar, originally acquired East Manganese in 2018, from prospecting and mining company Sehunelo Group’s subsidiary Southern Ambition.

“This is yet another indication that we strongly believe in South Africa as a conducive investment destination, where regulators are responsive and efficient. We are committed to developing assets and creating jobs. As a matter of principle, we don’t sit on our assets, we develop them,” says Menar managing director Vuslat Bayoglu.

“We are also committed to making an impactful contribution to host mining communities, by investing in projects and initiatives that genuinely uplift and empower local communities. We give priority to employing local people and purchasing local goods and services by integrating them into our supply chains, wherever possible.”

As part of this skills development approach, East Manganese also has a training centre that teaches workers skills, for example how to operate the various mining machines – from articulated dump trucks and excavators to

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dozers and the like. Other training includes blasting assistant training and training for health and safety representatives.

“This training is provided to new employees with the necessary certifications and as part of refresher courses for employees. It is critical that all employees are certified to carry out the tasks assigned to them and that they are correctly trained to do so, while upskill of local workers is also important to ensure that we improve their long-term employability prospects,” he says.

30 000

Tonnes of manganese ore produced per month at peak production Menar chairman Mpumelelo Mkhabela says anyone following business news headlines regularly will find some consistent and interrelated messages.

“From investors, you will hear of the need for speedy regulatory approvals for business licences. From the environmentally conscious, you will hear

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of the decarbonisation of economies. From policymakers worried about economic slowdown, you will hear of the need for economic recovery,” he says.

“In its maiden manganese operation, Menar and its partner, Sehunelo Group, have combined all these concerns. On business licence approvals, East Manganese showcased what government could do to speed up investments. We invested in the project in 2018 and in September 2020, in the middle of the COVID-19 pandemic that wreaked havoc across all economies, we started mining the box cut.

“East Manganese could serve as a model of speedy regulatory approval by all the relevant licensing authorities, including the Department of Mineral Resources and Energy.”

Regarding environmental consciousness, notes Mkhabela, Menar is excited to be involved in the extraction of a mineral used in the manufacturing of steel, which is then used in renewable energy equipment such as solar panels and wind turbines. Manganese is also an input in batteries for electric vehicles.

“Finally, on the economic recovery front, there is no doubt that steel will be crucial to massive expenditure by governments as they try to revive their economies through infrastructure projects.

“This investment demonstrates that Menar remains committed to South Africa, and to its focus on ensuring that the country’s economy, the mining industry, local residents, and especially the unemployed youth in the Northern Cape, benefit from East Manganese and other mining projects in the province that are currently being evaluated,” he says. ■

COLUMN

BAKWENA PLATINUM CORRIDOR CONCESSIONAIRE

CREATING WIN/WIN SOLUTIONS THROUGH PPPS

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15

The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.

I

in Limpopo, Gauteng and the North West t is more vital than ever that heavily used road provinces, it is also a primary link for the networks are maintained according to the transportation of goods, services and people into highest standards. This can only be achieved the Southern African Development Community. today through public-private partnerships.

The traffic growth on this network and the rising It is often said that roads are arteries value of goods transported underscores the through which the economy pulses. They are part importance of this road for the regional economy. of the pivotal infrastructure that will determine The country is faced with the vexed the pace and direction of South Africa’s economic question of how this vital infrastructure, which recovery and reconstruction. sustains economic growth and greatly benefits It is therefore of primary importance that an communities, should be funded. informed debate about the future funding model of road construction take place, especially on the FRAMEWORK FOR FUTURE INVESTMENT contribution of public-private partnerships (PPPs) The Infrastructure Investment Plan released to the expansion and maintenance of the primary

By Solomon Kganyago by government was seen as a major step in the road network.

COO of the Bakwena Platinum right direction. It offers a framework for future Across the world there is broad recognition Corridor Concessionaire investments and provides details of credible and that road funding models are moving beyond the bankable projects that are in the pipeline. traditional solutions of direct budget allocations, Importantly, it recognises the central role played by PPPs – fuel levies that will be impacted by green energy, and one-size-fitsespecially in the transport and construction sectors – and commits all toll networks. Private sector companies such as the Bakwena government “to remove policy bottlenecks in engaging with the private Platinum Corridor Concessionaire (Pty) Ltd with a strong track sector”. record in road expansion and management are able and available to Investment in road infrastructure has to be at the core of the contribute to the discourse on other models and to promote the value economic transformation strategy. On the list of infrastructure projects of partnership between the private and public sectors. announced by government are several shovel-ready construction and We should, however, recognise that whatever funding model is maintenance projects, which will be implemented in all nine provinces decided on, the citizens will continue to pay, whether through taxes, and improve the quality of life of all citizens. or tolling, or rising prices for goods and services resulting from higher We welcome President Cyril Ramaphosa’s commitment to a more fuel levies, or additional transport costs associated with a poorly coordinated engagement among government, the private sector maintained road network. and other players in the infrastructure financing space. This will no It’s therefore vital that existing road networks – especially primary doubt lead to greater private sector participation in both the planning roads such as the Bakwena Platinum N1N4 highway – be maintained and implementation of critical road projects. Moreover, the National according to the highest standards. Well-planned and well-maintained Treasury is preparing legislative changes to enable retirement funds to roads are catalysts for balanced and accelerated growth, and this invest more readily in infrastructure projects – a move that will further contributes to the fundamental transformation of society. release critical funding.

More than 85% of the national road network is funded directly The use of tolling to fund road projects is a workable and costfrom the national fiscus. A further 7% is managed by SANRAL as toll effective approach. It ensures that the money received from toll fees roads through toll levies and the borrowing of funds for construction is ploughed back into road assets for construction and maintenance on commercial markets. The remaining 6% is run as PPPs with purposes. concessionaires.

Compared to traditional tax-based funding, PPPs also accelerate the availability of initial resources for delivering road infrastructure HARD CHOICES ON PRIORITIES earlier while providing opportunities for the private sector to invest in a Government has to make hard choices on its spending priorities. new class of assets.

Immediate socio-economic needs in the fields of education, In its most recent report, the National Planning Commission notes healthcare, social welfare and security make legitimate demands on the concern that the state does not have the institutional or financial annual budgets. Road projects must compete with other strategic capability to finance infrastructure to the required scale. It concludes: infrastructure projects such as water, power and sanitation. However, “Given the government’s limited finances, private sector funding will a sustained lack of investment in roads has clear negative impacts on need to be sourced for some of these investments.” long-term development and sustainability.

Legislative amendments mooted by National Treasury that will Public infrastructure spending has been on a steady decline in enable pension funds to invest easily in infrastructure are a timeous recent years, and it currently amounts to only 13% of total expenditure. and welcome move.

It will have to accelerate rapidly in the remainder of the decade PPPs such as Bakwena transfer the risk from the public sector to if it wants to achieve the 30% by 2030 envisaged in the National the private sector. The concessionaire assumes full responsibilities and Development Plan. PPPs present a proven model that has been risks for the condition of the road pavement, the management of traffic implemented with great success across the world – and in South Africa. volumes, the collection of toll revenue and the costs associated with A concession contract to finance, construct, manage, upgrade and maintenance, rehabilitation and expansions for the duration of the maintain a reliable road infrastructure along the N1 and N4 arteries concession. was signed between SANRAL and Bakwena in 2000. For more than The toll revenues collected are used to recover costs for debt two decades Bakwena has managed a world-class road network on servicing, capital expenditure, maintenance, and a return on equity the N1 between Pretoria and Bela-Bela (95km) and 290km of the N4 to the investors with a defined cap. This offers a win-win option for connecting Gauteng through Rustenburg and Zeerust to the Botswana the companies, the government and citizens and ensures that vital border – 385km in total. infrastructure, managed in such a manner, continues to flourish. ■ In addition to the obvious benefits the road brings to communities

PRECIOUS METALS

THE HEART OF GOLD Following the Russian invasion of Ukraine and the economic fallout that followed, gold has once again come to prominence as a sound investment.

By Rodney Weidemann

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© ISTOCK – Suphansa Subruayying

W

hile gold has been an investment mainstay for millennia, the metal is known to take on different characteristics at different times of an economic cycle. Despite this, it has been the backbone for many global monetary systems, including the US Gold Standard, until 1971.

According to a 2020 report from Deloitte Western Australia, while modern economies have evolved in many ways, gold has continued to hold its status as one of the most highly sought-after commodities, due to its scarcity.

“It thus continues to be viewed as a liquid asset class the worth of which challenges ‘cold hard cash’ in times of economic disruption and uncertainty,” states the report.

“Unlike other commodities such as oil, grain, or iron ore, once gold has been mined it is not consumed, per se, and as such nearly every ounce of gold ever mined is still within human possession.”

The report adds that the supply/

demand forces that drive most commodity markets are not replicated within the gold market – there is no such thing as a glut or oversupply of the precious metal. In fact, in modern times, gold has been viewed as a safe-haven investment and a reliable store of wealth, meaning that its value moves inversely to the general market.

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When the economy is thriving and traditional currency is appreciating, gold is less valuable. However, in poor economic conditions or those of uncertainty, investors flock to the safety that a gold investment provides.

The report notes further that “over the past 20 years, gold has risen from US$270/oz to a record in excess of

© ISTOCK – Nordroden

GOLD SPIKE!

■

■

■

“

PwC’s SA Mine 2020 Report suggests that in 2020, total market capitalisation for gold increased from R840-billion to R1.28bn.

