4
BusinessDay www.businessday.co.za Friday 6 May 2022
INSIGHTS Energy, ESG and economies in the spotlight
Cape Town ready to welcome back sector players with •diverse in-person programme, writes Pedro van Gaalen
D
iscussions around investing in a just energy transition, supporting African economies, and driving the environmental, social and governance (ESG) agenda will take centre stage at the 2022 Investing in African Mining Indaba. After hosting a virtual event in 2021, event organisers Hyve Group will reconnect the African mining community at the CTICC in Cape Town from May 9-12, in accordance with government-mandated health and safety guidelines. More than 6,500 industry leaders, experts, stakeholders and luminaries will attend the live in-person event together with senior government officials and heads of state, including Botswanan President Mokgweetsi Masisi and Zambian President Hakainde Hichilema. “The Investing in African Mining Indaba is an integral part of the industry’s calendar that will reset the dialogue around opportunities and challenges in
Africa’s mining industry,” says Roger Baxter, CEO of the Minerals Council South Africa. “We look forward to welcoming the industry back to Cape Town and driving further growth for our industry.” Multiple streams and stages will present content and discussions exploring how the African mining sector, investors and broader society can thrive amid evolving trends around decarbonisation, digitalisation and social upliftment and empowerment. Specifically, the conference aims to drive the next evolution in African mining by prompting critical dialogue. These discussions aim to promote new strategies and deal-making to fund an industry-wide transformation through a just energy transition and broader ESG initiatives that support economic growth and community empowerment. The conference will host various new events. These include the Junior ESG Awards, which will recognise junior mining companies that excel in
making a significant positive ESG impact. The inaugural Investment Battlefield will pitch Africa’s hottest junior mining companies against each other to a panel of investor judges. The new Innovation & Research Battlefield, convened by Investing in African Mining Indaba, Business for Development and the Development Partner Institute (DPI Mining), will showcase and fund early-stage innovations focused on building sustainable post-mining economies, with a grant of up to $28,600 available for solutions that address critical sector challenges. “We want the Innovation & Research Battlefield to be a catalyst for closer, more agile collaboration between the private sector, academia and the mining sector to solve critical issues facing the industry, and to bridge the gap between proposed solutions and the funding needed for their implementation,” says DPI Mining Executive Director Wendy Tyrrell.
INVESTING IN AFRICAN MINING INDABA Sponsored content
Circular economy ticks ESG boxes According to the latest EY “Top 10 Business Risks and Opportunities for Mining and Metals” in 2022 report, global mining executives rank environmental, social and governance (ESG) as one of the top three risks/opportunities facing their business over the next 12 months. In response to demands from regulators, clients and stakeholders, the mining industry has stepped up efforts to protect the country’s natural resources, mitigate their impact on climate change, and implement measures to address social inequality while meeting evolving regulatory compliance requirements. “Miners are embedding ESG at every level within their operation and value chain, from risk management and investor relations right down to supply chain partners and on-theground operations and mine closures,” says Sean Doel, MD: Environment at WSP in Africa. Effectively meeting these requirements needs a clear, economically-viable plan that covers a mine’s entire life cycle, he says.
Rebound conditions favour SA’s junior miners
“There is significant focus on meeting due diligence requirements around broader climate risk mitigation measures. However, before the industry talks about climate change, we need to focus on water and community to deliver meaningful ESG impact.” Issues relate to managing scarce water and land resources, mitigating flood risks due to shifting rainfall patterns linked to climate change, and addressing air quality. “There is increasing pressure to meet these social and environmental objectives by achieving sustainable mine closures and ensuring miners
leave communities with usable land once operations end,” adds Doel. Mark Gilbert, Head of Advisory at NSDV, says sorting technologies can address the mineral waste liability issue in the local mining sector, which is a hot-button ESG topic. “SA has huge amounts of legacy and new mine waste. However, there are limited financial provisions to handle it, due largely to nonexistent regulations prior to the MPRDA and the poor application of this legislation following its promulgation,” says Gilbert. As such, the state cannot cover the costs and cannot impose once-off provisions on the industry as this is not sustainable for miners. “Various innovative technologies can help solve this waste challenge in a financially viable way while creating opportunities for environmental rehabilitation, community upliftment and economic benefit,” says Gilbert. For example, Acrux Sorting Technology uses sensor-based technology that does not require water and can extract
high-value usable material from a range of mineral tailings. The technology was successfully deployed in the coal industry to extract high-value usable coal from tailings, which improves plant efficiency while reducing rehabilitation liability. “Burning this ‘cleaner’ coal produces 50% less sulphur dioxide. Applying this technology within Eskom’s coal supply chain could effectively decrease emissions at the input stage, which would negate the R300bn earmarked to implement emission capture solutions at power stations and achieve compliance with SA’s environmental regulations.” “Ultimately, implementing technology that supports a circular economy model delivers better yields, and nothing goes to waste. This enables miners to operate more efficiently and cleanly while turning problems into lucrative solutions as they move towards a zero-waste mining operation.” Kunal Sinha, Head of Recycling for Copper, Cobalt and Electronics at Glencore, explains how recycling commodities can help drive the
circular economy. “Our Horne Smelter in Canada started recycling just after the Second World War. We have since become one of the largest recyclers of end-of-life electronics, batteries and battery metals globally,” he says. According to the UN, e-waste is the fastest-growing type of waste — volume is projected to grow from 53.6million tonnes in 2020 to 74.7million tonnes by 2050. Less than 20% of e-waste globally is collected and processed in formal recycling facilities. Sinha adds: “Our purpose is to responsibly source the metals that advance eve ryday life. In the case of lithium-ion batteries in electric vehicles and personal electronics, for example, copper, nickel and cobalt are essential.” According to Sinha, with the huge demand for these and other “green” metals, recycling will become an increasingly vital enabler in the transition to a low-carbon economy. “It also delivers a lower carbon footprint as recycled copper produces 80% fewer emissions than mining and refining it.”
