SA Mining March/April 2022 by SundayTimesZA

R715m: Gold Fields’ new generation plant

6 500: expected Mining Indaba delegates

SA MIN NG MARCH / APRIL 2022

www.samining.co.za

READ WHAT REALLY GOES DOWN IN SADC R39.90 (incl VAT) International R44.50 (excl tax)

AECI Mining’s CEO Mark Kathan

POWER OUTAGES

and the economy

SUSTAINABILITY IN MINING ■ Cop 26 and coal ■ Electric mining vehicles ■ Going off-grid

AECI MINING

for a better world

MINING INDABA IS BACK!

CORPORATE

PROFILE ENS AFRICA

RENEWABLE POWER

he ongoing energy security crisis in South Africa has compelled many mining companies to consider alternative and supplementary energy sources in order to meet demand. Given the need to lower the cost of production, renewable energy is an attractive supplement to reduce energy costs, while also incentivising mining companies to improve their environmental, social and governance positioning. For example, explains ENSafrica’s natural resources and environment executive Ntsiki Adonisi-Kgame, solar energy doesn’t contribute to environmental risks that are associated with nuclear power, water pollution, nitrogen oxides and other harmful waste. “In August and October 2021, Schedule 2 of the Electricity Regulation Act (ERA) of 2006 was amended to increase the threshold for embedded generation projects from 1MW to 100MW, presenting an extraordinary opportunity for the mining industry,” she says. “These amendments came after a long period of lobbying by industry for the self-generation threshold to be increased to at least 50MW. The amendments mean that energy generation projects that fall within the 100MW threshold do not require a generation licence, although they must be registered with the National Energy Regulator of South Africa (NERSA).”

for mining operations – what you need to know By Ntsiki Adonisi-Kgame

In light of this exemption, she says, these energy generation facilities may be operated by independent power producers. The amendments have undoubtedly paved the way for the mining industry to venture into renewable energy projects. In November 2021, the Minerals Council South Africa announced that it had renewable energy projects worth an estimated R60-billion, with the capacity to generate 3 900MW. These projects not only have the potential to help Eskom keep the lights on, but will contribute towards achieving net-zero emissions by 2050.

WHAT WILL THE PROCESS BE?

“On 10 October 2021, NERSA published the registration procedure in terms of Schedule 2 of the ERA. The registration procedure provides that a period of 45 days is required to process the application once payment of the registration fee of R200 has been effected. “One of the key factors to be considered during the analysis of the application for registration is the economic analysis of the

project, which will be based on the economic benefits such as employment during construction and operation.” While projects that will want to generate up to 100MW may be exempted from obtaining a generation licence in terms of the ERA, depending on the size and environmental impacts of the proposed facility, the generation of electricity requires a plethora of authorisations regulated by different pieces of legislation, she says. These include “environmental authorisations, water-use licences, biodiversity permits and various approvals issued by the municipality”.

KEY CHALLENGES

The weak synergy between South Africa’s environmental law and energy law is demonstrated in the foreseeable, yet not insurmountable, challenge of the inconsistent alignment of the prescribed time frames across various laws, as well as the strained capacity of various organs of state to process applications for such approvals timeously.

The Minerals Council South Africa has announced renewable energy projects: ■ Worth an estimated R60-billion ■ With capacity to generate 3 900MW ■ Contributing to net zero emissions by 2050

“This tension is set against the urgent need to generate affordable electricity to meet demand. As an illustrative example, in terms of the National Environmental Management Act of 1998 (NEMA), an environmental authorisation is required before activities listed in the Environmental Impact Assessment Regulations, 2017 can commence.” The development of facilities or infrastructure for the generation of electricity from a renewable resource such as wind and solar is a listed activity and requires an environmental authorisation, she says. “Where the electricity output is more than 10MW but less than 20MW, a basic assessment process must be undertaken. This process takes about 197 to 247 days. Where the electricity output is 20MW or more, a scoping and environmental impact report process must be undertaken. This process takes about 300 to 350 days.” Over and above the regulatory time

“

frames, the mining industry must be alive to some of the more commercial issues around these projects. These include securing land rights, which may include concluding surface-use arrangements with landowners or lawful occupiers such as communities. These may be accompanied by requests by various stakeholders to participate in the projects, through equity or other constructs. Mining companies must also be alive to the applicability of the Carbon Tax Act, 2019 and all considerations from the Mine Health and Safety Act, 1996. “The increase of the threshold from 1MW to 100MW is a welcome move and a step in the right direction in attracting investment and renewable energy expansion. Nonetheless, the success of the amendments will rest on the alignment of the legislation applicable to self-generation projects, excellent project management and the effective engagement or participation of key stakeholders in such projects,” says Adonisi-Kgame. ■

A WIN-WIN SITUATION Renewable energy offers mines an ideal scenario: access to reduced energy costs coupled with an improved environmental, social and governance positioning.

Ntsiki Adonisi-Kgame.

The increase of the threshold from 1MW to 100MW is a welcome move and a step in the right direction in attracting investment and renewable energy expansion. – Adonisi-Kgame

“

ENSafrica provides a genuine full-service offering to the mining industry Legal 500 EMEA Guide

discover more

CONTENTS

MARCH / APRIL 2022

Indigenisation, procurement and employment requirements in Africa’s mining industry.

Can (and should) mines go off the grid?

IN BRIEF 6

Caterpillar autonomously hauls more than one billion tonnes of material Promotions at NSDV Third-party rail access now a reality University of Pretoria to launch research centre for mechanised mining systems

FEATURES 14

Finance and legal The frequency of power outages creates downward pressure on productivity, labour output and the performance of mining and other key sectors.

Can – and should – mines go off the grid? Renewable energy plants won’t allow mines to go completely off-grid just yet – but will allow them to make significant reductions in emissions, while reducing pressure on Eskom.

