BD Insights Mining Indaba (Feb 2 2024)

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BusinessDay www.businessday.co.za Friday 2 February 2024

INSIGHTS

INVESTING IN AFRICAN MINING INDABA

Technology transforming operations of SA’s miners Boost for •safety, efficiency

and productivity, writes Pedro van Gaalen

D

espite the challenging global macroeconomic climate, mine operators continue to invest in technological advancements to improve operations.

“We consider technological advancements among the most influential disruptions impacting the mining industry as it has the potential to address numerous challenges,” says Stewart Nupen, Technical Mining Advisory Lead at Deloitte.

Dr Heinrich Jantzen, Senior Mining Advisor at Zutari, explains that mining companies are creating technology maps to facilitate mine modernisation throughout the mining life cycle.

“Physical and digital technologies can add value to the exploration, project evaluation, mine design, operations, closure and postclosure phases. If applied or modified for application, these technologies should increase production, productivity, efficiency, safety and reduce the

Dr Heinrich Jantzen … innovation. risk of human error.”

In exploration, Nupen says new technologies like parametric planning tools, cloud-based data storage and machine learning (ML) can accelerate orebody model creation and planning.

“These could streamline previously siloed strategic, medium and short-term planning into a more rapid, continuous and potentially selfdirecting process.”

“Mine operators can also apply technology in exploration for digital scanning to determine the available ore grades and type,” says Shirley Webber, Coverage Head — Resource & Energy at Absa CIB. Addressing challenges encountered during extraction is another area where technology can deliver significant returns. Jantzen

Progress. Together. www.glencore.com/south-africa

states that, given the magnitude of extraction challenges, it is extraordinary that the global mining industry underspends on innovation and business improvement programmes.

“On a revenue-to-revenue basis, the industry spends 80% less on technology and innovation than the petroleum sector. However, operating costs are increasing three times faster than consumer inflation rates and could double within five years.”

With industry margins squeezed, Jantzen recommends embracing innovation to find more productive, efficient and sustainable extraction methods.

Within the operational sphere, mine operators are deploying various intelligent technologies to support production, including internet of things (IoT) solutions, robotic process automation (RPA), cloud computing and renewable energy generation and storage.

“Technologies such as automation and robotics increase efficiency and reduce downtime and human resource requirements, resulting in improved mine all-in sustaining costs in production, and boosting margins and returns for mining companies,” says Webber.

In addition, RPA can improve mine safety by decreasing mineworker exposure to

dangerous conditions.

“Advanced analytics can foresee and mitigate potential hazards before they materialise, ensuring a safer and more predictable working environment and more costeffective operations for extraction.”

Mining companies are also deploying IoT sensors and drones to improve safety, with additional applications that can enhance operational efficiencies and environmental monitoring, says Servaas Kranhold, Head of Natural Resources at BDO Johannesburg. “Drone technology can streamline operations by measuring and monitoring mine dumps in a fraction of the time it takes physical reconnaissance, which can reduce costs and enhance human resource utilisation.”

Kranhold adds that connected mines use smart sensors on vehicles and mine workers to enhance safety by ensuring they maintain a safe proximity from each other while offering mine operators the ability to conduct remote operations using unmanned autonomous vehicles in highrisk conditions or areas.

Furthermore, IoT devices and increased computing power enable mining and metals companies to leverage data for real-time insights that augment decision-making on

various fronts, says Nupen.

“This data supports more robust and quicker designs, while advanced analytics and ML make predictive maintenance a reality.”

However, artificial intelligence (AI) is arguably the most hyped technology in the sector at present. “We already see AI deployed in autonomous mining equipment, and there is experimentation with it in other activities, but the mining industry is probably on the lower left quadrant of the AI maturity curve,” says Peter Clearkin, MD and Partner at BCG Johannesburg.

