Inside Mining Focus on Africa by 3S Media

FOCUS IN AFRICA

VOLUME 14 NO. 03

AUGUST 2021

Coal Face Decades of Coal Reserves

Infrastructure Unlocking Africa’s Rail Infrastructure Boom

Energy Transition An African Perspective

Siyanda Bakgatla Platinum Mine Ready to Make a Mark ISSN 1999-8872 • R55.00 (incl. VAT)

THE FOCUS IN AFRICA ISSUE | 2021

CONTENTS FRONT MATTER Editor’s comment............................................................................................................................2 Foreword.............................................................................................................................................3

INFRASTRUCTURE Africa’s infrastructure inroads despite the challenges.............................................. 6

Supporting AfCFTA through a transformed rail industry.............................................8 Cables and wires for tough mining environments............................................................9

INVESTMENT SBPM headed for platinum success...................................................................................10

Growing the South African economy.............................................................................. 13 Global commodities present unique opportunities for African mining........ 16

COAL FACE SA’s coal production to continue for decades............................................................ 18 Lubrication for coal processing and transportation.................................................20

Coal producer benefits from SRB solution...................................................................22

ENERGY Mining industry’s role in transitioning to clean energy...........................................24 Energy transition – an African perspective...................................................................27

EVENTS Africa Energy Week 2021 headed for Cape Town ................................................30 ECOWAS Commission Forum returns in September...........................................33 Kenya Chamber of Mines to host EAMEC...................................................................34 Ninth Joburg Indaba on its way...........................................................................................36

27 1

EDITOR’S COMMENT

THE VALUE OF EVENTS in the mining industry

Towards the end of the year, there are usually many events to look forward to in the mining industry. Unfortunately, this year-end event excitement has slowed significantly due to Covid-19.

ince the outbreak of the pandemic, global industries and organisations took action to put the necessary measures in place to mitigate the spread of the SARS-CoV-2 virus and reduce its inevitable impact as far as possible. One of those measures was cancelling or postponing any planned events. The mining industry saw prominent events and exhibitions – such as Mining Indaba, Electra Mining Africa and bauma CONEXPO AFRICA – cancelled. Making such a decision could not have been easy for organisers; however, it was the right call to make considering the current situation. The pandemic has brought with it a new normal, mainly consisting of doing things remotely, such as working from home, and avoiding any gatherings where possible. Adjusting to this hasn’t been easy for anyone, least of all the events industry, which has historically relied on human interaction for its success and survival. Like all the other industries, the events industry has adapted and events have gradually started moving to virtual platforms. From September, the mining industry calendar will start filling up with dates and times of upcoming events taking place in South Africa and the wider continent. September will see the return of the ECOWAS Mining & Petroleum Forum on 14 to 16 September 2021. This will be followed by the Joburg

EDITOR Dineo Phoshoko (dineo.phoshoko@3smedia.co.za) HEAD OF DESIGN Beren Bauermeister DESIGNER Lizette Jonker CHIEF SUB-EDITOR Tristan Snijders CONTRIBUTORS James Holley, Johan Meyer, Mxolisi Mgojo, Jovita Nsoh, Vuyo Ntoi, Nivaash Singh PRODUCTION & CLIENT LIAISON MANAGER Antois-Leigh Nepgen GROUP SALES MANAGER Chilomia Van Wijk PRODUCTION COORDINATOR Jacqueline Modise DISTRIBUTION MANAGER Nomsa Masina

DISTRIBUTION COORDINATOR Asha Pursotham BOOKKEEPER Tonya Hebenton SUBSCRIPTIONS subs@3smedia.co.za ADVERTISING SALES Amanda De Beer Tel: +27 (0)72 600 9323 / +27 (0)87 802 5466 Email: amanda.debeer@3smedia.co.za PUBLISHER Jacques Breytenbach 3S Media 46 Milkyway Avenue, Frankenwald, 2090 PO Box 92026, Norwood 2117 Tel: +27 (0)11 233 2600 www.3smedia.co.za

Indaba on 6 and 7 October 2021. In the same month is the Eastern Africa Mining and Energy Conference on 12 to 14 October 2021, while African Energy Week 2021 takes place from 9 to 12 November 2021. Details about all these events are available towards the end of this issue.

Significance of events Events are key for mining because they address critical issues facing the industry; in so doing, they contribute immensely to the development of the sector. Because mining is a global trade, events play a crucial role getting the right people to engage with each other regardless of geographical location. Through various sessions, events also address burning issues in the mining industry, which are discussed during panel discussions and presentations. Attendees are invited to participate in constructive discussions through comments or questions to panellists or presenters. Networking, business opportunities, as well as product and service showcases are just a few of the many advantages of attending events. The sheer number of upcoming events shows that mining stakeholders still find value in organising and hosting such events, even in the midst of a pandemic. It’s impressive to see that organisers have not only adjusted, but indeed embraced the new normal to host events that will benefit the industry. It goes without saying that event organisers must adhere to Covid-19 health and safety protocols when hosting events where attendees will be present in person, as must the attendees.

Dineo Novus Holdings is a Level 2 Broad-Based Black Economic Empowerment (BBBEE) Contributor, with 125% recognised procurement recognition. View our BBBEE scorecard here: https://novus.holdings/sustainability/transformation ISSN 1999-8872 Inside Mining. © Copyright 2021. All rights reserved. All material herein Inside Mining is copyright protected and may not be reproduced either in whole or in part without the prior written permission of the publisher. The views of the authors do not necessarily reflect those of the publisher.

THE FOCUS IN AFRICA ISSUE | 2021

FOREWORD

Third parties key to UNLOCKING AFRICAN RAIL infrastructure boom Across the developed world, industries and entire economies rely on rail to move vast volumes of goods efficiently and cost-effectively. By James Holley*

uring recent years, we’ve seen renewed investment in Africa’s rail infrastructure, as the continent looks to rail to unlock economic growth. But if we’re going to create the flourishing rail industry this continent needs, we must create a far more attractive investment environment to attract new financing. Most goods in Africa today are trucked by road – and, right now, road transport has an unfair advantage. In most cases, the infrastructure is heavily state-subsidised and has seen massive government investment. The fact that the road network is more developed allows trucks to run door-to-door. Road transport has relatively low barriers to entry, low levels of regulation, and uses highly versatile and fundable assets, which means there is high competition, with a large number of operators. By contrast, the rail industry has seen little state investment, is required to be self-funding, and often relies on one state-owned entity to run the rail services. This means rail capacity generally lags industry demand in Africa. The impacts of large volumes of rail-friendly freight on the road are well known and include: increased cost of freight, increased road maintenance charges, road deaths, high greenhouse gas emissions, border delays, port congestion, and more. That’s why making rail more competitive and efficient as a mode of transport should be a top priority for government. Currently, state-owned rail companies

James is currently the nonexecutive chairperson of the African Rail Industry Association

FOREWORD

It is time to get all stakeholders around the table to get our rail industry driving our economy forward

commonly own both the infrastructure (the permanent railway) and the assets that operate on it (the locomotives and rolling stock). Where there is a shortage of train sets, usually due to either a lack of adequate maintenance or a capital shortage to invest in these trains, the infrastructure remains underutilised, resulting in lost revenue opportunities.

How can rail companies unlock economic growth? State-owned rail companies have a vital role to play as enablers of growth in national economies, and have huge expertise in running rail operations. To unlock investments in the sector, they must open their networks to third parties – like freight companies, industries and independent operators – while retaining ownership of their networks. This will not just make them more profitable and sustainable freight railway businesses; it will power the infrastructure boom the industry – and the continent – needs through private sector investment into new train sets. The fact is that freight rail is a key driver of a nation’s logistics performance, which, in turn, drives greater economic performance. World Bank studies have shown that countries with well-functioning freight railways are more competitive and reap the wider benefits of balanced transport systems, in which the right freight moves on the right mode. Germany, which scores the highest on the World Bank’s Logistics Performance Indicator, has opened its rail network to private rail operators, and the entry of these operators on to the state network resulted in the creation of hundreds of SMEs for the provision of infrastructure interlinked to freight rail operations. In fact, much of the success of Germany’s rail network has come through state-owned rail operator Deutsche Bahn’s long-standing partnerships with third-party operators. In Australia, rail is booming, with more than A$100 billion (R1.08 trillion) of investment in new rail infrastructure planned by 2030, as the country looks to get its natural

resources and products to global markets as cheaply and efficiently as possible – also driven through partnerships with private operators. The investment case for new mines is clear; if one operator fails, there are a number of others waiting in the wings to take over. Egypt, Gabon, Mozambique, Senegal, Tanzania, Zambia and others have already introduced private operators with great success. The Tanzania-Zambia Rail Authority more than doubled rail volumes just two years after introducing private operators in 2019. West African powerhouse Nigeria is currently building a 284 km main line to connect three states at a cost of US$1 billion (R14.8 billion) over the next three years. South Africa is in the enviable position of having a countrywide core rail network that spans more than 23 000 km, but its vast installed network remains grossly underutilised. Rail infrastructure has been a neglected area of investment for decades – lagging areas such as energy, which has seen the construction of new power stations – and has had to compete with other infrastructure sectors for investment. This means the country’s growth prospects are constrained, as it doesn’t have the rail capacity the mining sector and heavy industry need to grow our primary industries. It doesn’t have to be this way. Rail has the potential to lead South Africa’s reset from the pandemic by providing a multibillion-rand boost to the national economy over the next five years, potentially creating tens of thousands of jobs and driving massive economic benefits for big rail users like mines and industry. To achieve this, though, it is critical that government moves ahead rapidly with its plans to grant third-party access to the core rail network, as mooted by President Ramaphosa in his Economic Reconstruction and Recovery Plan last October.