The Mining Indaba returns – with a vengeance After two years of COVID-19 disruption, 2022 sees the return of the Mining Indaba to Cape Town, with a key focus on sustainability and the Just Energy Transition.

Many local commodities on the up Commodities are, broadly, faring well on the back of global supply challenges and demand growth, due to the energy transition and new infrastructure programmes.

Many local commodities on the up. R715m: Gold Fields’ new generation plant

6 500: expected Mining Indaba delegates

SA MIN NG MARCH / APRIL 2022

www.samining.co.za

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

AECI Mining’s CEO Mark Kathan

POWER OUTAGES

and the economy

Contract management and compliance Managing contractors, especially in respect of health and safety issues, is a critical aspect of mining operations.

NEWS IN NUMBERS 22 30

R715m: Gold Fields’ new generation plant 6 500: expected Mining Indaba delegates

REGULARS 4 50

Out of Africa Column by Peter Major

COVER STORY: PAGE 8

READ WHAT REALLY GOES DOWN IN SADC

SUSTAINABILITY IN MINING ■ Cop 26 and coal ■ Electric mining vehicles ■ Going off-grid

AECI MINING

for a better world

Merging AECI Mining Explosives and AECI Mining Chemicals as AECI Mining has allowed the company to focus on its most important priorities, says MD Mark Kathan.

MINING INDABA IS BACK!

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FROM THE EDITOR

THE JUST ENERGY TRANSITION

AND THE FUTURE OF MINING

“

Finally, in our finance and legal section, labour and mining analyst Mamokgethi Molopyane considers the downward pressure placed on productivity, labour output and the performance of mining in general by frequent power outages and unstable electricity supply, and how this affects our economy. Of course, even challenges such as these do not prevent new projects from being launched, and when this happens, it is critical to ensure your contractors are properly managed. We take a closer look at the intricacies of contract management – most notably considering the implications for compliance, and the tools that can help mines to overcome contract management challenges. Mining commodities have taken a significant hit over the past two years, due to the myriad challenges created by the pandemic. But according to the experts, SA’s mining industry is bouncing back relatively well, thanks to higher prices driven mainly by infrastructure development and an inability of supply to meet demand. In fact, EY Africa suggests that South Africa’s commodities investors have been some of the biggest winners recently, as geopolitical factors have come to dominate markets, and there is an anticipation of decreased global supply of some key commodities, notably in the platinum group metals sector. Finally, our “explosive” cover story looks at how AECI Mining Explosives and AECI Mining Chemicals have come together and reinvented themselves under the AECI Mining banner, and in what it considers its most important priorities in the drive to retain its reputation as a market leader. ■

The SA Mining Indaba is back with a vengeance.

“

SA MINING

MARCH / APRIL 2022

www.samining.co.za

READ WHAT REALLY GOES DOWN IN SADC

EDITOR

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

ONLINE EDITOR

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

Rodney Weidemann

ollowing two years of immense disruption, thanks to COVID-19, the world is slowly beginning to return to some semblance of pre-pandemic times. And most notably for the mining sector, this means that the SA Mining Indaba is back with a vengeance. For more than a quarter of a century, the Mining Indaba has offered a unique perspective of the African mining industry, bringing together visionaries and innovators across the entire value chain. This year it is anticipated that there will be over 6 500 mining experts in attendance, along with keynote speakers including the presidents of Botswana and Zambia. This year’s main focus will be sustainability and the Just Energy Transition, with discussions around issues such as the hydrogen economy opportunity; environmental, social and governance investing; and decarbonisation, among others. Such a focus is no big surprise, coming on the back of last year’s United Nations Climate Change Conference (COP26) , with its strong stance on fossil fuels and the phasing down of coal use. In this issue, we follow that train of thought, to consider the broader impact of sustainability on mining. We look at what the COP26 decisions mean for the future of an industry that sustains thousands of jobs in SA. We also consider the impacts of the government’s Renewable Energy Independent Power Producer Procurement Programme, and what this will mean in the long term for mines – namely, is it possible for mines to go completely off the grid? Continuing with our sustainability theme, we look at transport in the mining context, and whether mines anticipate – and are preparing for – a future where their vehicles are completely electric.

SA MIN NG

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ART DIRECTOR

Shailendra Bhagwandin Tel: 011 280 5946 Email: bhagwandinsh@arena.africa

ADVERTISING CONSULTANTS

Ilonka Moolman Tel: 011 280 3120 Email: moolmani@samining.co.za Tshepo Monyamane Tel: 011 280 3110 Email: tshepom@samining.co.za

PRODUCTION CO-ORDINATOR

Gail Mortinson Tel: 011 280 5369 Fax: 011 328 2226 Email: gailm@arena.africa

SUB-EDITOR Andrea Bryce

BUSINESS MANAGER

Claire Morgan Tel: 011 280 5783 Email: morganc@sahomeowner.co.za

GENERAL MANAGER MAGAZINES Jocelyne Bayer

SWITCHBOARD

Tel: 011 280 3000

SUBSCRIPTIONS

Gail Mortinson Tel: 011 280 5369 Email: gailm@arena.africa

PRINTING

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OUT OF AFRICA NAMIBIA

MALI

SUPPORTING A GOLDEN OPPORTUNITY IN NAMIBIA

MODULAR WASTEWATER TREATMENT PLANT

IDEAL FOR AFRICA

WEC Projects, in conjunction with its partner Multotec, has designed and custom-engineered a wastewater treatment plant for a gold mine in Mali, West Africa. The plant, used to remove arsenic from the mine’s wastewater stream, incorporates a modular design that simplifies the logistics and reduces the costs of transport and installation. Wayne Taljaard, managing director of WEC Projects, says, “The mining industry in Africa presents some very unique challenges, not the least of which are the remote locations of many of the mines and the difficulties experienced in getting staff and equipment to sites where road, power and water infrastructure are often lacking. “Hence the requirement by Multotec for a modular solution that would allow for rapid transport to site and to simplify its installation and commissioning.” In the treatment process, the mine’s wastewater undergoes primary solid/water separation using coagulation and flocculation and the primary clarifier. From there it enters a two-stage chemical precipitation and secondary clarification process to reduce the arsenic levels. The final stage sees the sludge undergo dewatering before disposal. The treated water, although not potable, is then reused by the mine for process applications.