Metallurgical processing is one area where AI is already starting to drive greater efficiencies, according to Clearkin. “AI and advanced analytics could help inform processes and steer parameters to increase recoveries and improve profit margins.”

When properly applied, AI could also address funding for exploration, explains Chris Green, Office Managing Partner at Hogan Lovells Johannesburg.

“By significantly reducing the cost of large-scale geological and historical data analysis, AI could support global investment and close the funding gap in exploration activities due to concerns by traditional funders around ESG requirements and global economic uncertainties.”

Sponsored content

Indaba embraces disruption The Cape Town International Convention Centre will again host the world’s largest African mining investment event when industry stakeholders from across the continent gather from February 5-8 for the 30th Investing in African Mining Indaba.

The conference aims to encourage and support constructive changes needed in the sector under the theme: “Embracing the power of positive disruption: A bold new future for African mining”.

According to organisers, the industry finds itself in the early stages of disruption due to advancements in technology, health and safety, beneficiation and exploration, among others.

“Disruption means many things to various industry subsectors, and the Mining

Indaba wants to explore this theme on every level,” says Laura Cornish, Head of Content at Mining Indaba.

The 2024 theme outlines the need for Africa’s mining industry to embrace change to become a meaningful global competitor in supplying key minerals to drive a sustainable future for the planet. The conference hopes to address issues with a refreshed content programme that will take on a new direction and purpose.

“Ultimately, we want to disrupt traditional thinking around processes and conversations, and explore what our industry truly needs to resolve challenges. We want to deliver content that does not shy away from the difficult questions, and we want industry to showcase how they

are disrupting our industry to achieve a brighter future,” says Cornish.

During the conference, strategic and influential stakeholders, including governments, the private sector, investors and disruptive services providers, will experience new opportunities for knowledge sharing, deal sourcing and corporate matchmaking during a Ministerial Symposium, an Intergovernmental Summit, various content streams and special sessions that address diverse and relevant subjects.

The programme includes the three-day disruptive discussions, Industry Intel and Investor Series streams, and the two-day Sustainability Series and Technology and Innovation Hub streams.

Sector has challenges to overcome According to the E&Y Top 10 Business Risks and Opportunities for Mining and Metals in 2024 report, miners will need to navigate a complex operating environment over the next 12 months.

The commodity boom has fizzled out, and the sector is struggling to secure capital to fund expansion due to tighter financial markets amid the complex global economic landscape. In SA, the sector is grappling with challenges that hamper efficiency, raise costs and constrain exports.

“Negative headlines dominate the local news cycle as persistent power cuts, logistics challenges, the slow

pace of legislative reforms and labour instability negatively impact the sector,” says Nivaash Singh, Co-Head: Mining and Resources at Nedbank CIB. In response to the energy challenge, many mining companies are taking steps to secure energy supply through self-provisioning, says Lucas Chaumontet, MD and Partner at BCG Johannesburg.

“These companies are either investing in renewables for their operations or in partnership with other entities. Some are even creating new businesses around renewable energy.

“Mining companies are also investing in energy storage solutions through batteries and

pumped hydro to make renewable capacity more effective,” says Chaumontet.

Adds Singh: “Illegal mining and mine fatalities are additional issues facing the local sector, with a need for greater focus on improved health and safety.”

Furthermore, community tensions over mining rights, labour unrest and concerns about the environmental impact of operations continue to impact the sector, and a lack of skilled workers in mining-specific fields and technology-driven roles hinders productivity.

Despite these challenges, the mining sector in SA is forging ahead and making a positive contribution, believes Singh.

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BusinessDay www.businessday.co.za Friday 2 February 2024

INSIGHTS: INVESTING IN AFRICAN MINING INDABA

A fresh perspective

A thriving •junior mining

sector is key to revitalising industry

T

he junior mining sector is crucial to the overall health and longevity of the local mining industry and makes significant contributions to the economy.