Changing the landscape of rail freight Opening third-party access to rail infrastructure fundamentally changes the way freight moves in a country. It grows rail capacity and encourages efficiency

THE FOCUS IN AFRICA ISSUE | 2021

FOREWORD

through natural competition, which benefits a range of upstream industries – and the entire economy – by enabling more efficient freight movements. This efficiency and capacity unlocks potential new export markets to the rest of the continent and the world. Industry body ARIA (the African Rail Industry Association) estimates that only 17% of South Africa’s general freight currently moves by rail. Transnet moved 215 million tonnes in 2019, down 5% from 2018, with vandalism often paralysing the country’s electric fleet. More than 80% of the country’s 23 000 km network has ‘significant capacity’. ARIA research shows that approximately 190 million tonnes of intercity freight and 20 million tonnes of railfriendly bulk commodities currently move by road every year. Of this, around 58 million tonnes could move to rail almost immediately, with the sectors that would benefit including agricultural commodities, metals and minerals, cars, containers, hazardous chemicals, and liquid bulk. One of the big winners of getting as many extra tonnes on rail as possible will be Transnet, which will benefit from significant additional cargo flows and the related access fees – effectively turning the massive national network from a cost drain into a driver of revenue. A healthy balance sheet for Transnet will reverse the cuts to its credit rating and reduce the cost at which it borrows money. Of course, more cash in the hands of Transnet means more investment can be made in maintaining and upgrading the rail track infrastructure, further improving efficiency and adding more capacity.

Opening the rail network to third-party operators will unlock billions of rand in industry investments almost immediately. Traxtion has already announced an initial locomotive and wagon build programme of R1.5 billion, with plans to invest a further R14 billion to R17 billion in locomotives and wagons over the next five years as part of a carefully scaled rolling procurement programme. Early projections by ARIA suggest that additional parties using the rail network will create numerous upstream jobs by enabling industry (like smelters, steel mills, manufacturing and agri-processing) and mining (new coal, manganese, chrome, ferrochrome and iron ore mines, among others) to become internationally competitive. Similarly, rail corridors into Africa would create cost-effective gateways to take South African goods into these markets. Africa cannot afford to rely on governments alone to support the potential of its rail industry. We must bring in private operators as soon as possible to make the most of this incredible asset we have – for the good of the sector, industry in general, and the entire continent. When we fully optimise our rail networks, we will take a giant step forward towards achieving a competitive, growing, inclusive economic powerhouse – without privatisation, or any contribution from the state fiscus. We must take this opportunity now – it is a very rare win-win. *James Holley is the CEO of Traxtion.

INFRASTRUCTURE

AFRICA’S

INFRASTRUCTURE INROADS despite the challenges

Infrastructure is critical for the development of countries, economies and industries globally. As a continent consisting primarily of underdeveloped nations, Africa still has a long way to go in terms of infrastructure development. By Vuyo Ntoi*

frica’s infrastructure requirements are significant, with significant shortfalls across both social and economic infrastructure. Social infrastructure shortfalls – such as the lack of clean water supply, functional sanitation, education and health – are those that most closely affect individuals and communities, having a direct impact on quality of life and human development measures. While economic infrastructure, which relates to transportation, power and communication, affects individuals and communities as well, it also has a significant impact on economic activity, logistical efficiency and increased competitiveness. The shortage of infrastructure across the board is responsible for Africa not being able to meet its full economic potential, which is required for the continent to deliver a better quality of life for Vuyo has two decades of investment experience and has been involved in private its people. It has been estimated infrastructure investment in Africa since 2003 that the shortfall in infrastructure spending across the continent runs into tens of billions of US dollars per annum, and the challenge is to find the financing to provide this infrastructure.

Development challenges and African front runners The biggest challenge to the development of infrastructure has been insufficient financing, which has mainly related to the poor fiscal position of many African nations; however, this is not the only challenge. Others include the lack of technical capability to deliver the required infrastructure, a deficit in planning and implementation skills across the continent, and insufficient maintenance – meaning that even the existing infrastructure is lost over time. Sometimes, there is also a lack of political will to provide the infrastructure that countries and communities require. All these challenges are made worse by many countries not implementing the reforms required to attract private capital to step in to mitigate the infrastructure shortfall. The African Development Bank has an Africa Infrastructure Development Index, which monitors and evaluates the status of infrastructure development across the continent. The country scores tend to correlate with per capita GDP numbers. Some of the leading countries include the Seychelles, Egypt, Libya, South Africa and Mauritius. The index looks at ease of transportation, the scale and depth of electricity provision, and ICT development. The correlation to per capita GDP highlights that these countries have potentially more fiscal resources to pursue infrastructure projects for their citizens. In addition, the countries in the lead are those that have had relatively higher infrastructure stock for many decades.

THE FOCUS IN AFRICA ISSUE | 2021

INFRASTRUCTURE

Enhancing infrastructure development There are not many key continental infrastructure milestones to talk to, and many of those that do exist occurred quite some time ago. These include the likes of the Suez Canal in Egypt, the development of large FMX: The FMX truck is ideal for tough water projects in Ethiopia conditions common in and Lesotho, and large mining operations hydroelectric developments in Zambia, Zimbabwe and Mozambique. There have also been a significant number of resourcesrelated rail and port developments across the continent, but these have been mainly to support extractive industries. More recently, there has been significant investment into renewable energy – particularly in countries like South Africa, Morocco, Egypt, Kenya and Namibia – and this is a trend that we believe will continue and spread to more countries on the continent, into the future. Building skills in project procurement, development and implementation is key for the development of infrastructure on the continent. In addition, the regulatory environment must be further developed to make investment in infrastructure assets attractive to local and foreign investors. These two initiatives will help to unlock private capital, which can invest in increasing the stock of infrastructure across the continent, while also alleviating the strain on government coffers. *Vuyo Ntoi is the joint MD of African Infrastructure Investment Managers (AIIM).

AIIM has been involved in various infrastructure projects in Africa such as the Amandi IPP in Ghana

INFRASTRUCTURE

SUPPORTING AfCFTA

through a transformed rail industry The African Rail Industry Association (ARIA) has positioned itself to play a greater role in revitalising the local and continental rail sector and supporting the African Continental Free Trade Area (AfCFTA).

he AfCFTA, which came into effect on 1 January 2021, brings together more than 50 economies, from Algeria to South Africa. It aims to boost intra-African trade by 60% by 2034, creating a potential economic bloc of US$3.4 trillion (R49.93 trillion). “A thriving rail sector will play a key role in achieving the AfCFTA’s goals,” says Mesela Nhlapo, CEO, ARIA. “However, while there has been significant investment in Africa’s rail infrastructure in recent years, stateowned rail companies, industry and the private sector are going to have to work together to make the industry more relevant and tap into rail’s ability to unlock economic growth.” Nhlapo says President Ramaphosa’s announcement last year that South Africa’s rail network would be opened to third-party operators was a “major step forward” for the industry and could lead the way for the rest of the continent, while creating thousands of jobs and driving significant economic benefits. Granting third-party access to the core rail network within the next 12 months is a key element of the Economic Recovery Plan presented by the president on 15 October 2020. Under this policy, private freight rail operators will be allowed to operate on the stateowned rail infrastructure alongside Transnet. Open access will be complementary to Transnet, which stands to benefit significantly from new revenue streams. Nhlapo explains that opening the rail network to third-party operators would unlock “billions” of rand

in industry investments almost immediately. “South Africa and Africa’s state-owned rail companies have a vital role to play as enablers of growth in national economies. By opening their networks to third parties – like freight companies, industries and independent operators – while retaining the operational aspects of their networks, they will not only become more profitable and sustainable freight railway businesses but will enable a range of knockon effects up- and downstream.” Currently, most state-owned rail companies in Africa commonly own both the infrastructure (the permanent railway) and the assets that operate on this infrastructure (the locomotives and rolling stock). As long as there is a shortage of train sets, a capital shortage to invest in these train sets, or no investment appetite for a particular cargo, this infrastructure remains underutilised, resulting in lost revenue opportunities. To stimulate greater usage of, and investment in, national and continental rail infrastructure, a few key elements need to be put in place, starting with regulatory stability and user-friendly access agreement regimes. There will also have to be some work done to create clear and thorough safety regulations, which will attract the kind of quality operators that the infrastructure owners should demand. The role of ARIA, as an advocacy group, is to have the rail industry’s opinions heard and concerns heeded.