SA MINING

MARCH / APRIL 2022

An innovative expansion at a Namibian gold mine is to boost production by 50%, and vibrating screen specialist Kwatani is supplying five mill discharge screens – all custom-designed and manufactured at its Gauteng facilities. “The mine is gearing up to increase its production by 50%, to take advantage of the strong gold price,” says Kim Schoepflin, CEO of Kwatani. “Our role was to ensure that our discharge screens meet their exact process requirements – with our efficiencies of up to 95% – while delivering mechanical integrity for minimal maintenance downtime.” The expansion includes the installation of two latesttechnology mills – a high-pressure grinding roll (HPGR) and a vertical mill – which will boost production while reducing energy demand. Kwatani’s mill discharge screens, each measuring 3m wide by 8m long, will handle the coarse and fine material from the HPGR and the vertical mill. The company will also supply three silo feeders of 1.2m by 2.5m in size, to feed material from the silo to conveyors. “Our screen design optimises the retention time on the deck, allowing for better screening and stratification,” she says. “Due to the volume of slurry and water sprayed onto the screens, the added retention time assists with better drainage at lower cut points.”

GHANA

LOAN DEAL FINANCES UPGRADE OF MAJOR GHANAIAN ROAD Mandated lead arrangers Investec Bank and Intesa Sanpaolo S.p.A (Intesa), in partnership with export credit agency UK Export Finance and African Trade Insurance Agency (ATI), have signed a loan to finance the upgrade and rehabilitation of a 109km stretch of the Bolgatanga-Bawku-Pulmakom Road in the Upper East Region of the Republic of Ghana. Critically the large untied commercial loan tranche supported by ATI allows significant local sourcing of Ghanaian equipment and services and local job creation in the delivery of the project. Charles Adu Boahen, Minister of State at the Ministry of Finance, says: “We are delighted to again work with Investec as coordinating bank, in the delivery of this landmark export credit financing. The Bolgatanga road will provide access to essential services for local communities, will stimulate trade and economic and social development and will further integrate the Upper East and Northern regions of Ghana, as well as improve access to neighbouring countries.”

www.samining.co.za

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IN BRIEF

THIRD-PARTY RAIL ACCESS IS NOW A REALITY

CATERPILLAR

AUTONOMOUSLY HAULS MORE THAN A BILLION TONNES OF MATERIAL For the first time in mining history, trucks equipped with Cat MineStar Command for hauling have autonomously moved more than one billion tonnes of material in less than a year. Roughly 1.2 billion tonnes (1.3 billion tons) were autonomously hauled in 2021 using Command for hauling. Autonomous trucks equipped with Command for hauling are operating at 18 mine sites by 10 companies across three continents. Commodities autonomously hauled include iron ore, oil sands, copper, coal and gold, spanning the 190- to 360-tonne (210- to 400-ton) class sizes. “A recent five-year study by one of our customers autonomously hauling iron ore reported an 11% reduction in fuel usage – resulting in a 4 300-tonne-per-year (4 740 TPY) CO2 emissions reduction – 11% increase in hourly production, 50% higher maximum truck travel speed, and 35% improved tyre life,” says Marc Cameron, vice president, Caterpillar Resource Industries.

PROMOTIONS AT NSDV NSDV, Africa’s first fully integrated law and consultancy firm – specialising in mining, construction and environmental law, has announced three senior promotions after growing the firm from three founding members to 28 legal/corporate consultants and support staff over the past three years. Samantha Reyneke has been promoted from general commercial litigator, operating particularly within the realms of disputes arising from construction and engineering, business rescue, and product liability, to director in the Construction Department at NSDV. Muhammed Khan moves from his role as senior associate to director in the Mining and Environmental Law Department and Sarah Forshaw has been promoted from associate to senior associate in the Construction Department after only six months in her previous role. “Growing our business during the pandemic climate has been challenging, but our philosophy towards people and their growth has allowed us to reward exceptional leadership and avoid the usual ‘bide-your-time’ gauntlet many legal practitioners face,” says co-founder and director Lili Nupen. “We offer an intimate team structure that doesn’t rely on traditional hierarchy and policies to reward exceptional results for our clients.”

SA MINING

MARCH / APRIL 2022

Private rail operators have welcomed President Cyril Ramaphosa’s announcement that third-party rail network access is allowed, as of April this year. Mesela Nhlapo, CEO of the African Rail Industry Association (ARIA), says the opening up of SA’s rail network to private, fee-paying operators will create cost-effective gateways into Africa for South African goods through the African Continental Free Trade Agreement. Just as trade across Europe has thrived through the European Union, Africa is expected to benefit similarly, but that will not happen without efficient and interoperated rail systems. Nhlapo says multiple operators will generate additional revenues for Transnet that will be invested back into catch-up maintenance. The aim is to return South Africa’s rail network to the source of global competitive advantage that it should be.