The potential for a commodities super-cycle will create a favourable environment for South African junior miners. A rebound in post-pandemic economic activity, supportive regulations and infrastructure spending aimed at helping economies recover from the pandemic, and surging demand for battery minerals due to lowcarbon policies, helped drive up
prices of iron ore, nickel, rhodium, lithium, cobalt, copper and PGM group metals. The department of mineral resources & energy released its “Exploration Strategy for the Mining Industry of South Africa” document in April 2022. The strategy aims to “secure more than 5% share of the global exploration expenditure within three to five years and bolster
the mining sector’s contribution to the GDP”. It identifies the exploration and junior mining sectors as key drivers for SA’s resurgence as a leading global destination for exploration spending and foreign investment to meet demand for base materials and “minerals of the future”. Ralph Heath, MD: Earth & Environment, WSP in Africa,
says enabling legislation is the key to supporting exploration and creating a thriving junior mining sector. “SA also desperately needs to address bottlenecks in getting raw materials to refineries or to ports for export to support junior mining operations and help them grow and thrive in the favourable global environment,” says Heath.
Mark Gilbert … better yields.
5
BusinessDay www.businessday.co.za Friday 6 May 2022
INSIGHTS: INVESTING IN AFRICAN MINING INDABA Funding the just transition of SA’s mining companies to cleaner energy Despite the commodities boom and improved profits, miners still require funding to sustain their licence to operate, invest in digital transformation, and implement ESG projects, including decarbonisation and a just transition away from fossil fuels. “We are witnessing a revision in mining capital allocation strategies, driven largely by post-pandemic economic recovery trends and a rise in demand and commodity prices,” says Kerron Johnstone, Head of Ukwazi’s Transaction Advisory Division. “Determining future production figures, profitability and expenditures through robust modelling, analytics and
cost estimates, and providing code-compliant technical reports and risk assessments will inspire investor confidence, which will enhance access to appropriate capital and funding.” As more miners incorporate ESG into their operation, packaging and communicating relevant information to investors and funders will become a strategic imperative. “Miners must assesses operations through an ESG lens by considering ‘nontraditional’ metrics. This will help investors and funding institutions make sound investment decisions and prevent industry greenwashing,” adds Johnstone. These steps are particularly important to access funding
Nivaash Singh … visibility. through traditional channels, as most commercial banks no longer fund coal projects. “While coal is a fossil fuel and contrary to our environmental policy, we
recognise it remains a critical commodity to keep the lights on in SA,” says Nivaash Singh, CoHead of Mining and Resources Finance for Continental Africa at Nedbank. “We continue to support existing coal clients but will not fund any new coal projects for new clients. Nedbank has committed to a glide path to zero funding by 2045 in terms of our energy policy.” Singh says supporting the transition to cleaner energy sits firmly on Nedbank’s agenda as a green bank. “We understand that decarbonisation is more complicated for certain businesses. However, we will support all clients to implement
their energy transition by providing the necessary capital to achieve their goals, if they have ESG policies in place.” Nedbank is helping to provide full visibility into supply chains and will only provide debt capital to mining projects around Africa that can prove ethical sourcing. “We also acknowledge the interdependence of the mining and energy sectors. Mining supports the energy transition by providing the metals and resources needed to develop solar, wind and hydro generation projects and industrial-scale energy storage solutions,” says Singh. Moreover, miners require funding to implement on-site
decarbonisation initiatives. “Nedbank will continue to support the industry with affordable financing in the form of revolving credit, project finance and corporate debt solutions.”
Keeping these funding channels open is particularly important in the face of rising alternative finance options. “Miners must realise that, while alternative financiers typically offer faster, simpler
loan covenants, these funding lines are generally more expensive, and often come with onerous ongoing commitments and value extraction beyond the debt settlement phase,” cautions Singh.