THE FOCUS IN AFRICA ISSUE | 2021

INFRASTRUCTURE

CABLES AND WIRES

for tough mining environments Cables and wires must be constructed to withstand the harsh and demanding environments often found in underground and surface mining.

ining companies typically operate in harsh environments, with cables exposed to adverse weather and rugged, isolated terrain. The equipment used in this industry often places added stress on the mechanical properties of cables and wires through abrasion, impact, vibration, and tension. HELUKABEL offers reliable and highperforming cable and wire solutions that suitably withstand the conditions found in such rigorous operating environments. Exposure to chemicals in solvent extraction, flotation, mineral collection and depression are but a few of the challenges faced. HELUKABEL manufactures low-smoke, zero-halogen (LSZH) cables that do not emit toxins when exposed to flames.

HELUPOWER range HELUKABEL’s range of HELUPOWER REELABILITY cables are specifically designed for South African and African mining environments. The construction of these cables includes variations in pilots and screens, insulation materials, as well as the specific voltage rating per cable type and design. This range can also be designed in line with specific requirements for reeling and power transmission. Whether you require cables for hand tools and machinery,

mining vehicles, ore retrieval or processing – the cables in this range are suitable for various applications and designed with the customer’s requirements in mind. The HELUPOWER 1000 RV-K is one of the cables in the HELUPOWER range and is designed for ﬂexible, multipurpose power supply connections, which can withstand medium mechanical stress with free movement. Suitable for use in dry, damp and wet rooms, it is also suitable for direct burial, laying in tubes and underground installation areas. Typical application areas range from general production machinery to machine tool applications, conveyor belt systems, airconditioning units, steel plant installations and factory automation. It is ideal as a power or control cable, especially when elevated temperature and/or voltage are required. Its UV-resistant properties, due to its special PVC sheathing compound, also make it ideal as a power supply cable for outdoor mobile and portable devices and machinery. Alternatively, the cable is also used in the renewable energy sector. HELUKABEL has the products, with the proper certifications (such as SANS 507-1 and NRS 034-1), companies require when extracting precious metals and minerals from beneath the earth’s surface.

Specialised cables and wiring are required for the mining industry

INVESTMENT

SBPM headed for

PLATINUM SUCCESS

Richard Shaft is a key production area at SBPM

In 2018, Siyanda Resources, together with Bakgatla-Ba-Kgafela, became joint owners of Siyanda Bakgatla Platinum Mine (SBPM) after acquiring the mine from Anglo American Platinum. With over three years under new ownership, SBPM is doing well despite experiencing its fair share of challenges.

BPM mine covers several production areas and two processing plants. These include Spud Shaft, Richard Shaft and Declines. The processing plants are Mortimer and Ivan Concentrator. Within four months after the takeover, the Decline shaft was reopened. Increased production and strong financials When new management took over in 2018, the mine was producing an average of 170 kt (kilotonnes) per month and just breaking even. The figure increased to 180 kt per month at the beginning of 2019, when the basket price per ounce of PGMs (platinum group metals) was approximately R12 000. “The team’s mission was firstly, to enable a stable business and labour environment. Thereafter our leadership and management teams aimed to meet the operational objective to increase the life of mine

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and in turn generate extended shareholder value,” says Francois Uys, CEO. The company managed to close FY 2019/20 by producing 308 536 ounces of 4E (platinum, palladium, rhodium, gold), including 188 904 ounces of platinum, off a resource base of three million milled tonnes. “We managed our costs well and the PGM basket price was good due to our high proportional palladium split. As a result, our profit margins became healthy,” Uys explains. “We started the 2020/21 financial year facing a PGM basket price per ounce of over R45 000 and a potential mining output of 250 kt per month, as well as a looming Covid pandemic,” Uys says. Dealing with the global pandemic The Covid-19 pandemic was unexpected and ultimately had a far-reaching impact on many industries and economies across the word. “We all watched as countries around the world started to shut down their economies in efforts to minimise the human impact of the pandemic. When the first case in South Africa was announced at the beginning of March 2020, we were not complacent and reacted proactively,” Uys says. With a workforce of more than 5 200 people, SBPM is a labour-intensive business, and saving lives and livelihoods required decisive action from the company. “We established a multidisciplinary planning team two weeks before President Cyril Ramaphosa announced the first lockdown to limit the rapid spread of the Covid-19 pandemic. The necessary maintenance was done during lockdown; during start-up, we were ready for the challenge and started health screening of employees in

preparation for start-up at reduced capacity. We eventually started mining and processing activities in late April 2020 at 50% employment capacity under Alert Level 4. We did not have 100% of our employees until late October 2020. Some of them were locked outside the country’s borders or were under quarantine/isolation.” Despite the challenges of not having a full complement of production teams for a few months, supply-chain-related issues, as well strict social distancing, screening and testing protocols, SBPM went beyond merely maintaining critical activities – ramping up production by late June 2020 and gradually increasing labour while strictly observing all Covid-19 protocols. Some of the planned capital projects had to be delayed while the company was dealing with the reality of workforce shortages, as well as maintaining strict access control. In the short term, productivity and efficiency were impacted, but this was an acceptable risk, and the impacts ultimately negligible. HSE and rewards of resilience The drive to improve workforce health, safety and wellness is an important journey. The mining work environment can be highly hazardous and analyses of fatalities and serious injuries across the mining industry show that most incidents occur when somebody knowingly fails to comply with safety procedures or rules put in place to prevent injury. “Production and innovation are

Francois Uys is the CEO at Siyanda Bakgatla Platinum Mine

We emerged a stronger, more resilient business from the lockdown year. The Covid-19 pandemic has taught us to become more adaptive to unforeseen threats.”

INVESTMENT resulted in higher earnings than expected. “Despite the 7% decrease in total tonnes milled, we ended the 2020/21 financial year with a respectable R5.306 billion EBITDA.” Other milestones achieved by SBPM include: • four million fatality-free shifts in 2019 • sustainable stakeholder relationships with the local communities and government • healthy relationship with the labour unions • empowerment of employees through employee share scheme. “We emerged a stronger, more resilient business from the lockdown year. The Covid-19 pandemic has taught us to become more adaptive to unforeseen threats.”

dependent on us working together to change this mindset.” Uys believes that traditional linear enforcement and disciplinary processes, while essential, are not the only or most effective controls. He feels that leaders ought to take more responsibility in driving behaviour change. Despite the negative impacts “We need to set the compliance example and due to the initial shutdown, have to incentivise the correct restricted workforce numbers and behaviour,” he insists. strict Covid-19 procedures, we “Despite the negative managed to make most of our impacts due to the initial shutdown, restricted operational performance and workforce numbers and efficiency targets.” strict Covid-19 procedures, we managed to make most of our operational performance and efficiency targets,” Uys says. He further adds that, even with the largely Covid-19driven challenges experienced, the PGM basket price

Exciting opportunities on the horizon The past two years have been undoubtedly challenging; however, they have also presented some great opportunities for SBPM. According to Uys, the local business forum has put a lot of pressure on the business to create more opportunities. Effective controls have been put in place to manage the procurement opportunity management process better. In FY 2021/22, SBPM will advertise through a dedicated tender system where local communities will be invited to tender. “Ethically, we need to make sure that preferential procurement processes are always adhered to.” There are also plans to invest heavily into the future development of the mine to enable a longterm trajectory of sustainable growth. “To extend the life of mine, we continue to build capacity by investing in development. Our earnings are causally related to production. We have planned for conservative increases for the next financial year due to anticipated Covid-19-related disruptions. We also anticipate commodity pricing to remain buoyant,” Uys concludes.