This total is a R439bn (52%) year-on-year increase from 2019, largely attributed to the increase in market capitalisation of companies within the gold and PGM sectors.

Gold and PGM accounted for 80% of the market capitalisation of the companies analysed in 2020, and continues to dominate the sector.

“

Over the past 20 years, gold has risen from US$270/oz to more than US$2 000/oz.

US$2 000/oz, a momentous climb reflective of the importance of the commodity in supporting the modern-day economy”.

It adds that the same asset that was used to support various monetary systems around the globe in the 20th century remains a key element in today’s economic tapestry, with its intrinsic value and ability to weather market declines, rising inflation and depreciation of currency.

“With the considerable economic and financial uncertainty experienced over the past 20 years, in the form of the global financial crisis, political trade wars, the coronavirus pandemic – and now the invasion of Ukraine – the worth of gold is clear. Under a backdrop of uncertainty, with shining stars difficult to observe, history tells us to look for the glitter of

© ISTOCK – JONGHO SHIN

Gold is money - everything else is credit.

– JP Morgan

gold to light the way,” suggests the report.

NEW WAYS TO TRADE

In answer to the question of what makes gold such a sound long-term investment, Dane Viljoen, chief sales officer and co-founder of Troygold, points out that JP Morgan once said that “gold is money; everything else is credit” – and he was right.

“Gold is actually money – which means it is an excellent store of value, as it can transfer value across time – and is something that can always be used as a currency to settle commercial transactions.

“Among this smart money crowd, gold is still globally regarded as the pre-eminent store of value and hedge against both geopolitical risk and the debasement of paper currencies, and it is this debasement of paper currencies that has caused the rise of gold as an investment asset class,” he says.

“This is because while gold’s value

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remains constant over time, as does the holder’s purchasing power, the fact that paper currencies are printed out of thin air, thereby decreasing the value of each paper unit, means that gold effectively generates a non-cash flow yield, giving it the appearance of an investment.”

In this regard, he continues, it has certainly proven its mettle. In South Africa, based on Old Mutual’s long-term perspectives report, gold has returned 14.1% nominal return, albeit non-cash, against the rand for the first time since 1967, when the Krugerrand bullion coin was released to > the SA public. In US dollar terms, gold has

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© ISTOCK – jasonbennee

PRECIOUS METALS

© ISTOCK – assistantua

returned 500% over the past 20 years – that’s around 25% a year, and 422% in euros over the same time.

“Bonds, shares, paper currencies and insurance products are not property – they are paper credit instruments that provide a given return for a concomitant level of credit risk, of the issuer’s balance sheet.

“On the other hand, gold is an element – one of the 92 naturally occurring elements in our universe, the building blocks of everything. This means it is essentially property that you own, without taking on any counterparty’s credit risk.”

CRYPTO-GOLD?

Viljoen notes that as Russian tanks rolled into Ukraine, the rand, US and SA equities were down almost 2% and Bitcoin was down over 5%, yet gold was up over 2%.

“In the two weeks following the invasion, Russian citizens lost 80% of the value of their roubles against the dollar. In addition, Russians with bank cards couldn’t transact online as accounts were frozen. Amid growing fears of banks limiting access to depositors’ funds, there were queues outside ATMs for days as citizens tried to get their hands on cash.

“At the same time this was playing out in Russia, gold holders gained almost 7% on the USD value of their savings, as the price of gold reached an all-time high and the rouble

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price per ounce doubled,” he adds.

Explaining Troygold’s business, he points out that it is a digital gold non-bank – in other words, while it is not a bank itself, the company partners with banks to provide the financial tools to allow gold to function as money once more, alongside rands, in dayto-day finances.

This means, he says, you can save it, transact with it, pay with it or send it, and you can also borrow against it. This allows gold trading to be similar to a regular banking experience with rands – Troygold, he suggests, replicates the cash experience from banks, but for physical gold Krugerrand savings.

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“Retail gold bar and coin demand has averaged 1 100 tonnes a year since 2010, with the 2021 figure at 1 180 tonnes, which is a 30% increase from 2020 and an eight year high – so the demand has remained very strong among retail investors.

“This means that on the whole, gold is a $12-trillion market that we see continuing to grow, particularly as nation states sit with unprecedented amounts of debt, ultra-low interest rates, and historically high interest rates.

“Essentially, they can only default on their debts, or print themselves out of trouble – which is what they’ll do. And the more this occurs, the more smart investors will move to gold for protection,” says Viljoen. n

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READ WHAT REALLY GOES DOWN IN SADC

SUPPLIERS SUPPLIERS GUIDE GUIDE 2022 2022

Introducing the equipment, infrastructure and services you need www.samining.co.za

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SUPPLIERS GUIDE 2022

EQUIPMENT COVER STORY

DITSOGO ENGINEERING AND MINING DERRICK® CORPORATION Derrick Corporation is a family-owned and operated company with a global presence, focused on pioneering fine-separation technology. Since 1951, Derrick has been leading the industry in the design and manufacture of patented high-frequency vibratory screening machines, and screen surfaces.

Derrick is continuously in the forefront advancing the field of fine particle separation technology. Known worldwide for their high-capacity and superior separation efficiency, Derrick products allow processors to screen a wide variety of wet or dry fine materials in the range of 6.2 mm to 45 µm. Derrick’s global family is strategically positioned worldwide to provide superior service.

CONTACT: Tel: +27 (0) 12 653 6843 Email: nckruger@derrick.com Web: www.derrick.com

Ditsogo Engineering and Mining (Pty) Ltd is a 100% black femaleowned steel engineering, fabrication and mining support business.

The organisation is a BBBEE Level 1 local company, with a 135% procurement spend recognition. It is based in Rustenburg and has a national footprint through its partners.

Ditsogo specialises in the following products and services ■ Steel Fabrication, Refurbishment & Engineering services ■ Repair & rewind low voltage motors up to 132kw, winch motors, spindle pumps & ventilation fans ■ SMPP, corrosion protection and industrial vacuum cleaning ■ Mining equipment rentals (drill rigs, rock-breakers, excavators) ■ Installation and repairs of underground railways and drains, HDPE piping and supply of HDPE ■ Installation of secondary support (cable anchors, wire mesh, ventilation seals) CONTACT: Tel: +27 72 109 2480 Email: admin@ditsogoprojects.co.za Web: www.ditsogoprojects.co.za

ENVASS GROUP OF COMPANIES

Providing environmental solutions, dedicated service and achievements since 2004

FLOW SYSTEMS

The ENVASS Group of Companies has more than 80 years combined experience in helping organisations achieve competitive advantage through improved environmental, social and health & safety performance. We are a Level 2 BBBEE and have offices situated in Gauteng, North West, KwaZulu-Natal, Western Cape and satellite offices in Limpopo and the Northern Cape. As a multi-divisional service provider, ENVASS promotes integrated, trackable solution packages throughout the relevant divisions, ensuring cost-effective high-quality services designed to the requirements of each project and client.

Established in 1975, Flow Systems Manufacturers (Pty) Ltd designed the first locally manufactured turnstile in South Africa for the South African mining environment. Today, the company manufactures and installs an extensive range of high quality access control barriers from revolving doors and high security booths to robust industrial turnstiles. It also manufactures a range of vehicle access control barriers - namely manual and automatic boom barriers, with and without spike control, as well as fixed and movable bollards. For the mines, they also supply Alcohol Detection Turnstiles, Biometric Quarter Lock Turnstiles, Sanitiser Turnstiles, etc.

CONTACT: Tel: 012 460 9768 Email: info@envass.co.za Web: www.envass.co.za

CONTACT: Tel: 011 762 2453 Email: info@flowsystems.co.za Web: www.flowsystems.co.za

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© ISTOCK – Thossaphol

GNF1 Engineering and Construction (PTY) Ltd is a South African company, founded and registered in 2013. GNF1 is 100% black woman- and youth-owned, and is a Level 1 B-BBEE contributor.

GNF1’s policy is to expand and give employment, partnership and practical training to previously marginalised individuals.

Our services include: ■ Engineering ■ Construction (Grade 6 CEPE) ■ Loading & Hauling of commodities CONTACT: Tel: 013 692 3052 / 053 492 0421 Email: info@gnf1.com Web: www.gnf1.com Address: 88 Steenkamp Street Del Judor Witbank 1035 04 Hoofman Street Kuruman 8460

GUBHANI TRADING (PTY) LTD T/A GUBHANI EXPLORATION Gubhani Exploration is a surface exploration drilling organisation with over 13 years of experience, which has successfully left its mark on the mining industry, having drilled for companies such as Exxaro and De Beers. As a 100% black female-owned company, Gubhani is committed to providing tailored quality services that meet or exceed our clients’ expectations to achieve their desired results. We pride ourselves on our attention to detail, use of cutting-edge technology, and commitment to safety, thereby adding value to every project we take on.

CONTACT: Tel: 011 913 8024 Email: info@gubhani.co.za Web: www.gubhani.co.za

HYDRA ARC Hydra Arc has world class fabrication, engineering and manufacturing facilities in Mpumalanga, South Africa. The primary fabrication facility consists of four workshops spanning approximately 75 000m2 including the latest CNC operated plate and pipe rollers and plate bending machinery. Our extensive overhead crane capacity ranges from 20 to 1 500 tons, and together with our CNC operated milling and machining equipment, is able to service the requirements of Heavy Engineering Manufacturing Industries. Hydra Arc prides itself on being a world leader in the welding field, combining over 35 years of specialised experience with innovation and a willingness to embrace and develop new technologies, while offering the highest quality products and on-time delivery to our clients.