2045
The year by which Nedbank has committed to a glide path to zero funding in terms of its energy policy
Miners invest in innovation in bid to streamline operations and save costs Cash-flush miners are investing increased profits generated from the commodities boom in various areas within the business. While paying down debt remains a priority, miners are also spending on strategically important infrastructure projects and digital solutions that improve operational capabilities. Specifically, miners are typically leveraging surplus capital to fund intelligent mine transformations and digitalisation initiatives and are building self-generation capacity to benefit from the increased embedded generation threshold, which rose from 1MW to 100MW in 2021. “Investing to secure power supply via self-generation using flexible gas power plants, renewables and energy storage solutions (ESS) will address the energy supply challenges posed by Eskom and will help meet environmental and decarbonisation targets,” says Wallace Manyara, Business Development Manager Southern Africa at Wärtsilä. “Hybrid solutions can reduce electricity costs for mining companies because they can leverage ESS to store the cheaper energy generated during the day from solar PV for use during peak periods when tariffs are highest.” Numerous mines also work
Digby Glover … data analytics. outside PV plant operational hours, which requires a hybrid solution that uses a mix of gas engines and ESS to ensure 24/7 supply. “Using ESS during peak hours when on-grid tariffs are higher can add to significant returns realised from investments made into solar technology,” says Manyara. Technological and digital transformation is the other investment focus within the industry as miners look to streamline operations, save costs, improve productivity and prioritise sustainability. Digby Glover, CEO at United Mining Services (UMS) Group, explains that miners find themselves at different stages on their digitalisation journey. “Most mine operators are implementing projects across the mining value chain in a
piecemeal approach — few have implemented end-to-end mine digitalisation projects.” According to Glover, it makes sense to start with data analytics that provide better insights into the operation in the current environment. Data analytics and visualisation tools allow miners to monitor and report various operation-related and environmental metrics. “Most digital technology investments aim to gather data to identify inefficiencies or potential bottlenecks and better inform real-time decisionmaking related to production and operational efficiencies and safety,” says Glover. Miners are also leveraging technology to establish new mining operations more efficiently, with automation playing a vital role in safety, and accelerating the journey to the extraction phase. “Applications start at the concept stage, with digital technologies increasingly used in mine design and 3D modelling, and continue through to the construction and engineering phases where digital engagement tools enable better collaboration and project management,” says Glover. “At the shaft-sinking stage, investing to automate and mechanise this traditionally manual and inherently
dangerous process enables miners to keep people out of harm’s way and deliver shorter lead times to operation commencement.” Glover adds that the industry is increasingly moving towards remote operations. “These technological capabilities enable operators to sit anywhere in the world, with the ability to monitor progress, along with machine dynamics and human performance, which helps deliver more reliable and successful outcomes.” The State of Digital Transformation in the South African Mining Industry report released by the Minerals Council of South Africa reveals other ways local miners embrace technology to run more efficient operations, manage risk, and improve health and safety outcomes while reducing the cost of maintenance and extraction. “About 25% of miners surveyed for the analysis are spending about 0.3% of turnover on digital investments,” says Cuma Dube, Senior Consultant at Mazars Advisory. “Respondents typically deployed technologies in production, engineering and asset-management processes, as they felt these areas would help them realise better value. The Internet of Things is where most money is going, followed
by condition monitoring and robotics process automation. Miners are also using virtual reality to train staff.” For example, the Vedanta Zinc International (VZI) Swartberg mine in the Northern Cape recently introduced a modular digitalisation project at a Black Mountain Mining underground operation. “This project provides the mine with real-time data for more effective performance monitoring and efficient decision-making,” explains Xolani Qamata, Black Mountain Mine GM at VZI. “The mine’s digitalisation journey has also paved the way for more value-producing opportunities that will lead to enhanced productivity, better safety and performance standards, improved equipment utilisation, and reduced production costs.” Additional digitalisation projects under way at major mine operations across the world include enterprise-wide cloud-based analytics to aid decision-making and benchmarking, explains Erik Pretorius, ABB’s Regional Sales Manager — Mining, Aluminium and Cement Projects for Africa and Australia. “Miners are also deploying plant optimisation and improvement solutions to increase recovery rates.”
Single source provider for all engineering, design, planning, project management and construction for underground mining and metallurgical processing projects. Solving tomorrowȇs mining and mineral processing challenges today.
UMS GROUP UNITED MINING SERVICES
Call Center +27 (0)11 445 4300
Ground Floor, Building 12 | Woodlands Oɝce Park |
E-mail info@umsint.com
20 Woodlands Drive | Woodmead |
Web www.umsint.com
Johannesburg | 2191 | South Africa
UMS has regional oɝces in the United Kingdom; USA (Nevada); Botswana; Zambia
30582
36 B
Leading sustainable Y Ė ĝ ĝ ĦăĖ
34 B
32 B
With our through-the-cycle offering encompassing the provision of debt, ĺ ĝăĖŁ ĝ Ėĺ ĝ Ė Ħĝ ōăĻĝ Łă Ļ ē ĖĦ Ė Ļ Ħ ŁăĬ Ħă provide a full-spectrum solution to shape the trajectory of Africa’s mining ĝ
30 B
ĦăĖ ĦăĻ Ė ĝ ĝĬĝĦ ĬĦĬĖ
nedbank.co.za/sustainable-growth
28 B
2022
Ħ ă ŕŝřŕƠŔŔŔŔŔŝƠŔŚ
ĝ Ō ĝ Ėĺ
ĝ Ė ĝĦ Ė Ė Ħ ēĖăĺ Ė ' ( ()ŕŚ*
2023
2024
2025
2026
2027
2028
2029