For more information, contact SBPM:

Telephone: +27 (0)11 832 2453 – Ext 109 Website: www.siyandaplatinum.com Siyanda Bakgatla Platinum Mine Siyanda Bakgatla Platinum Mine (Pty) Ltd

THE FOCUS IN AFRICA ISSUE | 2021

INVESTMENT

the South African economy Driving inclusive and long-term growth for South Africa starts with participation and collaboration. All businesses – both listed and private companies as well as individuals who have the funds – should invest in our country, and work together with government to create employment opportunities. By Johan Meyer*

e cannot only generate revenue and issue dividends to shareholders without reinvesting, so that future generations can also reap the benefits. Businesses solely focused on profit without purpose are not developing the country or their communities. I fundamentally believe that the only way to improve our economic situation is if all companies dig deep and reinvest to grow the country – that way, we all win. But how do businesses go about investing in initiatives that matter and collaborating with the right partners to generate real value? Let us look at Exxaro’s investment commitment, successful implementation of projects, and strategic public-private partnerships (PPPs) as a proof point.

Investing in South Africa’s future with impactful projects In 2019, we committed R20 billion to President Cyril Ramaphosa’s investment drive for the country at the South African Investment Conference (SAIC). This commitment is geared towards developing our coal mining operations and renewable energy investment in Limpopo, Mpumalanga and the Eastern Cape. These projects will generate the required cash flow not only to sustain and grow the business but also to unlock value for our stakeholders, including our host communities. Excluding the proposed Thabametsi independent power producer (IPP) project, which was cancelled due to a lack of IPP investment, our revised

Johan believes that participation and collaboration are critical in driving inclusive and long-term growth for South Africa

INVESTMENT

It’s crucial for businesses and individuals to invest in South Africa, especially with the challenges of Covid-19 and uncertain electricity supply

investment is around R17.5 billion. To date, we have spent R13 billion of this – about 75% of our committed value. R7.4 billion has gone towards projects that have been completed, including the Dorstfontein West Expansion, Leeuwpan Lifex Extension, Grootegeluk New Rapid Load Out Station, Mafube Life Extension and Belfast Implementation projects. We have spent R13 billion on projects we are currently working on, which is in line with our original plan and cost flow provisions. Our Grootegeluk 6 project will be concluded next year and our Matla expansion (which is associated with Eskom) will be concluded at the end of 2023. The R4.5 billion project is on track and will result in the mine again producing 10 million tonnes of thermal coal per annum to support the power stations’ requirements. Social impact is our focus across all of these projects, with thousands of direct and indirect employment opportunities being created and local black-owned, black-woman-owned and black-youth-owned businesses flourishing through enterprise and supplier development. All these initiatives drive our purpose of powering better lives for our people. And from a presidential perspective, we are creating hope for South Africa

by delivering growth projects that can sustain our country in the long run.

Urging more businesses to follow suit and invest Exxaro’s commitment falls directly in line with the need for investments to support South Africa and to grow this beautiful country of ours. The more investments we have, the more projects we can execute and the more jobs we can create, moving South Africa forward. For example, at the peak of our investment, we helped 7 000 contractors earn a living through implementing these projects. With more investments, these contractors and construction companies can stay afloat and give their communities hope for the future. As our CEO, Mxolisi Mgojo, reminds us, the small seeds we plant today eventually grow into strong, sheltering trees under which people can find shade and refuge. Over the life of our projects, we hope to generate value for generations to come. It’s crucial for businesses and individuals to invest in South Africa, especially with the challenges of Covid-19 and uncertain electricity supply. We will need the right contractors to build these ‘trees’ that will eventually have a massive country-wide impact, providing much-needed jobs for all South Africans.

THE FOCUS IN AFRICA ISSUE | 2021

INVESTMENT And for those who are reluctant to invest, we need to prioritise ethical leadership to form a foundation of trust. Citizens and businesses need to believe in and trust South Africa’s leadership so much so that they know the private sector and government can join hands to run the country ethically.

Joining forces for success We all want to win this race for South Africa; however, just like a literal race, we cannot do it without the correct coach, training or talent. Forming PPPs is imperative to achieve our common goal of driving our country forward. As Exxaro, we cannot do it alone; as individual employees, we cannot do it alone; and as citizens, we can’t do it alone – we must work together. We first need to form partnerships with government agencies; we then need partnerships with other private-sector companies so we can benefit from each other’s expertise. For example, Exxaro partnered with Tata Power when we first embarked on our renewable energy journey. We knew nothing about wind energy and consulted with them as specialists in the field, eventually buying out their share, and acquiring full ownership of renewable energy business Cennergi. Cennergi’s wind farms contribute renewable energy to the country – a prime example of how a well-defined partnership has created value for various stakeholders.

The CEOs and business leaders of South Africa need to be bold enough to dream and then come together through PPPs to actually build these shared dreams. The link between aspirations and results is called execution – we cannot only talk about our dreams; we need to action them. Partnering with like-minded leaders and businesses is key to realising any dream. Exxaro’s dream has always been to power better lives by building businesses that can support many families while successfully contributing to society and the economy. A R3.3 billion project like Belfast Mine, for example, has an annual projected income of R2 billion over the next 20 years, sustaining the community for decades to come. However, committing to investments and PPPs and following through are two different things. Companies need to put their money where their mouths are and actually execute their plans. Consequence management is important, as it shows businesses what happens when they do not deliver on their promises and, more so, when they do it unethically. Let us start sowing seeds now for our children and their children to benefit from. It is up to us to dream big, choose aligned partnerships, communicate with these partners, and execute those dreams. The future of South Africa depends on it. *Johan Meyer is the executive head of projects and technology at Exxaro Resources.

INVESTMENT

Global commodities present unique OPPORTUNITIES for African mining Under normal circumstances, the performance of the world’s mining sector, like most other sectors, tracks the movement of global GDP. This direct correlation has become well entrenched over the years, which is why, traditionally, when global GDP figures have trended upwards, Over the course of his career, Nivaash has most mining counters developed key, strategic banking relationships with global mining company executives have followed suit. (Credit: Nedbank) By Nivaash Singh*

hile upward trends in GDP are mirrored by mining trends, the reverse has also generally been the case. In fact, the mining sectors have historically borne the brunt of periods of negative GDP growth. However, this historic correlation between the fortunes of global economies and mining industries has never really been tested against the backdrop of a truly global health and economic crisis – until 2020, that is. Apart from its obvious and tragic health impacts, the arrival and rapid spread of Covid-19 across the globe created economic challenges unlike any the world has witnessed before. Global markets found themselves battling to contain the damages inflicted by the virus, as negative quarter-on-quarter global GDP growth became the norm. Mining and resources bull market But while the overwhelming majority of industries and economic sectors found themselves in rapid decline, the mining sector largely bucked this trend. In fact, mining and resources currently find themselves in what can only be termed a bull market, seemingly immune

to the widespread carnage being wreaked in most other sectors by a Covid-19-fuelled global markets bear. While this bull-within-a-bear scenario has most people, including those involved in the mining sector, somewhat perplexed, the primary reason for it is fairly obvious – and it has a lot to do with timing. When Covid-19 first became known in China, the country went into immediate lockdown, well ahead of the rest of the world. As a result, when most other countries, and entire continents, eventually ‘caught up’ with the need for strict lockdown responses, China found itself at the tail end of the first wave of the pandemic, and was already working intensively to restart its economy – with a particular focus on manufacturing. This is clearly evidenced by air quality readings taken in China in the midst of the Covid-19 crisis. While lockdowns in the rest of the world were resulting in clear blue skies, emissions in China in May 2020 were actually higher than those of the same period in 2019 – which points to a very busy manufacturing industry in the country during that time. So, as most sectors and industries across the world found themselves suffering from a significant decline in

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INVESTMENT demand, commodities were, and continue to be, highly sought after. That continued high demand has served to drive up the prices of most resources in 2020, thereby creating this apparent commodities bull market anomaly. While the impact of second and third Covid-19 waves across the world remains to be seen on this unique scenario, the demand for commodities was still very evident at the end of 2020. This points to the likelihood that Chinese industry is still working tirelessly to make up for lost production earlier in the last year, and is likely building significant stockpiles of finished goods to act as a cushion against the economic impact on any possible future Covid-19 lockdowns. Benefits of manufacturing for the mining sector The benefits of the manufacturing drive are flowing through to mining sectors across the world. And given that it is a leading supplier of many of the currently in-demand commodities, Africa is one of the main beneficiaries. This has numerous positive knock-on effects that Africa’s mining sector would do very well to capitalise on. The first is that there has clearly never been a better time than now to invest in mining stocks. And African mining stocks, in particular, offer a compelling investment proposition. Second, the outperformance of the mining sector on the continent creates a real opportunity for it to realign itself with the role it can, and should, be playing in terms of driving the sustainable well-being of Africa and her people. Covid-19 is obviously a massive crisis for what is

undeniably a ‘poor’ continent. While governments across Africa are doing their utmost to fight the pandemic and protect the health of their people, funding is in short supply. Mines currently have that funding but they need to be willing to apply it beyond merely making the required tax and royalty contributions. If they are also willing to leverage their good financial positions to make strong corporate social investments into Covid-19 relief and support initiatives, these African mines may well emerge from the pandemic with much more than just strong balance sheets. They will also enjoy the immense benefit of positive local and international perceptions that will help to attract the investment needed to grow their operations and profitability into the future. There is no African mine that can afford to squander this unique opportunity to position themselves for such future growth by leveraging their healthy balance sheets to restore their reputation, enhance their appeal as a good corporate citizen, and return their licence to operate to good standing. And, hopefully, the resulting transformation of mining in Africa will finally allow for the sector to realise its vast potential to be the engine of sustainable social development and economic growth that it can, and must, be for the continent. *Nivaash Singh is the co-head of mining and resources finances at Nedbank Corporate and Investment Banking.