According to a report by the Minerals Council SA, the sector directly employs an estimated 33,500 to 40,300 people, with a total employment impact of 230,000 to 800,000, including indirect and induced jobs, due to the multiplier effect.

“By investing in and operationalising smaller mining opportunities, junior miners get access to resources not extracted by bigger mining companies, which creates new wealth and jobs over wider geographies and enhances broader local equity participation,” says Mike Miller, Group CEO at Mantengu Mining.

A thriving junior mining sector also brings fresh perspectives, agility and a bigger risk appetite to the sector.

“Smaller, nimbler operators can experiment and pioneer new exploration and extraction methods to discover new mineral deposits, particularly in untapped areas that larger mining companies have neglected or in African countries that pose unique risks and challenges,” says Servaas Kranhold, Head of Natural Resources at BDO Johannesburg.

This exploration supports sector growth through diversification, as junior miners

Mike Miller … lack of scale. typically focus on a wider range of resources, including critical minerals such as lithium, manganese and cobalt needed for renewable energy technologies.

“Investing in junior miners can catalyse growth as they are ambitious enough to exploit new resources, despite fluctuations in the raw materials market, and they provide a high-risk, high-reward chance in the early-stage exploration and development niche,” says Dr Heinrich Jantzen, Senior Mining Advisor at Zutari.

This diversification reduces dependence on a select basket of commodities and makes the industry more resilient to price fluctuations.

“Junior miners are also open to adopting new technologies to develop more efficient mining practices during the mine establishment and extraction phases, which can help revitalise a sector that fuels economic growth and job creation,” says Kranhold.

Despite the sector’s importance, junior miners face several challenges. “The major obstacles include a lack of access to capital, delays in obtaining licences and permits, and adequate port and rail

infrastructure required to export bulk commodities,” says Lili Nupen, NSDV co-founder and Head of Mining and Environmental. “The result is that junior miners looking to enter the space do not necessarily have the capital reserves to weather the preoperational phase obstacles.”

The challenges in accessing finance to fund exploration and development and bureaucratic red tape discourage investment and constrain greenfield developments.

“Most operational challenges are, directly or indirectly, attributable to the lack of scale in the junior mining sector,” says Miller. “The resultant lack of capital or balance sheet capacity, resource or life-ofmine limitations, and access to economically viable logistics solutions or reputable off-take makes investing in and managing a junior mining operation extremely difficult.”

Unlocking the full potential of the junior mining sector will require targeted support from the government and other stakeholders to streamline regulations and permitting processes and improve the infrastructure that supports the

Lili Nupen … challenges.

sector.

Nupen says the government can accommodate junior miners through regulatory reforms, as existing legislation currently places excessive financial and administrative burdens on junior miners.

“A flexible regulatory structure that enables junior miners to compete with larger operations would go a long way toward encouraging activity in the sector.”

Regarding the logistics problem, Nupen says the government should consider partnerships with the private sector to assist at ports and railways to improve operations and attract investment.

“The government also needs to create a platform that derisks investments to attract capital from the private sector to bolster exploration among junior miners, and policymakers should focus on optimising tax and rebate incentives to promote these investments,” adds Miller.

Junior miners can also leverage numerous innovative funding models to fund growth throughout their life cycle, says Jantzen.

“Production-based financing, where junior miners sell a right to future production to secure funding, has become an increasingly common option.”

Other creative financing strategies highlighted by Jantzen include hybrid financial instruments, such as earn-in and funding-related joint venture arrangements or convertible notes, and flowthrough shares, which are issued to taxpayers as part of an agreement in which the company agrees to incur a certain value of eligible expenses.

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Players await new cadastre system Among the various challenges constraining the local mining sector, the ongoing delays in launching a functional and efficient online cadastre system by the department of mineral resources & energy (DMRE) continue to dampen output, growth and investment.

An open online electronic system for registering and managing prospecting and mining licences and other permits is vital to support` exploration and a thriving junior mining sector.

