Green Economy Journal Issue 52 by GreenEconomyMedia

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ISSUE 52 | 2022

IMPROVING LIVES THROUGH WATER The Olifants Management Model Big prize for small enterprise

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Economy G

journal

CONTENTS 6

NEWS AND SNIPPETS

WATER Improving lives through water

MINING Green business for good 14 The economic case for the mining industry to support carbon taxation 12

18 STORAGE Carbon Capture, Utilisation and Storage 20 MINING Sunshine is golden for the mining industry 24 Global standard prioritises better management of water 26 TSF failure: standards for response and recovery 29 Opportunity for Africa to fill the commodity gap 30 Winning with the right procurement localisation

READ REPORT

34 MOBILITY EV battery supply chain – trends, risks and opportunities in this fast-evolving sector 37 State of the motor industry

THOUGHT [ECO]NOMY

greeneconomy/report recycle

41 STORAGE Second-life storage batteries: a true circular economy solution 42 46

ENERGY The race to green hydrogen in Africa Shaping tomorrow’s hydrogen market

48 METROLOGY The National Metrology Institute of South Africa supports manufacturing and trade 50 THOUGHT LEADERSHIP To densify or not: the pandemic as a driver of urban transformation 54 WATER The good, bad and ugly in South Africa’s watercompliance 56 GREEN TECH The fully-fledged state-owned enterprise 59 ENERGY Industrialisation through local manufacturing 60 WASTE Sustainable IT transforms waste into opportunity

To access the full report in our Thought [ECO]nomy report boxes: Click on the READ REPORT wording or image in the box and you will gain access to the original report. Turn to the page numbers (example below) for key takeouts of the report

key takeouts of the report

PUBLISHER’S NOTE Dear Reader, The renewable energy market is bursting with megaprojects, either awarded or about to be awarded, with new rounds being announced (sic REIPPPP BW6) while at the same time somehow retentive, hesitant, stymied while the broader economy is desperate for power and an end to the incessant load shedding. RMIPPPP promises so much and yet a combination of legal challenges, radical technology, cost hikes, delays in permissions, grid capacity constraints and myriad other headaches are ratchetting up the pressure, the costs and ultimately the risk. And we know how banks feel about risk! REIPPPP BW5 has been awarded, but also faces the same input tech cost hikes and grid access challenges. And I cannot overstate this – IPPs with gigawatts of bid-ready projects, after doggedly soldiering through the bidding hiatus, have seen the bulk of their pipelines wiped off the books by the grid access f__k-up in the Northern Cape. Eish! The private sector is steaming ahead, but there too, it’s all too new and it’s taking time for the nay-sayers to leave the building, and let the doers get on with it, while equipment gets more expensive and less available in this Putin inspired global mess previously known as logistics. I feel like I’m in a straight jacket trying to gesture my argument, while onlookers note that I’m obviously mad! Calling all stakeholders to find a way to make these projects work, shift tariffs if costs have legitimately shifted, find a way for IPPs to jointly fund investments in grid capacity, cut red tape, let ideology take a back seat. We all need this. We all need this now!

Economy G

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EDITOR: Alexis Knipe alexis@greeneconomy.media CO-PUBLISHERS: Gordon Brown gordon@greeneconomy.media Alexis Knipe alexis@greeneconomy.media Danielle Solomons danielle@greeneconomy.media LAYOUT AND DESIGN: OFFICE ADMINISTRATOR: WEB, DIGITAL AND SOCIAL MEDIA: SALES: GENERAL ENQUIRIES: ADVERTISING ENQUIRIES:

CDC Design Melanie Taylor Steven Mokopane Gerard Jeffcote Glenda Kulp Nadia Maritz Tanya Duthie Vania Reyneke info@greeneconomy.media alexis@greeneconomy.media

REG NUMBER:

2005/003854/07

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4750243448

PUBLICATION DATE:

May 2022

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Yours,

Publisher

EDITOR’S NOTE Welcome to the 52nd issue of Green Economy Journal. On page 8, we look at an integrated water service model for the Olifants River raw and potable water management called the Olifants Management Model Programme. The model has the potential to be replicated across the country as it is underpinned by public-private participation which sets a platform for community inclusivity. We wish the launch of the Olifants Management Model Programme all the best. To coincide with the African Mining Indaba 2022, this issue of Green Economy Journal focuses on all things mining. Enjoy! Alexis Knipe Editor

Cover image: The cover image shows the launch of the Olifants Management Model Programme. Top picture: Anglo American Platinum. Bottom picture: De Hoop Dam. All Rights Reserved. No part of this publication may be reproduced or transmitted in any way or in any form without the prior written permission of the Publisher. The opinions expressed herein are not necessarily those of the Publisher or the Editor. All editorial and advertising contributions are accepted on the understanding that the contributor either owns or has obtained all necessary copyrights and permissions. The Publisher does not endorse any claims made in the publication by or on behalf of any organisations or products. Please address any concerns in this regard to the Publisher.

YOU SEE USED BOTTLES. COLLECTORS SEE VALUE. Recycling PET plastic bottles creates over 60 000 income opportunities every year in South Africa. Many of these are reclaimers, who helped divert upwards of 95 000 tonnes of PET plastic bottles from landfill in 2019. The used bottles they collect are recycled, ensuring that they become bottles yet again. This creates yet more jobs in the process, contributing positively to our country’s GDP while eliminating the chance that they end up harming the environment. Recycling ensures that a circular economy is established where the value of plastic bottles continues indefinitely.

55% POST-CONSUMER

Plastic bottles are not trash.

R278 MILLION

beverage PET bottles collected for recycling.

OVER 50 000

The market value of post-consumer PET bought by PET recyclers. * Reported in 2020

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active collectors invloved in PET Collection and recycling.

NEWS & SNIPPETS

NEW MINING GUIDELINES In March 2022, the DMRE published the Artisanal and Small-Scale Mining (ASM) Policy and the Mine Community Resettlement Guidelines. Both policy documents illustrate the desired integration of ESG standards in the mining sector. The regulator provides guidelines on ASM and resettlement of mine communities to assist them to fulfil their ESG obligations.

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. It introduces formal definitions for artisanal and small-scale mining, setting out monetary thresholds to differentiate between artisanal (maximum R1-million) and small-scale (maximum R10-million) miners. It also distinguishes between illegal mining, which is a criminal activity, and ASM, for which an ASM permit is required.

The ASM Policy 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. The ASM may mostly be limited to surface and opencast mining.

THE RESETTLEMENT GUIDELINES

Resettlement for mining is not a new phenomenon. It is a global issue which has attracted the attention of international bodies such as the International Labour Organisation 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 lifecycle of the operation, whenever resettlement is necessary.

IFC TO EXPAND GREEN BUILDING FINANCING IN SA

To support the construction of green buildings in South Africa, IFC is providing a R600-million ($42-million equivalent) loan package to Business Partners, a South African non-banking financing entity specialised in providing finance, mentorship and support programmes to SMEs.

Business Partners will use IFC’s loan to finance the construction of certified green commercial buildings in South Africa and/or to renovate existing commercial buildings to make them more environmentally friendly, making them at least 20% more energy efficient. Eligible green building certifications will include EDGE, LEED, BREEAM and Green Star. IFC will also provide financial incentives to Business Partners to partially offset the costs involved in greening and certifying buildings, based on the company meeting certain green building targets in their portfolio. Conventional buildings account for almost 40% of energyrelated greenhouse emissions worldwide due to a growing urban population and outdated construction practices. An IFC study estimates that South Africa’s green building demand presents a $7-billion investment opportunity between 2016 and 2030. Although the supply of green buildings in the country is growing, the green building market is still at a nascent stage.

WIND AND SOLAR

Global electricity generation. (Terawatt hours)

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The Global Electricity Review 2022 reports that wind and solar generated over a tenth (10.3%) of global electricity for the first time in 2021, rising from 9.3% in 2020, and twice the share compared to 2015 when the Paris Climate Agreement was signed (4.6%). Combined, clean electricity sources generated 38% of the world’s electricity in 2021, more than coal (36%).

NEWS & SNIPPETS

INVESTEC ISSUES GREEN BONDS

Investec has reaffirmed its commitment to funding a sustainable future, with the issue of the group’s first green bond. The bond is backed by several of Investec’s flagship renewable energy projects. The bonds raised R1-billion under Investec’s DMTN bond programme. The issue, which was 3.8 times oversubscribed, highlighted a healthy appetite among institutional investors looking to make a positive impact in terms of their ESG commitments. The bonds have been issued in line with the Green Bond Principles of the International Capital Markets Association, a global association of debt securities issuers as well as the Investec Sustainable Finance Framework. The principles seek to support the financing of environmentally sound and sustainable projects that foster a net-zero emissions economy. “Investec’s green bond issue references existing, returngenerating projects, rather than future projects. These are all accredited renewable projects currently delivering clean power into the grid,” notes Louis Dirker, head of debt capital markets at Investec Bank. “In many cases, the projects also have concurrent programmes helping to create jobs and uplifting communities.” Investec’s green bonds reference five of South Africa’s leading wind and solar projects, namely: • Bokpoort CSP Power Plant (50MW) • Aurora Wind Power Project (94MW) • Karoshoek Solar One Project (100MW) • Kathu Solar Park (100MW) • Windfall 59 Solar Project (74MW) According to the World Economic Forum, annual issuance of green bonds is expected to exceed US$1-trillion in 2023, double the amount issued last year. Considering that the global bond market is worth some US$130-trillion, there’s significant room for green bonds to grow within the fixed income asset class. According to Dirker, South African institutional investors are becoming more aware of the risks of climate change to their portfolios and are having to disclose these. “There’s also greater pressure being brought to bear from their stakeholders to make a positive contribution through their ESG policies and related financing. Green bonds thus fulfil an important role within the fixed-income component of an institution’s portfolio, especially where there is a reference to bankable, cash-generative projects.”

CLIMATE CHANGE BILL OPEN FOR COMMENTS The portfolio committee on environment, forestry and fisheries opened comments for the Climate Change Bill in April 2022. The bill seeks to enable the development of an effective climate change response and a long-term just transition to a low-carbon and climate-resilient economy and society for South Africa. The bill details the need for appropriate adaptation responses and requires the Minister of Environment, Forest and Fisheries to implement an effective nationally determined climate change response that encompasses mitigation and adaptation actions that represent South Africa’s fair contribution to the global climate change response.

GLOBAL LEADERS TO GUIDE COAL PHASE-OUT

The International Energy Agency (IEA) recently announced that a high-level advisory group of global energy, climate and finance leaders will provide strategic input for a forthcoming IEA special report that will explore how to put the world’s coal emissions on a path toward net zero amid the major energy security and affordability challenges that are affecting countries worldwide with particularly severe economic impacts in the developing world. IEA executive director Fatih Birol convened the High-Level Advisory Group to offer recommendations for the major new IEA report, Coal in the Global Net Zero Transition: Strategies for Rapid, Secure and People-Centred Change, which is due to be published in the fourth quarter of 2022. The report will provide the first authoritative assessment of how to tackle one of the world’s biggest energy and climate challenges in the changed global landscape resulting from Russia’s invasion of Ukraine. The emerging global energy crisis driven by Russia’s invasion of Ukraine has laid bare the challenges that countries face in ensuring, sustainable and affordable energy supplies in a complex and uncertain geopolitical environment. As well as hurting consumers and businesses around the world, especially in developing economies, the turmoil in global energy markets threatens to derail efforts to prevent the worst effects of climate change. Last year, global energy-related CO2 emissions rebounded to their highest level in history, largely because of record use of coal to generate electricity. The move away from coal will not be straightforward. Renewable energy options are the most cost-effective new sources of electricity generation in most markets, but there are still multiple challenges to reducing emissions from the existing global fleet of coal power plants while maintaining secure and affordable electricity supplies. Increased financial flows and new financing mechanisms will be essential to bring down coal emissions and innovation in areas such as carbon capture will be key in many industrial sectors Tackling the consequences of change for workers, communities and vulnerable consumers will also require dedicated and determined policy efforts. This is especially the case in developing economies where electricity demand is growing rapidly, coal is often the incumbent fuel for power generation, and unabated use of coal in the industrial sector is on the rise. Many of these challenges have become even more acute in recent months amid the sharp increases in the prices of energy and other crucial commodities, such as cereals and other food staples, which have been driven to all-time highs by Russia’s invasion of Ukraine. This is putting further strains on the already fragile financial situation in many developing economies. It also risks pushing energy sector transformation down the policy agenda in countries worldwide.

WATER

IMPROVING LIVES THROUGH WATER Bolstered by a collective call to action by the president for the public and private sectors to work together to address the infrastructure backlog, the sectors collaborated and conceptualised the Olifants Management Model Programme.

WATCH VIDEO De Hoop Dam outside Steelport in Limpopo.

outh Africa is a water-stressed country and is facing several water concerns. The lack of basic services such as water supply and sanitation is a key symptom of poverty and under development. In this context the provision of water supply and sanitation services cannot be separated from the effective management of water resources. Department of Water and Sanitation (DWS), as sector leader, seeks to manage the critical balance between sustainability of the resource, equitable allocation and economic growth. The National Water Act 36 of 1998 mandates DWS to ensure efficient conservation, management and control of resources to support the country’s water security needs. Future challenges will depend on current responses. Sustainable solutions require a systematic approach of integrated solutions rather than addressing issues in isolation. Most of these opportunities will need to take advantage of the synergies between government, private sector and civil society. In response to the negative growth impact of water and sanitation challenges, DWS has over time established a wide variety of partnerships. Lebalelo Water User Association (LWUA) was established in 2002, in line with the National Water Act, as a

collaboration between DWS and the mining industry (ie ordinary and industrial members) to build bulk raw water infrastructure that will develop the Eastern Limb of the Bushveld Igneous complex in Limpopo. LWUA’s purpose is “improving lives through water” and its strategy sets out a staged implementation approach that not only aims to transform the Association into a strategic model for future water delivery in the country, but to use water as a catalyst for socio-economic development in the areas it operates in. LWUA itself is also transforming and rebranding and will become the

Sustainable solutions require a systematic approach of integrated solutions rather than addressing issues in isolation.

WATER proposed Olifants Management Model Water User Association (OMM WUA) with institutional and commercial members based on a 50/50 collaboration model.

LAUNCHING THE OMM PROGRAMME

SYNERGISTIC CO-EXISTENCE The hive understands the need synergy between nature and bees and between bees themselves. The bee logo (below) was chosen as an interim icon to represent the synergistic nature of the OMM Programme. The programme aims to achieve synergy or collaboration between the public and private sector.

Institutional and commercial members joined forces to plan an integrated water service model for the Olifants River raw and potable water management called the Olifants Management Model (OMM) Programme. The model has the potential to be replicated across the country as it is underpinned by public-private participation which sets a platform for community inclusivity. To address the issues relating to the supply of water in the region, members agreed to accelerate bulk raw water delivery, potable water service delivery and socio-economic development (SED). Besides providing much-needed water to surrounding areas, the model will unlock the strategic mineral and industrial potential in the region. It will also establish a sustainable platform for the technical, financial and socio-economic growth of Limpopo.

COLLABORATION IS KEY

The OMM Programme was formalised through the signing of a Heads of Terms for an OMM Framework Agreement in 2022 between institutional and commercial members. Structured collaboration In terms of the proposed governance structure, the OMM Programme will be housed within the OMM WUA, which will be the implementation vehicle for the OMM Programme. The proposed OMM WUA authority structure is underpinned by a Charter in accordance with the principles of King IV TM good governance. The OMM Programme Steering Committee shall consist of seven members: three appointed by DWS, three appointed by the Commercial Users Consortium, with the CEO as a co-opted member.

THE NEED FOR THE OMM PROGRAMME

The OMM Programme aims to improve socio-economic growth in the Limpopo Province through the acceleration of the Olifants River Water Resources Development Plan (ORWRDP) and the costeffective provision of potable and raw water infrastructure to defined areas in the Northern and Eastern Limbs of the Bushveld Igneous Complex. In the early 2000s, DWS conceptualised the ORWRDP to address the bulk water needs of the middle Olifants River catchment area. Projected water demands had increased significantly due to the anticipated development of the mining sector. A key objective of government was to stimulate this mining growth and associated economic activity in a sustainable way for the

WATER

OMM PROGRAMME OVERVIEW The scope of work entails: Augment Supply. Move a portion of the scheme’s current supply from Flag Boshielo Dam, via the abstraction point on the Olifants River at the Havercroft Weir, to the De Hoop Dam to enable water supply to the Mogalakwena area from the Flag Boshielo Dam. Re-sequence ORWRDP. Re-sequence the construction of the ORWRDP bulk raw water infrastructure to meet revised water needs and reduce capital costs. Establish resource partnership. Set up a partnership to construct, operate and maintain defined infrastructure. Implement socio-economic development. Put a SED plan into effect that is focused on potable water (for approximately 380 000 people), sanitation services, connectivity, education and enterprise development to develop skills, create jobs and change behaviour. benefit of the local and national economy in concert with the Growth and Development Strategy and the Spatial Development Framework of the province. ORWRDP is a designated strategic integrated project in terms of section 7(1) of the Infrastructure Development Act, 2014 and of significant importance to South Africa. Phase 1 of the project, raising Flag Boshielo Dam by five metres, was closely aligned to the developing mining sector in the area. Prosperity in the area is closely linked to mining as it creates employment opportunities and economic growth – and water is the catalyst for this development. The ORWRDP Phase 2 forms part of the Presidential Infrastructure Coordinating Commission’s strategic infrastructure projects, which were aimed at fasttracking development and growth across South Africa. The construction of De Hoop Dam was the second phase of the ORWRDP and was first announced by President Mbeki in 2003 as one of the flagship programmes of government’s Accelerated and Shared Growth Initiative for South Africa (AsgiSA). De Hoop is the 13th largest dam in the country with a 347-million cubic metre reservoir capacity. The importance of the dam was twofold; it would be a bulk

storage facility to augment the water supply around the Steelpoort and Olifants rivers as well as to the mines and unlock vast deposits of platinum group metals (PGM) found in the region – the largest known unexploited mineral wealth in our country. While the ORWRDP was partially developed over the last two decades, recent studies together with rising community pressure have highlighted the need to adjust and accelerate the ORWRDP. In the Eastern Limb of the ORWRDP, social unrest has impacted on communities’ access to potable water and mines and other commercial operations’ ability to safely operate. There had also been increasing levels of vandalism on water infrastructure. With bulk raw water pipelines passing through communities that have no access to water, the communities’ frustrations are understandable. Their difficulties are further compounded by the lack of employment, economic development and opportunities. The concerns of the community are valid, and something needed to be done to improve their quality of life. The OMM Programme aims to accelerate the delivery of bulk raw and potable water infrastructure to the Northern and Eastern Limbs of the Bushveld Igneous Complex.