A Chinese manufacturing drive led to an increase in the demand for commodities

COAL FACE

SA’s coal production to continue

FOR DECADES

While the global focus on environmental, social and governance (ESG) issues looks to phase out coal as an energy resource, the prospects for South African coal production remain strong for the coming decades.

ollowing the 3rd Coal Industry Day, held online in July, Lesley Jeffrey, principal coal geologist at SRK Consulting, said coal remains a key contributor to the country’s economy – in terms of both energy production and mineral export revenues. Coal was only recently overtaken by platinum group metals as the country’s leading commodity by sales, but it remains the most significant component of the country’s mining in terms of value added – accounting for 25%1. “Strong international coal prices of around US$130 per tonne (R1 910/t) have raised the attractiveness of exports, with most of South Africa’s export coal going to Pakistan,” said Jeffrey. “China is also opening up opportunities for imports from South Africa, following its trade wrangling with Australia – previously an important coal source for them.” Although there has been less coal demand from India due to a surge in local production there, South African coal remains better suited to India’s production of sponge iron, she noted. This suggests that the recent dip in exports to that country may only be temporary; the added advantage is that this market takes relatively low-grade product from South Africa. Coal Industry Day presenter Xavier Prévost confirmed that coal remained the largest single source of power generation globally. Prévost also said the coal sector expected a strong recovery in 2021 – a reminder of coal’s central role in fuelling some of the world’s largest economies. Jeffrey highlighted that coal-fired power stations are still being built on a large scale in developing regions

Lesley Jeffrey is the principal geologist for coal at SRK Consulting South Africa

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COAL FACE like Southeast Asia, as this provides an affordable route to powering broader economic development. While South Africa has mined out much of its traditional export quality coal, there remained a long horizon of demand abroad for our lower-grade coal. “Unreliable rail services to the Richards Bay Coal Terminal continue to constrain South Africa’s coal exports, and this has been exacerbated by a recent hacking event and the spate of looting in parts of the country,” she said. The export market was vital to sustain, she emphasised, as it created the economic balance that keeps coal producers profitable while they continue to supply Eskom at low margins. Without the higher-value exports, local electricity prices would likely have to rise even faster to meet the full cost of mining. Coal reserves for decades to come Looking further ahead, there was a level of consensus among Coal Industry Day speakers that South Africa could still expect another 20 to 30 years of reliance on coal. “Between now and 2050, we have few options apart from coal for most of our energy generation,” Jeffrey said. “Of course, there will have to be a change towards less carbon-intensive energy sources – and it is constructive that work has been initiated on charting a just transition towards renewables.” The coal industry’s employment of about 90 000 workers2 – nearly a fifth of mining’s headcount – means that as many as half a million people3 are directly reliant on coal mining. These are among those who

will be affected as the country moves towards a lower-carbon future, said Jeffrey. Eskom has recently completed comprehensive social impact studies for its Komati, Hendrina, Grootvlei and Camden power stations to assess the local impact of closure. Closing these plants could have devastating effects on direct and indirect employment in these areas. “While power stations like Komati are relatively small, it is a good place to start,” she said. “It is vitally important that practical ways are found to transition away from coal while not leaving communities stranded.” The challenge, she pointed out, was that the pace of South Africa’s transition was going to be slower than the climate change deadlines being pursued by developed countries. It is to be expected that developing countries will be looking for more time to make the necessary changes in line with global commitments. References: 1. Stats SA: http://www.statssa.gov.za/?p=14225 2. S A coal producers’ website Coal Mining Matters: http://www.coalminingmatters.co.za/what-matters/ employment 3. O ne miner supports about five dependants: https:// coaltech.co.za/wp-content/uploads/2019/10/Task7.8.5-Socio-economically-Sustainable-CommunitiesPost-Mine-Closure-Phase-1-2006.pdf

Coal experts believe that South Africa could rely on coal for the next two to three decades

COAL FACE

Lubrication for coal processing

AND TRANSPORTATION

Coal processing and transportation require unique lubrication solutions to preserve equipment performance because of the prevalence of fine coal particles (duff) and their corrosive impact on coal-handling machinery. Lubrication Engineers South Africa has a range of lubricants ideal for coal processing and transportation

long with fine particles, heavy loads, shocks and jars are typical of coal operations. Lubricants designed to withstand these conditions are essential to ensure maximum efficiency, explains Callum Ford, national marketing manager at Lubrication Engineers (LE) South Africa. “At LE South Africa, our work in the coal processing and transportation industry has shown us that it’s critical to use lubricants designed to repel duff and dirt to protect the equipment at all stages across the coalhandling system,” he says.

Important maintenance tasks According to Ford, the products LE South Africa supplies to its coal industry clients work best in conjunction with some key maintenance techniques. These include making sure grease fittings, fill pipes, plugs and gear-tooth surfaces are cleaned before a lubricant is applied. Ford also recommends that drums and containers be kept covered when not in use and stored in a clean, closed area, where possible. The ideal solution is a bulk lubrication storage system, which eliminates the risk of contamination and reduces the room for operator error. When it comes to lubrication, correct application is also important. “For example, plain sleeve bearings that are lubricated with grease should be pumped to capacity, or until some of the old grease escapes at the bearing end. This provides a flushing action and seals the bearing against foreign matter getting in and causing damage.” Fully sealed bearings, where grease cannot easily escape, usually require only a small amount of

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COAL FACE lubricant, applied at infrequent intervals when using premium-quality lubricants. “Operating conditions will largely determine how often each part must be serviced but, generally speaking, regular monitoring of the fluid through oil analysis is best, particularly when aiming for a longer or irregular drain interval. Where the lubricant is continuously reused, such as in enclosed gear units, the oil may need to be changed regularly to keep it free from abrasive matter,” he explains. Coal processing lubrication options LE South Africa’s lubricant range for coal processing and transportation has been designed to be as long-lasting as possible, even in harsh operating environments. Included in the product line are three high-performing lubricants for equipment along the coal-handling chain. The Almatek General Purpose Lubricant (1233 & 1235) is highly tacky and designed to withstand shock loading, pound-out and water washout in friction

and anti-friction bearings, chassis points and other grease-lubricated applications. “This lubricant is a great solution for coal processing because it clings to metal surfaces and won’t wash off or pound out of pins, bushes and bearings,” says Ford. The Almagard Vari-Purpose Lubricant (3752, 3751 & 3750) is a long-lasting, water-resistant red grease that runs cool, even in heavy-duty applications. Ford recommends this lubricant for extended service applications because it is extremely tacky and will similarly not wash off, pound out or melt and run, even in severe conditions. “We have also seen the Monocal GP Grease (1499) perform well in coal-related applications. It is a versatile grease with calcium sulfonate complex thickener that is especially good at protecting equipment that has to withstand heavy loads, heat and/or moisture,” he adds. Ford advises that, prior to deciding on lubricants, it’s important for operations managers to engage with a lubrication specialist who can help them to find the best lubrication solution.

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COAL FACE

COAL PRODUCER BENEFITS from SRB solution

SKF was approached by a leading South African coal producer to quote on a traditional solid spherical roller bearing (SRB) to replace an obsolete unit on a bucker wheel feeder.