“SA is one of the last countries in Africa to adopt a mining cadastre, yet it is imperative for any developed mining country to attract international investment,” says Nivaash Singh, Co-Head: Mining and Resources at Nedbank CIB. Wessel Badenhorst, Partner at Hogan Lovells Johannesburg, says the current South African

Nivaash Singh … imperative.

Mineral Resources Administration (Samrad) system is an overly bureaucratic, labour-intensive paper-based system that lacks the real-time information technology needed to deliver an efficient user-friendly interface.

“The absence of a functioning digital cadastral system perpetuates the

inefficiency of an archaic analogue licencing system.”

After publishing a request for proposals to replace the errorprone Samrad system, the process has been marred by delays after the DMRE initially told parliament that the new system would be in place by February 2023.

“The latest delay relates to a lack of appropriate hardware and IT infrastructure at the DMRE that meets the minimum standard required to implement an off-the-shelf solution,” says Singh. “The project is now on hold, I believe, while the DMRE updates its IT infrastructure.”

“It is impossible to predict whether, once in place, the new mining licensing system will deliver on the promises made, but against an ever-increasing backlog of new mining licence applications, the new system cannot come soon enough,”

adds Badenhorst.

The resultant lag in developing new mining projects is a major issue highlighted by Singh. “If the DMRE does not implement a solution to issue exploration licences efficiently and expediently, then SA will not have the capacity to replace lost production from mines reaching the end of life.”

Despite the delays, Shirley Webber, Coverage Head — Resource & Energy at Absa CIB, says the local mining sector anticipates the new mining licensing system will significantly enhance efficiency and transparency, thereby driving growth and investment.

“The system is expected to streamline the application process for mining rights and permits by addressing the longstanding issues of permitting backlogs and maladministration.”

Decarbonising operations a top priority The mining sector plays a dual role in the just energy transition (JET), acting as an enabler and contributor to the shift towards a low-carbon future.

“Demand for critical minerals to develop the infrastructure that can decarbonise energy systems, such as lithium, nickel, cobalt, and copper, has led to significant investments in mineral exploration and mining,” says Dominic Varrie, Candidate Attorney at NSDV. However, the mining sector is not just responsible for extracting and supplying these resources. The industry is also actively adopting practices that minimise its environmental impact and footprint. “Huge investments in renewable

energy aim to lower greenhouse gas emissions, decrease operational costs and improve energy security,” says Varrie.

These investments also positively impact mine operations by improving energy security and reducing costs.

For example, Glencore is taking steps to reduce carbon emissions at its Rhovan operation, one of the largest producers and processors of vanadium products, which will play a role in supporting a lowcarbon future.

Rhovan has commenced with the construction of a 25MW solar photovoltaic plant and this supports Glencore’s broader climate change strategy aimed at reducing Scope 1 and 2 emissions from its industrial

operations in line with its shortand medium-term targets.

Once completed, Rhovan will integrate the project into its electrical network, which is expected to supply more than 30% of the mine’s annual power requirements. Glencore expects the reduction in grid-supplied electricity to save more than 48,000 tpa of CO2e in annual carbon emissions.

Additional ways the sector is lowering its carbon footprint include utilising water-efficient techniques, embracing technology to optimise resource extraction and reducing and reusing waste.

Kate Stubbs, Marketing Director at Interwaste, says miners can use waste to tackle the energy crises and help

achieve the JET provision of net zero carbon emissions by 2050.

“Numerous mining giants have adopted a zero waste to landfill approach by working with partners to find alternative solutions for their waste streams,” she says.

A major focus entails developing alternative energy sources, such as waste-derived fuel production facilities.

“We have pioneered two types of refuse derived fuels (RDF) locally. The solid fuel created through shredding and bailing certain pre-sorted dry industrial nonrecyclable waste produces a clean RDF that has a high heating value similar to A-grade coal. This offers a suitable and robust alternative to fossil fuel,” says Stubbs.