CONTACT: Tel: 017 632 7000 Email: info@hydra-arc.com Web: www.hydra-arc.com

SPECIALISED MAINTENANCE PRODUCTS SMP Industrial specialises in a cost effective, quality range of cleaning, maintenance and safety products. These range from specialised industrial degreasers, solvents and lubricants, to general housekeeping, kitchen and laundry products - and more recently a range of workwear and personal protective equipment.

SMP’s national stock holding and distribution footprint enables it to provide fast and efficient service to its customer-specific solutions throughout Southern Africa.

CONTACT: Tel: 011 552 8403 Email: chris@smp.co.za Web: www.hyvest.co.za

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SUPPLIERS GUIDE 2022

GNF1 ENGINEERING AND CONSTRUCTION

SUPPLIERS GUIDE 2022

EQUIPMENT COVER STORY

KINETIC MINING SOLUTIONS INVINCIBLE VALVES 40 years of service excellence to our esteemed customers around the globe.

Invincible Valves offers a wide range of industrial valves locally manufactured and or imported, including the Inval range and ancillary equipment, as per client requirements. In conjunction with the new valve sales, we also offer in-house rubber lining and reconditioning of all valve types.

As a Level 1 BBBEE service provider with our head office in Germiston, Gauteng, we have satellite offices and/or agents countrywide. We also ship globally to mining, petro-chemical, power generation and all other industrial sites.

Kinetic Mining Solutions is a majority black female-owned original equipment manufacturer (OEM), of both traditionally used brute force and kinetic energy saving vibratory screens, feeders and grizzlies.

Kinetic energy efficient ranges: ■ Use a minimum of 60% less power (size-for-size).

■ 25% production throughput increase ■ Reduce maintenance, spares costs and downtime.

Kinetic’s equipment is 100% South African designed, manufactured and serviced where it carries all high mortality spares required.

Savings set us apart from our competitors, as customers get the best possible return on investment (ROI) over the equipment’s lifecycle.

CONTACT: Tel: 011 822 1777 Email: sales@invalve.co.za Web: www.invalve.co.za

CONTACT: Tel: 072 022 8581 Email: info@kineticmining.co.za Web: www.kineticmining.co.za

PRESTANK Suppliers of fully customisable, high quality water storage solutions Prestanks, manufactured by STRUCTA TECHNOLOGY, offers sectional water storage tanks that are hygienically safe, cost effective and a reliable way to store water for commercial sectors, private sectors and even for personalised storage.

Pre-manufactured storage facilities can be provided for a vast variety of applications and are used extensively by the mining industry and municipal authorities, and range from 1 500 litres to 4.2 million litres. Choose from temporary or permanent installations. Structa Technology is a Level 1 BBBEE contributor.

CONTACT: Tel: +27 (0)16 362 9100 Email: watertanks@structatech.co.za Web: www.prestank.co.za / www.structatech.co.za

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TWOOBII Mining faces unique challenges, often due to the remote locations in which mines operate – beyond the reach of technologies like fibre, LTE and 4G/5G. This does not however, negate the need to be in constant contact with suppliers, service providers and senior management.

There is a clear requirement for an available anywhere, always-on and highly reliable connectivity solution. Twoobii’s Smart Satellite broadband offers a high availability, great-value, standalone, integrated back-up or primary communications solution for remote business locations.

CONTACT: Tel: +27 (0)12 665 0052 Email: enquiries@twoobii.com Web: www.twoobii.com

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COLUMN

WEBBER WENTZEL

ESG IN THE MINING INDUSTRY WHAT’S MISSING?

A

lack the same approach for recent analysis of community members. Clearly there ESG reports by nine are certain practical considerations mining companies – like resources, COVID and interest highlighted groups, etc. – but there is a key strengths and ESG opportunity for companies weaknesses in how they are here. They should focus on rolling tackling these objectives. out holistic and pro-active health With the help of team and wellness programmes to members specialising in a community members, aimed at multitude of practice areas, an mental, physical and financial analysis of the sustainability/ health. environmental, social and Mine closure has become governance (ESG)-related increasingly complex. reports of nine large players Environmental, social and in the South African mining

By Nomsa Mbere, partner, and Sebastian industry was undertaken.

Steenkamp, associate, at Webber Wentzel economic impacts and the interrelationships between the This was to track key ESG three have resulted in mine closure moving from a mere technical trends and, more importantly, to determine what’s missing when process to one that’s iterative and requires planning, consultation and looking at South African mining companies’ current approach to ESG. thinking throughout the process. This is to ensure that all stakeholders Possibly the most important theme that surfaced was the interare ready for the closure and its aftermath. related nature of each of the environmental, social and governance Internationally, there is a growing body of literature on the elements that together form the ESG landscape, and the pressing social aspects of mine closure and similar strides are being made in need for companies to adopt an integrated and holistic approach to South Africa, where a draft Mine Closure Strategy was published for operating in an ESG-targeted manner. comment in 2021.

The most prominent environmental issue highlighted in the reports was climate change, and the various operationally disruptive permutations that may emanate from this overarching issue.

When looking at climate change, a key strategy that some (but not all) companies have adopted is an active buy-in to the circular economy. In short, this is a model of production and consumption that involves reusing, repairing, refurbishing and recycling existing materials and products for as long as possible.

There are obviously trade-offs when looking at a system like this (for example efficiency and safety), but this, in our view, is a concept that warrants further exploration by players in the industry.

Most companies have also identified the need to move towards a diverse energy mix, coupled with a strategy to use more renewable sources of energy. However what seems to be lacking is a coordinated approach towards engagement with government on the framework that regulates self-generation. This is becoming even more important given that we are already seeing certain interpretative and practical issues from a regulatory perspective.

Lastly, we identified a real opportunity for mining companies to increase their collaboration with regulators, communities and conservation organisations, particularly on mine closure strategies.

SOCIETY

Although the mining industry still presents a potentially dangerous working environment for many employees, in recent years there has been a greater move towards automation (as a key driver of safety and efficiency) and, with COVID-19, socially distanced remote working.

From a community perspective, an unfortunate reality that many mining communities still face is a lack of access to proper education and employment opportunities, coupled with poor health and support facilities and infrastructure.

If not managed adequately or properly acted on, these issues can lead to serious dissatisfaction among communities and employees, potentially leading to social unrest.

We found that many companies have a holistic and comprehensive approach towards the health and wellness of their employees, but

GOVERNANCE

If well managed, the ESG focus of mining operations, coupled with technological advances and social investments, can play an important role in creating lasting benefits for mine host communities and the broader population.

These benefits will endure beyond mine closure and will influence a company’s future financial performance and its overall social licence to operate.

Against this background, our analysis showed that ESG initiatives are not being sufficiently integrated into the corporate strategy, particularly social closure plans.

The European Union recently published a Proposal for the Directive on Corporate Sustainability Due Diligence, a step towards making sustainability a legislated feature in the global economy. The directive introduces directors’ duties to oversee the implementation of the corporate sustainability due diligence and integrate it into the corporate strategy.

There is also increasing pressure from investors and regulators for companies to disclose ESG performance and set targets. In this regard, improvements in gathering useful ESG data to assist in the disclosure and the decision-making process for investors is increasingly becoming critical. Standardised reporting of a company’s ESG impacts, and its sustainability measures, will progressively be an important feature in companies’ integrated reports.

Our analysis showed that there was an absence of measurable ESG goals. The King IV Guidance Paper on Responsibilities of Governing Bodies in Responding to Climate Change, and JSE Sustainability and Climate Disclosure Guidance, as well as other global disclosure standards, will help to strengthen reporting in these areas.

However, this guidance should be coupled with investments in new technology and the relevant software to process the collected ESG data, so that a company has the relevant information to report to its governance structures, shareholders, and potential investors.

Adequate information will enable stakeholders to quantify the ESG impact of their investment and evaluate the company accordingly, giving the company a competitive advantage over its rivals. ■

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The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.

ENVIRONMENT

PRECIOUS METALS

TURNING

PRECIOUS METALS GREEN

By Benjamin van der Veen

T

he agreements made at the recent 2021 United Nations Climate Change Conference (COP26) haven’t just affected the South African coal mining sector, but may influence other mining sectors such as the precious metals industry. Countries agreed to reach net zero by 2050 and to begin phasing down their use and reliance on coal and other inefficient fossil-fuel subsidies.

One of the ways they’re doing this is through the introduction of electric vehicles (EVs) and renewable energy solutions.

The transition from petrol to electric vehicles is an essential step in moving to a net-zero future. According to the International Energy Association (IEA)’s netzero pathway, more than 60% of passenger car sales globally must be EVs by 2030, to be on track for net zero by 2050. By that year, all cars must run on electricity or fuel cells.

Compared to 2012, when just 130 000 electric cars were sold in a year, some progress in the electric vehicle market has been made, with over 6.6 million in global sales – an increase of 29% compared to the year before and representing close to 9% of the worldwide car market by 2021. At the same time, the sale of cars with other fuel types went down globally by 16% due to the pandemic.

The transition from petrol to electric vehicles comes with its challenges, and the mining industry is set to experience the majority of these challenges.

POSITIVE POTENTIAL

When asked about how he thought the increased demand for electric vehicles and the growth of the electric vehicle market would affect South Africa’s platinum group metals (PGM) sector, Andrew Lane from Deloitte said he was optimistic that the mining sector would see positive results, as

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South Africa has most green metals required for the production of hydrogen fuel cells.