KF managed to come up with a solution in the trapped position on the SKF Cooper Split that would enhance worker safety and SRB also increases production uptime and shrinks deliver substantial cost savings. The Cooper maintenance costs. Split SRB solution is expected to enhance Extended service life safety and reduce mean time to repair (MTTR) by 70% Furthermore, the wire-cut inner and outer ring for the local coal producer. manufacturing technique and sealed versions of “The customer faced two primary challenges with the SKF Cooper Split SRB extend service life or the traditional solid SRB, namely limited accessibility longer mean time between failures compared to and prolonged downtime during maintenance,” other split bearings. explains Lisa Binzani, Binzani also points territory sales engineer: out that increased Central & Eastern machine availability Gauteng, SKF. “But of and performance bigger concern was – and subsequent the fact that the nature uptime – have a direct of the application and positive influence arrangement for on productivity and the free end was production levels. posing a safety risk SKF Cooper leads to maintenance the market in personnel. Statistics the field of splithave shown that up bearing technology to 43% of accidents in and is the only the mining and cement bearing manufacturer industry occur during to offer split maintenance work cylindrical, taper or when personnel and spherical roller conduct checks on The SKF Cooper Split SRB was delivered to the coal bearings in addition conveyors. We therefore plant at the start of Q3 2021 to the new sealed recommended the split SRBs. SKF Cooper Split SRB, The SKF Cooper Split SRB is suitable for a wide range which offers safety and cost advantages over the of applications, including conveyor pulleys, rope solid SRB unit.” sheaves, bucket elevators, stackers/reclaimers, hoists Thanks to its special design, the Split SRB can be and winches, horizontal grinding mill pinions, mixers replaced easily in situ, requiring very few changes to the shaft alignment or driveline. As there is and agitators, jack shafts and fans. no need to dismount the drive coupling or the “We highly recommend the conversion of traditional cantilevered drive to replace the bearing – thus bearing units to the SKF Cooper Split SRB to any avoiding realignment – MTTR is reduced by twocustomer that requires bearings that can be easily thirds. In addition to enhancing the safety of replaced in situ with little disturbance to the shaft maintenance personnel, in situ bearing replacement alignment or driveline,” concludes Binzani.

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ENERGY

MINING INDUSTRY’S ROLE in transitioning to clean energy

Climate change is one of the most pressing challenges of our age. How we choose to address it today will have a lasting impact on businesses, the environment, future generations and society. By Mxolisi Mgojo*

eveloping countries like South Africa are particularly vulnerable to the global shift, often suffering the most from the devastating impacts of climate change through droughts, storms, floods, and rising sea levels. Yet, these regions have historically contributed the least to global emissions. President Ramaphosa recently illuminated this irony in his speech for US President Biden’s Leaders Summit on Climate, where 40 world leaders committed to working together to tackle the climate crisis and support the most vulnerable. “Without effective adaptation responses, climate change has the potential to reverse the developmental gains of many countries on our continent and push millions of people further into poverty and unemployment,” our president explained. He called on developed economies, which historically bear the greatest responsibility for emissions, to support developing economies to mitigate and adapt to climate change. “The move towards a low-carbon future cannot happen overnight. We need to work together to create a climate-resilient society, ensuring that as we transition, it

is based on a just transition that assures that the most vulnerable do not get left behind.” As Exxaro, we agree with President Ramaphosa’s sentiments and fully support the work of the Presidential Climate Change Coordinating Commission (PCCCC) to reduce our country’s emissions in the context of overcoming poverty, inequality and underdevelopment. It is promising to see global climate action intensifying, with the US targeting an emissions reduction of 50-52% by 2030 and more countries committing to join the clean energy revolution. We believe the local mining sector has a pivotal role to play in our country’s transition to a low-carbon economy. As such, we are ramping up our organisation-wide efforts to achieve carbon neutrality by 2050. We plan to minimise risks and maximise clean-energy opportunities to reach this crucial milestone. In doing so, we also hope to pave the way for others in our industry to follow suit. Making strategic decisions and seizing sustainable opportunities Although Exxaro is currently predominantly a coal

THE FOCUS IN AFRICA ISSUE | 2021

ENERGY

Mxolisi has worked in the mining

producer, we are also a diversified balancing our business’s financial industry since 2001. He sits on the boards of Exxaro resources company and have been performance with South Africa’s Resources and since our creation in 2006. More energy needs and climateTronox Limited than a decade ago, we realised change-related social and the necessity of a clean energy environmental responsibilities. transition when climate change This includes reprioritising our considerations were on the rise coal reserves to minimise stranded and coal exports to Europe – a assets, selling non-core coal former significant coal customer – operations, and stopping further began declining. The German investments in new thermal coal government started discussing the mine developments. We are also idea of moving away from coal as maximising our asset portfolio far back as 2003, and we realised a through renewable energy renewable-energy revolution was solutions, investigating low-carbon about to emerge. technologies for our operations As South Africans, we pride ourselves on being fast and considering afforestation and reafforestation followers – if we aren’t creators – so, we needed to adapt initiatives for carbon capture and storage. quickly. In 2010, Exxaro entered the renewable energy market by establishing Cennergi, a 50/50 joint venture Prioritising existing communities and developing new economies with Tata Power. Today, Cennergi is wholly owned by We recognise that transforming our business in response Exxaro and operates two wind farms in the Eastern Cape to new energy needs opens a unique opportunity to that feed 239 MW of renewable energy into the national build a resilient and sustainable future for our people grid – making us among the first fossil fuels companies to and the communities around us. This transition is become a renewable energy solutions provider. critical, especially for the communities dependent on In 2019, we aligned our governance, risk management our business to provide jobs and other opportunities. and strategic processes with the TCFD recommendations Therefore, our most poignant question right now is: to guide our Climate Change Response strategy. To how do we effectively transition on the ground without solidify our goal to be carbon neutral, we are currently

Exxaro’s Grootegeluk mine is in the process of being decarbonised through a PV plant installation

ENERGY

We recognise that transforming our business in response to new energy needs opens a unique opportunity to build a resilient and sustainable future for our people and the communities around us

leaving our communities behind? Our journey goes far beyond merely moving from coal to renewables – we also need to ensure that we become a catalyst for new economic activity across our host communities. In 2019, I was invited by the Vatican to discuss how mining could be used as a common good for society. Since then, we have looked beyond our social labour and community development plans to determine how we could drive sustainable growth while transforming society and our communities. We are now looking at a diversity of projects holistically, packaging them together for large-scale impact, utilising our land and mines to create an entirely new agriculture value chain. We will be approaching the impact investment funds and support the financing of these projects. We have always invested in the communities we operate in, even after our mines in the area close, but now we are focusing on solar photovoltaic (PV) microgrids as clean energy sources for these community members too. Our climate change journey revolves around the environment and business resilience, while ensuring we can create new economies that can support the renewable energy strategy we are embarking on. Harnessing renewable and distributed energy We don’t know the future of coal – so while we are still producing it, we need to ensure that we aren’t contributing to further environmental damage. As we continue to supply the country’s power stations, we

must get the best out of our coal assets, focusing on high-value coal with a low impurity content. In the meantime, we have a team investigating minerals that can support a clean future, not only for Exxaro but also for the rest of the country. We are also in the process of decarbonising our mines; first up is Grootegeluk in Lephalale, with an 84 MW PV plant that is likely to become one of the largest PV facilities in South Africa. In doing so, we found that we will save 12-15% on electricity costs, reducing the mine’s carbon footprint by 30-35% and Exxaro’s overall carbon footprint by 15%. We are also engaging with other mining companies, offering them assistance to start decarbonising their mines, and collaborating with industry players like Eskom to support each other by reducing operational costs. Distributed energy is a new growth area for Exxaro, with expansion plans for the rest of the continent. Ultimately, dealing with climate change is about driving impactful investments and creating new energy opportunities for communities in terms of clean renewables. We can’t do this on our own – ongoing partnerships with government, business, labour and civil society are critical. South African mining companies can continue their catalytic role in the economy towards a low-carbon future. We hope others will join us to power better lives and lay the foundations for a more sustainable and equitable South Africa. *Mxolisi Mgojo is the CEO at Exxaro Resources.

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ENERGY

– an African perspective The world is collectively experiencing a transition from fossil-based energy systems – such as coal, natural gas and oil – to renewable energy sources, such as hydropower, solar and wind. The case is no different for the African continent. By Jovita Nsoh*

uring the last decade, African countries have started increasing renewable energy penetration into their supply mix. The most adopted renewable energy systems are solar, wind and geothermal, with countries such as Kenya, Morocco and Rwanda taking the lead in transition. The current energy transition is based on multiple factors, including reducing carbon dioxide (CO2) emissions and improving Africa’s power supply. According to NJ Ayuk, executive chairman at the African Energy Chamber, the greatest opportunity in Africa lies in providing its people with electricity. Ayuk further posits that energy transitions present the biggest investment opportunity in Africa, since these projects will include infrastructure construction and minerals like rare earth elements, cobalt, nickel, lithium and more. He also highlights that Africa is dealing with climate change, and these materials are going to become increasingly important in the future. This article describes some the immediate and nonimmediate implications of energy transitions for the African continent. A worldwide revolutionary transition The world is undergoing a revolutionary transition from high-carbon, fossil-fuel-based energy systems to low-carbon energy systems. At the heart of this massive transition is the goal to reduce CO2 emissions as a measure of limiting climate change1. The underlying

notion is that the earth’s climate has been changing for the worse, primarily due to human activity. Significant changes include rising temperatures, unpredictable weather patterns, melting ice, rising sea waters and more drought. Transitioning away from the current energy model to a more sustainable approach Among the many hats he wears, Jovita is a member of the is widely perceived as Institute of Electrical and Electronics the ultimate solution to Engineers (IEEE) the problem. By switching to lowcarbon models, countries can minimise their carbon footprint while reducing the possibility of adverse weather events. As the world slowly embraces transitions and nations join the collective action of switching to low-carbon energy sources, African countries slowly join the transitions through energy initiatives. African nations have shown commitment to the 2015 Paris Agreement on Climate change and active efforts in deploying energy efficiency and renewable energy technologies2. Transition efforts that are extensively visible in other parts of the globe, including North America and Europe, are also