The dam will supply water to thousands of residents as well as mines in the Waterberg, Sekhukhune and Capricorn districts.

WATER

OBJECTIVES OF THE OMM PROGRAMME

Given the country and the region’s endowment of critical raw materials, water infrastructure development is a key enabler to create employment through the infrastructure programmes, mining expansion and manufacturing of renewable energy technology. This aligns with the South Africa’s industrialisation objectives. Besides providing much-needed water to communities, the OMM Programme will unlock the enormous strategic mineral and industrialisation potential of the region to capitalise on the global transition to cleaner energy. Key benefits include: Water security. Accelerate delivery of the ORWRDP as part of the OMM Programme and supply potable and bulk raw water to identified areas. Economic growth. Develop enabling infrastructure essential to the industrialisation of the Bushveld Igneous Complex and to take advantage of mining commodity cycles. Job creation. Create local jobs through construction and system operations, as well as mining developments and develop skills in the water sector. Cost savings. Re-sequence the build programme to utilise existing dams and infrastructure to their optimal efficiency levels. Fiscus support. Private sector contributions to the infrastructure programme will provide support to the fiscus while tax revenues will also benefit from the increased economic activity in the region. Socio-economic development. SED in Limpopo will also be accelerated through localisation of infrastructure and operational spend as well as widening the skills base through local and regional development. Sustainability. Mandate and equip the OMM WUA to implement, manage, operate and maintain the OMM Programme. Replicable model. The public-private collaboration model has the potential to be replicated across the country and other sectors. Social harmony. Improve integration through the provisioning of water, job creation and SED.

Water conservation. The Programme will implement behavioural change programmes with a focus on conscious water use. Water reuse. SED activities will prioritise sanitation and water reuse and address wastewater treatment. ESG footprint. The OMM seeks to make optimal use of infrastructure resources (cement, steel, diesel, etc) to minimise its footprint.

SUSTAINABLE DEVELOPMENT

Sustainable development is one of the key underlying concepts of the OMM WUA’s mission, vision and strategy. The United Nations adopted 17 Sustainable Development Goals in 2015 as a universal call to action to end poverty, protect the planet and ensure that by 2030 all people enjoy peace and prosperity. The 17 goals are integrated, and it is recognised that action in one area will affect outcomes in others, and that development must balance social, economic and environmental sustainability. The defined OMM Programme targets will directly or indirectly impact on all these sustainable development goals.

SOCIO-ECONOMIC BENEFITS

Formal economic activity in Limpopo is highly diverse and is characterised by commercial and subsistence agriculture, mining activities, manufacturing, commerce and tourism. Large coal, PGM as well as copper and phosphate deposits are found in the area. The Olifants Catchment is home to several large thermal power stations that are strategically important, and which provide energy to the country as a whole. A large proportion of the catchment is not economically active (45%), with a further quarter (24%) of the population being unemployed. Only a third of the population (31%) are employed of which 68% are employed in the formal sector. The OMM Programme represents a significant opportunity for SED in the region given the extent of the infrastructure programme across the province and its associated capital and operational spend. Themes to steer development Five priority themes have been identified to steer socioeconomic development activities, and all SED projects within the OMM Programme will align to the themes represented in the diagram on the left. A central hub concept is to underpin all collaboration, to ensure inclusivity and transparency. In terms of quick wins, the OMM Programme aims to expand on existing SED projects (youth leadership and entrepreneur development), work with existing Water Service Authority projects, collaborate with schools and build on existing technology infrastructure.

WATCH VIDEO The five priority themes that have been identified to steer socio-economic development activities.

Watch Bertus Bierman, CEO of Lebalelo Water User Association in an interview with Gordon Brown, publisher of GreenEconomy. Media.

GREEN OUTCOMES

The OMM Programme will pursue: Renewable energy. Considering water resource availability and regional water needs, additional studies will be conducted in the pre-feasibility phase of the OMM Programme to further optimise and reduce water costs through energy use optimisation and the use of renewable energy.

Future challenges will depend on current responses.

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PURPOSE To safeguard global sustainability through our metals and energy solutions. VISION To be a leader in superior shared value for all stakeholders.

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MINING Anglo American Plc

Anglo American Plc, Kumba Iron Ore, Sishen.

The economic case for the mining industry to support carbon taxation

As governments try to navigate a path to a safe climate in the 21st century, the public debate has focused on net zero, carbon taxes, electrification and renewable energy. Mining is rarely an anchor point of the discussion, even though renewable energy infrastructure and low-carbon technology require vast amounts of metals and minerals. BY SALLY INNIS, BENJAMIN COX, JOHN STEEN, NADJA KUNZ*

ickel, for example, is essential for electric vehicles and battery storage. The amount of nickel required by 2040 for the energy transition alone will be equal to the total demand for nickel across all industries in 2020, according to the International Energy Agency. There is widespread consensus among economists that carbon

taxation is one of the most effective policies to reduce carbon emissions. Presently, 27 countries have enacted carbon taxation policy at the national level, however only seven of these are leading mining countries, and mining companies and industry organisations oppose carbon taxes in many of these countries. Addressing climate change requires a coalition between

MINING

Cox et al. 2022

Projected demand change for copper and nickel requirements for energy transition technology. The solid bars show the amount of metal demand projected for the energy transition, while the transparent bar shows the actual total demand for copper and nickel across all industries in 2020.

industry and government. The idea that the industry supplying the technology for renewable energy is also opposing the economic policy needed to curb emissions is counterproductive. Simple economic modelling proves that resisting a carbon tax is the wrong strategy for the industry.

METALS OUT, A LITTLE CO2 IN

Anglo American Plc

There are many factors throughout the mining process that contribute to carbon emissions. The commodity being mined heavily influences the number of emissions and where the emissions are generated throughout the mining process.

For iron and steel most emissions are generated in the later stages during smelting. Mining copper ore, on the other hand, generates most of its emissions in the earlier stages during the crushing, grinding and hauling of ore. One way to look at the impacts of carbon taxation in mining is to compare the commodity’s carbon footprint to its economic value. For example, the average carbon footprint of copper is 3.83 tons of carbon dioxide per ton of copper. So, for each ton of carbon dioxide emitted, 261 kilograms of copper worth US$1 700, using 2019 copper prices, are produced. This is a relatively high value. The same cannot be said for other

Anglo American Plc, Platinum, Mogalawkwena North Concentrator.

MINING

industries, like animal agriculture, where a ton of carbon emissions corresponds to about US$125 of wholesale beef (using equivalent 2019 pricing).

HOW WOULD A CARBON TAX AFFECT MINING?

The basics of a carbon tax are that more carbon-intensive industries will be taxed more. Our study tested three levels of carbon taxation: US$30, US$70 and US$150 per ton of carbon dioxide, and compared them against commodity prices in 2019.

MINING FOR CARBON TAXES

Outside of aluminum refining and steel mills, the mining industry will perform better with a carbon tax than it would without one. This is because the carbon tax would increase the price of fossil fuels relative to renewable energy and the materials required for renewable energy technology. For example, the costs of coal used for energy production will more than double, making electricity from coal increasingly uncompetitive. The rising demand for solar and wind power will drive further increases in the consumption of base metals for wind turbines and solar panels. If implemented on a global scale, a carbon tax would not change the underlying cost of the base metal business, but it does have vast financial benefits for the mining sector. These benefits come from the increased demand for metals from the energy transition, paired with a relatively lighter percentage of global carbon taxes, in comparison to other industries.

The impact of three levels of carbon taxation (US$30, $70 and $150) modelled as a percentage of present product value for selected commodities. This shows that most mining industry and energy transition commodities will not be taxed to the same degree as other commodities.

These levels closely follow the Pan-Canadian approach to carbon pollution pricing, which are currently set to $50 per ton and increase $15 per year to $170 in 2030. We modelled the impact of a carbon tax on a range of commodities. Our model included all Scope 1 and Scope 2 emissions – direct emissions from the source and indirect emissions associated with heating, cooling or electricity. The production of some commodities is more carbon-intense than others, which affects the impact of the carbon price. In some cases, the carbon tax can be greater than the product’s value. When the price of carbon is US$150, coal is taxed at 144% of its value. Copper, on the other hand, is taxed at 10% of its value. Two metals are outliers to the industry: aluminum and steel. The mining of the raw materials is not carbon intensive. Bauxite and iron ore generate 0.005 and 0.02 tons of carbon dioxide per ton of product respectively but smelting these ores into metals emits more carbon in production.

Rather than opposing carbon taxes, the mining sector should become a global advocate for aggressive carbon targets, the harmonisation of international carbon taxes and pursue further reductions to emissions such as the electrification of fleets or carbon offsets.

SA CARBON TAX South Africa introduced a carbon tax in June 2019 as part of a package of policy measures to help achieve the Nationally Determined Contribution commitments submitted under the Paris Agreement. To assist industries to transition to sustainable and low-carbon practices in a cost-effective manner, a carbon offset tax-free allowance is provided to companies under the Carbon Tax Act (No 15 of 2019) to help reduce their carbon tax liability and encourage additional investments in eligible lowcarbon offset projects.

*Sally Innis, PhD candidate, Benjamin Cox, PhD student, mining engineering, John Steen, ey distinguished scholar, global mining futures, Nadja Kunz, Canada research chair and assistant professor, mining, all from University of British Columbia.

The Conversation under Creative Commons License

One way to look at the impacts of carbon taxation in mining is to compare the commodity’s carbon footprint to its economic value.

MINING

MINING UNDER PRESSURE TO DECARBONISE OPERATIONS In 2021, President Ramaphosa recommitted South Africa to a series of steps aimed at reducing the country’s carbon footprint because “the world is facing a climate crisis of unprecedented proportions”. South Africa joins the world in this urgency as it races to achieve net zero targets over the coming decades. Sameer Singh, research analyst at Old Mutual Wealth Private Client Securities, says that to reach the goal of carbon net zero, industry at large, and diversified miners specifically, can expect increased stakeholder pressure and must plan for business process transformation to remain both relevant and profitable. “Mining, as an extractive activity, leaves a long-lasting mark on the environment. Additionally, the processes of extraction and refining emit a substantial amount of greenhouse gases. The mining industry specifically will see dramatic shifts in both the demand for their products and the regulatory environment. For some it will signal the beginning of the end, while for others it will be the start of a new growth trajectory,” says Singh. One miner plotting the path of mining for the future is Anglo American. For much of the company’s existence, it had been about expansion. The 21st century ushered in a phase of consolidation, which saw the group shifting from operating eight business units with multiple commodities to four key business units and six commodity groups. Anglo’s strategic shift started in 2015 when the miner recognised both a change in demand as well as the inevitable need to define a relevant and more responsible mining industry of the future. Singh says increased demand for platinum group metals (PGMs) is far more than a cyclical commodity trend. “Renewable energy, electric vehicles and battery storage, electricity networks and other clean energy technologies require significantly greater amounts of critical minerals than we are currently consuming. Transitioning to and meeting this increased demand will be a key focus for all miners over the next few decades. PGMs are integral to the energy transition value chain, where hydrogen plays a big role too,” he says. Singh says the miner’s vision, which aims to build connected, intelligent, automated and waterless mines, should see the miner achieve “less waste, fewer inputs, reduced energy consumption and lower capital intensity, which are all earnings accretive”. Anglo is focusing on renewable energy generation, switching

Anglo American Plc, Platinum, water testing at Der Brochen, South Africa.

from diesel for fuel to hydrogen, battery energy storage, limiting methane emissions, pursuing carbon efficiency and implementing emission compensation strategies. “When investors look at the medium and long-term prospects of mining companies, they should do so with a future-oriented lens and track where the miner is going relative to where the world is going, and what stakeholders will demand,” adds Singh. Anglo has already secured 100% renewable energy for all its South American operations and is currently testing the mining industry’s first hydrogen-electric haul truck. “From an investor’s perspective, Anglo is doing all the right things and is executing them well,” explains Singh. He adds that 8% of the company’s long-term incentives are linked to greenhouse emission reductions and 5% of annual bonuses are tied to key environmental programmes. Operationally, the group has realised an 8% improvement in energy efficiency and a 22% saving in greenhouse gas emissions. Earlier this year, the group concluded the spin-off of its South African thermal coal business and announced the sale of South American thermal coal. By 2030 Anglo is targeting a 30% improvement in energy efficiency, a 30% net reduction in greenhouse gas emissions, aims to have eight carbon neutral sites and by 2040 the group aims to be carbon neutral across all its operations. Anglo American has signed a MoU with EDF Renewables, a global leader in renewable energy to work together towards developing a regional energy ecosystem in South Africa. While there is an abundance of solar and wind power in our country, there is limited renewables infrastructure to harness it.

Anglo American South Africa PGM operations, such as Mogalakwena (featured), are increasingly using treated effluent, or grey water, rather than drawing on freshwater supplies.

CoUnCIL FoR GEosCIEnCE CoUnCIL FoR GEosCIEnCE CoUnCIL FoR GEosCIEnCE May 2022

May The Council for Geoscience (CGS) is the national custodian responsible for the collection, compilation and curation of all 2022 onshore and offshore geoscience data and information. The CGS aims to use this information and knowledge to develop geoscience solutions to real-world challenges in South Africa. The Council for Geoscience (CGS) is the national custodian responsible for the collection, compilation and curation of all 2022 onshore and offshore geoscience data and information. The CGS aims to use this information and knowledge toMay develop geoscience solutions to real-world challenges in South Africa.

MInERaLs anD EnGInEERInG GEoLoGY The Council forEnERGY Geoscience (CGS) is the national custodian responsible for the collection, compilation and curation of all GEoHaZaRDs onshore and offshore geoscience data and information. The CGS aims to use this information anD and knowledge to develop The Minerals and Energy theme geoscience solutions to real-world challenges in South Africa. includes integrated geoscience As the custodian of the national mapping, anD which is the core seismological network, the MInERaLs EnERGY EnGInEERInG GEoLoGY function of the CGS. This theme CGS monitors and maintains anD GEoHaZaRDs Theaims Minerals and Energy theme a geohazard inventory for to attain a fundamental includes As the custodian the national South Africa. This of information u n d e rintegrated s t a n d i n g geoscience of South mapping, which isand theoffshore core seismological network, the Africa’s onshore is primarily used in developing MInERaLs anD EnERGY EnGInEERInG GEoLoGY CGS monitors and maintains function of the CGS. theme geology using anThis innovative effective and novel geohazard anD GEoHaZaRDs The Energy theme a geohazard aims toMinerals attain and a fundamental multidisciplinary approach. The mitigation solutionsinventory to promotefor includes geoscience As theand custodian of the national South Africa. This information u ntheme d e r s tencompasses a nintegrated d i n g o ffundamental South safe judicious land use. mapping, which the core seismological network, the Africa’s onshore andis offshore is primarily used in developing geoscience mapping, economic Modern artificial intelligence CGS monitors andapplied maintains function of thegeochemistry CGS. This theme geology an innovative effective and novel geohazard geologyusing and and techniques are in a geohazard inventory for aims attainapproach. a fundamental multidisciplinary The mitigation solutions promote varioustogeophysical techniques. subsidence mapping andtoseismic South This information u n dencompasses e r s tdata a n d i nare g fundamental ointegrated f South theme safe Africa. and judicious land use. These hazards characterisation. Africa’s enabling onshore and offshore isModern primarily artificial used in developing towards South Africa’s geoscience mapping, economic intelligence geology using an security innovative effective and novel minerals and energy and geology and geochemistry and techniques are geohazard applied in multidisciplinary approach. The mitigation solutions to and promote socioeconomic growth. various geophysical techniques. subsidence mapping seismic theme encompasses fundamental safe and judicious land use. These data are integrated hazards characterisation. geoscience mapping, economic Modern artificial intelligence towards enabling South Africa’s geology and geochemistry and techniques are applied in minerals energy security and aFRICan mapping FootPRInt anD variousand geophysical techniques. subsidence and seismic socioeconomic growth. otHER CoLLaBoRatIons WoRLDdata CLass These areFaCILItIEs integrated hazards characterisation. towards enablingfunctions South Africa’s As the Permanent Secretariat The geoscience of the minerals energy security and of the Organisation of African CGS areand supported by a multisocioeconomic growth. 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In addition, the organisation carries footprint in the African continent of the Organisation of African such as petrography, whole rock CGS are supported by a multigovernance. In this capacity, bookshop and a national core out environmental geoscience research which aims to Geological Surveys (OAGS), facetted laboratory that are performs where italso oversees and carries geochemistry, petrophysics, coal the CGS collaborates with repository, all of which used provide sustainable solutions to monitor and mitigate the WatER anD EnVIRonMEnt the leaves an impressive a range of analytical services outCGS various geoscience services science hydrochemistry. In various academic institutions and impact of geology and mining activities on the health of bywide theand scientific community and footprint in the African continent such as petrography, whole rock in linecouncils. with global standards, The CGS carries hydrogeological studies and addition, the CGS science the environment andout its inhabitants. the general public.manages a where geochemistry, petrophysics, coal i n t e ritn aoversees t i o n a l and p o l icarries cy and geoscience museum, library, aquifer modelling. In addition, the organisation carries WatER anD EnVIRonMEnt out various geoscience science and governance. In thisservices capacity, bookshop and hydrochemistry. a national coreIn out environmental geoscience research which aims to inthe lineCGS withalso global standards, The CGS carries solutions out hydrogeological studies and addition,allthe collaborates with repository, of CGS whichmanages are used a provide sustainable to monitor and mitigate the i nvarious t e r n a tacademic i o n a l p oinstitutions l i c y a n dand CGs WoRK museum, aquiferofmodelling. In addition, the organisation carriesof impact geology and mining activities on the health by geoscience theat scientific communitylibrary, and governance. In this capacity, bookshop and a national core outenvironment environmental research which aims to science councils. the andgeoscience its inhabitants. the general public. •repository, The CGS an integrated and sustainable multidisciplinary programme the across Africa. with CGS South also collaborates allisofundertaking which are used provide solutionsgeoscience to monitor andmapping mitigate the various academic institutions and impact of geology the scientific and this programme •by Some recent community projects under include:and mining activities on the health of science councils. the environment and its inhabitants. the general public. - Multidisciplinary geoenvironmental baseline investigations in the southern Karoo into the feasibility of shale gas development.