UNIVERSITY OF PRETORIA TO LAUNCH RESEARCH CENTRE FOR MECHANISED MINING SYSTEMS The University of Pretoria (UP) is set to host the South African Mining Extraction, Research, Development and Innovation (SAMERDI) Research Centre for Mechanised Mining Systems in its Faculty of Engineering, Built Environment and Information Technology. Known as the Mandela Mining Precinct (MMP), its role is to modernise mining in South Africa, and is being implemented through five thematic applied research focus areas: the longevity of current mines; mechanised mining systems; advanced ore body knowledge; real-time information management systems; and the successful application of technology centred on people. Professor Francois Malan, head of the Mining Resilience Research Centre at UP, who will be one of the heads at the new centre, says it will function as a multidisciplinary research initiative between the Departments of Mining Engineering, and Mechanical and Aeronautical Engineering. “It will establish research expertise in automated condition and performance assessment of rock and equipment, from the parameters obtained during drilling and blasting operations. The practical implication of this is that maintenance of equipment can be done more proactively. “Furthermore, significantly more data can be obtained from the behaviour of rock mass behaviour. This will allow designs to be adapted if, for example, a harder or softer rock mass is encountered in different areas.”

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EXPLOSIVES COVER STORY

AECI’S KEY PRIORITIES

hile it has reinvented itself as AECI Mining, the company remains focused on its important priorities and on retaining its reputation as a

market leader. With a history that spans nearly 125 years, AECI is one of South Africa’s most enduring and iconic industrial brands. Known today as AECI Mining, the company is the largest and most internationalised business in the AECI Group. It comprises divisions that manufacture and distribute surfactants for explosives manufacture; commercial explosives, initiating systems and blasting solutions; and chemicals for ore beneficiation and tailings treatment. The integration of these offerings under the AECI Mining banner is a reinvention of the company in respect of what it is, what it does and how it does it, says Mark Kathan, who has been AECI’s Group CFO since 2008 and recently took over the key role of AECI Mining’s managing director. Working closely with his predecessors, Kathan has played a pivotal role in developing the integration strategy that brought together AECI Mining Explosives (AEL) and AECI Mining Chemicals (Experse and Senmin) as AECI Mining. He has also played a major part in formulating and executing the globalisation strategy that has resulted in significant expansion activity in Australia, Indonesia and South America over the past 13 years.

SA MINING

MARCH / APRIL 2022

AECI Mining Explosives in South America.

Kathan explains that there are priorities that AECI Mining focuses on to retain its market-leading reputation, outlining each of these in turn.

PEOPLE ARE NUMBER ONE

“People are my main priority, particularly in terms of global mindset and skills. Therefore, my top priority is to make sure that our people are motivated for this approach. “At present, we are based mostly in South Africa, sitting around the table and talking about the world. But we don’t have people from around the world at this table, creating a challenge in that lack of international input reinforces a fairly narrow perspective on reality,” he says. “We must bring the right skills on board and some of those will have to be global. In looking for the best skills, we must remember that we have a very strong heritage. There are extremely capable South Africans all over the world – they’ve led,

www.samining.co.za

they’ve expanded the brand and enhanced the industry as a whole.” A few years ago, he adds, AECI’s main board came to the same conclusion regarding its composition and consciously sought to recruit non-executive directors from other countries – an approach that has proven successful. AECI Mining now needs to do the same, he says. “At the same time we must remember that diversity and transformation are equally important. For example, bringing women into the mining sector is both a legislative requirement locally and a global imperative.”

TRAINING AND SAFETY

To enhance skills development and training, the latest technologies – like virtual reality – are being applied. Implementation enables consistency across the world, providing users with a uniform real-life experience that enhances their capabilities. > “As an example, AECI Mining has

aeciworld.com

YOUR EXTREME BLASTING CONDITIONS. OUR EMULSION.

A signiﬁcant new development in AECI Mining Explosives’ product offering is the development of its Powergel X² range, designed for surface mining applications where extreme blasting conditions such as hot blast holes and reactive ground, or a combination of both, exist. *Only available in certain regions.

EXPLOSIVES COVER STORY

“

New water treatment facility at AECI Mining Explosives in Modderfontein.

“

An immovable focus on safety at AECI Mining’s operations has morphed into an enduring culture where safety is viewed as a way of life. partnered with North West University to provide six technical short learning courses that combine theory and practical exposure. The courses reinforce the requirement for efficient and safe blasting in mining and quarrying.” He says the courses cover: ■ Commercial explosives in construction, mining and quarrying. ■ Underground tunnel and narrow reef mine blasting. ■ Underground massive mine blasting. ■ Surface mine blasting. ■ Commercial initiation systems for surface mine blasting. “An immovable focus on safety at AECI Mining’s operations has morphed into an enduring culture where safety is viewed as a way of life. Testimony to this is the organisation’s consistent and continuous improvement in safety performance over the past decade, culminating in the best-ever total recordable incident rate of 0.16 in 2021. This is comparable with the world’s best. “To keep improving, we have developed a safety, health, environment and quality (SHEQ) framework that maps the process of maturing safety processes and procedures from compliance to being proactive and ultimately to being resilient. “At the same time, AECI Mining invests heavily in research and development that enhances safety at sites, through the incorporation of smart technologies including biometrics, facial recognition and virtual reality. “We’re also members of SAFEX. Through this international learning organisation, members learn from each other as they

SA MINING

MARCH / APRIL 2022

share SHEQ information on any topic that can prevent unwanted explosives-related incidents.”