ENERGY

moderately patent within African nations. Even so, some African policymakers have expressed their concerns regarding the declining investment in fossil-fuel-based energy sources3. Notably, fossil fuels are significantly crucial in some of the continent’s economies. They have a unique role in ensuring energy access under Goal 7 of the United Nations Sustainable Development Goals (SDGs) – promoting energy access for all. Nigeria is a case in point of a country that economically relies heavily on fossil fuels. The country exports fossil fuels in large volumes and relies on them to drive its highly populous economy. All the same, Goal 7 of the SDGs also advocates for clean energy. The need for clean energy is compatible with other SDGs, such as energy efficiency, reduced inequality, and response to climate change. Access to electricity a challenge for Africa While electricity access has been vital in the solution of global challenges such as famine, poverty and gender inequality, research shows that approximately three billion people are still reliant on unhealthy and polluting fuels for cooking and lighting. That accounts for 40% of the world’s population. Statistical data is particularly worrying for Africa, where over 600 million people lack access to electricity and about 900 million lack clean cooking facilities. Although the African continent is rich in renewable energy sources like hydropower, solar and wind, the predicted population growth will demand the use of already-existing energy sources. According to the International Energy Agency, one in every two additional people in the world population is African. Hence, Africa may become the most populous continent by 2023. Africa’s population growth trend may continue until 2040. Africa’s anticipated population growth, its industrialisation, as well as a young, urbanising and fast-growing population all fuel global energy patterns. Energy transitions are, thus, being advocated as a

means of addressing climate change. Some experts have argued that, since fossil fuels have helped power economic development and industrialisation in developed countries, it seems only fair that developing countries in Africa benefit from fossil fuels as well. The ultimate issue, however, is a question of preparedness rather than fairness. As such, African nations should create optimum energy transition policies while protecting their socio-economic interests. For Africans, the transition to low-carbon energy sources creates the opportunity to participate in climate change mitigation efforts and the chance to create new jobs and leapfrog to modern economies. Contrariwise, the global energy transition has both positive and negative effects, and may escalate existing energy access challenges due to reducing funding for fossil-fuel-based projects without a corresponding increase in green energy initiatives. Although the shift from fossil fuels is challenging and complicated, the need to tackle climate issues and the lowering costs of renewable technologies have made various companies and organisations across the world question their investment in carbon-based energy systems. For instance, Norwegian firms have questioned their investments in fossil fuels. In 2020, Norwegian authorities announced the prospect of selling more than US$10 billion (R148 billion) worth of stocks in firms that deal with fossil fuels4. Norway’s approach revealed a national effort towards energy transition. In Africa, countries like Egypt, Ethiopia, Kenya, Morocco and South Africa have expressed firm national commitment towards installing renewable energy technologies and have turned out to be leaders on the continent when espousing the transition to clean energy5. Smaller African countries like Rwanda and Djibouti have also made significant strides in setting renewable energy targets. Generally, solar and wind energy markets on the African continent are growing meaningfully, suggesting gradual energy transition participation.

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ENERGY

Africa’s commitment to energy transition While there are discernible advantages to energy transitions, the global focus on transitioning from fossil fuels has increased concerns such as heightened energy access challenges and economic development disruption in developing nations. Despite that, African countries have shown their dedication to the installation of renewable energies. Such countries are committed to the fight against climate change yet also concerned about the transition’s financial and socio-economic consequences. With Africa’s immense renewable energy potential and low contribution to global emissions, an energy transition seems paradoxical. The main factors slowing energy transitions in Africa include finances, human and technical capacity, and domestic politics and policies. Most African countries lack the financial and technical capabilities required to successfully transition from fossil fuels to renewable energy systems. There is, therefore, an urgent need for collaborative efforts between African and non-African nations and companies on energy transitions. References: 1. Solomon, B. D., & Krishna, K. (2011). The coming sustainable energy transition: History, strategies, and outlook. Energy Policy, 39(11), 7422-7431. https:// oi.org/10.1016/j.enpol.2011.09.009 2. Chin-Yee, S. (2016). Briefing: Africa and the Paris climate change agreement. African Affairs, 115(459), 359-368. https://doi.org/10.1093/afraf/adw005 3. Dimitrov, R. S. (2016). The Paris agreement on climate change: Behind closed doors. Global Environmental. Politics, 16(3), 1-11. https://doi.org/10.1162/GLEP_a_00361 4. Taraldsen, L. (2021). Norway Wealth Fund Dumps Oil Stocks Amid $10 Billion loss. BloombergQuint. Retrieved 1 April 2021, from https://www.bloombergquint.com/ markets/norway-wealth-fund-dumps-oil-stocks-amid-10billion-2020-loss 5. Obonyo, R. (2021). Push for renewables: How Africa is building a different energy pathway. Africa Renewal. Retrieved 1 April 2021, from https://www.un.org/africarenewal/magazine/ january-2021/push-renewables-how-africa-buildingdifferent-energy-pathway. *Jovita Nsoh is an advisory board member at the African Energy Chamber.

EVENTS

AFRICA ENERGY WEEK 2021

headed for Cape Town African Energy Week (AEW) 2021 will take place in Cape Town from 9 to 12 November 2021.

EW 2021 will showcase the first-ever African Energy Village – an interactive exhibition and networking event that seeks to unite African energy stakeholders, drive industry growth and development, and promote Africa as the destination for Africa-focused events. Commencing with a three-day conference and ending with a golf tournament on 12 November, the event’s primary focus is to define and promote the African energy agenda through development, deal-making, and private sector participation. “We are happy with the tremendous support from so many in- and outside Africa. Our oil and gas producers have been a force for good and we must be proud of this industry,” says NJ Ayuk, executive chairman, African Energy Chamber (AEC). Key topics Key topics include: making energy poverty history before 2030; the future of the African oil and gas industry; up-, mid- and downstream African opportunities; African oil, gas and finance in the face of the energy transition – highlighting African financing institutions such as the African Development Bank, the African

Export-Import Bank, the African Financing Corporation, Africa50, the Industrial Development Corporation and the Development Bank of Central African States; local content; women in energy; and making African energy competitive for investment into a decarbonised Africa. Additionally, the conference will address the roles of the following organisations in relation to Africa: the Organization of the Petroleum Exporting Countries (OPEC), the Gas Exporting Countries Forum (GECF), the International Energy Agency (IEC), the African Petroleum Producers’ Organization (APPO), the International Association of Geophysical Contractors (IAGC), and the American Petroleum Institute (API). By opening the dialogue on Africa’s gas miracle and its potential in markets including Algeria, Angola, CongoBrazzaville, Equatorial Guinea, Ghana, Mozambique, Nigeria, Senegal, South Africa and Tanzania – as well as small-scale liquified natural gas, intra-African trade and the African Continental Free Trade Agreement – the conference represents the ideal networking and dealmaking platform for all African energy stakeholders. “We must also welcome energy transition and engage Africa with the most forceful conversation and solutions

THE FOCUS IN AFRICA ISSUE | 2021

EVENTS for the future. AEW 2021 offers a unique and interactive networking experience in which global energy stakeholders can unite and participate in the continent’s transformation. The time is now,” adds. An Africa-focused event in Africa The AEC’s commitment to hosting this Africa-focused event in Africa comes at a crucial time for the oil and gas industry. Considering recent developments that seek to suggest Africa is not capable of hosting events of global standards, the Chamber feels responsible to voice against this and lead by example by showcasing the continent and all its profound beauty. With this in mind, the only Africa-focused, in-person energy event aims to capture the essence and cultural hub of Cape Town. The AEC will not abandon the continent for international venues. AEW 2021 is an energy event like no other and the Chamber is fully focused on promoting African development and growth through events held on African soil. A bold message Ayuk believes that AEW 2021 Energy Week will have a bold message that encourages energy solutions that cut out entitlements, handouts and foreign aid. “No one owes us anything and, in order for so many Africans who want to make energy poverty history to triumph, we must embrace all forms of energy in our energy mix. We must attract investors and push our leadership so that

each country wins when we create and encourage an enabling environment,” he adds. AEW 2021 is taking place with the full support of prominent African and global industry leaders, as well as oil and gas organisations, and is focused on expanding opportunities in Africa. Additionally, AEW 2021 will present innovative exhibition spaces at Cape Town’s V&A Waterfront that aim to promote African heritage and culture, while showcasing the exciting technological advancements the industry has to offer. According to Ayuk, African energy producers can only grow and meet energy demand when everyone does their best to mobilise resources and advocate for important principles of personal responsibility, smaller government, lower taxes, free markets, personal liberty, and the rule of law. “This will kick-start investment and make a transition that works for Africa. Let’s do this in Africa, for Africa and for the energy sector,” concludes Ayuk. Of equal importance, the event will take place under strict Covid-19 protocols to ensure the safety of all attendees. In line with current government regulations, AEW 2021 will host a series of networking events across a variety of locations at the V&A Waterfront, thereby ensuring social gathering limits are in place at all times. Additionally, through mandatory testing and the availability of personal protective equipment and facilities, AEW 2021 aims to protect attendees while ensuring a successful and productive event.