CGs atThis WoRK work has uncovered previously undefined groundwater aquifers. Regional soil geochemical samplingand andmultidisciplinary detailed follow-up surveys, particularly in the Northern Cape, North West and • The CGS is undertaking an integrated geoscience mapping programme across South Africa. CGs Mpumalanga at WoRK Provinces. • Some recent projects under this programme include: - Geothermal energy andancarbon capture storage research, aiming mapping to Karoo expand South Africa’s current renewable energy The CGS is undertaking integrated andand multidisciplinary programme across Africa. -• Multidisciplinary geoenvironmental baseline investigations ingeoscience the southern into the feasibility of South shale gas development. mix while decreasing the country’s carbon footprint. • This Somework recent under this programme include: hasprojects uncovered previously undefined groundwater aquifers. -- Ground stability and geotechnical assessments for infrastructure development in the Cape of and Freegas State Provinces. Multidisciplinary geoenvironmental baseline investigations in the southernparticularly Karoo intoNorthern the feasibility shale development. - Regional soil geochemical sampling and detailed follow-up surveys, in the Northern Cape, North West and This work has uncovered previously undefined groundwater aquifers. Mpumalanga Provinces. - Regional soil geochemical sampling and detailed surveys, in the Africa’s Northerncurrent Cape, renewable North Westenergy and - Geothermal energy and carbon capture and storagefollow-up research, aiming particularly to expand South Mpumalanga Provinces. mix while decreasing the country’s carbon footprint. - Geothermal and carbon assessments capture and storage research, development aiming to expand Africa’s current renewable energy - Ground stabilityenergy and geotechnical for infrastructure in theSouth Northern Cape and Free State Provinces. mix while decreasing the country’s carbon footprint. ContaCt - GroundUs stability and geotechnical assessments for infrastructure development in the Northern Cape and Free State Provinces. @CGS_RSA I I Our head office is located at: 280 Pretoria Street, Pretoria, 0184 I Tel: +27 (0)12 841 1911 I Email: info@geoscience.org.za I Web: www.geoscience.org.za

I @CGS_RSA I I Tel:Our +27head (0)12 841is1911 I Email: I Web: I www.geoscience.org.za @CGS_RSA I I office located at: 280info@geoscience.org.za Pretoria Street, Pretoria, 0184 Tel: +27 (0)12 841 1911 I Email: info@geoscience.org.za I Web: www.geoscience.org.za

Our Advert_ headCGS office is (Generic)_ locatedFull at:Page 280 PretoriaMay Street, Pretoria, 0184 CS2022_ Services (210x275mm)_ 2022_ 20220429_ v1.indd 1

2022/04/29 09:22:53

STORAGE

Carbon Capture, Utilisation and Storage in a South African context Owing to its reliance on a coal-based energy supply, South Africa ranks globally as one of the high emitters of greenhouse gases. The Council for Geoscience has been commissioned by Department of Mineral Resources and Energy to pilot and prove Carbon Capture Utilisation and Storage in our country. BY THE COUNCIL FOR GEOSCIENCE

arly research has formulated an Atlas of Geological Storage focussing on the prospectivity of deep saline aquifers and depleted oil and gas reservoirs. However, given that the major CO2 emissions point sources are located inland, primarily in Mpumalanga and Gauteng, a shift in focus to possible storage sites proximal to major point-source CO2 emitters was initiated. As such, the Council for Geoscience has entered into agreements with the Govan Mbeki Local Municipality in Mpumalanga to establish a Carbon Capture Utilisation and Storage (CCUS) pilot injection and storage project near Leandra. It is envisaged that 10 000 to 50 000 tons of CO2 will be injected into Archaean-age (2 700-million-year-old) mafic and ultramafic formations of the Ventersdorp Supergroup at depths ranging between 1 000 and 1 700m below the surface. Mafic volcanic rocks comprise 60% of the earth’s surface and, owing to their widespread distribution globally, are deemed viable targets for CO2 sequestration in regions where classical sedimentary storage options are limited. Mafic (commonly basalts) and ultramafic units are rich in divalent cations (eg Ca2+, Mg2+, and Fe2+) which are chemically reactive to CO2. The addition of water, either injected with the CO2 plume, or as formational waters, results in the formation of stable, nontoxic, void-filling carbonate minerals such as calcite, magnesite, and siderite. In these conditions, geological soluble and mineral storage conditions are created significantly more rapidly than can be achieved through conventional storage options, with mineralisation occurring within a matter of years post-injection. The current project identified potential target injection zones within mafic and ultramafic volcanic rocks of the Klipriviersberg Group which forms the base of the Ventersdorp Supergroup in the region. The core of sixteen boreholes in the area was scanned at the National Core Library of the Council for Geoscience at Donkerhoek using Intellicore hyperspectral core imaging software. The hyperspectral scanner at the library allows for high-resolution core imaging in the Red-Green-Blue (RGB), Short Wavelength Infra-Red (SWIR) and Long Wavelength Infra-Red (LWIR) bands, as well as mineral and spectral classifications. Of the scanned boreholes, two (BH2068 and BH2188) occur within a 3km radius of the study area and were therefore selected for detailed logging and appraisal. The boreholes achieve adequate depths to intersect deep potential reservoir zones greater than 800m. For basaltic injection, however, the 800m supercritical CO2 phase barrier is not of vital importance, as evidenced by the shallow (400-800m depth) injections in the Carbfix project in Iceland. The current study focuses primarily on basaltic reservoir/seal pairs located at depths greater than 800m. This allows for the potential injection of supercritical, dry (non-water-dissolved) CO2 (as has been achieved by Big Sky Regional Carbon Sequestration Partnership in Wallula, USA).

Schematic illustration of a possible CCUS site in Govan Mbeki Municipality.

The boreholes were logged at centimetre scale utilising RGB and mineral composition band ratios to define potential reservoir zones and associated seals. Cut-off values of 5m thickness, like those used in the Wallula project, were chosen to delineate the most prospective reservoir seal pairs. The identified pairs were subsequently logged and sampled. Reservoir zones comprised both ultramafic volcanic units, highly porphyritic lava flows, highly vesicular and amygdaloidal flow-top zones, agglomerates and flow-top breccias, whilst confining zones (cap rocks) are defined by individual massive basaltic flows, massive basalt flow interiors and entablature zones. In line with international best practice, guidelines for CCUS site characterisation requires data on porosity, permeability, water saturation, salinity and pore pressure data to effectively define and model potential reservoir/seal pairs within specific geological strata. Analyses of these criteria are currently underway at the CGS using X-ray fluorescence, X-ray diffraction, helium porosimetry, conventional optical microscopy, scanning electron microscopy and X-ray tomography. Resultant porosities determined for 15 potential seal and 23 reservoir units correlate well with low apparent values defined for confining zones and reservoir zones, respectively, within the Columbia River basalts of the Wallula project. Results for average envelope (bulk) density, true density and porosity are closely aligned with findings published internationally. Geological characterisation has defined potential injection zones within porphyritic basalts, breccia zones and ultramafic volcanics developed between the depth intervals of 1 000 and 1 700m. The targeted injection reservoirs are capped by massive basalts, recognised to have low permeability. The identified sequence of stacked reservoir/seal pairs results in a world-first scientific opportunity to study the chemical reaction behaviour of CO2 within Archaean (2 700 Ma) volcanic sequences. The Council for Geoscience will continue research and development, including extensive environmental baseline monitoring, with a view to establishing the first pilot CCUS site in South Africa.

MINING

SUNSHINE IS GOLDEN FOR THE

MINING INDUSTRY

This case study details the renewable energy solution modelled for a tailings processing and exploration diamond mining operation. It uses certain assumptions to demonstrate the engineering and economic feasibility of various hybrid energy approaches. BY GLYNIS COETZEE, TOUCHPOINT ENERGY*

CASE STUDY: RENEWABLE ENERGY SOLUTION FOR MINE Technical and commercial review for a solar photovoltaic and battery energy storage hybrid project to supply a South African based mine.

he mine is an open-cast prospecting mineral and tailings crushing and processing operation, situated in the Northern Cape region, of South Africa, and operates 24 hours per day, seven days a week. The mine electricity supply is grid-connected directly to the Eskom grid and could potentially export energy via the local 10MW substation, approximately 15km away from the Point of Connection (PoC) to the mine incoming supply. The mine has several diesel generators on site that provide electricity supply backup in the event of outages. The load profile is essentially flat at a peak demand of 4.8MW (see Figure 1). There was planned maintenance over the lower consumption period, which is an anomaly to be ignored for the purposes of this model.

5000 4000 3000 2000 1000

Figure 1. Annual peak demand graph.

BASF

MINING

Storage projects in Varel, Lower Saxony, Germany using NaS (sodium suphur) batteries. For more information on NaS batteries in South Africa, please email Lloyd Macfarlane, Altum Energy at lloyd@altum.energy.

PROBLEM STATEMENT

The mine operation, which runs crushing and sorting machines, water processing and purification as well as general mining processes has a monthly electricity bill of between R3.5-million and R5-million, comprising and inclusive of usage charges in cents per kWh consumed, network demand charge in cents per kWh, as well as other service and ancillary charges at fixed rates. The primary objective of this project’s first phase is to lower the electricity consumption and therefore usage costs of the mine operation and improve the yield, by the installation of a photovoltaic (PV) solar energy generation system. This PV solar system is intended to provide cheaper electricity, generated from a renewable resource and, if economically viable, provide non-fossil fuel security of supply, by the additional installation of an energy storage system (ESS) to mitigate load shedding and other outages that may occur periodically due to lightning strikes or other unforeseen events.

BATTERY ENERGY STORAGE SYSTEM

A battery energy storage system (BESS) has been selected to meet these objectives. Both Lithium Iron (Life) and Sodium Sulphur (NaS) BESS options were examined to determine the optimum Levelised Cost of Storage (LCOS) in this application. The ratio split between off-peak, standard and peak usage costs are calculated as a percentage of the total consumption to provide a basis for modelling the application of the BESS. The NaS BESS was

selected as the NaS economics are advantageous when compared to LiFe under these conditions and is most suitable for the six-hour option, while the LiFe BESS is more suitable for a twohour backup. The addition of a BESS to provide uninterrupted power for the full 24-hour operational cycle, essentially creating a fully gridindependent energy usage scenario, would potentially allow for a lowering of the network maximum demand (NMD) charges by lowering the peak. Due to the initial CapEx costs, this would likely have the nett effect of increasing the usage tariff above the current Eskom tariff, diminishing the cost savings, thus the focus is on operational expenditure cost saving for now.

CHALLENGES AND ASSUMPTIONS

The primary challenge is to ensure that the solution is financially beneficial to the operation by being able to offer a reduced tariff on a power purchase agreement (PPA) for a set period. In this instance, it is assumed that there will be a 15-year PPA – reducing the period further will have the effect of increasing the proposed tariff. The mine is on a Time of Use (ToU) tariff of Ruraflex Interval and to determine the competitive levelised tariff which must be achieved, the breakdown of percentage usage in each of the ToU periods is applied (see Figure 2). This is a typical usage breakdown, but further savings are achievable by planning the battery storage to peak save.

RURAFLEX - NL 22/23 Extra c/kWh

Tariff 22/23

0.3474

1.53

0.3474

Import LowPeak

12%

R1.88

0.6676

LowOff

18%

R1.02

0.3474

1.0528

LowSTD

51%

R1.40

0.3474

4.6899

HighPeak

R5.04

0.3474

0.7714

HighOFF

R1.12

0.3474

1.4209

HighSTD

12%

R1.77

Average

100%

R1.5036

Figure 2. Comparative Eskom tariff.

MINING • 10MW connection size • Operation and maintenance (O&M) as well as insurance costs are included in the financial model • Financial model assumes that the full production will be purchased (take-or-pay) • P50 yield figures have been used in the financial model • Escalation for the tariff from Eskom is projected at a regular10% increase per year • Exchange rates assumed at R14.85/U$D

Under the PPA proposal, Touchpoint Energy builds, owns, operates and maintains the entire PV solar generation system until the end of the PPA period, whereafter it reverts to the mine at no cost. The mine can then either choose to continue to operate the system, potentially under a Service Level Agreement with the original or a new Independent Power Producer, or may require a decommissioning of the system. Other assumptions are as follows (including but not limited to): • All land area required – between 15HA and 22HA – is available for development of the PV solar facility and BESS installation for the options described

TECHNICAL AND COMMERCIAL SOLUTIONS Option A: 5mw load plus six-hour battery backup This option sizes the PV solar generator at 10MW/11MWp to ensure that the NaS 250-1500kWh BESS can be charged using the PV during daylight generation hours. This option provides for six hours of BESS backup, which would allow for further reduction of the use of power from Eskom. Because of the mine’s 24-hour operation, the stored battery energy could be used during the peak morning and peak evening times, thus reducing the reliance on the expensive Eskom electricity. Low demand season 23

22 WEEKDAYS

21 20

High demand season

2 3 20

4 5

SUNDAY

17 8

16 9

15 14

Peak

Standard

Off peak

WEEKDAYS

SATURDAY

2 3 4

SATURDAY

5 SUNDAY

7 16

8 9

15 14

Peak times in low and high demand season.

Commercial feasibility The financial model based on the above design produces the following feasibility for the project, while achieving the desired return for the investor. • Project cost approximately R235-million • Touchpoint Energy tariff is at 135.25c/kWh against the levelised Eskom tariff of 150.36c/kWh • Annual escalation at 6% against an escalation of >10% by Eskom The mine would enjoy immediate starting savings of more than 10% on existing levelised tariff over the period of renewable energy production, as per the savings graph below. Cumulative savings over period of the PPA – usage only, excluding any potential savings on NMD – amounts to more than R352-million. YEAR

Municipal vs Touchpoint Energy costs per year.

USAGE SAVINGS / MONTH

USAGE SAVINGS / YEAR

2023

R283 674.75

R3 404 097.01

2024

R411 959.41

R4 943 512.88

2025

R558 14906

R6 697 788.67

2026

R724 269.96

R8 691 239.47

2027

R912 559.62

R10 950 715.39

2028

R1 125 487.96

R13 505 855.56

2029

R1 365 780.61

R16 389 367.26

2030

R1 636 444.35

R19 637 332.22

2031

R1 940 795.26

R23 289 543.08

2032

R2 282 489.39

R27 389 872.71

2033

R2 665 556.64

R31 986 679.69

2034

R3 094 437.78

R37 133 253.39

2035

R3 574 025.21

R42 888 302.49

2036

R4 109 707.60

R49 316 491.23

2037

R4 707 418.99

R56 489 027.83

MINING

Option B: 5mw load plus two-hour battery backup This option sizes the PV solar generator at 6.3MW/7.4MWp with the addition of an 8.4MWh LiFe BESS. This option provides for two hours of BESS backup for load shedding mitigation, which could allow for a reduction of the use of the expensive peak time power from Eskom at the beginning and/or end of the day. Commercial feasibility This financial model produces the following feasibility for the project while achieving the desired return for the investor. • Project cost approximately R125.5-million • Touchpoint Energy tariff is at 112.75c/kWh against the levelised Eskom tariff of 150.36c/kWh • Annual escalation at 6% against an escalation of > 10% by Eskom The mine would enjoy immediate starting savings of 25% on existing levelised tariff over the period of renewable energy production, as per the savings graph below. Cumulative savings over period of the PPA – usage only, excluding any potential savings on NMD – amounts to approximately R315-million. YEAR

USAGE SAVINGS / MONTH

USAGE SAVINGS / YEAR

2023

R476 231.18

R5 714 774.21

2024

R578 638.68

R6 943 664.12

2025

R694 007.94

R8 328 095.32

2026

R823 754.98

R9 885 059.73

2027

R969 441.01

R11 633 292.07

2028

R1 132 786.92

R13 593 443.00

2029

R1 315 689.11

R15 788 269.30

2030

R1 520 236.88

R18 242 842.55

2031

R1 748 731.51

R20 984 778.16

2032

R2 003 707.24

R24 044 486.83

2033

R2 287 954.20

R27 455 450.37

2034

R2 604 543.71

R31 254 524.47

2035

R2 956 855.90

R35 482 270.85

2036

R3 348 610.15

R40 183 321.82

2037

R3 783 898.34

R45 406 780.07

Municipal vs Touchpoint Energy costs per year.