SUSTAINABILITY AND RESILIENCE

Better mining is one of the AECI Group’s sustainability goals because the company recognises the importance of making mining safer and more circular. Sustainability, explains Kathan, has a two-fold influence on AECI’s way of thinking. Firstly, it’s about looking for ways to reduce its own impact on the environment, and secondly, it takes into account the impact of its products through their life cycle. “We are certainly on the path to Going Green, which is one of AECI’s core values. For example, we’ll be harnessing green ammonia going forward as well as some of the technology relating to extractives, to help reduce water usage. “We’re also building two solar farms – one in Sasolburg to support the AECI Mining Chemicals business, and one in Modderfontein to support the AECI Mining Explosives business. Other Going Green initiatives already under way include the use of used oil in the production of emulsion explosives.” Perhaps the biggest challenge facing the organisation today is its supply chain, due mainly to the ongoing disruptions caused by COVID-19. This was apart from activating a business continuity plan that addressed anticipated risks and challenges well ahead of COVID-19 restrictions being imposed, on the movement of people and goods across many parts of the globe, he states. This involved locking up future raw material supply with key suppliers and filling

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the supply pipeline. In addition, by applying near-shoring principles and looking to suppliers closer to the point of use, shipping delays were avoided. This ensured that the supply chain was geared to manufacture and distribute products in line with customers’ changing needs during COVID-19. AECI was able to keep all customers supplied during the worst of the pandemic. Furthermore, since the coal mining industry remains key to electricity supply in South Africa, AECI Mining was classified as a provider of “essential products and services” and was thus able to keep operating, despite the local lockdowns. “Other swift and strategic measures we took from the outset included even greater emphasis on safe behaviours at our operations and AECI as a whole set up a health and safety task team which met virtually on a daily basis for well over a year. “Members of the task team included the whole AECI Group executive committee, medical personnel and other subject specialists. The team developed and deployed related policies and guidelines and we tracked the health of all our employees globally on a daily basis. “On a positive note, we were able to continue paying employees their full salaries and keep our teams intact, without needing to retrench anyone. This bears further testimony to the commitment and resilience of AECI’s people. They have taken us to marketleading positions and will keep us there into the future,” says Kathan. ■

FINANCE & LEGAL CORPORATE PROFILE PETA ATTORNEYS

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BOUTIQUE SERVICES to a broad industry sector

he mining sector is a key industry that requires specialized legal services. Our team is committed to delivering high standards of professionalism, ethics and expert knowledge in all engagements with our clients in industry– in accordance with the values of our firm and importantly, the ethical standards that regulate the attorney’s profession.

OUR FIRM

Peta Attorneys is a black female-owned and led boutique law firm in South Africa. We specialise in the fields of mining, environmental, maritime, and energy law with expertise in corporate and commercial law in each of these practice areas. Our firm is one of the few boutique firms of its kind that extends a comprehensive legal service to the mining industry.

OUR SERVICES

We provide valuable insights and expertise in the practice areas of mining law, mineral regulation and environmental law. The extensive services that we render include, but are not limited to, regulatory compliance advisory, management of licences to operate from application to compliance reporting, legal support in preparation of environmental management programmes, social and labour plans, and mining work programmes, among others. Additionally, we offer commercial transaction advisory services in mining related transactions together with mining litigation. Peta Attorneys also provides further training on mining and environmental law regulation.

SA MINING

MARCH / APRIL 2022

The team at Peta Attorneys.

OUR CLIENTS

We value the relationships that we have formed with our clients and, are proud of the services that we deliver to them. We work with a range of organisations and businesses including state-owned enterprises, government departments, regulators, municipalities and SMMEs, all within the firm’s areas of specialisation.

OUR LEADERSHIP

Our brand, Peta Attorneys Inc, is derived from the values and extensive expertise of our founder Dineo Peta, who is a seasoned attorney with over 16 years’ postqualification experience. Dineo has amassed extensive experience in mining law that she acquired during her tenure at global mining companies, including BHP Billiton Energy Coal South Africa and BHP Billiton Manganese South Africa. Within these entities she managed the legal aspects

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pertaining to the company’s mineral and surface rights matters. She holds numerous qualifications, including an LLM degree in Environmental Law (Wits), a certificate in Prospecting and Mining Law (Wits) and a PGD International Maritime Law (World Maritime University, Sweden). Dineo serves on various boards and currently, is the deputy chairperson of the National Nuclear Regulator as well as an interim director to the board of Alexkor SOC Ltd. She also serves on the environmental appeals panel for the Gauteng Province.

LOCATION

Peta Attorneys is based in Midrand, Gauteng at the International Business Gateway Office Park. Its satellite office is at Ballito Business Park, Ballito, Kwazulu-Natal. For more information or legal assistance, please visit www.petainc.co.za or contact dineop@petainc.co.za ■

International trade and export of amongst others, mineral resources through shipping, is one of the major contributors towards greenhouse gas emissions across the globe. In Article 2 of the Paris Agreement 2015, there is an aim “…to strengthen the global response to the threat of climate change…”. There have been developments at international law level and also the foreign laws of many maritime countries to promulgate various legislative, policy and strategic measures designed to reduce the usage of fossil fuels, thereby decarbonizing shipping transportation. South Africa being a signatory to the Paris Agreement and other similar international instruments, should accelerate the formulation of laws that will give effect to strategies designed to decarbonize the shipping industry.

13 Challenger Avenue, International Business Gateway, Newroad, Midrand, 1685 +27 10 800 1515

admin@petainc.co.za dineop@petainc.co.za https://www.facebook.com/petaattorneysinc/ https://za.linkedin.com/company/peta-attorneys-inc