Lithium-ion cells and the demand for electric vehicles will increase the production of green metals in South African mines.

The most common type of EV batteries are lithium-ion batteries. However, the battery type can differ according to the type of EV. The minerals needed to manufacture EV batteries can depend on the chemistry of the cathodes, but the critical minerals are lithium, cobalt, graphite, nickel and manganese.

While South Africa does not have sufficient lithium reserves to mine, it has a longstanding experience and expertise in mining minerals such as manganese, iron ore, nickel, and titanium, all of which can be used to produce lithium-ion batteries.

There are three types of lithium batteries that drive the EV sector: ■ Lithium (11%) Nickel (73%) Cobalt (14%) Aluminium (2%) Oxide (NCA).

■ Lithium (7%) Iron (60%) Phosphate (33%) (LFP).

■ Lithium (12%) Nickel (30%) Cobalt (30%) Manganese (28%) Oxide (NCM).

NCM batteries are the most popular

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battery choice in the electric vehicle market.

The combination of minerals lowers the risk of over-heating, improving the overall safety of the lithium-ion battery.

The popularity of the NCM battery chemistry represents an enormous opportunity for South Africa’s manganese producers, such as Manganese Metal Company in Mbombela. They are the largest producers of electrolytic manganese metals, used as a cathode component, outside of China.

There are concerns around the global supply of cobalt. However, South Africa could potentially become a critical low-cost hub for NCM battery production, as the majority of cobalt is located in the Democratic Republic of the Congo. The majority of the essential minerals required to produce the NCM batteries can be found in Africa.

WHERE DOES THIS LEAVE PGMS?

In a report titled Using SA Resources to Remain Relevant, Werner Jacobs of KPMG South Africa wrote, “South Africa holds 94% of the world’s PGMs, such as platinum and palladium, currently used in the production of catalytic converters.

© ISTOCK – Nordroden

“ South Africa has most green metals required for the production of hydrogen fuel cells.

– Lane

Electric cars sold globally in 2021 “With a rise in the production of EVs, the PGM industry is expected to decline in the future. Considering the substantial contribution of PGMs to the South African economy in 2018 – R48.3-billion in total employee earnings, 172 171 employees, and total sales of R97bn – it is critical that the PGM industry prepares for change.”

The most plausible choice for repurposing the PGM sector to survive the increased demand for electric vehicles is to look at the renewable and alternative energy market.

As an energy storage medium, hydrogen fuel cells are a clean and reliable way to repurpose the PGM sector to counter the decline in autocatalytics being produced.

The energy in hydrogen fuel cells can be electrochemically converted directly into electrical energy, using fuel cell technology, where hydrogen serves as the fuel and platinum as a catalyst.

Platinum is considered to be one of the vital catalytic materials used in most fuel cells. As the vast majority of the world’s

reserves of PGMs are in South Africa, the mining sector is presented with an excellent opportunity to reintroduce platinum into the EV manufacturing process.

Introducing platinum as a catalyst for hydrogen and fuel cell technologies introduces the PGM sector to the potential socio-economic benefits derived from these natural resources.

In July 2018, Anglo American Platinum and state-owned Public Investment Corporation each committed R1.3 billion to a venture capital found promoting the development of innovative and technological uses of PGMs. This initiative aims to stimulate and sustain the demand for PGMs in the future.

Currently the heavy vehicle market offers the most significant initial opportunity for hydrogen fuel cells to be used, as standard NCM batteries will not only consume too much available space in trucks and other heavy machinery, but also take hours to charge. Longer distances will also pose a

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© ISTOCK – Photon-Photos

“

6.6 million

significant challenge for battery-powered vehicles.

The perfect example of this is the prototype of the world’s largest hydrogenpowered mine haul truck – the nuGen™ – recently launched by Anglo American Platinum at its Mogalakwena PGMs mine.

“PGMs play an essential catalytic role in many clean-air technologies, including related to hydrogen production and hydrogen-fuelled transportation. As part of our market development work, we have for some years been working towards establishing the right ecosystem to successfully develop, scale up and deploy hydrogen-fuelled solutions,” says Natascha Viljoen, CEO of Anglo American Platinum.

“Hydrogen has a significant and wide-ranging role to play in achieving a low-carbon future – particularly as an energy carrier enabling the development of a renewables-based power generation system. We are particularly excited about the potential of nuGen™, among other opportunities, as we work to champion the development of South Africa’s Hydrogen Valley.” n

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SAFETY

BETTER SAFE THAN SORRY

By Rodney Weidemann

S

afety, driven by the principle of zero harm, lies at the core of the mining industry. Digital technologies now offer new innovative ways to improve safety in this arena.

Technology, and the innovation that drives it, offers enormous benefits to the mining industry in the way it can be leveraged to improve safety across the sector.

This encompasses everything from safety training to solutions for on-the-job safety, and even includes using technology to help in handling the risks involved in the postmining closure phase.

LEVERAGING TECHNOLOGY

The latest technological advances in training, in the form of virtual reality (VR), are being introduced locally by KBC Health & Safety. Innovation manager Natalie Pitout explains that using VR allows learners to experience a simulated version of real-life dangerous scenarios. In this way, they can safely learn to mitigate the associated risks.

“The benefit of simulation is that it is not a real-life situation where a possible fatality could result. Instead, any wrong actions can

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be addressed safely and proactively,” says Pitout. She adds that VR is not a standalone competency module, but is being introduced as part of a blended learning approach.

Blended learning means there is a theoretical component designed to impart the necessary knowledge, which learners are then assessed on, followed by a virtual reality experiential component by means of headset goggles.

“A major benefit of virtual reality is that we can put people from different industries together in one room with the same virtual setting,” she says. “For example, coal and platinum miners can be engaged together to identify common hazards in their respective segments, and we can actually see how different workers react in different situations.”

By introducing analytics on the back end, she says, it becomes possible to identify if people are making the same mistakes, or whether they are identifying similar risks.

“If people are seen to be making the same mistakes, the hazards or risks can be identified for clients, and an appropriate virtual reality simulation suggested to remedy that problem.”

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WEARABLE SOLUTIONS

When it comes to the safety of mine workers, says Thando Sibindi, managing executive for Mining, Manufacturing and Utilities at Vodacom Business, the company has developed smart technology known as the “connected worker”. This involves a smart device based on narrow band technology, which doesn’t draw a lot of power and can provide longer battery life.

“This device can be worn on the wrist or on their workwear, and as the employee moves around the mine, it sends back realtime information on what is going on in their environment. This allows for reactions in real time.

“For example, if they enter a geo-fenced area they are not supposed to be in, the device will instantly alert them to that fact.

At the same time, of course, the operations centre undertaking the monitoring is also able to track that they are in a hazardous zone,” he says.

“The beauty of technology like this is that it not only improves safety, but also boosts efficiencies. For example, we have installed mobile private networks delivering high connectivity and low latency, to enhance the operation of these devices, which has the

“

“

Digital technologies not only improve safety, but also boost efficiencies.

– Sibindi

SAFETY BEST PRACTICE

added benefit of improving communications too. Naturally, workers may be concerned that such monitoring is intrusive, but this simply requires worker education so they understand that this is for their safety.”

A practical example of how it improves safety, he adds, is how – with increasing automation of large mining vehicles occurring – people on the ground are equipped with sensors so that the computer driving the vehicle is aware of where all personnel are at all times.

“Personally, I think that mining organisations are reaching a tipping point as far as digital technologies go. It is critical to stay on top of technologies like this, as they roll out. Wearables like this are a great first step, but mines really need to consider digital transformation and automation as well. After all, the more safety-focused technologies you have in place, the more easily they can adhere to the principles of zero harm,” says Sibindi.

SAFETY AFTER CLOSURE

Ettiene Van Der Watt, regional director of Axis Communications, a provider of internet of things (IoT) solutions, points out that when it comes to decommissioning a mine, there

is legislation to be followed around issues of safety and public health.

“Often mines are re-established as grazing land or forest, and sometimes even for residential development. The public health and safety laws speak to the power of off-site monitoring – technology that can be the eyes and ears of the customer, even when no one is onsite,” he says.

“The use of motion detection, cameras and IoT sensors allows the customer to monitor the site, check for movement in certain classified zones, and even grant access rights to relevant individuals – via facial recognition technology – during the decommissioning phase.”

From a security perspective, he says, monitoring starts with security for those high-value autonomous vehicles that can take time to remove from the site. It then shifts to watching for illegal activities onsite during decommissioning.

He notes that in the closure phase, Axis recommends thermal sensors, which can cover tremendous distances, and don’t require lights to do their job.

“These devices can pick up heat signatures and are useful in multiple ways.

They can identify accidental trespassers

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© ISTOCK – TonyLomas

© ISTOCK – BalkansCat

Surface mining industry association ASPASA has released a comprehensive best-practice guideline that shows the correct way to deal with accidents and properly document findings in order to avoid similar accidents in future.

ASPASA director Nico Pienaar says: “Accident investigation is an important part of any safety management system. Without a detailed and thorough investigation, management has no true knowledge of the reasons why accidents occur and how to prevent re-occurrence.

“The idea is to give management a tool to use in the heat of the moment when confusion and uncertainty still surround events leading to the accident and subsequent outcome. Under these circumstances the simply written and easy-tounderstand document can ensure that all the necessary procedures are undertaken timeously.”

so they can be alerted to possible danger, but can also be used to track and monitor how well wildlife is returning to a decommissioned area, for example.