Both options provide considerable savings for the mining operation, reduce the company carbon footprint and increase the yield for the mining operation with no capital outlay so that the mine company can focus on its core business.

ADDITONAL BENEFITS

An added benefit of the project would be the reduction of the operation’s carbon footprint, as well as the potential for job creation in the area used for the basic maintenance of the installation. The resultant CO2 annual saving is approximately 15 665 tons per year for Option A and 23 226 tons per year for Option B.

*Touchpoint Energy is part of the Genesis Group: projects@genesis-eco.com.

MINING

Global standard prioritises

better management of water

With water posing a significant risk to the stability of a tailings storage facility, the Global Industry Standard on Tailings Management places significant focus on water management as part of its sweeping realignment of what global stakeholders now expect of mines. BY PETER SHEPHERD, SIMON LORENTZ, LINDSAY SHAND, SIMON BRUTON, SRK CONSULTING

balance model and the associated water management plans must be applied throughout the structure’s lifecycle, even in perpetuity, to protect against unintentional release and this requires stochastic as well as historical water balance modelling. As mines look to

Beyond the on-site water balance and actual water volumes and fluxes in the TSF, best practices in water management emphasise a broader water stewardship approach.

SRK Consulting

hese requirements include aspects such as diversion of clean water away from the tailings complex, capturing and containing water that falls within the tailings storage facility (TSF), measuring and recording of flow data and simulating the likely effects of climate change. Being a key element in the transportation of tailings, water has in recent years received more attention as mines work to reduce the water volumes reporting to tailings facilities while increasing the volumes that can be re-used in the processing plant. The rainfall that falls directly onto the TSFs needs to be managed and stored in a safe manner. The water should be drained through the penstocks and drains safely and quickly to reduce the risk of overtopping the TSF basin walls. The Global Industry Standard on Tailings Management (GISTM) also highlights that the water

A conventional gold tailings dam with steeper slopes, benches and extensive erosion features.

SRK Consulting

become more resilient to climate change, they will need to carefully balance the likely risks against rising infrastructure costs. Monitoring and controlling water-related variables on TSFs means applying appropriate instrumentation for water level sensors – in dam levels as well as in outflow structures. Mines have been paying more attention to these aspects, including the increased use of automatic water level sensors within TSFs, flow measurements in drains and trenches and in site-wide reticulation. The GISTM will undoubtedly lead to an acceleration in this trend as well as the frequency of monitoring. Rather than monthly or weekly analyses of data collected, this should ideally be done continuously in real time using telemetry monitoring systems. This will require mines to scrutinise the gaps in their monitoring and metering network more closely to ensure that the resulting data can effectively inform short-term and long-term actions.

SRK Consulting

MINING

Measuring evaporation from the surface of platinum tailings using the surface renewal technique.

Measuring surface runoff from vegetative covers on a tailings dam side slope.

Construction of a large lysimeter for measuring infiltration and evaporation from covers on a waste rock impoundment.

Responding to the GISTM’s water balance concerns will need a better understanding of evaporation fluxes and variability. Measuring evaporation from TSFs is a field of growing interest and research, with important gains being made in the scientific assessment of what has previously been an estimation. While annual potential evapotranspiration (PET) in semi-arid environments like southern Africa reaches volumes often exceeding three times the annual rainfall, the actual evaporation volumes from the TSF are controlled by the hydraulics of the porous medium. An improved knowledge of evaporation effects assists design engineers to understand the development of the pore water flow within the body of the TSF – allowing better assessments of TSF stability to be made. Beyond the on-site water balance and actual water volumes and fluxes in the TSF, best practices in water management emphasise a broader water stewardship approach. A leading mining company has even targeted zero-use of fresh water in its mines, recognising that water conflict could threaten its social licence to operate. These pressures for water stewardship beyond GISTM standards speak to trends emerging in the public space, guiding mines to adopt water strategies that will build resilience within the business. In future, such an approach is likely to be vital when accessing finance and markets. www.srk.co.za Click here to visit the GISTM site

MINING

TSF FAILURE:

standards for response and recovery Even with the range of mitigation measures applied by mines to ensure that tailings storage facilities are safe, the Global International Standards on Tailings Management highlights that catastrophic failure may still occur – and outlines how mines should then respond. BY ANDRIES FOURIE, EDRIE DU PLESSIS, SRK CONSULTING

SRK Consulting

he Global International Standards on Tailings Management (GISTM) covers actions that many mines already apply when adopting a best practice approach. These include a site-specific Emergency Preparedness and Response Plan (EPRP) for the tailings storage facilities (TSF), based on credible flow failure scenarios. Such scenarios would predict the possible inundation area, the time of arrival of tailings flow after a breach and the depth of flow. The standard takes it further, however. In addition to providing an effective immediate response to save lives, mines are also called upon to provide humanitarian aid and minimise environmental harm. Emergency readiness and response can be regarded essentially as disaster management, a field that is well recognised legally in most countries (for instance, by South Africa’s Disaster Management Act) and supported internationally by the United Nations. Significantly, the scope of responsibilities within this field is usually well beyond the capacity of an individual mine, so collaboration with other stakeholders is a vital element of an effective response. Such interaction, however, is often complex. The effectiveness of communicating the importance of testing and review as a risk reduction measure must be undertaken with various stakeholders, also considering the risk rating of the TSF. Comparing this to safety belts in motor cars, everyone should wear one as a risk reduction measure, but the driver should still drive with caution. Starting at mine level, an EPRP firstly demands close cooperation between engineering and social teams – to ensure that the plan has technical integrity and can be both informed by and communicated to local communities and relevant stakeholders. In

Disaster management continuum.

Significantly, the scope of responsibilities within this field is usually well beyond the capacity of an individual mine, so collaboration with other stakeholders is a vital element of an effective response. addition to being documented, the plan also needs to be tested or simulated; regular drills, for instance, need to be prioritised, while recognising that engagements like these can only be implemented on a foundation of trust and collaboration. Key to the GISTM requirements is meaningful engagement with employees and contractors on the EPRP, and “co-developed” community-focused emergency preparedness measures with project-affected people. In line with disaster management principles, mines also need to coordinate with public sector agencies, emergency services (first responders) and local authorities to harness the scale of resources necessary for an emergency response. In South Africa, the role of the National Disaster Management Centre would be important. These stakeholders, according to the standard, should also help identify gaps in capability – to improve preparedness. The GISTM’s inclusion of humanitarian aid highlights the need for a well-coordinated joint response to TSF failure, as this function would certainly require levels of resources and specialised expertise outside a mine’s capability. The same could be said of the GISTM’s Principle 14, which requires mines to prepare for long-term recovery after a catastrophic failure. Here, the requirements include applying and assessing post-failure response strategies; planning for reconstruction, restoration and recovery plans; the participation of affected people; and ongoing monitoring and reporting. Emergency preparedness and response places onerous demands on mines, among them the cost implications of an EPRP and recovery actions. Mines may also be uncertain about the capacity of government agencies – including local government – to play their role in an emergency response. The remote location of many mines is likely to complicate a meaningful response by humanitarian agencies. The solution must nonetheless be built on good communication and collaboration with local communities and key stakeholders. The advent of the GISTM is a signal to industry that the world has changed, and the standard provides a demanding, but exciting, opportunity to raise the bar in tailings management. www.srk.co.za

MINING

OPPORTUNITY FOR AFRICA

to fill the commodity gap

Forecasts suggest that the global economy is facing a “commodity gap” soon as the demand for battery minerals could outstrip supply. Could Africa be the continent to fill that gap? BY SRK CONSULTING

here is certainly good reason to see Africa making a valuable contribution to future supplies of mined commodities from lithium, cobalt, nickel and graphite to manganese, iron, copper, chrome, uranium and aluminium, according to SRK Consulting director and principal consultant Andrew van Zyl. While there are considerable resources of these minerals available in Africa and even currently being mined, there remain challenges which prevent their economic extraction. “One of the reasons why the gold sector thrives in many parts of Africa, for example, is because it needs relatively little in the way of national or state-managed infrastructure,” says Van Zyl. “For better or worse, a gold mine can operate quite effectively as an ‘island’ of activity and prosperity – providing most of its own inputs to mine and process ore, and to transport the very compact end-product.” By contrast, many of the commodities that are now growing in demand are bulk minerals that need extensive road, rail and harbour infrastructure – so they can be transported efficiently and shipped to customers from functioning ports. Planning and developing such facilities require more than capital, he argues. They rely on far-sighted government policies being implemented by well-resourced state bodies – combined with collaboration from the private sector and international funding agencies. They also call for close working relationships between neighbouring countries, with the necessary shared vision and practical protocols to allow railways, powerlines and goods of all descriptions to pass over borders with minimal effort and at the lowest possible cost. Further, with the African Continental Free Trade Area (AfCFTA) agreement having come into effect, this should also expedite matters. “The start of trading under the AfCFTA agreement in January 2021 marks the dawn of a new era in Africa’s development journey. Over time, AfCFTA will eliminate import tariffs on 97% of goods traded on the continent, as well as address non-tariff barriers,” says ESG partner Darryll Kilian. There is little question that the minerals of the future are to be abundantly found in Africa, adds Ivan Doku, principal resource geologist and country manager for SRK Ghana. “There is plenty of opportunity for exploration and mining of battery minerals in West Africa, as we have been discovering in Ghana,” says Doku. “The country is becoming an interesting place to explore right now, having not been historically associated with battery minerals. A significant lithium deposit is currently being investigated – the only one so far in West Africa.” He says deposits like these have attracted considerable foreign interest, and it is likely that more prospective investors will be looking at the region as data once this project was published. Van Zyl highlights that the condition for – and impacts from – large, bulk mineral projects extend not just to physical infrastructure but to communities. Mines with larger footprints

and longer supply chains upstream and downstream also affect a wider natural and human environment. “For these projects to be sustainable in terms of ESG, developers need to navigate complex terrain related to regulatory compliance and social licence to operate,” he says. “This assumes a level of certainty in the expectations of the host country, as well as a high level of scientific and engineering skill being available to help mines identify and mitigate the related risks.” He says Africa is gradually developing the capacity to deliver on these requirements, and the continent needs to share the professional expertise that is available across its borders and from the global community. “It is important to remember that Africa has made great strides in a range of facets, and we are successfully producing a large range of minerals, including bulk commodities,” attests Van Zyl. “This is something that few developed economies have achieved and, while SRK is focusing on further improvement in Africa, it is also contributing its expertise to other developed economies that are struggling to establish mining industries.” Environmental scientist Wouter Jordaan notes that SRK Consulting's business model is set around collaboration between its global consulting practices to ensure that the needs of its clients are met. For example, SRK has embarked on a strategic approach of servicing its Chinese clients in Africa, particularly in the Democratic Republic of Congo and Zambia, from its offices in Lubumbashi, Beijing and Johannesburg. SRK Consulting’s longer-term vision is aimed at establishing a dedicated resource from China in its Lubumbashi office. This provides the opportunity to engage with clients at head office and mine level, thereby providing the relevant expertise required at each level. To strengthen these links, the SRK South Africa, DRC and China team will be attending the Mining Indaba in May and DRC Mining Week in June. The collaborative effort will also look at infrastructure projects within the region.

MINING

Winning with the right

PROCUREMENT LOCALISATION

South Africa’s economy is under intense pressure and the outlook appears to be eroding. Operating amid an economic slump, mining could improve the country’s financial outlook while also helping to achieve its social objectives with a focus on shared value. BY KEARNEY CONSULTING*

outh Africa has undertaken a bold programme to entice investors with the promise of building an economy underpinned by inclusive growth, competitiveness and transformation. With vital strategic importance, the government has challenged the mining and mining-related industries to play a central role in helping the country achieve its social and economic objectives.

Because policy and regulatory changes such as the Mining Charter III compel the industry’s players to prioritise the national agenda, forward-thinking mining companies will commit to a transformation with inclusive growth (see figure 1). To preserve the social license to operate by balancing approval from local communities and the management of legislative pressures, South Africa’s mining companies often invest in social

AT Kearney Analysis

Note: Sectors have been ranked based on industries that have high impact and ease of influence scores relative to other sectors. Impact and attractiveness points to the relative contribution by the industry in terms of GDP and the multiplier effect it has within the economy. Ease of influence is based on structural advantage and the ability to have impact quickly.

MINING

AT Kearney Analysis

impact initiatives at national and site levels, including charitable giving or risk mitigation programmes. Although these initiatives can create social benefits, they generate minimal levels of sustainable socioeconomic value. Local supplier bases become saturated and organisations waste significant amounts of money on programmes that eventually fail. As a result, the industry is missing out on potential advantages, including from local procurement. Capturing and sustaining a competitive advantage will require embracing a shared value agenda – one that benefits not only the mines but also the communities in which they operate. What’s needed is a strategy that addresses the national priorities of inclusive growth and transformation. Procurement can be the driver and enabler for this transformation.

Three steps to procurement excellence.

ASSESS LOCALISATION PRIORITIES

The 2019 Kearney Foreign Direct Investment Confidence Index reveals that several factors influence decisions about where to invest. Among the top 10 factors are R&D and innovation capabilities, security and crime, transparency and efficiency of local government regulations, the strength of investor and property rights, government tax incentives and investment promotion as well as the efficiency of legal and regulatory processes. These factors highlight the vital role the government can play in creating an environment that supports investor confidence. In South Africa, where social issues are becoming more prevalent, organisations must strategically position themselves

to capture benefits from these changes and build a sustainable competitive advantage. For mining companies, this translates into emphasising strategic areas that align with the societal context and developing viable, local supplier bases. Developing economies face a variety of country-specific challenges in their supply chains, restricting the achievement of procurement objectives. For example, the supply chain has a shortage of local suppliers and insufficient core capabilities and resources. These characteristics have instigated change in the operating environment, including new legal requirements, as outlined in South Africa’s Mining Charter III, as well as social requirements to operate within a community. The procurement function can react to these changes and ensures operational efficiency by shifting the fundamental approach to supplier management. By developing an understanding of local issues and collaborating to develop mechanisms that address these issues, procurement teams can develop practices that facilitate the creation of shared value. In a developing economy, procurement plays an instrumental role in developing existing suppliers and establishing new ones. To generate shared value, the procurement team must be committed to resolving core social issues with tailored solutions that deliver a substantial, sustainable impact. Context-specific initiatives as well as a localised approach are essential to delivering shared value and achieving procurement objectives alongside sustainable social development in the community. Done right, localisation can be a win-win: making a significant socioeconomic impact throughout the community while creating numerous benefits for the organisation, including shorter lead times, higher-quality products and services, lower costs and even attracting investors and improving related industries.

Localisation programmes are inherently complex, requiring real organisational transformation. AT Kearney Analysis

Four factors to consider when localising procurement.

MINING AT Kearney Analysis

Four archetypes of suppliers.

ADAPT TO UNIQUE LOCAL NEEDS

After assessing the localisation priorities, the procurement function must be able to identify and map the right suppliers across the category strategies. Four archetypes of suppliers reveal that substrategies that consider local characteristics are required when defining a localisation programme. In South Africa, this means considering Broad-Based Black Economic Empowerment (B-BBEE) policy as well as the sectorlevel requirements in the Mining Charter. A sustainable localisation strategy requires a portfolio of local suppliers with all four archetypes. Each region has a unique subset of suppliers classified along the four archetypes; some regions have all four, while others have suppliers that are mostly in one archetype. It is important to bear in mind some principles for customisation. First, when dealing with unions, focus on protecting people, not jobs. In other words, prepare people for current and future jobs (if current ones are doomed to disappear). Job projection per se is not sustainable as the company will bear unnecessary costs. Second, combine short-term and long-term perspectives. Focus on sharing gains, not giving handouts, which have an ephemeral impact. With the ubiquitous presence of social media, individuals can quickly coordinate flash strikes or supply chain disruptions. Without decisive actions, mining companies will be facing an increasing pressure to meet ad-hoc demands from well-coordinated pressure groups. In the long run, plan to ensure local economic viability even after site closure. The next step is to align the procurement organisation for successful execution.

ALIGN WITH GLOBAL BEST PRACTICES

In leading organisations, procurement is aligned with gaining a competitive advantage by leveraging the market value that already exists within the supply chain. This results in achieving procurement’s primary focus: improving the organisation’s overall profitability with sustainable cost reduction and substantial revenue growth. In South Africa, companies must address shortcomings in the supply chain, leverage their procurement function to grow shared value and prioritise engagement with local issues. This will require enhancing procurement’s capabilities to drive localisation. Many companies report on financial, social and environmental results without analysing the connections between business performance and social impact. Often there is no comprehensive assessment of the organisation’s performance and distributed cash is often tracked but with no outcomes achieved – inhibiting the full potential for growth and multifaceted strategies. *Authors: Theo Sibiya, partner; François Santos, partner; Sujeet Morar, principal.