COLUMN EQUIPMENT

FINANCE & LEGAL COVER STORY

UNSTABLE ELECTRICITY SUPPLY

AND ITS IMPACT ON MINING AND THE ECONOMY

SA MINING

MARCH / APRIL 2022

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

electricity crisis with the nation’s energy security, he frequency of power outages, due to climate change, inclusive and sustainable unstable electricity, creates downward economic growth and development challenges. In a pressure on productivity, labour output way the electricity issue is a multifaceted crisis that and the performance of mining and other touches every aspect of society, including the lives key sectors. Beyond disruptions in the of everyone. Here I will attend to the far-reaching broader economy, the lack of stable power leads impact the lack of stable electricity has on the to adverse economic consequences for companies, country’s social, economic and political stability. workers, consumers and ordinary people. These Undoubtedly one of the most significant direct can be measured in loss of income, increased costs and indirect effects of power outages on workers, and destruction of livelihoods. companies, livelihoods and people is not just South Africa presently experiences electricity the productivity of those affected, but also the supply instability and load shedding. The frequency economy’s performance. of power outages indicates the ongoing crisis at For example, the extent of load shedding and the state-owned enterprise Eskom, especially its frequency comes with disruption costs and its electricity generation capacity, due to Mamokgethi declining performance in critical sectors such as maintenance-related problems at its power plants. Molopyane manufacturing and mining. In the past decade, In the absence of stable electricity, the country Labour and mining analyst capital expenditure on resources for alternatives remains vulnerable to poor economic activity such as generators has increased. and recovery. Additionally, where energy policy remains a murky However, even with such an investment, blackouts and load and unclear terrain, the overall economic wellbeing of South Africa shedding have had a negative financial implication on companies is unlikely to be good. Without a systematic change in energy and indirectly too. They lead to a reduction in produced goods, decrease electricity policies and politics, Eskom’s failings pose an energy in sales, low labour productivity and idle machinery (both can have security challenge to the country. Furthermore, this crisis and the a cost-adding outcome), loss of data, and damages to hardware and COVID-19 pandemic demonstrate that now is the time to redefine and machinery. rework the country’s entire energy policy regime. The last mentioned is a consequence of the frequency of power Addressing the electricity shortage, while setting South Africa more outages that eventually cause machines to deteriorate and break firmly on the path towards a just transition for an environmentally down. sustainable economy, will be one of the defining challenges and Implications include the fall in consumer confidence and the features of President Cyril Ramaphosa’s administration. The challenge inability of companies to meet is even more significant when their targets. In mining, unstable policies have to strike a balance electricity could lead to a company between responding to the being perceived as incapable of increasing impact of climate meeting its production target, and change and delivering the being viewed as unreliable, leading obligations of a state that deems to fewer sales. itself to be developmental in its We have already witnessed stance and objectives. some of the effects of a lack of Balancing the two stable electricity. It has led to undertakings will determine the reduced demand that induces a failure or success of the energy decrease in sales, productivity, policy. Of course, all will depend performance and total output – as on its implementation. illustrated by a 0.3% fall in annual mining output between 2016 and One of the indications of how things are changing is the 2021. establishment of the Presidential Climate Commission (PCC) to And then, and as a consequence, the decline leads to a fall facilitate a just and equitable transition towards a low-emission and in company and industry competitiveness at a domestic and climate-resilient South African economy. To achieve this, a shift away international market level. Even with a boom in 2021 that saw 39.1% from the current reliance on fossil fuel (coal) for electricity generation minerals sales (compared to 2020), reinvestment of those returns in must occur. This is an unenviable process for the PCC, Mineral new exploration projects in South Africa is less than 1% of the total Resources and Energy Ministry, and the government, since they will global expenditure. Ultimately, as has been evident throughout the have to explain and even justify this in terms of its potential impact on years, mining’s overall contribution to GDP has declined relative to coal mining companies, workers and livelihoods. other sectors. SIGNIFICANT IMPACT Taken together, these significant adverse effects of load shedding, We know that the country’s current and dominant mode of electricity due to unstable electricity supply, are indicative of poor planning, generation is coal, emitting the highest carbon dioxide content of the ailing infrastructure and unresponsive political leadership to the crisis. various fossil fuels. The overly high reliance on coal as the baseload They also reveal the severe implications of unstable electricity on the source for power generation means the country’s energy policy has to performance of companies and industries like mining and the overall address delinking from fossil fuel in the long term, and simultaneously economy. respond to exogenous factors such as binding agreements of reducing In short, a South Africa that could be advancing through economic greenhouse gas emissions as per South Africa’s commitment to the growth is falling behind other developing economies, due to the Paris Climate Accord. unreliability of power supply, resulting from poor energy policies and At a glance, the above demonstrates the intersection of the lack of reforms relating to electricity-generating infrastructure. ■

FINANCE & LEGAL

INDIGENISATION, PROCUREMENT AND EMPLOYMENT

REQUIREMENTS IN AFRICA’S MINING INDUSTRY

aking a look at the critical areas of indigenisation and local procurement and employment requirements in various key countries in Africa Comprising a network of leading law firms in 28 African countries, LEX Africa is Africa’s largest legal alliance. In the mining sector, Africa is renowned for its focus on indigenisation requirements, as well as those around local procurement and employment. Since each member of LEX Africa is an independent law firm, we spoke to a few from various African nations to find out the requirements for their country.

EGYPT

According to Merna Osama, associate at Marghany Advocates in Egypt, when it comes to local ownership rights, should a local company wish to start operating in the mining field, it must obtain a licence for exploration or licence for exploitation from the Egyptian Mineral Resources Authority. “According to the Mineral Resources Law No 198 of 2014 and its executive regulation, there are different types of ownership with regard to this matter. For one thing, the ownership of the land where the exploration

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or exploitation takes place does not fall to the mine. However, if they have obtained a licence for exploitation, they shall have ownership over the ore extracted,” says Osama. “They would, however, have to pay a rental value for their mines and quarries, on a per square kilometre basis – the rental value for mines under exploration is EGP25 000/km2, while for white sand it is EGP9/km2.” However, when it comes to foreign ownership of mining rights and local procurement and employment quotas, things are not onerous. “There are no restrictions regarding foreign companies with respect to mining rights, but the same rules apply to them as for local entities. There are also no quotas with regard to local procurement and employment, but practically speaking, the employer has the right to hire foreign employees at a ratio of one for every nine local employees.”