NJ Ayuk is the executive chairman of the African Energy Chamber

Host

Endorsed by

Co-Host

23 -25 NOVEMBER 2021 SAFARI PARK HOTEL - NAIROBI, KENYA OrGanISeD by:

15 – 17 OctOber 2019 Kenyatta InternatIOnal cOnventIOn centre | naIrObI, Kenya

CREATING AN ATTRACTIVE INVESTMENT FRAMEWORK cReatiNg aN attRactiVe iNVestmeNt FRamewoRK to adVaNce east aFRica’s miNiNg&&ENERGY eNeRgy sectoRs TO ADVANCE EAST AFRICA’S MINING SECTORS

THE FOCUS IN AFRICA ISSUE | 2021

EVENTS

ECOWAS Commission Forum returns in September The city of Niamey, Niger, will be the main stage of ECOMOF 2021 – the third ECOWAS Mining & Petroleum Forum and Exhibition.

he event will take place on 14 to 16 September 2021, at the Radisson Blu Hotel & Conference Centre, Niamey. Under the theme ‘Integrating the Mining and Petroleum Industries in the Development of Regional Value Chains’, the third edition of ECOMOF is organised by the ECOWAS (Economic Community of West African States) Commission, the Government of the Republic of Niger, and AME Trade. The event is one of the largest mining events in West Africa and brings together the highest-ranking government delegations from the 15 ECOWAS West African member states, including Benin, Ghana, Ivory Coast, Liberia, Niger, Sierra Leone and Togo, among others. The last edition of the event happened in 2018 in Ivory Coast, with more than 2 000 visitors, 51 speakers and 59 exhibitors from 29 countries. Niger as a host country and new event features Niger’s economy is rapidly developing, with GDP growth in 2019 estimated at 6.2%. The country’s economy is strongly growing and developing as it aims to diversify mineral production, extend its investor base, develop infrastructure, and position the country as a friendly market for investments in mining and petroleum. ECOMOF 2021 is the first international mining event in Niger and represents a unique opportunity to seal new business deals. The 2021 edition includes a three-day conference, pre-conference training, a collocated trade exhibition, a packed social and networking programme, and post-event industry and sociocultural tours. ECOMOF 2021 also brings new features such as a B2B area, with a new meeting mobile app, and the

ECOWAS mining data room to present new projects for investors. Benefits of attending ECOMOF 2021 The event gathers the key public and private sector decision-makers in the West African mining and petroleum industries. By attending ECOMOF 2021, delegates will benefit in the following ways: •g ain knowledge by attending a variety of conference sessions, workshops and roundtables with industry experts • develop their network, as ECOMOF creates a favourable environment to B2B development • access, at first hand, the latest technologies, products and services for the mining and petroleum sectors in West Africa • have the unique opportunity to showcase their products and services at a regional level • strengthen and develop new linkages between all sections of the mining and petroleum supply chain. ECOMOF 2021 will promote and develop the mining and oil potential of member states, as well as ensure the socio-economic integration of the West African region. The event also aims to harmonise legal, regulatory and taxation instruments. Furthermore, ECOMOF 2021 will use the mining and petroleum industries to develop community infrastructure, add value to mining and petroleum products, and strengthen trade in these products. Lastly, it will develop human resources and create a network of experts to promote corporate social responsibility and increase stakeholders’ awareness of the development issues within their local communities.

EVENTS

Kenya Chamber of Mines

to host EAMEC

The Kenya Chamber of Mines (KCM) will host the Eastern Africa Mining and Energy Conference (EAMEC) – one of the largest conferences in the region’s extractives industry.

AMEC is scheduled to take place on 12 to 14 October 2021 at the Safari Park Hotel in Nairobi, Kenya. The event is regarded as Eastern Africa’s largest and only international and local mining and energy forum. It is designed to gather key players in the mining, oil and gas sectors for focused dialogue exploring the immense opportunities held by the region’s extractives and energy sector. Endorsed and supported by Kenya’s Ministry of Petroleum and Mining, the conference provides a good opportunity for the public and private sector in the extractives and energy sectors to network and discuss any interventions aimed at growing and strengthening these spheres. “As a government, we are alive and cognisant that the extractives industry is economically important to the Eastern Africa region. It provides employment, dividends and taxes that help governments deliver services to their citizens on one hand and returns to investors [on the other],” says Cabinet Secretary for Petroleum and Mining John Munyes. “Realising the economic benefits and wealth generated by mining for many producing countries, we have initiated appropriate legal frameworks that are supportive to the communities, citizens and investors. The reforms and status updates shall be presented during the conference,” he continues. Addressing issues facing the regional sector Building on the success of the Kenya Mining Forum,

which has been hosted by the KCM for the last eight years, the conference sessions will include plenary and carefully selected break-out sessions centred on the principal issues facing the East African extractives sector. “Industry leaders, in particular, will take a closer look at the evolution and direction of the market and balance views on the ever-critical traditional and new policies and legislation, infrastructure plans, and technology maximisation,” says Moses Njeru, CEO of KCM. The growing importance of the extractives industry in the region calls for more attention to be given to the social, economic and political dimensions of the sector. Making refence to a circular at the start of 2021, President Uhuru Kenyatta of Kenya said, “To promote the sustainable development of the extractives sector, the State Department for Mining has been merged with the State Department for Petroleum, and has been re-established as a single state department within the Ministry of Petroleum and Mining.” In this context, EAMEC provides a conducive platform for players in the sector to deliberate on how best to explore and exploit extractives potential in a sustainable manner for the mutual benefit of the region and investors. The conference will be conducted virtually and faceto-face observing Ministry of Health and WHO Covid-19 protocols.

EVENTS

NINTH JOBURG INDABA on its way

Now in its ninth year, the 2021 Joburg Indaba is scheduled to take place on 6 and 7 October. As things stand, the event will be held online; should this change, however, an announcement will be made.

or the second year in a row, the Joburg Indaba is being hosted on a virtual platform. It goes without saying that hosting an event of this magnitude virtually can be challenging. In the same breath, there are also numerous advantages to digital hosting. First, more international CEOs and investors are able to participate, as they are not limited by their geographical locations. Second, audience participation is also slightly easier via the online platform. Finally, the content of the event can still be accessed even after the event has concluded. What to expect in 2021 Regardless of the format, attendees can expect a highly engaging and interactive two days packed with no-holds-barred, constructive conversations on a wide range of critical issues affecting all stakeholders in the mining industry. Despite the pandemic, the industry has seen some strong commodity prices and the suggestion of a so-called commodities super-cycle. Speakers will unpack this and what it says about current trends affecting the global world of mining, with a focus on South African mining, the energy transition, the move towards

decarbonisation and cleaner energy sources, ESG imperatives, investor requirements, and much more. The online event will also answer some burning questions, such as: 1. How is our country and its mining sector positioned to seize the opportunities ahead of us? 2. How does the country ensure economic recovery and prosperity, safeguard essential infrastructure, produce clean energy, increase investment, and reimagine socio-economic development collaboratively? Renowned as a leading industry gathering, the Joburg Indaba will once again bring together CEOs and senior representatives from all major mining houses, local and international investors, government, parastatals, experts from legal and advisory firms, and representatives from communities and organised labour. The event promises to engage attendees in open and honest discussions around the current state of the mining sector and how all stakeholders can work together to ensure that the industry grasps the opportunities of the future and contributes to economic recovery and development.

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Inside Mining Focus on Africa

Articles inside

Ninth Joburg Indaba on its way

Lubrication for coal processing and transportation

Kenya Chamber of Mines to host EAMEC

Energy transition – an African perspective

Africa’s infrastructure inroads despite the challenges

Coal producer benefits from SRB solution

Growing the South African economy

Global commodities present unique opportunities for African mining

SBPM headed for platinum success