The first step is to assess the strengths of the procurement function compared with best practices for executing a localisation strategy. This will require benchmarking the function against global standards. Forward-thinking companies assess the social impact of their localisation strategies by defining the key performance indicators, measuring the interaction of business and social results. This is a twofold process. First, understand the full financial impact of interventions, including both benefits and costs, to expose materiality and justify shared value activities. Second, use a model to determine the social impact on the community. Delivering value through procurement processes requires three elements: team, category and supplier management excellence. The leaders typically achieve superior returns from supply management with a clear focus on these elements, delivering a broad range of strategic value, including innovation, risk management and talent development. High-performing procurement teams play a proactive role in contributing to executive strategy and demonstrate leadership in containing costs and creating value. This requires that most of the team effort is focused on strategic activities and is supported by standardised, automated processes. In addition, analytics is essential to generating timely insights, which can be fed back into the strategy. Leading organisations use analytical tools to gain access to up-to-date spend data, track a wide range of procurement key performance indicators and conduct an endto-end value chain analysis. This will accelerate time to insight so that the right shared value decisions are made. Driving category excellence requires not only a clear focus on costs, but also the identification of vital business insights. This is achieved with high visibility into category and supplier spend and the ability to source and influence more than 70% of the spend. Prerequisites for this are robust sourcing processes and clear category strategies for key spend areas. Achieving supplier management excellence requires a welldefined supplier relationship process that yields high rates of compliance and value. Well-managed supplier relationships contribute to a competitive advantage by offering innovation and risk management through a robust collaborative process. Once the AAA road map is defined, the next step is to steer the company in the right direction.

THE FOURTH A: ACTION

Localisation programmes are inherently complex, requiring real organisational transformation. The chief executive officer’s active participation along with the commitment of senior management is essential to success.

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MOBILITY

EV BATTERY SUPPLY CHAIN Trends, risks and opportunities in a fast-evolving sector

Global electric vehicle demand has risen rapidly over the past five years and the increase in sales will be exponential over the next decade. Electric vehicle battery supply chains are under immense pressure to scale and keep pace with the heightened demand. BY FITCH SOLUTIONS*

itch Solutions forecasts global electric vehicle (EV) sales to reach over 26.7-million units in 2030, representing yearon-year growth of 379% from 2021. More importantly, the annual global demand for EV batteries, in terms of total global capacity, is expected to reach 1 925GWh by 2030, an increase of 688% from 244.7GWh in 2021. In response to this demand, automakers have been pressured to adapt their model line-ups and associated supply chains (especially as it pertains to EV batteries and their sub-components) to ensure that they are best placed to capitalise on this elevated demand outlook over the coming decade and beyond. EV demand has also been bolstered by the global drive towards decarbonisation. Many auto manufacturers have established clear targets that aim for either total or partial electrification of their fleets.

Commitments were made by some automakers at the COP26 conference, including GM, Ford, Mercedes, BYD, Volvo and JLR, which all committed to entirely zero emissions new car and van sales by 2040. Governments have also driven global demand for EVs, as EV adoption is a critical component of governments’ climate targets. Disruptions caused by pandemic-related shortages and price spikes in the commodities used in lithium-ion batteries (LiBs) have created bottlenecks and heightened competition among automakers to secure necessary stocks of these components. EV supply chain resiliency will be a chief concern in the near term as it will be essential for automakers to employ a range of strategies at the upstream, midstream and downstream stages if they are to secure sufficient materials and components necessary to meet their electrification targets.

Annual averages based on comissioning year Illustrative trend

Announced capital costs per unit of new EV and energy storage battery manufacturing capacity, 2010-2019.

www.iea.org

USD/Wh capacity

MOBILITY

www.iea.org

Commissioned EV and energy storage lithium-ion battery cell production capacity by region, and associated annual investment, 2010-2022.

Broadly, ongoing structural shifts in global supply chains have presented key challenges that have politicised the EV battery supply chain. Factors such as Covid-19 exacerbating anti-globalisation sentiment, geopolitical tensions between the United States and China, changes in consumer tastes and preferences, and rising wages in China have presented major political and structural challenges to EV battery supply chains. These challenges are particularly overt at the upstream level. The rise in EV demand has spurred competition among EV and EV battery manufacturers to secure access to the critical raw materials (CRM) used in LiBs, most notably lithium, cobalt and nickel. In particular, the access to lithium, cobalt and nickel supplies are characterised by several supply chain risks. These risks mostly centre around EV battery manufacturers’ dependency on a concentration of mining and refining sites in a relatively small number of countries. According to data from BNEF, China has control of 80% of the world’s raw material refining capacity, 77% of the world’s battery cell production capacity and 60% of the world’s EV battery component manufacturing.

A particular trend is that EV automakers are investing heavily into the localisation of their supply chains.

Vehicle and battery manufacturers are also facing ESG-related risks as the mining methods in certain countries, such as the Democratic Republic of Congo (where 70% of the world’s cobalt mining takes place), have been criticised because of human rights concerns and unsustainable mining practices. As a result, the entire EV battery value chain manufacturing landscape, from CRM extraction to battery and EV manufacturing, will change significantly in the coming years, as developed markets aim to reduce their ESG-related supply chain risks and their dependency on China, which dominates parts of the upstream and midstream supply. Companies have taken various actions to secure their EV battery supply chains. A particular trend is that EV automakers are investing heavily into the localisation of their supply chains. This is evident in the midstream where, as of November 2021, there is a total of 145 EV battery factories that are either operating or undergoing construction across 28 markets. This includes 51 construction projects in Europe, totalling 1 230GWh, and 29 in the US at 488.2GWh. These projects are key enablers in the localisation of EV battery supply chains; by offering automakers a nearby supply of LiBs, local gigafactories will reduce firms’ dependency on foreign suppliers and the string of downside risks ingrained in global supply chains. Localisation is also occurring upstream with automakers and EV battery manufacturers employing various strategies to develop local supplies of CRMs near manufacturing sites. Governments are driving localisation by enacting policy that aims to consolidate domestic supply chains. Notable examples include the Joe Biden administration’s USD6-billion stimulus package for EV supply chains and the EU’s “European Battery Innovation” project, which will provide about EUR2.9-billion in subsidies to build the bloc’s domestic EV battery manufacturing capacity and reduce its reliance on Asia for LiBs. Consequently, localisation will be a leading trend in EV battery supply chains over the next decade. Renewable energy will become a major pull-factor for EV battery manufacturers in the near term. Battery manufacturing is a capital and energy-intensive process – it therefore behoves firms to produce in markets with abundant access to affordable renewable energy in order secure funding (given the growing

MOBILITY importance of ESG) and to ensure the sustainability of EVs. Consequently, the primary pull-factor for EV battery manufacturers (outside of government support) is expected to shift from labour cost/availability to renewable energy cost/availability and sustainability. This is because automakers and their large commercial clients have put in place their own sustainability strategies which will add increased pressure on their component suppliers to become more sustainable. This will include sourcing more ethically produced materials, using renewable energy and reducing the carbon footprint along their own supply chains. A final key trend in EV battery supply chains is EV battery recycling. Recycling presents several upside risks to the EV supply chain. By enabling automakers to re-use the CRMs in EV batteries, recycling offers an affordable, reliable and local supply of CRMs, which tapers automakers’ exposure to supply chain risks and reliance on the mining industry for regular supplies of expensive metals. Recycling is also an attractive process, particularly to governments and private sector firms, as by diverting LiBs away from landfills recycling contributes to an organisation’s sustainability efforts. A recent autos investment round-up on battery recycling shows how this industry is expected to experience exponential growth over the next five years, given that a wide array of actors is investing heavily into the sector, including automakers, LiB recycling start-ups, battery manufacturers, as well as chemical recycling, energy and mining firms. It is predicted that the

industry will grow exponentially over the next decade given its ability to mitigate some of the risks that are currently hampering EV battery supply chains. www.fitchsolutions.com

HIGHER METALS COSTS TO NEGATIVELY IMPACT MARGINS Electric vehicle (EV) battery prices will remain high in 2022 because of elevated battery metals prices due to increased demand amid the race to electrify the global vehicle fleet. As battery metals remain one of the largest contributors to the cost of battery manufacturing, higher prices in 2022 will squeeze the profit margins of manufacturers and automakers alike as more EV models are deployed. Higher input costs are expected to result in upside risks for battery prices in 2022 as long-term agreements with mining firms for the supply of key metals are entered into at substantially higher prices compared to 2020. Over the longer term, developments in the increase of battery recycling will lead to a more favourable battery metals supply outlook as a “closed-loop” environment offers better pricing mechanisms amid more metals being reused in newer EVs going forward. It is forecasted that global EV sales will rise by 40.3% in 2022 as demand remains elevated amid the need to decarbonise the global vehicle fleet. In the meantime, the shift towards more cost-effective Lithium Iron Phosphate (LFP) battery chemistries to tame the rising costs associated with nickel-rich chemistries is likely. The global share of EVs that use LFP battery chemistries should rise from 21.1% in 2021 to 30.3% by 2025. Higher costs of nickel-rich battery chemistries, such as the nickel manganese cobalt (NMC) and the nickel cobalt aluminium (NCA) chemistries, will necessitate the shift towards the more cost-effective LFP chemistry. The demand for battery grade nickel will far outstrip supply as automakers ramp up EV production. As a result, NMC market share will decline from 51.1% in 2021 to 45.3% by 2025. Going forward metals retrieved from recycling operations will result in the NMC chemistry gaining a foothold once again from 2026 (with a market share of 45.9% rising to 51.4% by 2030) as

this chemistry option offers higher energy density levels offering better range capabilities for EVs. Automakers in China are already making the shift towards more cost-effective LFP chemistries while the likes of Tesla have indicated that it will offer the more affordable chemistry type for its entry-level EV models globally. The move towards cell-to-pack battery structures that remove the need for battery modules will also be more broadly implemented by automakers to ensure that rising costs are limited to the battery cell level and ensure automakers can deploy more EVs amid heightened demand globally. Some of these developments have already gained traction as Ford recently announced that it will utilise cell-to-pack designs as well as LFP battery chemistries to further reduce costs. While automakers will look to keep prices of fully-built EVs constant to raise EV adoption globally, countries without any meaningful consumer-focused incentives will be vulnerable to higher battery costs going forward. Countries in the developing world with lower EV penetration rates (EV sales as percentage of total vehicles sold) will be affected should original equipment manufacturers pass on higher prices when compared to more developed EV markets such as China, Europe and North America. This is due to relatively higher incomes in these latter markets and the prevalence of incentives to cut down the initial purchase prices of EVs. Countries that have little to no support will be vulnerable to further increases in already higher purchase costs of EVs relative to internal combustion engine (ICE) powered vehicles. It is anticipated that automakers will deploy mild and plug-in hybrid models for lower-income markets to cushion consumers from higher EV prices due to high battery costs.

*This article is an excerpt from the report EV Battery Supply Chain published by Fitch Solutions in December 2021.

MOBILITY

STATE OF THE MOTOR INDUSTRY

Electrification, market trends and motorsport developments President and CEO of Toyota South Motors, Andrew Kirby, delivered his fifth State of the Motor Industry address recently. The event, which has become a permanent feature on the local automotive calendar, discussed several pertinent topics in the industry.

• D r Gill Pratt says Toyota believes that the best way to reduce carbon emissions sooner is to employ diverse solutions • A ndrew Kirby predicts that a total of 540 000 vehicles will be sold in 2022, including 334 800 passenger models, 178 198 light commercial vehicles and 27 002 medium and heavy commercial vehicles • L eon Theron announces the launch of Gazoo Racing Junior Academy and Gazoo Racing Cup

hief scientist of Toyota Motor Corporation (TMC) and CEO of Toyota Research Institute (TRI) Dr Gill Pratt mapped out the company’s global plans regarding electrification, reduction of carbon emissions and autonomous driving. “We believe in battery electric vehicles (BEVs) and we’re investing heavily in them, but we also believe that the way to reduce more carbon emissions sooner is to employ diverse solutions. This is particularly important for mitigating climate change because CO2 emissions accumulate globally and remain in the atmosphere for a long time: we need to reduce CO2 as much as possible as soon as possible,” says Dr Pratt.

MOBILITY

He outlined that Toyota’s strategy towards the reduction of carbon emissions was premised on three key points: • D ecarbonise as much as possible as quickly as possible • E nable everyone to reduce carbon emissions • M aximise Carbon Return on Investment (CROI)

DIVERSE APPROACH

As Dr Pratt puts it: “The greatest reason Toyota believes we should diversify our portfolio of solutions to climate change is that a diverse approach is more likely to work. That’s why in December 2021, Akio Toyoda, president of Toyota Motor Corporation in Japan announced that Toyota will invest approximately $70-billion globally in electrified vehicles, including hybrid-petrol vehicles, plug-in hybrid fuel cell and battery electric vehicles. Toyoda explained that Toyota wants to prepare as many options as possible for its customers around the world, and he also announced that Toyota plans to roll out 30 BEV models by 2030 and that Lexus is aiming for 100% BEV sales globally by 2035.

ALL HAVE A PART TO PLAY

According to Dr Pratt: “There is also another reason why Toyota believes in a diversified approach to electrification, and it is a human reason. We want to give all people around the world – from all walks of life – the best tools to solve the global problem of climate change. Different people have different circumstances and different needs. Some live in areas with electrical grids powered by renewables, others live in areas that will be powered by fossil fuels for some time. Some have convenient charging stations at home and others live in cities where that is more difficult. Some are wealthy. Most are not. As a result, what is best for the average person or for any particular person is not best for every person: we need to supply the world with a diversity of tools. Toyota believes the best strategy today for reducing greenhouse gases is to offer a diverse portfolio of hybrid vehicles, plug-in hybrid vehicles, battery electric vehicles and fuel cell vehicles.”

We want to give all people around the world – from all walks of life – the best tools to solve the global problem of climate change. 38

CARBON RETURN ON INVESTMENT

Dr Pratt concludes: “Now let me provide a third reason to believe in a diverse approach and this is an economic reason. The manufacture of products that reduce carbon emissions often emits some carbon as well, and this is generally true for solar cells and batteries. For example, a way to measure this phenomenon is to think of it like an investment: a carbon investment where we emit some carbon today to save more carbon from being emitted in the future. “The term for this is carbon return on investment (CROI) and here is where it gets. For batteries as a whole to reduce the most net carbon we should try and maximise the CROI of every battery cell produced. If we produce a battery cell and never use it, its CROI will be zero, and it will end up making climate change worse. On the other hand, if we fully use the battery cell to reduce carbon, its CROI will be strongly positive, helping mitigate climate change.”

WHAT TOYOTA SOUTH MOTORS SAYS

Toyota South Motors (TSAM) president and CEO of TSAM Andrew Kirby concurs with Dr Pratt that a diverse approach or “diversity of drivetrains” is what is needed by the industry in the fight against carbon dioxide. He says that government incentives were needed in South Africa to encourage the adoption of new energy vehicles as well as making cost attractive to the market. He added that the local market is not yet conducive for the full adoption of BEVs, citing infrastructural shortcomings related to energy generation as well as high import duties. Last year, the Department of Trade, Industry and Competition published a green paper on incentivising the local manufacture and purchase of new energy vehicles. It is hoped that the policy would kick off soon after the white paper has been adopted in due course.

STATE OF THE MOTOR INDUSTRY

According to Kirby, total vehicle sales for the 2022 will continue the post-lockdown recovery and settle at 540 000 at the end of the year. “The breakdown for this year’s forecast includes 334 800 passenger models, 178 198 light commercial vehicles (LCV) as well as a total of 27 002 medium and heavy vehicles. “The extrapolation (540 000 units) is based on a variety of socio-economic factors that do not bode well for the local motor industry, including the rising interest rate cycle, the strain taken by the agricultural sector due to heavy rainfall, the muted tourism recovery as well as possible market instability owing to ANC leadership elections and NBF wage negotiations,” says Kirby.

MOBILITY “The GR Yaris really set the motoring press alight in 2021 and we felt that this is the perfect car to use for a media challenge race series – to show just what the GR Yaris is capable of, out-of-thebox,” says Theron. GR Junior Academy: Here TSAM, together with motorsport veteran Leroy Poulter, have handpicked some of the best junior drivers in motorsport to be groomed for future success. They range between the ages of nine and 15 years. “I’m really proud because we get a chance to invest in the future of motorsport in the form of the GR Academy. The Gazoo Racing brand is really going from strength to strength and with this in mind, we thought it the perfect opportunity to start a GR Academy to foster young racing talent,” concludes Theron.

He concluded that his forecast was “constrained” and that the industry could even sell more vehicles if the economy performed better than expected or if issues in the automotive supply chain were to be resolved.

GAZOO RACING ANNOUNCEMENTS

The last segment of State of The Motor Industry 2022 featured a number of new vehicle reveals including Lexus LX, NX, LS 500 Hybrid, Toyota Hilux GR-S, Corolla Cross GR and RAV4 VX Hybrid. These were followed by a couple of motorsport announcement made by Senior Vice President of Sales and Marketing at TSAM, Leon Theron. GR Cup Yaris Challenge: This initiative sees six local journalists battling it out on various racetracks in South Africa, all piloting the fabled Toyota GR Yaris. They include Jeanette Kok-Kritzinger, Mark Jones, Thomas Falkiner, Lerato Matebese, Sean Nurse and Ashley Oldfield.

ENERGY TM

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CIRCULAR

SECOND LIFE STORAGE BATTERIES: A true circular economy solution REVOV supplies storage batteries for the renewable energy and uninterrupted power supply market in Sub-Saharan Africa that are repurposed from the cells of electric vehicle batteries. Why does this matter?