GUINEA

One of the major requirements regarding ownership of rights and equity in Guinea, says Jean Noé Mwizerwa of Thiam &

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Associates, is related to the Guinean state participation in the share capital of rights holders. The mining code, he notes, provides that the grant by the state of a mining operation title immediately gives the state an ownership interest, at no cost, of up to a maximum of 15% in the capital of the company holding the title. “The mining code also provides that the state has the right to acquire a supplementary participation, in cash, according to the terms agreed with each relevant mining company within the scope of the mining agreement. It should be mentioned, however, that the total participation of the state may not exceed the 35% threshold of the share capital,” he says. “With regard to the Local Content Decree (LCD), this generally applies to large infrastructure projects, including mining infrastructure. Thus the LCD provides that project operators must acquire materials, constructions and associated services on the local market. However they may obtain such materials from abroad when these materials or services cannot be found on the local market.” Mwizerwa says the LCD also provides

“

LEX AFRICA

In Nigeria, there are no restrictions to foreign ownership of mining rights and shares in a company with a mineral title. – Giwa-Osagie

“ Chris Stevens.

Jean Noé Mwizerwa.

thresholds for local sub-contractors. So 30% of the expenses incurred for the implementation of a project must be dedicated to local sub-contractors. “Mining title holders, and companies working on [their] behalf, must however give procurement preference to Guineanowned or -controlled companies for goods or services. During the exploration phase, the mining title holders, and companies working on their behalf, must contract with 10% of Guinean small and medium-sized enterprises. During the development phase, this percentage increases to a minimum of 20%.” The LCD, which governs and protects local procurement, also contains provisions on the employment of Guinean workers, he says. “Such provisions are, more or less, similar to the provisions of the mining code.”

MOZAMBIQUE

In Mozambique, and pursuant to the Mining Law, the state is required to progressively increase its participation in mining projects, says Faizal Jusob, partner at Couto, Graça & Associados. “Nevertheless, the new Mining Law is unclear as to whether this means that the

state shall be a larger participant in mining projects in the future, or whether the state is expected to obtain greater interests in particular projects, over time.” The Mining Law establishes that the mining contract must be signed with companies that have the state as shareholder and a minimum local content. The Mozambique government must create mechanisms of involvement of Mozambican companies or individuals on the mining ventures and must promote, gradually, the increase of the level of its participation in mining ventures, says Jusob. “There are no restrictions regarding foreign ownership – however for small-scale and artisanal operations, some mining titles are reserved for citizens of Mozambique.” Under the new Mining Law, preference should be given to goods and services purchased or obtained from Mozambican individuals or entities, he adds. Further, the Mining Law requires that goods or services, the value of which exceeds a particular amount (to be determined in subsequent regulations), must be purchased by way of a public tender. “The criteria for the hiring of foreign > citizens have been adapted for the mining

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Merna Osama.

Faizal Jusob.

Osayaba Giwa-Osagie.

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MARCH / APRIL 2022

“

NIGERIA

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MARCH / APRIL 2022

All companies in South Africa are subject to employment equity targets in terms of the Employment Equity Act including mining companies. – Stevens

SOUTH AFRICA

“There are no general provisions dealing with restrictions in ownership of rights or equity in the holders of rights by citizens of South Africa. Thus a foreign company could potentially own 100% of a right or the equity in the holder of a right,” says Chris Stevens, head of mining, environmental and resources practice at Werksmans Attorneys. “However this is qualified to the extent that the mining legislation and the Mining Charter 2018 are applicable to ‘historically disadvantaged persons’. Applicants for new mining rights now require a 30% historically disadvantaged person ownership. “The original version of the Mining Charter 2018 required a 5% free carry in favour of host communities and qualifying employees, but the provisions in relation thereto have been scrapped as a result of a court judgment in litigation instituted by the Minerals Council South Africa against the Department of Mineral Resources and Energy, and therefore the obligations to have such free carries are no longer applicable,” says Stevens. As a result of this court decision, there are now also no set restrictions or targets

According to Osayaba Giwa-Osagie, senior partner at Giwa-Osagie & Co, only companies incorporated in Nigeria are entitled to have a mining title. The company can be 100% owned by foreigners but must be registered in Nigeria. An applicant for a mining title is required to show proof of sufficient working capital and technical competence to carry out the proposed mining exploration or operation. “There are no restrictions to foreign ownership of mining rights and shares in a company with a mineral title. The Nigerian Investment Promotion Commission Act allows companies incorporated in Nigeria to be wholly foreign-owned. “However, in practice, where the proposed company that desires to operate in the mining sector is 100% owned by foreigners, the Corporate Affairs Commission may require that the company has a Nigerian director to reflect local content.” There are currently no regulatory policies on local content and/or procurement in the mining sector, he says. “However, there is a proposed bill at the National Assembly to provide for local content across various sectors in Nigeria, including the mining sector. This bill is yet to be enacted into law.” The Minerals and Mining Regulations provide that an applicant for a

reconnaissance permit, exploration licence, mining lease and water-use permit should have in their employment a person with a qualification and experience in exploration or mining (as applicable). They must also be registered with the Council of Nigerian Mining Engineers and Geoscientists (COMEG) and any other relevant professional body, he says. “There are currently no regulatory policies on the employment of employees from local communities in mining operations. However, in practice, employing from local communities is necessary to foster a good relationship with the local communities.”

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sector to ensure that more qualified workers are attracted to mining operations. Additionally, the Mining Law states that mining companies must guarantee employment and training of Mozambicans in the areas of mining activity, thus promoting local employment and technical-vocational training plans.” However there is no specific legislation in Mozambique regulating the hiring of citizens from the local communities in which mining activities are carried out, Jusob says.