“The mining industry’s rich history also carries some important lessons, and one of these is that poor closure or abandonment of mines by the industry is a global challenge. It is thus imperative that companies evaluate the risks involved and invest in safety and security measures in the post-mining closure rehabilitation phase.

“Video surveillance systems that are designed to monitor a site with a high level of activity and thermal-based intrusion protection technology are some of the best tools available for securing vast remote perimeters,” he says. ■

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SAFETY

CORPORATE PROFILE

WORKER SAFETY

AND REHABILITATION

© ISTOCK – sezer66

should be top of mind

“

have a moral imperative to ensure the safety of their workers.

Moreover, suggests Dr Miranda Moloto, head of Rehabilitation at Rand Mutual Assurance (RMA), they must understand that there is a holistic benefit and broader contribution to the organisation through enhanced productivity and cost management for employers and improved wellness for employees.

“RMA, as an organisation that focuses on administration compensation of occupational injuries and diseases, we constantly witness that compensation involves far more than just the payment of a disability claim.

“It also encompasses the impact of an injury/disease on an employee’s health, post-

“

W

orking closely with the Compensation Fund, RMA is focused on supporting employers to inculcate a culture of safety and a deeper understanding of injury rehabilitation in the mining and metal, iron and steel, and manufacturing industries.

There are several pieces of national legislation on health and safety (in both mining and manufacturing) that direct organisations on what to include in their health and safety systems and the set-up to prevent injuries and diseases in the workplace. These have very specific sections on the responsibilities of the employer and employees. But employers need to understand and appreciate that they also

Instilling a culture of safety in every aspect of the business begins with leadership.

– Moloto 28

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affliction mental state and sexual health, as well as the family’s earnings and dependents, due to workers sometimes being sole providers, not only for their immediate but also often their extended families,” she says.

“To this end, we encourage companies to implement codes of good practice that are in line with the Mine Health and Safety Act and the Occupational Health and Safety Act and their respective regulations.

“This includes aspects such as training, elimination of hazards and/or management of risk exposures in a workplace, providing relevant warning signs and safety equipment etc.

“The real challenge with some organisations is that the health and safety programmes are not supported by leadership, and the tone at the top is not strong in promoting a health and safety culture. Therefore no basic health and safety systems exist with procedures, performance indicators, incentives and toolkits.

“An effective health and safety framework

© ISTOCK – Sunshine Seeds

cannot simply begin with the provision of personal protective equipment.”

She adds that it is ironic that in the corporate world, data safety is high on the radar, with many programmes designed to inculcate a security mindset; yet in labourintensive industries, there is often less focus on physical safety.

“Leadership sets the tone and direction for health and safety through various enablers – by including safety on the organisation’s strategic agenda.

This provides direction for the broader organisation, including the promotion and importance of the safety and health function.

“The organisation’s health and safety policy and fundamentals then provide context on appointing the right people and safety performance requirements.”

DEALING WITH DISABLED EMPLOYEES

Moloto notes that despite the high levels of permanent disability in the industry, very little attention appears to be paid to the

rights of disabled workers, and there are few comprehensive programmes to address their issues, post-injury or post-compensation.

“RMA, as a funder, is taking its cue from the imminent Compensation for Occupational Injuries and Diseases Amendment Bill on how organisations should deal with workers who have become disabled through injuries.

“It is important that companies work to ensure these employees can still have some level of earning capacity, even if they can’t go underground after an amputation, for example. They should seek to instead find an above-ground position for them, allowing them to remain economically viable and restore their dignity.”

This dignity is critical, although organisations don’t always take it into account, she says. “You simply cannot put a value on something like this.”

When it comes to rehabilitation, Moloto says the programme has various pillars.

Initially in the clinical rehabilitation pillar,

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payment of disability claims impact on employee’s health post-injury mental state psycho-sexual health families’ earnings and dependents’ future

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Dr Miranda Moloto.

■ ■ ■ ■ ■

© ISTOCK – Juan Jose Napuri

COMPENSATION ENCOMPASSES:

which is the acute phase after injury, they have access to the relevant healthcare and specialists for their type of injury or disease.

In some cases the injured worker is able to be introduced early to rehabilitation for physical and occupational therapy. This is a vital step towards accelerated return to work.

The other two pillars of the programme > include vocational rehabilitation, which

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SAFETY

CORPORATE PROFILE

CHANGING MINDSETS

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capabilities that might be required to supplement their health and safety strategies and programmes. This is a key project for us, and we are working with different stakeholders for the purpose of keeping the worker safe, supporting them in the rehabilitation process, but more importantly in ultimately preserving and restoring their dignity.

“We are very excited about both our prevention and rehabilitation programmes, which we feel will be a step change for occupational health and safety and rehabilitation, reintegration and early return to work.

“We have a moral obligation to keep employees safe. This means that safety, rehabilitation and compensation are absolutely critical aspects to a modern mining organisation’s business operations,” says Moloto. n

For business, there is a tangible legal and moral obligation to keep employees safe.

– Moloto

© ISTOCK – :Alfio Manciagli

“Enabling previously injured employees is all about changing the mindsets of workers and their employers and communities. Too often, an amputee is essentially ‘written off’ due to such an injury, when – with the appropriate vocational rehabilitation – they could be trained to do a different job.”

She says it all starts with the culture of the organisation and its leaders determining what they stand for as an organisation. Are they only in business for the profit, or does the focus also include protecting their employees from workplace injuries or diseases? If they choose the latter, then leadership must inculcate the culture of safety.

They are in a position to ensure that they introduce preventive strategies and programmes and by also employing the right health and safety officers and medical practitioners. They will also be able to ensure that employees are not only properly skilled,

but are also compensated well if injured.

“We also encourage organisations to ensure they conduct a proper investigation of any incident leading to the injury. This is crucial, as it is important to close the loop by finding out exactly what went wrong and how the injury occurred, in order to prevent it from happening again – something that must also include consequence management.”

Moloto points to a strategic prevention programme introduced and launched in April by RMA. This, she says, is about making occupational health and safety abilities accessible to small and medium enterprises, which don’t always have capacity to purchase technology to help track injuries and investigations. More importantly it’s about RMA supporting employers in reducing the rate of accidents.

“We are committed to partnering with employers and bringing additional

“

ensures reskilling and possibly returning the worker to meaningful employment even if it’s not their pre-morbid work.

Social reintegration is the pillar beyond the workplace to return the newly abled worker back to their family and community.

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Providing affordable and reliable cover for injury on duty claims since 1894 RMA provides complete COID administration for the mining, iron, steel, metal and related industries.

Ensuring your employees are compensated in the event of work-related injury, illness or death

in line with COIDA (Occupational Injuries and Diseases Act) requirements. We see to it that injured employees receive compensation to cover medical costs, disabilities, pensions or an ongoing income.

Proudly administering more than one million lives.

Follow us

Tel: 0860 646 274 | Email: contactcentre@randmutual.co.za www.randmutual.co.za Rand Mutual Admin Services (Pty) Ltd is an authorised Financial Services Provider (FSP No. 46113) licensed with the Financial Service Conduct Authority and forms part of the Rand Mutual Group of Companies

PROJECTS IN AFRICA

IN UNLOCKING TRADITIONAL FUNDING OPTIONS FOR THE JUNIOR MINING SECTOR

By Benjamin van der Veen

J

unior mining companies face many challenges, but new technological developments and a strong recovery in commodity prices in early 2021 have countered the low commodity prices and weak equity markets from 2019 to late 2020.

The lack of funding from traditional capital sources, such as debt financing and equity investments, has made it necessary for junior mining companies to discover and access alternative funding sources.

Production-based financing has become an increasingly common option for the junior mining sector. Production financing is conducted when companies secure funding by selling a right to future production at a mine.

UNLOCKING TRADITIONAL FUNDING OPTIONS

In a webinar hosted by Mining Review Africa during the COVID-19 lockdown, notable experts in the junior mining field – Errol Smart (CEO of Orion Minerals), Olebogeng Sentsho (Simba Mgodi Mining Incubation Fund), and Grant Mitchell (head of the Junior and Emerging Miners’ Desk: Minerals Council South Africa) – spoke about the challenges that come from unlocking traditional funding options for the junior mining sector, and how to overcome those difficulties.

Mitchell pointed out that, “It is important for a country to create a regulatory

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environment that is conducive to investing in junior mining companies.”

Using South Africa as an example, he said the regulatory environment was “primarily targeted at large mining companies. The junior sector is growing. However, the regulatory environment doesn’t support them”.

Mitchell suggested that governments should offer some sort of relief for junior mining companies. This could be in the form of a separate code of practice for junior and smaller mining companies, and additional tax incentives to junior companies to create a more considerable appeal for investors to invest in the local junior mining sector.

However, Smart noted that strong junior mining projects would always get good finance, and that the lack of funding wasn’t about government tax incentives or regulatory policy.

“Recent statistics show that Australian companies have substantial mining interest in Africa,” he said, adding that juniors should stop hiding behind excuses about why investment is non-existent.

“At the end of the day, there is a shrinking pool of international financial capital and only the best projects will receive the required funding. Junior mining investment in Africa traditionally comes from Australia and Canada, where both countries are experiencing limited access to financial capital, so for a company to sit back and say there is no money is simply not true. It’s a

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competitive world out there so juniors have to work hard to secure funding.”