BY LANCE DICKERSON, MD AT REVOV

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ere’s the context: lithium iron phosphate batteries are superior to lead-acid batteries in every metric, from safety to performance. The storage batteries are used in uninterrupted power supply (UPS) systems for power back up or in renewable energy installations to provide off-grid or hybrid power solutions. Ordinarily, the lithium supply chain pressures caused by growing lithium shortages – driven by the surge in electric vehicles (EVs) – would spell bad news in terms of affordability. However, second-life batteries, which are repurposed from the cells in replaced EV batteries, have stepped up to fill the void. Every EV’s battery needs to be replaced when the weight no longer justifies the performance. Ordinarily these batteries would end up in landfills. However, the individual cells, when repurposed correctly and when built into batteries with intelligent management systems, still have enough life and performance in them to provide stationary storage for as long as first-life batteries with the added benefit of performance specifications unique to the EV sector, such as the capacity to perform in harsh conditions. This is how REVOV has built its business: by securing these premium cells and by building premium second-life batteries, we’ve provided a compelling solution to close the circular economy in Sub-Saharan Africa. The time is right for partnerships that will change the face of energy storage. Imagine the possibilities that reside within repurposing the cells of the Audi E-Tron that won a stage at the Dakar and using the second-life batteries to provide energy storage at a renewable plant: the symbolism couldn’t be more poignant as we are quite literally in a race to save the planet.

REVOV PRIME 100kWh.

Why? Because in the absence of a viable recycling value chain, we know the batteries end up in landfills – which is the opposite of what saving the planet should look like. However, the individual cells in these EV batteries still have many years’ life – up to 10 or 15 years – if they are repurposed correctly and built into storage batteries where weight doesn’t matter. That’s the position in the circular economy that REVOV was created to fill because what better way to contribute to the wellbeing of the economy than to supply energy backup to another burgeoning industry – renewable energy – using secondlife batteries? South Africa’s government has started making very promising moves, not least in raising the embedded generation threshold from 1MW to 100MW. Besides energy security, which is crucial for this country to reach its potential, it is clean energy. It becomes obvious why the carbon-friendly second-life battery option is ready to step up and play a crucial role in our future. Sure, there are brand new lithium batteries that are built to go into the storage market, but when you consider that there is a trivial difference in performance, and in some instances superior performance from the EV cells used in second-life batteries, it becomes a no-brainer. Why add additional strain to the lithium supply chain when we can solve a massive problem for the EV industry and close a vital gap in the energy storage industry? REVOV predicts second-life batteries will become the dominant battery type providing energy backup to power renewable energy installations and UPS systems.

ENERGY

THE RACE TO GREEN HYDROGEN IN AFRICA Hydrogen is an attractive opportunity that could realise a cumulative global investment of USD450-billion by 2030. Countries are shifting away from a dependence on fossil fuels such as coal – a crucial export for South Africa, so the development of our hydrogen economy could be a game changer. BY FITCH SOLUTIONS

outh Africa is home to 75% of the global reserves for platinum group metals (PGMs), which are used in hydrogen and fuel cell technologies. About 40% of PGMs are used in catalytic converters for internal combustion engines (ICEs). The potential decline of ICEs due to climate-related restrictions threatens the existence of this market and the future demand for PGMs. Through the hydrogen economy, South Africa can mitigate this with PGMs in hydrogen fuel-cell vehicles and greenhydrogen production technologies. Given our share of PGMs and their contribution to the economy (R187.6-billion in 2019) and the dire unemployment situation, it is essential to capitalise on the increased demand for hydrogen applications that require PGM metals. The PGM industry currently employs about 160 000 people, with two to three indirect jobs in

other industries for each direct job, resulting in almost 400 000 jobs. The potential for hydrogen to support the growth of our renewable energy industry as an energy-storage solution would also contribute to job creation.

JUST TRANSITION: THE CORE OF FUTURE POLICY

There is a need to ensure inclusive participation in the transition and that substantial benefits of a green economy are shared. The World Resources Institute considers our national dialogue on just transitions one of the most advanced and South Africa was the only one to have included a just transition in its Nationally Determined Contributions (NDCs) in 2015. In early 2021, the Presidential Climate Change Coordinating Commission was established to coordinate South Africa’s just

ENERGY transition. The large concentration of coal mining and power generation in Mpumalanga, as well as the potential decline in coal demand in the global market, means the need for a just transition in South Africa is particularly relevant to deal with the potential loss in jobs and economic activity in affected communities. The recent update to the NDCs means that the country must move with speed to respond to the global commitments on emissions reduction.

GREEN HYDROGEN IN AFRICA

South Africa, Morocco and Egypt boast the most diverse and largest industrial bases in Africa and face the most significant pressure to move towards sustainable energy sources for critical value chains. According to ClimateWatch, South Africa accounts for 1.06% of global greenhouse gas emissions, while Nigeria is at 0.73% and Egypt is around 0.6%. Nigeria is among the top 20 largest emitters in the world, the second highest in Africa after South Africa. Morocco and Angola account for 0.16% and 0.25% of global greenhouse gas emissions respectively.

WHY GREEN HYDROGEN?

The proliferation of low-carbon hydrogen across multiple sectors will be key to achieving global climate goals in line with the Paris Agreement and COP26. Green hydrogen is produced from renewable electricity making it the cleanest hydrogen format, unlike the incumbent market leaders, grey and brown hydrogen, which are produced from fossil-fuel based energy. Blue hydrogen is fossil-fuel based but utilises carbon capture and storage (CCS) systems to mitigate the emissions and is also low carbon. Carbon capture, utilisation, and storage (CCUS) is an emissions technology that involves capturing, transporting and storing greenhouse gases back into the ground. Kearney believes that South Africa is best positioned to drive the regional energy transition followed by Morocco and Egypt. Other traditional oil and gas producers such as Nigeria and Angola, though lagging, could benefit from leveraging their existing natural resources, infrastructure and human resource capabilities to participate in production and export of hydrogen.

Ember's Global Electricity Review 2022

African emissions by source. (Megatonnes of CO2)

South African emissions by source. (Megatonnes of C02)

ENERGY SUSTAINABLE INDUSTRIAL DEVELOPMENT

Hydrogen Council

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HYDROGEN COST COMPETITIVENESS

CLOSER THAN YOU MIGHT THINK

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INCENTIVES HOW DO WE GET THERE? DEMAND & SUPPLY

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HOW DO WE GET THERE?

#HYDROGENNOW

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READ MORE IN THE FULL REPORT, PATH TO HYDROGEN COMPETITIVENESS: A COST PERSPECTIVE

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become major hydrogen exporters in the short-tomedium term while transforming local industries on a longer-term horizon.

OPERATIONAL CONSIDERATIONS

The openness to foreign investment coupled with good legal environments will be key to attracting private sector participation in hydrogen and renewables. Morocco, Egypt and South Africa are more welcoming to foreign investment and offer stronger incentives for technology and energy industries, relative to Nigeria and Angola. In these states, progressive pro-business investment policies have driven considerable industrialisation and development of renewable energy sources with notable success in public-private partnerships (PPPs) as opposed to Nigeria and Angola. In terms of bureaucracy, South Africa boasts strong contract enforceability and performs better than Egypt, Nigeria and Angola. As seen in Nigeria and Angola, the risk of slow policy reform momentum and the dominance of large stateowned entities in the energy hydrocarbons sectors will negatively affect foreign direct investment into green energy solutions.

LEADERS IN THE AFRICAN RACE

1. South Africa is well-placed to utilise existing natural resources such as wind and solar to produce renewable power for green hydrogen production. The country will most likely attract substantial investor interest in green energy as it is SSA’s most industrialised economy with the largest installed non-hydroelectric renewables capacity base in the region and a strong PPP track record. The presence of platinum, steel, energy and related industries will allow for efficiency gains in the production of green hydrogen. The government plans to launch a hydrogen corridor, which will involve heavy-duty fuel cells for the country’s air, freight and rail network as well as trucks. Regulatory delays and political tensions may deter more risk-averse investors. 2. Morocco and Egypt are well-positioned to export green hydrogen to proximal demand markets, such as Europe. Both country’s nonhydropower renewables sector will continue to attract significant investment through to 2030, with vast untapped solar and wind power potentials proving attractive to investors.

ENERGY Egypt outperforms Morocco due to a comparatively higher green hydrogen high-rewards profile underpinned by a strong demand outlook, despite higher project and legal risks. Rising competitiveness and falling costs have made solar and wind power Egypt’s cheapest source of electricity. This will contribute greatly towards the country becoming a regional electricity and green hydrogen export hub. 3. Angola and Nigeria’s development of non-hydropower renewables capacity has been limited due to continued project delays and regulatory hurdles. Investors are wary of burdensome legal and foreign currency repatriation risks, given the long-term and capital-intensive requirements of green energy investments. Nigeria is mostly likely to rise in the rankings by 2030. Future demand variables are key factors for the country, and it is expected to lead the region in road freight capacity and dry natural gas consumption, while being second in SSA (behind South Africa) in terms of crude steel production. Nigeria has the largest gas-fired power generation capacity in SSA; which points to the potential for blending hydrogen with gas to reduce emissions from the power sector going forward.

BARRIERS TO PRODUCTION OF HYDROGEN

There are numerous challenges preventing SSA markets from developing industrial-scale hydrogen production operations, broadly stemming from the pervasive lack of economic, political and electricity security across most markets. There are three key aspects limiting the region’s capacity to develop its hydrogen production sector at present namely: inadequate renewables electricity supply and constraints in access to freshwater; lack of existing related utilities and transport infrastructure and human capital and sluggish renewables uptake preventing the build-out of green hydrogen industry. Given the high costs of storing and transporting hydrogen, Egypt and Morocco’s proximity to European markets hold strong export potential in the future. Transport logistics. The low volumetric energy density of hydrogen (in both compressed gas and liquid forms) makes the storage of hydrogen challenging. This limitation is felt most strongly in onboard storage, but it is also a risk in the delivery and distribution of hydrogen. A number of chemical, solid state and other approaches (that could lead to higher stored energy density) can be used in countries to manage the use and, primarily, transportation of hydrogen from point-of-production

to point-of-use through pipelines, roads and shipping networks. Expertise needed to enable production. Growth in the hydrogen and fuel cell industries will lead to new demand for workers in these sectors. Many of these jobs do not currently exist or have occupational titles defined in official classifications. They will require different skills than current jobs and training requirements must be assessed so that this rapidly growing part of the economy has a sufficient supply of qualified workers. The most critical skills are likely to be those from technical workers. South Africa, Egypt and Morocco have strong levels of skills availability by regional standards, particularly for mid-entry level roles, but will likely need to import workers for more specialised roles. Businesses need to be mindful of the barriers to importing foreign workers and the added complications in obtaining the necessary permit documents. Key policy risk areas. When it comes to local use of hydrogen, Kearney believes that African countries including its largest economies will face numerous challenges in producing, storing and trading green hydrogen. From a policy perspective, according to the International Renewable Energy Agency (IRENA), countries need certain key pillars for clean hydrogen development: • A cohesive national or regional strategy (as seen in the EU, Japan and Australia). Countries will also have to develop robust industrial policies across the value chain, particularly for heavy industries and boost PPPs in renewable energy development. • Adequate research and development programmes and plans to boost expertise. • For hydrogen trade to occur successfully, coherent regulations are necessary in both the clean hydrogen origin and destination countries, and policy areas need to be clear and consistent. Additional incentives will be needed to entice various stakeholders to commit to longer-term purchase agreements of green hydrogen. • Because the molecules of hydrogen are identical, regardless of the method of production, a certification system or guarantee of origin is needed for end users to know the origin and sustainable nature of the hydrogen production process for each delivery. Several countries have already initiated certification schemes, such as the EU’s CertifHy and Australia’s Hydrogen Certification Scheme; however, for international trade it is vital to ensure that these standards are compatible with domestic processes. www.fitchsolutions.com

The above article is an excerpt from a Fitch Solutions report Low Carbon Hydrogen Global Pathways to Multi-Sector Opportunities published in December 2021.

THOUGHT [ECO]NOMY

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HYDROGEN SOCIETY ROADMAP FOR SOUTH AFRICA 2021 | Department of Science and Innovation [2021] The race is on for countries with a comparative resource advantage to demonstrate the production of green hydrogen for export, at scale and at competitive prices. The projected growth of demand for green hydrogen over the next 10 to 30 years offers an attractive growth area as the world shifts from carbon-intensive to zero-carbon emission economies and industrial sectors; the emerging zero- or low-carbon hydrogen-energy system’s momentum is rapidly growing. Cabinet approved the Hydrogen South Africa Strategy (HySA) in 2007, so South Africa today is well-poised to leverage the hydrogen opportunity at the centre of our economic growth and development strategies, as well as part of our mitigation strategy for climate change through greening our economy and society. The Hydrogen Society Roadmap is one of government’s strategies aimed at bringing together a variety of stakeholders (both public and private) around a common vision on how to use and deploy hydrogen and related technologies as part of our economic development and greening objectives. This roadmap has the potential of placing South Africa as an important player, participant and scientific thought leader in the emerging global hydrogen system.

ENERGY

Shaping tomorrow’s hydrogen market Since hydrogen markets will grow exponentially in the mid- and long-term, companies that invest today in hydrogen will be able to capture this growth, become technology leaders and shape the future of the business. BY BAKER MAKENZIE*

owever, there are still multiple barriers to the widespread development of decarbonised hydrogen and each investment will face challenges in the form of policy, regulatory, economic and financial barriers. The speed of deployment of hydrogen in coming years is expected to vary between sectors and countries. These variations come partly from the different level of maturity of the technology required for decarbonised hydrogen development. The details of different governments’ strategy will affect what opportunities can be taken advantage of. Mastering government strategies, regulations and sources of funding will be crucial. In each region, government strategies and regulatory barriers should first be assessed and then monitored. Governments’ economic strategies create good market conditions and are vital. The speed of development of the decarbonised hydrogen market will depend on how quickly governments require the current and future markets for hydrogen to decarbonise. Those companies ahead of the curve in factoring government climate strategy into investment decisions are the ones that will lead tomorrow’s hydrogen market. The presence of favourable economic conditions for the development of green and blue hydrogen, in a particular region or country, should be a precondition for any large-scale investment by first movers. Outdated hydrogenrelated regulations should also be monitored. Despite government commitments, regulations can be slow to adapt. Outdated regulatory regimes are significant hurdles to smart power advancement, including hydrogen-based storage. Some of the barriers include, among others: • The absence of “Guarantees of Origin” schemes enabling the distinction between different types of hydrogen based on greenhouse gas emissions associated to their production • The unclear legal status of “power-to-hydrogen” plants that can prevent such plants from being rewarded according to the actual service rendered to the energy system • Counterproductive industrial emissions or safety regulations • Inconsistent funding rules • Outdated market rules in the gas or electricity markets • Government discrimination based on irrational concerns.

To ensure a return on their investment, first movers should assess (i) the effect of existing regulatory barriers on any new investment or project, (ii) the likelihood of such barrier disappearing for a particular market and within a particular timeframe, and (iii) the availability of public support to derisk the investment when needed. Smart movers should use government support to de-risk investment with respect to the cost of hydrogen.

Smart first movers should also rely on direct government support to de-risk investment during the early years of this emerging market. To do so, it is important to act in the right areas and in the right markets, where government support is likely to be abundant. To best use available government companies should understand (i) which countries provide the best focused funding support and (ii) what types of projects governments are likely to support. Companies contemplating a specific investment in their own region and field of expertise should carry out a thorough analysis of funding opportunities. However, understanding regional and sectoral funding trends as well as expert recommendations can already provide some insight as to government-financing patterns. In the past, governments have so far, (i) favoured the development of green (as opposed to blue) hydrogen production and (ii) focused on hydrogen-based transportation. In practice, these two efforts are closely connected since 40% of the publicly funded water electrolyzers have been installed to supply hydrogen-fuelled buses or cars. Thanks to these investments, many stakeholders share the opinion that large-scale demand and standardisation, rather than further technological progress, are now the key to the widespread adoption of fuel cells, water electrolyzers, and hydrogen refuelling. A transition of public funding from technological demonstration projects and R&D into projects enabling large-scale demand and standardisation should therefore be expected. In 2019, the International Energy Agency (IEA) published a report on the future of hydrogen which identified high-potential business opportunities whose funding would give a boost to the hydrogen market and drive down costs and recommended that government seize the following “near-term opportunities”: • Turning existing industrial ports into epicenters for scaling up the production and use of clean hydrogen • Capitalising on existing natural gas infrastructure and increase hydrogen demand by implementing an obligation to mix (low-carbon) hydrogen into natural gas • Making fuel cell vehicles more competitive for vehicle fleets, freight transports and corridors by ensuring the parallel expansion of infrastructure for hydrogen supply, vehicle refuelling and vehicle manufacturing • Stimulating the creation of international hydrogen trade. One can expect that many governments’ strategy will be reviewed soon, largely in a direction inspired by the IEA’s recommendations.

*This article is an excerpt from the Baker McKenzie report, Shaping tomorrow’s global hydrogen market.

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COMPETITION

CELEBRATING

World Metrology Day 2022 May 20 is World Metrology Day, commemorating the anniversary of the signing of the Metre Convention in 1875. This treaty provides the basis for a worldwide coherent measurement system that underpins scientific discovery and innovation, industrial manufacturing and international trade, as well as the improvement of the quality of life and the protection of the global environment. BY NMISA

he theme for World Metrology Day 2022 is Metrology in the Digital Era. This theme was chosen because digital technology is revolutionising our community and is one of the most exciting trends in society today. Across the world, national metrology institutes (NMIs) continually advance

measurement science by developing and validating new measurement techniques at the necessary level of sophistication. World Metrology Day recognises and celebrates the contribution of all people that work in intergovernmental and national metrology organisations and institutes throughout the year.

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THE NMISA WAY

The National Metrology Institute of South Africa (NMISA) is part of the Department of Trade, Industry and Competition’s (the dtic) family of Technical Infrastructure (TI) institutes, which includes the South African Bureau of Standards (SABS), National Regulator for Compulsory Specifications (NRCS) and the South African National Accreditation System (SANAS). These associations instil confidence in local goods and products and together they allow for successful prosecution in cases of non-compliance. The accuracy of measurement results can be demonstrated through traceability to the National Measurement Standards realised by NMISA, enabling: Globalisation of trade in manufactured products • Providing traceable, comparable and mutually acceptable measurements globally • A ssisting manufacturers to get it right the first time Lean manufacturing • Allowing for productivity, product reliability and less waste • Supporting repeatable and predictable results over time • Minimising errors in decision-making • Promoting improved human safety Market acceptance of products and services • Product superiority by meeting quality specifications • Market confidence in measurement reliability For additional information on NMISA, visit www.nmisa.org or send an email to info@nmisa.org Facebook: NMISouthAfrica Twitter: @NMISouthAfrica Instagram: @nmisouthafrica YouTube: National Metrology Institute of South Africa (NMISA)

COMPETITION

Terms and Conditions • The competition is open for registered small and medium enterprises across South Africa. • The prize is not transferable and cannot be exchanged for cash. • Prize includes a printer and 5 rolls of Polylactic Acid (PLA) to get you started. *Computer and printing software is excluded, although technical support will be available from the supplier. • Only one original entry per person is allowed, and two additional entries for social media engagement (Facebook and Linkedln) can be added. • The Winner will be chosen at random, via lucky draw. • The Winner will be announced live at the World Metrology Day 2022 virtual celebration event. • The Winner must be willing to be interviewed for publicity purposes.

ENTER COMPETITION

Closing Thursday 19 May at 23:59 SAST (South African Standard Time)

BIG PRIZE FOR SMALL ENTERPRISE In celebration of World Metrology Day 2022, NMISA invites all South African SMEs to enter our competition and stand a chance of winning a 3D printer. The Institute has recently experienced how additive manufacturing of instrument replacement parts benefited NMIs in SADC when the Additive Manufacturing project was launched. Metrology requires advanced scientific instrumentation and tools. Most African NMIs typically import sophisticated measurement instruments, while replacement or modification parts for the instruments are non-standard, unique, expensive or only available from the original equipment manufacturers (OEM). These OEMs and their support engineers are geographically far away and servicing such instruments is often difficult, sometimes impossible, resulting in significant costs and shipping or custom clearance delays. The ability to locally manufacture mechanical components with a 3D printer resolves this problem and in so doing reduces the reliance of African NMIs on international supply chains. The AFRIMETS Additive Manufacturing (AM) project was developed by NMISA to provide a 3D printer, online training and support six African NMIs. This project allowed the NMIs to manufacture mechanical components for their laboratories, and also included training on digital part modelling as well as design for AM and 3D-printer usage. The project was a huge success providing opportunity for future expansion. Locally, additively manufactured functional parts will make African metrology institutes more sustainable and independent. These institutes are now able to provide additional calibration services, which link the measurement units to industrial and everyday measurements. A 3D printer will help SMEs to create additively manufactured functional parts for machines or to develop prototypes while developing new manufacturing products. NMISA supports SMEs operating at all levels of the value chain: from basic measurements enabling traditional trade (mass and volume) to sophisticated measurement systems. We support leading edge research and enhance export opportunities for local producers. In addition to measurement services, NMISA’s training centre provides a range of courses for local and regional technologists, scientists and engineers in the field. Hands-on practical training in NMISA laboratories is on offer. Special development projects that assist SMEs have been created that include an SME measurement toolkit and educational video material. Ndwakhulu Mukhufhi, CEO for NMISA, states: “NMISA recognises that SMEs are invaluable to accelerate inclusive growth in the South African economy, as advocated in the National Development Plan 2030.” He adds that NMISA will continue to look for development opportunities related to measurement science and technology to enable SME development, specifically innovationbased SMEs, to weather ongoing economic uncertainty.

TO ENTER THE COMPETITION

and stand a chance to win a 3D printer for your business

CLICK HERE 49

THOUGHT LEADERSHIP

TO DENSIFY OR NOT: the pandemic as a driver of urban transformation

David Bülow

Urbanism drowning in the uncertainty of the Covid-19 pandemic. David Bülow (2020)

“The streets were all empty, The pews were all bare. The neighbours were treated Only with what we could spare. Alone we sat, fearful and forlorn, Locked in our homes, to weather this storm.” Darren C Mossman (2021)

The Covid-19 pandemic is challenging one of the basic tenets of urban orthodoxy namely that there are numerous benefits to be derived from urban density. BY LLEWELLYN VAN WYK, B.ARCH; MSC. (APPLIED), URBAN ANALYST

liver Schaper argues that at the core of what makes dense urban environments authentic lies a network of forces that create unpredictability, serendipity and diversity – qualities that in times of social distancing appear to be a threat to our personal safety and wellbeing.1 Richard Florida, a professor in the University of Toronto’s School of Cities, agrees, arguing that the very same clustering of people that makes our great cities more innovative and productive also makes them, and us, vulnerable to infectious disease.2

However, the question remains whether density supports higher rates of infection. David Madden argues that there is no simple relationship between urbanisation and infectious disease. He notes that researchers have traced how interactions at urbanrural peripheries create new vulnerabilities to disease, and cites a study published in 2017 that looked at 60 countries and found that, overall, infectious disease burdens decreased with urbanisation. While epidemics have periodically devastated poor and marginalised urban communities, cities have also spawned

THOUGHT LEADERSHIP

new health policies, housing reforms and social movements that help people survive disease.3 As he points out, much of the anxiety about cities during the pandemic has centred on fears that population density might heighten the risk of contagion. He argues that density and crowding are not the same thing. Overcrowding is the result of inequality and the housing crisis, not an unchangeable feature of urban life. As Florida points out density is likely just one of several key factors that determine how vulnerable places are to the virus. Globally, Covid-19 has taken root and hit hard in several types of places. One is large dense superstar cities like New York and London, with large flows of visitors and tourists, diverse global populations and dense residential areas. A second is industrial centres like Wuhan, Detroit and Northern Italy, which are connected through supply chains. The third is global tourist meccas like the ski slopes of Italy, Switzerland and France, and their counterparts in the Colorado Rockies. And in smaller communities, the virus targeted nursing homes and funeral parlours, and of course cruise ships, which are like dense small cities at sea. As he notes, there is no simple, one-size-fits-all explanation when it comes to cities and the virus. It is important to distinguish the unfortunate hot spots where it first cropped up from the characteristics of places that may propagate, or limit, its spread. Cities differ along many dimensions – population size, age, education level, affluence, religiosity, the kinds of work people do, levels of social capital and more. These factors may affect their vulnerability to the coronavirus. Analysis done on the geography of Covid-19 finds that it is not density in-and-of-itself that seems to make cities susceptible, but the kind of density and the way it impacts daily work and living. That is because places can be dense and still provide places for people to isolate and be socially distant. Simply put, there is a huge difference between rich dense places, where people can shelter in place, work remotely and have all their food and other needs delivered to them, and poor dense places, which push people out onto the streets and onto crowded transits with one another. There are several other factors in addition to density that merit closer attention as the virus’s spread is tracked. Two obvious ones are the age of population and pre-existing health conditions. It is critically important to look closely at the uneven impact of the virus on poor and minority communities. It is also important to zero in the differences in the kinds of work people do: the shares of the workforce that can engage in remote work versus the share of frontline workers in healthcare, delivery and grocery stores that are particularly vulnerable to the virus. Then too, that some things we want to encourage in cities, like tight social bonds and

civic capital, make them more vulnerable. Rather distressingly, it appears that the virus may reinforce some key faultiness of our existing economic and geographic divides.4 Elek Pafka, a lecturer in urban planning and design at the University of Melbourne, takes this argument further. Writing in The Conversation, he notes that physical distancing has been the most common measure to contain the spread of the virus. But, he argues, this does not mean higher-density cities are necessarily more vulnerable and lower-density cities more resilient to the pandemic. He acknowledges that some say high density is a key factor while others argue it is unrelated. But he posits that evidence invoked on both sides has often been anecdotal. Too little attention is paid to what urban density means. Density in cities takes on a broad range of meanings, such as density of buildings, residents or jobs. There is often confusion between internal densities within buildings, which vary widely with wealth, and the external densities of street life, which we share. To complicate things further, each of these concepts can be applied to a range of scales, from a building to a neighbourhood to a metropolis. In identifying what kind of density is relevant for the spread of the coronavirus he notes that it has become increasingly clear Covid-19 is mainly transmitted through extended close contact, particularly in enclosed spaces, where droplets and aerosols accumulate. The density that matters is internal population density – generally measured as square metres per person. Thus, high-risk places can include dormitories, open plan offices, churches, hospitals, public transport, planes and cruise ships. The evidence to date points to much less transmission through casual contacts in outdoor spaces such as streets or parks. Neither gross residential densities of suburbs or neighbourhoods nor overall metropolitan densities necessarily reflect conditions at the scale of human encounter that determines transmission risks. Pafka suggests there are two main reasons for this. First, densities at the street or walkable neighbourhood scale can differ vastly from metropolitan or postcode averages. A local main street, for instance, can be dense when the average is low. Second, a short physical distance between people is not the same thing as social encounter. The density of quarantine accommodation (such as a hotel) may be much higher than that of an aged-care facility, but we have seen the latter can be quite lethal. Internal densities are geared to wealth. This means some people live and work under conditions where they can adapt to this virus, and some do not. Reflecting on what this all means for the design and planning of a healthy city; he acknowledges that some might be tempted to propose “pandemic-safe” urban forms like the anti-

THOUGHT LEADERSHIP urban utopias of the early 20th century. But he cautions, if urban form is solely conceived to distance people, to eliminate the friction of social interaction, it will also eliminate urban buzz, reduce economic productivity, sociability, walkability and ultimately public health as well. Instead, we should use this crisis as an opportunity to rethink urban resilience from a broad and nuanced public health perspective. Questions that he raises includes how to design a more adaptable city that maximises capacities for change in both its architecture and urban design as well as how do we undo the rigidities of the “masterplan”? Referencing urban sociologist Richard Sennett, how to design a city that works like an accordion – where people can spread out when necessary and vice versa? What we need to do is design a more equitable city without the internal densities that have proven so deadly.5 That means that the spread of pandemics in cities is not just about combating density – it’s also about addressing the underlying inequalities that force people to live in unhealthy environments and shoring up neighbourhoods’ public health. If cities are going to respond better to future pandemics, they are going to need stronger health infrastructure for the most vulnerable – and housing policies that right historical wrongs. Pandemics, we are often told, reveal a society’s hidden flaws. The coronavirus has shown that many cities remain highly polarised and unequal. That is especially true for urban centres where nearly a third of the country’s population lives. As Coburn put it, “We have not, in the United States, addressed the fundamental inequalities in cities, and we must – if we’re going to have a healthier kind of urban environment.”6 Andy Forbes from Forbes Real Estate Council has a different take on this subject. While he agrees that the problem is not density or cities, in his view, the dilemma lies in how we use our open space. If we do not factor human experience into our decisions for highdensity development, we give up green space and pedestrian areas. The more we sacrifice quality of life, the more we give way to smaller spaces that can result in packing people. As cities smartly

If cities are going to respond better to future pandemics, they are going to need stronger health infrastructure for the most vulnerable – and housing policies that right historical wrongs. densify, streets will play a critical role in supporting the new types of connected spaces and communities for people. Density is about healthy mobility, but also about creating destinations that are a breath of fresh air.7 Acuto argues that it is a bit early to take on lessons learned from Covid-19, but you would probably have a big conversation about the value versus the risks of densification. Clearly densification is and has been the problem with some of this. Covid-19 puts a fundamental challenge to how we manage urbanisation. He suggests that rethinking density management is a key for longterm survival in a pandemic world.8 Part of this rethinking means thinking about decentralisation of essential services. Looking at where we might see radical transformation because of the pandemic, it must be remembered that the need for changes will have to be weighed against changes needed to support climate change adaptation and mitigation. If the city is spread out rather than further densified, much better public transport connectivity will be required. What should change is the decentralisation of services, better managing of supplies and nets of smaller entities in food delivery. But should is different from will. Will market forces sway the things we do towards what is marketable and economically profitable versus saying this clearly is a call for redundancy in public health and public transport?

THOUGHT LEADERSHIP

Silvia Taveras and Nicholas Stevens argue that it is the combination of diversity and density that makes urbanity – it’s a product of diverse social opportunities in close proximity.9 This is why densifying cities has been a goal for achieving healthy, social and prosperous cities. However, the risks of Covid-19 transmission have strengthened anti-density discourses. It is worth remembering that ways of fighting disease, such as sanitation, were only possible because of their financial savings and infrastructure efficiencies enabled by denser cities. Density done right is safe, and it permits the human interactions and connections we need – and which we are now missing. The scrutiny is not just at the city scale, but is driving the creation of an intermediary scale, the megaregion. The pandemic, Anthony Flint, a Senior Fellow at the Lincoln Institute of Land Policy, argues is exactly the kind of crisis that reveals what Europeans refer to as “territorial cohesion.”10 We generally think of three basic levels of governing – national, regional, and local – but Flint states that planners have long recognised that a lot of activity occurs at the interregional scale, across geographically proximate clusters of settlement. People may live in one region but commute to a city in another or live in the city and travel to a second home in another region.11 The megaregion framework, he argues, has been useful for all kinds of initiatives, from protecting wilderness that similarly cross political jurisdictions to designing transportation policy including inter-city high-speed rail networks, agreeing on carbon emissions reductions or building more affordable housing across a larger catchment of labour markets. Flint notes that others who have studied megaregions say the approach will be well-suited to coordinating re-openings, or continuing closures, as regions manage the next phases of the Covid-19 pandemic. And if that’s successful, regions may use megaregions to make future improvements in housing, transportation and the environment. Flint also points out the observation of Robert Yaro, professor at the University of Pennsylvania, that “it’s clear that actions to manage and recover from the pandemic will require regional action, since the virus doesn’t respect arbitrary political boundaries.” Yaro argues that this kind of collaboration support the longerterm steps needed to rebuild the economy – and build the mobility systems and settlement patterns needed to mitigate

The evidence to date points to much less transmission through casual contacts in outdoor spaces such as streets or parks.

against future events of this kind. Historically, states have often resisted working together so for many it is gratifying to see how a planning construct could become so useful in this desperate time of need. Planners have been trying to illustrate the advantages of a regional approach for many years. In the future megaregions could become the policy vessel for new realities, including more people working remotely, allowing them to spread out across agglomerated labour and housing markets. But the behaviour of people in a pandemic is probably not the best guide to how they want to live their lives in normal times. As Tavernise and Mervosh note, so much is unknown: what will happen to housing prices, whose meteoric rise in cities was a big part of what was driving people away? Or immigration – one of the most important forces contributing to growth in cities? And cities themselves will likely look different, as they begin to plan for the possibility of pandemics. Undoubtedly, one of the biggest questions for the future of cities is what becomes of low-wage workers, who are an essential part of urban populations, but often work in jobs impossible to do from home. It is important to realise that cities, suburbs and rural areas can all be hit by Covid-19. Regardless of size or density, all places need to invest in the qualities that build residence. Strong regional economies built from local assets can creatively adapt to shifting demands. A flexible built environment that is green, walkable, and has low barriers to new and mixed land uses can reduce crowding and provide a platform for new businesses to launch and grow. And inclusive and civically organised neighbourhoods can communicate public health measures, promote compliance, manage fear and support vulnerable individuals and businesses. As Loh and Leinberger note, while fear of cities regarding pandemics may be misplaced, the solutions to such crises can have a place everywhere.12

REFERENCES 1 2 3 4 5 6 7 8 9 10 11 12

Schaper, O. 2020. “Defining the future of our cities: Five areas of opportunity for a post-pandemic world." Gensler, May 08, 2020. F lorida, R. 2020. “The geography of coronavirus.” Citylab, April 3, 2020. M adden, D. “Our cities only serve the wealthy. Coronavirus could change that.” The Guardian, June 2, 2020. Florida, R. 2020. “The geography of Coronavirus.” Citylab, April 3, 2020. P afka, E. 2020. “As coronavirus forces us to keep our distance, city density matters less than internal density.” The Conversation, May 14, 2020. O saka, S. 2020. “Does city living spread coronavirus? It’s complicated.” Grist, June 22, 2020. Cohen, A. 2020. “Finding the right words: Smart density is city wellness.” Forbes, May 1, 2020. Klaus, I. 2020. “Pandemics are also an urban planning problem.” Citylab, March 6, 2020. Taveras, S. and Stevens, N. 2020. “Cities will endure, but urban design must adapt to coronavirus risks and fears.” Flint, A. 2020. “Covid-19.” Flint, A. 2020. “Covid-19.” Loh, T. and Leinberger, C. 2020. “How fears of cities can blind us from solutions to Covid-19.”