He said junior miners should not “fall in love” with their projects; they should be realistic and be prepared to back only the best ones.

LOOKING WORTHY OF INVESTMENT

Adding her thoughts to how junior mining companies could make themselves look more worthy of investment, Sentsho mentioned that there were several key factors that junior miners should account for: “Firstly, they should look at the commodity they are mining – is there a demand for it, or is it a mineral that is in decline?”

Secondly, she said: “Put together a detailed financial model that will make sense to investors. Thirdly, put together a proper prospectus that goes all the way through the value chain. An investor needs to be confident that you have a well-thought-out business model, from exploration through to final productivity.”

She advised that juniors do research into whom they would like to seek international investment from, as investors from different countries have specific requirements that they look for to protect their current and future assets.

It is vital to know an investment company’s objectives, if you wish to attract their interest in those regions or countries where they prefer to invest their money, and what the company looks for in a junior

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CHALLENGES

“ “

mining company’s leadership team.

Sentsho said to look attractive in order to gain investments, juniors should aim big. “A lot of juniors prefer not to be listed companies. This tells the investors that you are a subsistence miner with no ambition to grow your operation. You just want to mine marginally so that you can make your money and get out.

“The projects that stay in the minds of investors are those with the biggest dreams; it’s those companies who have a wellthought-out business model and financial plan to take their company all the way up to the listing.”

ALTERNATIVE FUNDING OPPORTUNITIES While traditional funding sources are drying up for juniors, new cash resources can be found in alternative funding methods.

Sentsho said technology was set to play a significant role in mining with the rise of the Fourth Industrial Revolution and the industrial internet of things. “As such, juniors should use technology platforms such as crowdfunding and blockchain to fund their projects.”

With the increasing push towards moving away from fossil fuels and the increased popularity and presence of electric vehicles (EV) on roads to reduce pollution, one should expect that the lithium-ion battery metals market would be the most attractive to junior mining explorers in Africa.

However, according to Luke Peters, MSA’s senior exploration geologist, exploration in the renewable energy sector is still at an early stage. It is currently reactive to relatively short-term periods of increased demand or, more commonly, to perceptions and forecasts of future demand or supply.

While battery metals exploration is expected to continue to increase in the future, it is still gold and base metals that currently attract the most exploration funding.

Peters said “electric vehicles are here to stay and are riding the growing wave of global public opinion focused on environmental and climatic concerns”.

“It is predicted that around 100 million of these vehicles will be on the road by 2030.

We are currently a far cry from that, but when the demand for EVs does increase and

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DIGITAL AVENUES OF FUNDING:

■ ■

Blockchain Crowdfunding

© ISTOCK – hrui

South Africa’s junior sector is growing.

However, the regulatory environment doesn’t support them.

– Mitchell

the supply is constrained, then we will see a renewed focus on exploration within the battery metals sector.”

And as the demand for battery metals increases, he said, “so there will also be more interest in exploring substitutes and alternatives, and this may be where the future opportunity lies for junior miners”. ■

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MINING INDABA

R

egulatory, investment, environmental and energy challenges dominated the discussions at this year’s incredibly successful event.

The 2022 Mining Indaba, the first inperson Indaba since the start of the COVID-19 pandemic, brought together a fascinating group of speakers from the legal and engineering industries, as well as academics and members of parliament.

Delivering the keynote address, President Cyril Ramaphosa highlighted several important issues that the country needs to address to grow the mining industry.

After acknowledging the importance of mining to the South African economy, he noted the significant challenges faced by the industry and the country’s relegation to one of the 10 least attractive mining investment destinations in the Fraser Institute Survey.

This, he says, underlines the importance of moving with greater speed to remove impediments to growth.

The president also highlighted the need to fix regulatory and administrative problems, clear the backlog in applications for rights and transfers thereof, and put a modern and effective cadastral system – for the efficient identification of ownership over prospecting rights – in place. He also mentioned the need to improve rail and port performance, and ensure a secure and reliable supply of affordable electricity.

He demonstrated enthusiasm about

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highlights regulatory and environmental challenges

By Rodney Weidemann

South Africa’s potential for a hydrogen economy and the launch of the hydrogenfuelled truck by Anglo American.

However, Ramaphosa’s endorsement of oil and gas exploration in Africa – which would result in increased burning of fossil fuels – does not correspond with South Africa’s commitments to help address global warming.

It was also felt he missed an opportunity to address environmental, social and governance (ESG) issues, and specifically the social element of ESG. Others were unhappy about the lack of detail on the measures proposed to increase investment and grow South Africa’s mining industry.

Speakers included: Three heads of state one prime minister two energy ministers one mayor over a dozen CEOs ADDITIONAL KEYNOTES

Mineral Resources and Energy Minister Gwede Mantashe told the conference that the industry was meeting against the backdrop of high energy prices, caused partly by the conflict between Russia and Ukraine, on which the minister maintained government’s detached,

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neutral stance.

He touched on high energy prices, but didn’t speak of the reliability of energy supply.

This led Andrew Lane, Energy, Resources and Industrials leader at Deloitte Africa, to later suggest that fixing issues such as Transnet’s ability to get exports out through the rail and ports system and Eskom’s persistent load shedding was now more of an imperative than attending to regulations.

Mantashe further maintained his cautious scepticism on energy transition, implying that it should not come at the cost of development.

He said Africa must build energy resilience while mitigating against climate change through exploration and attracting new investment, at the same time as increasing beneficiation. Furthermore, like Ramaphosa, he also alluded to the need for South Africa to improve the country’s ranking on the Fraser Index.

The Webber Wentzel mining team felt there were several issues lacking in the minister’s speech. These included: ■ A clear pathway, in light of Eskom’s capacity shortfalls, to new energy generation capacity to service the South African industry, including mining, and households, through a liberalised energy market, as envisaged in the Electricity Regulation Amendment Bill, by enabling private power generation and sale, or otherwise.

■ An acknowledgement of the current progress and blockages in the South

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PROJECTS IN AFRICA

“

“

A consistent theme at this year’s Mining Indaba was the imperative toward action.

– Dickson

FOCUS ON DECARBONISATION AND YOUTH

“A consistent theme at this year’s Mining Indaba was the imperative toward action,”

says Mark Dickson, head of Energy Transition and Decarbonisation at dss+. “Many companies have pledged their willingness to change, but the practicality of these changes – which need to be systemic – are much more complicated to address.”

He says considering risks is paramount, and implementing real decarbonisation plans requires internal planning and risk mapping, the right capabilities and operating models at the asset level, external collaboration with relevant partners, and industry-level solutions and lobbying.

“A big challenge is ensuring that the transmission and distribution of renewable energy, for example, can service the demands of the mines moving from diesel or other fossil-based sources – and this is not a problem that can be solved purely by one company.”

Another key issue, he notes, is funding. In order to mobilise decarbonisation projects, companies need to access finance that won’t hinder company returns while enabling the projects that achieve demonstrable ESG results.

“Resources like sustainability and ESG-linked loans can be tied to specific outcomes, such as GHG emissions reduction, for which the borrower receives a discount on the interest rate. These types of financing vehicles will become more important as mines start to turn decarbonisation roadmaps into action.”

Looking to the future on the final day, national head of mining and audit partner at Mazars, Thinus De Vries, said: “The South African mining sector of the future will be

driven by ‘specialist generalists’. While technical skills are and will continue to be sought after, the sector’s future leaders will need to be skilled communicators, diligent planners and courageous networkers who are willing to tackle difficult issues head on.

“Youth will therefore need to go above and beyond academia to become wellrounded individuals who have an acute appreciation of the role that the industry can play in South Africa’s economic development.”

A prominent part of the discussion around youth in mining involved a session that centred on the Youth Leaders Programme, an initiative that aims to recruit and engage emerging talent from Africa who are exploring the possibility of a career in the mining sector. The session brought together university students, young professionals and senior leaders in mining, government, and civil society.

“We identify willing youth from designated groups and provide them with an extensive job readiness training programme to expose them to proper job support. Knowledge sharing is one of the most powerful tools that mining companies and the public sector can use to build the youth-driven workforce of the future.

“As industry role players, we cannot relegate the responsibility of educating the youth to institutions of learning. We have a collective responsibility to bolster traditional education initiatives with mentorship programmes, networking opportunities and widely accessible training programmes,” he says. n © ISTOCK – jotily

African mining industry.

Any positive regulatory adjustments in the pipeline that might facilitate investment.

■ Any mention of the mining cadastral system (which has been under development for many years).

■ How coordination among different government departments, which is hindering implementation of positive regulations, is being addressed.

■ How infrastructure blockages are being tackled.

In his speech titled A New Dawn for Zambia’s Mining Sector, President Hakainde Hichilema set out his government’s vision for a resilient and sustainable mining industry, anchored on ESG standards, that delivers benefits for all Zambians.

He emphasised the need to move beyond talk of Africa’s potential towards action, to realising that potential, saying Africa does not deserve to live in poverty, as it is endowed with a lot of resources for wealth creation.

Hichilema also stressed that under the New Dawn government, the mining regime in Zambia would be transparent, consistent, predictable, fair, and based on an intolerance to corruption.

Following this keynote, Peter Leon, partner and Africa chair of international law firm Herbert Smith Freehills, suggested that “this was the speech that Minister Mantashe should have delivered”.

■

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PROJECTS IN AFRICA

NEW ASM POLICY AND RESETTLEMENT Guidelines: progress, but grey areas remain

By Nomsa Mbere, partner and Jaqui Pinto, senior associate at Webber Wentzel

THE ASM POLICY

Currently, mining laws in South Africa do not regulate ASM as a discrete form of mining.

Instead, a mining permit which is less onerous than a mining right can be obtained, but ASM miners still struggle to meet its requirements.

The ASM Policy aims to create a formal ASM industry that can operate in a sustainable manner and contribute to the economy, and it also aims to deter illegal mining. This policy is very similar to that published for public comment on 5 May 2021.

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It goes further than Section 27 of the Mineral and Petroleum Resources Development Act, 2002 (MPRDA), which deals with mining permits and does not specifically address ASM. In the ASM Policy, the DMRE has opted to create a new system by introducing new permits. Consequently, legislative changes will be needed to enable the implementation of the ASM Policy.

“

The ASM Policy aims to create a formal ASM industry that can operate in a sustainable manner and contribute to the economy.

“

T

he Department of Mineral Resources and Energy (DMRE) recently published two key policy documents dealing with artisanal and small-scale mining and resettlement as a result of mining. These are the Artisanal and Small-Scale Mining Policy, 2022 (the ASM Policy) and the Mine Community Resettlement Guidelines, 2022 (Resettlement Guidelines).

Although they don’t directly mention environmental, social and governance (ESG), both policy documents illustrate the desired integration of ESG standards in the mining sector. The regulator is attempting to provide mining companies, junior miners, and other smaller entrants into the mining sector with guidelines and tools on ASM, and the resettlement of mine communities, to help them fulfil their ESG obligations.

Notably, the ASM Policy introduces formal definitions for artisanal and small-scale mining, setting out monetary thresholds to differentiate between artisanal (maximum of R1-million) and small-scale (maximum R10m) miners. It also distinguishes between illegal mining – which is a criminal activity – and ASM, for which an ASM permit is required.

Policies promoting the growth, sustainability and development of the ASM industry are welcomed to unlock the development potential in this unregulated

www.samining.co.za

field, but there are several points that require further consideration.

First, the extent to which ASM permits are capped: mining permits are limited to a five-hectare area, but the ASM Policy does not cap ASM permits. This could lead to an abuse of the system where holders of these ASM permits use them as a “back door” to obtain less onerous rights over large tracts of land.

This concern is bolstered by the “graduation” principle in the ASM Policy – a dual licensing method, where the existing “first come, first served” system will coexist with an invitation system. This is not in itself problematic. However, the criteria for this invitation system remains unclear.

ASM operators and large-scale operators are encouraged to coexist, through the use of instruments such as tributing agreements.

These tributing agreements appear to be similar to a lease, and may need further review to ensure they provide equitable terms for the ASM operators and large-scale operations.

Given that ASM currently falls outside the legislation governing mining in South Africa, all the statutory obligations that lead to the suspension and cancellation of a right are in the governing legislation (the MPRDA); and there’s a danger that large-scale operators with tributing agreements over their mining areas could be held accountable for damage and losses they didn’t cause. It isn’t clear

© ISTOCK – Thossaphol

Nomsa Mbere.

whether these tributing agreements are provided for under South African law and whether they would require the consent of the minister in terms of Section 11 of the MPRDA. Second, the policy empowers the minister to designate certain areas for ASM. It is unclear whether this means that those areas would still be available for larger-scale mining, and whether existing mining rights on those areas will be considered.

Third, the ASM Policy contemplates that ASMs will have access to historic residues and stockpiles, but the MPRDA and common law limits the minister’s jurisdiction over stockpiles created before the MPRDA came into effect. In practice, those dumps have common law owners, and this could present an awkward situation for ASM permit holders, where a permit is being allocated over a dump that’s not regulated by the MPRDA. The ASM Policy does, however, introduce positive changes. It provides structure to the ASM industry and, as it becomes formalised and pays taxes, the ASM industry will be able to contribute to poverty alleviation and economic growth. Another positive aspect of this document, which differs from the circulated draft, is that ASM may mostly be limited to surface and opencast mining.

Since underground operations are by nature more dangerous and capital-intensive, this is a welcome approach.

THE RESETTLEMENT GUIDELINES

Unlike many other industries, mining is site-specific and the physical and economic displacement of people, or a community, is sometimes an unavoidable part of the exploration and mining of mineral resources.

Resettlement for mining is not a new phenomenon. It is a global issue that’s attracted the attention of international bodies such as the International Labour Organization and the International Council on Mining and Metals, both of which have published guidance documents.

The Resettlement Guidelines outline the process for applicants and holders of prospecting and mining rights, or mining permits, to follow when their operations require the physical resettlement of landowners, lawful occupiers, holders of informal land rights and mine and host communities. It also applies to both new operations and existing mines that are expanding, and is intended to apply throughout the life cycle of the operation, whenever resettlement is necessary.

The Resettlement Guidelines propose meaningful consultation (as defined) with all interested and affected parties (including traditional authorities, land claimants, nongovernmental organisations, communitybased organisations, and the local municipality), followed by a Resettlement Plan, Resettlement Action Plan and Resettlement Agreement.

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Jaqui Pinto.

Once it has been signed, the Resettlement Agreement must be submitted to the DMRE. Crucially, the Resettlement Guidelines envisage that mining cannot commence until the Resettlement Agreement is concluded, which contradicts the MPRDA and fails to consider the rights and obligations that holders of rights have to commence mining operations.

Another important issue that may be encountered in implementing the Resettlement Guidelines is that there are practical challenges in determining what constitutes a community and how to obtain the requisite consent for such an agreement, especially when there are factions within community groups. Clearer direction on how to obtain valid consents and what constitutes a “community” are needed. The Resettlement Guidelines explicitly state that any compensation must be clearly distinguished from other obligations that miners may have (set out in its social and labour plans).

So while both documents represent progress in the social sphere of mining, they need more refinement to address some of the issues we have raised. Importantly, their adoption requires statutory amendments and alignment to streamline them and provide for the processes they contemplate. ■

SA MINING

MAY / JUNE 2022

37

COLUMN EQUIPMENT TECHNODYN COVER STORY

ERP SHOULD BE A CORNERSTONE OF THE SA MINING SECTOR

© ISTOCK – MikeDrone

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SA MINING

MAY / JUNE 2022

www.samining.co.za

The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.

E

shape strategy as quickly as possible. The sooner nterprise resource planning (ERP) can play mining companies can derive value from their a crucial role in bridging the gap between investments, the better. advanced technologies and legacy systems in optimising mining operations.

DOING THINGS INTELLIGENTLY Growing at more than 9%, the global This creates the impetus for a new age of growth enterprise resource planning software market in ERP solutions at local mines, where datasize is expected to top $93-billion by 2028. Now driven insights are used to provide mines with consider projections that the market value of the complete visibility over their operations. Mines smart mining industry will break the $20bn mark must understand the need for a centralised data at the end of 2025. ERP has the potential to play infrastructure that allows them to have complete, a vital role in bridging the gap between advanced aligned oversight across their processes, allowing and legacy systems, helping to optimise mining them to truly embrace the power of intelligent data. operations.

Global supply chains are going to take a while However, if this is to be successful, especially

By Heman Kassan to return to normal, due to the pandemic and the at a local level, one of the most significant barriers Chief commercial officer recent developments in Ukraine. The latter has to mining transformation and innovation must be at Technodyn put even more pressure on the oil price, and the addressed – system fragmentation. impact will be hard felt across diesel fuel and food Even today, very few mines have a single source production prices for the foreseeable future. Mines need foresight to of truth that provides timely and reliable data about the business. This pre-emptively manage these disruptions. is even worse when it comes to using a single platform to standardise To this end, mining companies must adopt greater oversight on processes consistently across the organisation. Software applications product lifecycle management at every point of the supply chain. and the data being generated are fragmented across the mining Insights drawn from intelligent data can allow mining houses to reap environment. the benefits in the long run.

Further exacerbating this is the fact that mines use multiple ERP, Many mines believe they have the right foundation but are enterprise asset management (EAM), project management, and still reliant on complex and disparate systems that are inefficient workforce planning and scheduling optimisation solutions. Simply in gaining real-time oversight of processes. So creating a digital put, there is no cohesion when it comes to the technology and data infrastructure that optimises efficiencies through the likes of ERP, real estate of a mine.

EAM, and even artificial intelligence, will create greater transparency Because mining is asset-intensive, companies must often choose while driving new efficiencies between replacing an expensive that extend product and asset life and heavily customised ERP cycles, reduce waste, and provide system or buying an additional feedback mechanisms to support solution capable of enhancing the circular economy. projects from a technology perspective. It is hardly TECHNOLOGY ENABLER surprising that the latter is often Technology and a digital business chosen, adding complexity to model will help mining companies the IT environment. identify new revenue streams and Furthermore, many give them the flexibility to develop mining houses have multiple, and respond to changing market overlapping ERP and other conditions. Already, traditional enterprise software systems industries such as manufacturing inherited from companies and construction have introduced and operating divisions they service revenue streams to acquired along the way. their business models and use technology to aid success on this PROVIDING OPERATIONAL journey.