WATER

THE GOOD, BAD AND UGLY

in South Africa’s water compliance The recent publishing of the Blue and Green Drop reports is a significant step forward in disclosing the water and sanitation crisis our country finds itself in after nearly a decade of silence about a slow onset disaster we in the water sector all know too well is unfolding. BY BENOIT LE ROY*

An opinion piece from the SA Water Chamber CEO

hat the No Drop report is not published is still a concern as this is about the non-revenue water (NRW), which is reportedly at a staggering national average of 41% with physical losses at around 37%. As a country, we cannot afford to augment our water supplies into a leaking system, so this aspect is as important as the water quality and wastewater qualities focused upon in the Blue and Green Drop programmes. We need to understand what brought us to this crossroad, without dwelling on the negative, to identify and understand the root causes and then embark on the remedial actions required. This crisis is no different to the Eskom one, this article was written during ongoing load shedding, although it’s far more serious as there are no substitutes for water while energy has a plethora of options from generators to candles, wood/biomass, paraffin lamps, rechargeable appliances, gas and the list goes on without omitting renewables that are out of the reach of most of our population, unnecessarily so. Firstly, the Blue Drop deals with potable water systems (from the production systems to the bulk delivery pipelines and distribution networks). These are three different and distinctive systems where generally: • Potable water production is produced by water boards directly under national government’s control as the single shareholder and water service authorities (WSA) under district municipality control, which is local government. These systems produce the water in bulk and disinfect before conveying in bulk to their clients that are generally industry, Eskom and municipalities. Mostly, the water board water quality is of an acceptable standard with district municipalities not so. • Bulk conveyance systems generally boost pressure and

disinfection so that the residual chlorine is compliant at the client’s reservoir. • The client, typically a municipality, then distributes the compliant water to their clients via hundreds to thousands of kilometres of pipelines, pump stations and reservoirs. These municipal systems also require disinfection and pressure boosting to ensure sufficient volume at the delivery points with adequate chlorine residuals. Only 40% of the potable water delivery systems achieved micro-biological compliance to SANS 241. This indicates that there is inadequate disinfection by municipalities. Irrespective of the production origin, it is the water service provider’s mandate to ensure that there is adequate disinfection in their delivery system to comply to microbiological standards. Secondly, the Green Drop deals with the wastewater from municipality, state-owned enterprises, industry and Public Works where around 90% are municipal owned and operated. A mere 2% of these wastewater systems achieved Green Drop status, which means that 98% did not comply, which is a complete system failure. The non-municipal systems achieved 83% of their systems scoring above 50%, admittedly a low bar. In both Blue and Green Drop cases the obvious non-compliance is firmly in the mandate of local government. This is acknowledged by the Ministry of Water and Sanitation without hesitation with the principal reasons for non-compliance given as: • Non-payment for water • Substandard infrastructure upgrades, extensions and renewals • Non-commissioned newly constructed systems • Failed O&M monitoring • Insufficient skills employed

WATER This is a time bomb. So, let’s discuss how we must remediate this collapse of our municipal water systems that are key to support any decent economic activity and to offer some dignity to all our citizens. The root causes are generally: • Dereliction of duty by city councillors • Deployment of cadres and unskilled staff • Inadequate revenue in the water system • Substandard infrastructure

DERELICTION OF DUTY

That we, as a country, have allowed our councillors to not be held accountable is entirely on our shoulders. This has allowed governance collapse as we see daily with potholes, for example. The water infrastructure is mostly underground and so out of the way and not on anybody’s agenda until the taps run dry and sewage overflows into roads and houses. My suggestion is that municipalities that receive national fiscus grants in the form of their so-called equitable share, should be incentivised to meet, amongst other metrics, 90% compliance to not only receive their full grants, but also at least 50% of their annual salaries. It will very rapidly drive totally different behaviour when one's own budgets and salaries are on the line. I strongly believe that this is the only way forward on this KPI.

SKILLS SHORTAGE

The skills shortage is driven by several factors from cadre deployment to simple ineptitude. Water and wastewater systems are licenced with the Department of Water and Sanitation and must have certain levels of skills to comply to their licence conditions from Class one to Class six operators, for instance, where these skills are simply not employed. The Water Services Act of 1997 amended in 2013 makes this a legal requirement. It is tantamount to sabotage and is like using a flight attendant to fly an airliner. How did we get here? The Auditor-General needs to include this metric on a quarterly basis and non-compliance should lead to criminal prosecution of councillors and responsible officials without fail. This will resolve the situation rapidly.

INADEQUATE REVENUE

Since the introduction of “free water” we have effectively been the designers of our water system demise. With a recent Stats SA report stating that 59% of our households do not pay for water,

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THOUGHT [ECO]NOMY

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Since the introduction of “free water” we have effectively been the designers of our water system demise. it is impossible for the remaining 41% to sustain the system. Food is a basic human right but it is not for free. Why should a complex service like water be free? It simply does not make sense. Everyone should pay, albeit proportionate to their levels of affordability. That municipalities get away with not paying their bulk water provider, some R14-billion in 2021, is simple theft and cannot be allowed to continue and these payments should be made before councillor salary payments to ensure sustainable water service provision to communities and businesses.

SUBSTANDARD INFRASTRUCTURE

The system used to require an owner’s engineer that would protect the municipality’s investments in infrastructure. Why has this key function either failed or no longer practiced? In the absence of such checks and balances the system becomes open to failure through corruption and incompetence. If we as a country do not stem the decline of our water system, we will experience a total collapse, which is not an option. We must reinstate infrastructure project governance of the higher order. We did it well before, so it’s possible. The Good is that we have a national government that has admitted the failures and it is overtly looking to remediate the situation. The Bad is that local government is in total disarray with the most worrying collapse of their water systems and seemingly no urgency in rectifying. The Ugly is the vulnerable water infrastructure that has induced unnecessary hardship on our country’s poorest with the KwaZulu-Natal floods merely reinforcing our state of decay. I sincerely believe that because we now have all the facts on the table, that we as a country can embark on a road of the recovery of our water security with all the tools available to catalyse the Water and Sanitation Masterplan and the National Infrastructure Plan 2050 that are, in effect, plans to marshall the rebuilding of our economy and country for the benefit of all.

THE GREEN DROP NATIONAL REPORT 2022 | THE BLUE DROP PROGRESS REPORT 2022 | Department of Water and Sanitation [April 2022] In 2008, the Department of Water and Sanitation (the then Department of Water Affairs) introduced the Blue Drop and Green Drop certification programmes. The Blue Drop certification programme seeks to protect citizens from the hazards associated with contaminated drinking water and the Green Drop programme seeks to protect the environment from the hazards associated with polluted wastewater or sewage. While there is primary legislation which deals with these aspects, these programmes are intended to augment and compliment the normal legislative and regulatory provisions. The first Blue Drop and Green Drop reports were released in 2009 and each year thereafter until 2014. There was a break in the department’s undertaking, but it has now resuscitated the programmes. To this end, the Green Drop National Report 2022 was released in April 2022 and the Blue Drop report is due in March 2023. The Blue Drop Progress Report 2022 is available in the interim.

* Benoît Le Roy is the founding member and CEO of the South African Water Chamber NPC, CEO of Enviro-One, advisory board member of IFAT Africa and operations director of Nexus Water Alchemy.

GREEN TECH

The fully-fledged state-owned enterprise In the last two years, the Atlantis Special Economic Zone has made significant strides in putting the company on the right track to begin doing business with investors. BY ATLANTIC SPECIAL ECONOMIC ZONE

uilding a Special Economic Zone is akin to constructing a city. It evolves gradually. The Atlantic Special Economic Zone (ASEZ), unlike other SEZs in the country, does not have a decade to get off the ground. We must move much more quickly and set a good example. When the 2020 fiscal year began, the ASEZ had no business scheduling, no land, no capital and were still on Wesgro’s books because we were unable to open our own bank account due to the lack of a business scheduling and no offices. The Atlantis SEZ Company (ASEZCO) is now a fully-fledged

state-owned enterprise and the land acquired from the City of Cape Town, through a shareholders’ agreement, is now on ASEZCO’s balance sheet. Our first tranche of capital for civil works in the zone has been approved and we have been independent of Wesgro since 1 April 2022. We now have a debt-free asset of R60-million with all the necessary systems and structures in place. The above is our greatest achievement. ASEZCO prides itself on the work we do with the Atlantis community. Some of the programmes we have successfully implemented are to be celebrated as much as the above two milestones.

GREEN TECH

Above and below: The Atlantis Change Challenge 2022 aims to create awareness around the concepts of a green economy and introduces the ASEZCO’s objectives to the youth.

ATLANTIS CHANGE CHALLENGE 2022

Atlantis Primary and High School pupils have for a month had the opportunity to take part in the Atlantis Change Challenge and show how renewable energy can bring positive change to communities. Many of the pupils knew little about renewable energy before taking part in the challenge. Working in collaboration with Soapbox South Africa, a number of workshops were held to introduce the students to the renewable energy concept and to also help them start with building their prototypes. Equipped with the workshop teachings and enthusiasm, the students applied themselves and

gained a thorough understanding of green tech to come up with practical solutions. Ten high school teams participated, and first prize in the high school’s category went to the Atlantis School of Skills for their elemental classroom solution model, with Atlantis Secondary School in the second and third place with their Keeping it Green and Infinite Energy models. Ten primary schools also took part, and Team Hybrid, Fantastic Four and Team Renewable Energy, all from Wesfleur Primary School won the first, second and third place prizes for primary schools. West Coast College also joined the challenge, building incredible models.

The Atlantis SEZ is surging ahead with an all-inclusive strategy to build a strong power-producing plant. The SEZ is expected to attract R3.7-billion in investments over the next two decades. One of the aims of establishing the Atlantis SEZ was to unlock the underlying economic value of existing and under-utilised infrastructure through the creation of a green tech manufacturing hub. Situated on the West Coast 40km from Cape Town, the SEZ capitalises on the province’s booming renewable energy and green technology sector. It supports the manufacturing sectors to become component manufacturers for the renewable energy industry. Top row, centre: Jarrod Lyons, CEO, ASEZCO, says that the company runs enterprise and skills development programmes to afford opportunities for employment in the sector.

A great location for green tech manufacturing

The Atlantis Special Economic Zone (SEZ) for Green Technologies is located on the West Coast of South Africa, in the Cape Town Metro. The zone is dedicated to the manufacturing and provision of services in the green tech space. Wind turbines, solar panels, insulation, biofuels, electric vehicles, materials recycling and green building materials are examples of green tech that are welcomed.

If you are a manufacturer, service provider or supplier to green tech value chains, the SEZ may be a great place to locate. It offers the benefits of co-location, access to strong markets, a development-ready area, great support and incentives, and an attractive skills base to recruit from.

w w w.a tla nt isse z. com

To find our more, contact Jarrod Lyons, Investment Facilitator, jarrod@greencape.co.za.

ENERGY

Niveshen Govender, CEO of SAWEA.

INDUSTRIALISATION THROUGH LOCAL MANUFACTURING The South African Wind Energy Association has reaffirmed its push for sector industrialisation by advocating for increased local manufacturing. BY SAWEA

ed by South African Wind Energy Association (SAWEA) the industry has set unambiguous local manufacturing targets with a specified timeframe. Furthermore, the Association has reiterated that its approach to the industry’s growth is to persistently deliver new wind power generation to the grid responsibly and sustainably, which should be aligned to the South African Renewable Energy Masterplan (SAREM) that falls under the Department of Trade, Industry and Competition (dtic). Estimating that the sector can deliver 1.6GW per year, in line with the country’s energy roadmap, local content targets of between 56% and 61% by 2030 is the projected goal. The majority of this will be achieved by locally manufactured wind turbine towers and steel anchor cages, but also includes smaller components, equipment and related services. “The necessary research will be conducted to quantify and define exactly what new or additional components will be added to the current mix to achieve these local content target thresholds,” says Niveshen Govender, CEO of SAWEA. Considering the targets set by the Department of Mineral Resources and Energy (DMRE) and dtic are currently pegged at 40% local content, and the wind energy industry has achieved 47% exceeding the 43% commitment, the Association has outlined the required policy certainty and procurement criteria if it is to achieve these new power generation targets and fulfil its role in stimulating the economy simultaneously. In its recent response submission to SAREM, SAWEA outlined the conditions that the renewable energy sector requires to meet these local manufacturing targets. Foremost a stable and consistent pipeline with foreseeable and predictable timelines between renewable energy procurement rounds is necessary

to attract significant investments to rebuild the manufacturing sector and create a local market based on its competitiveness and value-add. “We are working on delivery solutions to the industrialisation agenda, which is rooted in strong local manufacturing capability. To achieve this, we need to address market conditions and investor certainty off the back of rolling procurement rounds and offtake over the next 10 years. This will allow the sector to develop its supply chain to ensure product quality and compliance, while delivering jobs and clean power to South Africa in line with the favourable pricing tariffs that the sector offers,” adds Govender.

Market certainty is the most important aspect to building a local manufacturing industry. Furthermore, SAWEA has stated the need for the industrialisation policy to offer sector incentives to allow for robust local capabilities, so that the wind industry can compete with international markets, while supporting local manufacturers to become competitive for export markets. “Transformation goes hand-in-hand with the industrialisation of the wind power sector. And market certainty is the most important aspect to building a local manufacturing industry. Hence, we require the DMRE to provide consistency, in line with the IRP2019, to kick-start industrialisation by upfront certainty on a number of REIPPPP rounds and their primary local content framework,” concludes Govender.

WASTE

SUSTAINABLE IT:

transforms e-waste challenge into opportunity Most organisations are heavily reliant on IT assets that require regular upgrades for almost all operations. Responsibly managing the resulting e-waste is not only a legal requirement but an opportunity to implement sustainable IT and circular economy practices.

staggering 50-million tons of e-waste is generated around the world every year. With the pace of technological innovation and the Covid-19 pandemic spiking demand for electronics, global e-waste volumes are projected to grow to 75-million metric tons per year by 2030. Less than 20% of e-waste globally is officially documented as properly recycled. That means most electronics being discarded end up in landfills, where the items are incinerated or buried, leaking harmful toxic chemicals such as mercury or lead which pose environmental and health risks. In South Africa, the National Environmental Management Waste Act, 2008 stipulates that all reasonable measures must be taken to: • Avoid and minimise the generation of waste • Reduce, reuse, recycle and recover waste where generation cannot be avoided • Ensure waste is treated and disposed of in an environmentally sound and safe manner.

CIRCULAR ECONOMY PRACTICES

“To meet the obligations, all South African companies must reduce and manage their e-waste. Companies need to move from a linear ‘produce, use and discard’ approach to a circular and more sustainable ‘produce, use, reuse and recycle’ approach,” says Kwirirai Rukowo, general manager of Qrent, a division of InnoVent Rental and Asset Management Solutions. “Circular economy practices enabled by innovative business models manage the first, second, and third lifecycles of IT assets responsibly. This not only maximises the lifecycle of a company’s IT assets but also reduces e-waste, maximises re-use and recycling opportunities and supports responsible end-of-life disposal. In addition, it allows companies to reap the benefits of sustainable IT, such as reducing costs, meeting sustainability or ESG goals and improving investor and stakeholder confidence, without negatively impacting the bottom line.”

PRACTICES IN IT MANAGEMENT

Monitoring IT requirements and assets across business units within the organisation provides a complete view of how effectively the entire organisation’s IT needs are being met. The right IT asset tracking solution will collate valuable information, such as accurate data about how many IT assets a company owns, which employees are using the devices, what new devices or upgrades are required now and, in the future, and how each asset is disposed of at end-of-life.

ACCESS TO EQUIPMENT

“The traditional model of outright device ownership, funded by expensive capex, is fast being replaced by access to equipment found in hardware-as-a-service, subscription, leasing or rental models,” explains Rukowo. “The right model eliminates the hassles of 100%

ownership of IT assets, including capital outlay, maintenance, delayed upgrades, and the responsibility for correctly disposing of harmful e-waste.” Innovative models such as subsidised finance models help businesses finance and manage technology assets in their first life, by eliminating the need for expensive capex.

REFURBISHING OR REMANUFACTURING

IT equipment that no longer satisfies the user’s original needs is not necessarily obsolete and should be brought back into the circular economy to be repaired, refurbished or re-used for other purposes, extending the lifecycle to extract maximum value. Giving technology a second life reduces the amount of e-waste in landfills, preserves natural resources, reduces the quantity of new products being manufactured, drives down greenhouse gas (GHG) emissions and limits overall footprint.

RESPONSIBLE DISPOSAL

The lack of disposal policies can create a large amount of e-waste for companies that leads to further issues such as data security, space constraints and storage costs. “Replacing and updating a company’s technology necessitates disposing of old equipment without contributing to environmental hazards while also protecting your data, which requires a more complex strategy,” explains Rukowo. “At the end-of-life stage for electronic devices, a professional and specialised IT asset disposal programme is required to provide secure data sanitisation ensuring confidential data on the devices are safely removed to avoid a data breach; and also, to provide the correct disposal of outdated IT assets.” Unviable equipment must be disposed of by accredited service providers in a responsible manner, in accordance with high industry standards for environmental stewardship.

Answering the call for infrastructure-led, socioeconomic recovery through public-private collaboration The Olifants Management Model (OMM) Programme is a collaboration between Commercial Users, represented by the Lebalelo Water User Association, and Government. As bees in a hive understand the need for synergistic co-existence, the OMM Programme aims to achieve synergy between the public and private sector and, in doing so, improve socio-economic growth through the cost-effective provision of potable and bulk raw water infrastructure to defined areas in the Limpopo Province.

Olifants Management Model (OMM) Programme lebalelo.co.za/omp

Green Economy Journal Issue 52

Articles inside

GREEN TECH

WASTE

ENERGY

WATER

METROLOGY

THOUGHT LEADERSHIP

ENERGY

Shaping tomorrow’s hydrogen market

STORAGE

MOBILITY

State of the motor industry

Winning with the right procurement localisation

Global standard prioritises better management of water

MINING

NEWS AND SNIPPETS

The economic case for the mining industry to support carbon taxation

TSF failure: standards for response and recovery

STORAGE

Opportunity for Africa to fill the commodity gap