EXCELLENCE For their part, mines rely on Generally, all mines operate technology to play a vital part similarly and employ strategies in continuing a sustainable that are not that different. and profitable operation without lowering safety and efficiency To really stand out and drive operational excellence, a mine must requirements. Mines are used to operating across geographical consider a technology-centric approach. Here ERP solutions can be borders and understand the importance of mobility and flexibility. The used optimally by integrating e.g. EAM and geographic information glue tying all this together is ERP solutions. systems (GIS) to streamline exploration and feasibility studies, Mining efficiency will be harnessed via capturing, interpreting, enhance operations and maintenance, and take care of regulatory and operationalising large amounts of data. Owning the data will be compliance and financial analysis to improve the lifecycle of a mine as important as sharing the data. Streamlining has come a long way consistently. for mining houses, but there is still a long journey ahead. For now, Being agile and acting fast to optimise production capacity and the key remains to use modern ERP to integrate what has been put maximise profitability can only be done if a mining company operates in place and draw the insights needed to shape the future direction from an integrated environment. Systems, processes, and data must of mining. ■ be integrated to provide decision makers with the insights needed to

The mineral rights minefield The Mining Charter is just one of many pieces of legislation, policy rather, against which South African mineral rights holders’ compliance is measured; there are also currently at least 14 Acts, as well as numerous bylaws, whose stipulations require adherence to. The upshot? A very sticky web of regulations that’s been known to entangle the inexperienced.

Thankfully, experience is what we at NSDV have in abundance. The work we’ve done over many years, and the senior relationships we’ve developed, allow us to navigate the field with comparative ease. There’s no facet of the process we can’t deal with on your behalf to ensure full compliance and guarantee that your assets are expertly managed.

To uncover more of what we offer, visit www.nsdv.com today.

COLUMN EQUIPMENT

MININGSTORY WITH THE MAJOR COVER

LICENSING REGIME CURRENTLY DISCOURAGES SMALL-SCALE MINERS

W

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SA MINING

MAY / JUNE 2022

www.samining.co.za

The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.

© ISTOCK – Photon-Photos

© Robert Tshabalala @ Financial Mail

The well-used term “small-scale miner” inherently e’ve all heard the mantra, “The refers to mining and prospecting start-ups. Those most likely source of funding for any firms that generally dedicate their energies and venture is from family, friends and resources into obtaining the required licences that fools.” Nothing could be closer to the will allow sufficient exploration and research to truth! progress enough in order to make a determination of According to an article written by Jason Gordon in whether to put more time, effort and money into the April this year, friends and family provide the funding project/property – or to walk away.

– better known as “seed capital” – for 35% to 40% of Now here is where geography – or countries/ all start-ups. Does this mean that fools provide the locales – come into focus. The country one is remaining 60% to 65%? prospecting (and hoping to mine) in is vitally Well, not all of it, but a large part. After that it’s the important. What is the security of tenure? What is professionals, a category that is very large and broad the process to obtain tenure? What is the route one – from pawn shops and loan sharks to banks, private needs to take with the various stakeholders and equity and venture capital funds, wealthy individuals, Peter Major gatekeepers to obtain a licence? angel investors and groups, government agencies Mergence Corporate South Africa seems to be in the media much more and many others.

Solutions Director: Mining than any other country in the world in this regard; at This latter category is usually accessed last, least since 2002, when all of South Africa’s mineral because of the large amount of work (and often rights were nationalised, following the release of the revolutionary collateral) that professionals require – and collateral is something the Minerals Act. entrepreneur is usually quite short on by the time he has run out of South Africa’s government also required everyone applying for family, friends and fools. minerals (prospecting and mining licences) to have a black economic We all know the money chain: the intrepid entrepreneur first empowerment (BEE) partner. And each year since, that definition has uses up his own individual savings, then debt (overdraft). Then become more specific and demanding, and the terms and conditions borrowings against his assets. Then a partial or full sale of his assets, of who can be considered BEE, for how long and under what terms and followed by family, friends, fools, then on up and through the conditions, more onerous. professionals if needed.

This short article isn’t meant to elaborate or explain any of this.

The start-up/entrepreneur usually only gets down to a formal, This article’s intention is merely to point out how arduous it is to be a well-thought-out business plan by the time they’ve exhausted all their mining entrepreneur, especially in a place like South Africa. And how, if individual and easy-to-tap resources, and are then required to put more one does everything professionally thought and effort into a formal and correctly, the disorganised, SWOT (strengths, weaknesses, complicated (and often opportunities, threats) analysis corrupt) state of affairs at South and business plan.

Africa’s Department of Mineral It is unfortunate if the SWOT Resources and Energy (DMRE) and business plan are only means waiting to obtain one’s tackled when desperation and licence(s) can take years. the exhaustion of easy money Years of not knowing have set in. Thorough thought, where in the DMRE investigation and preparation (and government’s) labyrinth of any idea and all aspects of divisions and chambers and surrounding it are invaluable. personnel the licence is, who is This early research will save looking at it, and what more is required for it to be granted and issued. huge time, energy, stress, drama, broken relationships, and most of all – This is by far the hardest part in mining in South Africa today – money. receiving one’s licence.

There are pitfalls and perils galore for any start-up, no matter how Next hardest is selling or ceding or even co-funding the small and simplistic it may seem, and this particularly applies to the licence. Because as soon as it involves any “change in control”, mining sector. government must be notified and nothing further can be done without Few people with any mining experience or background would their specific permission (the infamous Section 11). This can take consider the industry to be a quick, inexpensive, easy, or straightforward anywhere from six months to two years, with 12 to 18 months seemingly way to make money. In reality, mining is anything but any of those. It is the norm. rather something that is laborious, stressful, long-term and most of all, At this year’s Mining Indaba in Cape Town, no fewer than four heads hugely expensive and bureaucratic. of state convincingly explained and sold to excited investors and miners Mining today involves numerous regulations, licences, permits and how serious they were about doing business in their countries. The negotiations. There are so many gatekeepers and role players who now fifth head of state – our own Cyril Ramaphosa – and his sidekick, DMRE have to be involved – official and unofficial. And these are for mere startMinister Gwede Mantashe feebly and unsuccessfully tried to do the same. ups. It gets worse progressing up the production ladder. Therefore, most But with still no cadastre system and no plan and timeline of how investors and entrepreneurs in mining concentrate on the very earlyto fix it in place, and with 4 500 licences now piled up in the DMRE stage prospects. offices, we will almost certainly have to wait for next year’s Indaba to This means obtaining a property and or early-stage licence – a see anything in South Africa that makes us more appealing than all our prospecting/exploration licence. Obtaining a prospecting/exploration neighbours, save Zimbabwe. They and SA unfortunately look likely to licence almost universally allows one to have exclusivity – usually for five remain off limits to investors and miners alike until at least 2023. ■ to eight years – over an area to later apply for an actual mining licence.

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MAKING MINES WORK

ELB ADOPTS TELEMATICS across its range

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n an era where machine uptime has a direct impact on an operation’s bottom line, construction and mining equipment supplier ELB Equipment has launched its own custom-developed telematics system to radically enhance the effectiveness of its machines on sites.

The telematics solution comes standard with equipment across the entire medium and heavy range, providing a host of valuable information to the user via easy-to-use web-based reporting software.

While the machinery supplied by the company is at the pinnacle of reliability, the telematics systems assist the fleet manager to locate and manage fleets from remote locations on any device in real time.

According to Keon Kardolus, ELB Equipment earthmoving and construction sales manager, the addition of telematics as a standard feature on its equipment is the next logical evolution of fleet optimisation. Premium-quality equipment nowadays is made to be productive, is ultra-durable and reliable.

The addition of a telematics management system further ensures operator conformance, assisted service and maintenance scheduling, alarm parameters, geolocation and a host of other parameters to ensure the equipment remains optimised.

“Our hardware solution provides users with operating details such as driving, idle and standing times, [and] an engine hour meter reading, operating event recording, real-time reporting of critical events and accurate GPS positioning with playback.”

Kardolus adds that the web-based software package provides the user with extensive tools to manage and report on the fleet. It enables the user to manage both operator and machine information, define and report on custom events, analyse fleet data and extract summary and detailed reporting. The software can be accessed by multiple users in real time on any device from any location.

“The operator and machine-specific reporting allows the manager to assess the operator’s operating style, position, productivity etc. on Google-style mapping. Certification management and ad hoc reminders and machine service reminders can be done online,” says Kardolus.

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SA MINING

MAY / JUNE 2022

www.samining.co.za

Telematics solutions significantly boost efficiencies.

Northam has achieved another major project milestone with the completion of drilling of its No 3 Shaft, at a world record depth of 1 382m, at the group’s Zondereinde mine in the western bushveld. Work on the No 3 Shaft at Zondereinde’s significant brownfields capital expansion project, the Western extension, started in early 2020.

Zondereinde’s Western extension is a quality resource block containing 21 million ounces of platinum group metals (PGMs) within the highgrade Merensky and UG2 orebodies. The resource was purchased in 2017 for R1-billion. The addition of the Western extension improves operational flexibility at Zondereinde and will permit annual PGM output to increase to 350 000 ounces 4E by 2026. It also extends the remaining life of the operation to over 30 years.

Mining activity from the existing workings of the Zondereinde mine will gradually transition into the Western extension block. The new shaft complex is situated some 4km from the original Zondereinde mine complex, a distance that constrains service delivery and logistics.

The new shaft will transport people and materials, as well as allow the supply of services, including backfill, chilled service water and ventilation, to the underground workings. This will alleviate the challenges associated with distance from the existing Zondereinde shafts.

© ISTOCK – Nordroden

NORTHAM EXTENDS LIFE OF ZONDEREINDE MINE TO OVER 30 YEARS

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READ WHAT REALLY GOES DOWN IN SADC

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