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FINANCE & LEGAL

for procurement regarding either goods or services. It is anticipated that such obligations will be ultimately provided in regulations or amendments to the Mineral and Petroleum Resources Development Act. “All companies in South Africa are subject to employment equity targets in terms of the Employment Equity Act including mining companies. In addition, Mining Charter 2018 imposes obligations on mining companies in regard to the employment of people which will promote equal opportunity and fair treatment. “This is to eliminate unfair discrimination and ensure implementation of affirmative action measures to redress disadvantages experienced by designated groups, thereby ensuring equitable representation in all occupation levels of the workforce.” There are therefore requirements for a minimum of a certain percentage of historically disadvantaged people and women on the boards of mining companies, as well as executive management, senior management, middle management and junior management, he says. “There are also requirements regarding employees with disabilities and employment of historically disadvantaged persons in core and critical skills,” he says. n

54 AFRICANCOUNTRIES 1ENTRYPOINT www.lexafrica.com

The Evolution of African Mining has begun Unprecedented line-up of Pan-African Ministers, mining CEOs and global investors

HEADS OF STATE CONFIRMED

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H.E. Hakainde Hichilema

President Botswana

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HEADLINERS TAKING THE AGENDA BY STORM

Hon. Gwede Mantashe

Duncan Wanbald

Sinead Kaufman

Mark Bristow

Minister of Mineral Resources & Energy South Africa

Chief Executive Anglo American Group

Chief Executive – Minerals Rio Tinto

CEO Barrick Gold

Mxolisi Mgojo

Roger Baxter

Clive Johnson

Alberto Calderon

CEO Exxaro Resources

CEO Minerals Council South Africa

President & CEO B2Gold

CEO AngloGold Ashanti

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ENERGY

CAN (AND SHOULD) MINES GO OFF THE GRID? By Trevor Crighton

enewable energy plants won’t allow mines to go completely offgrid just yet – but will allow them to make significant reductions in emissions and take substantial pressure off Eskom. “The increase of the generation licensing threshold from 1MW to 100MW is one of those rare ‘stroke of the pen’ reforms that unleashes enormous financial, economic and environmental value,” says Sedibelo Platinum Mines chief environmental, social and governance (ESG) officer Lael Bethlehem. “It’s an extraordinary reform that provides relief to Eskom and has a spin-off in terms of supporting South Africa’s growing green economy.” Norton Rose Fulbright head of energy Matt Ash says mines can take advantage of the change in two ways – with embedded behind the meter generation or distributed generation. “In the case of the former, the generation site would be situated on land owned by the mine and near to the operation where it is required,” he says. “That’s easier than the latter, where the generation facility is located remotely from the mine.” Distributed generation with wheeling is a financial, not physical, transaction, with an independent power producer (IPP) being

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credited for the electrons injected into the network on its accounting system and the offtaker being entitled to take them off the network at the other end, with adjustments made to supply. Ash says from a behind the meter point of view, the change in the threshold means that mines wanting to do so can simply get on with it. But there’s a challenge for those looking to operate a distributed model. “The problem is that the Eskom network is physically incapable of having hundreds or thousands of IPPs feeding energy into it, without significant risk of network destabilisation – which could happen in a nanosecond and see the entire country in the dark for two to three weeks should the network fail.” Another challenge in using renewable energy is intermittency of supply, so if the load were to suddenly disappear – or power unexpectedly become available – it would quickly destabilise the national grid. “These distributed connections wouldn’t all be possible until there is a set of rules around balancing the grid that is agreed on by all players, also with penalty consequences for those who breach the rules,” says Ash. “That said, we’re doing a lot of work with mines that have a mix of embedded and distributed generation, coupled with some battery storage systems

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to deal with intermittency – they’re voting with their feet and moving forward with their plans.”

GOLD FIELDS’ HEAD START

Gold Fields is proceeding with building its own R715-million generation plant at South Deep, Johannesburg, which should be commissioned in the third quarter of this year. “Our application for construction of a 40MW solar plant was approved by the National Energy Regulator of South Africa in February 2021. When the increase in embedded generation was announced, South Deep carried out a further optimisation study which revealed that upgrading the solar plant by an additional 10MW would unlock maximum value within the mine’s current ability to make use of additional power generated,” says Martin Preece, SA’s executive vice president of Gold Fields. “Taking this into account, the change of scope will increase capacity from 40MW to 50MW and allow for future expansion to 60MW within the existing environmental authorisation.” The plant will increase power generation from 94GWh per annum to 103GWh per annum – 24% of South Deep’s annual electricity consumption – and reduce its CO2

DUAL BENEFITS Increased self-generation for mines will: ■ Develop a more sustainable power supply. ■ Positively impact the environmental footprint.

“

We have opted for a combination of wind and solar so each supplements the other. – Bethlehem footprint by around 110 000 tonnes. By covering South Deep’s baseload requirement, the plant will allow for shifting pumping and other key activities – which were traditionally done at night – into the daytime window, with no surplus energy generated. “Of course, solar energy can only be generated during daylight hours, and to further reduce our dependency on grid power, both alternative renewable sources of energy as well as storage solutions are being investigated. “Given the unpredictable nature of renewable sources of energy, if we were to rely solely on renewables, we would need to install between two and three times our baseload requirements, which is why viable storage solutions are a critical part of the puzzle to solve,” says Preece. “We are encouraged by the potential of wind as a source of renewable energy, as well as the advances with storage solutions, and will be pursuing these aggressively.” Sedibelo’s Bethlehem says the size of the plants will depend on demand, and not many miners will need as much as 100MW of their own generation. “We released a request for proposal for a 40MW plant that uses a combination of wind and solar generation, and in time hope to supplement that with battery storage when that becomes financially feasible,” she says. “Renewable energy works well when the natural resource is available. We have opted for a combination of wind and solar so each supplements the other, but are aware that renewable energy alone cannot provide

Martin Preece.

100% of our 24-hour requirements. We think our plant will provide us with 55% to 60% of our 24-hour demand, with wind and solar working in tandem.”

DUAL BENEFITS

Norton Rose Fulbright head of mining Christina Pretorius says it’s important to remember the dual benefit of increased selfgeneration for mines. “Along with developing a more sustainable power supply, the inclusion of renewables will positively impact their environmental footprint,” she says. “I’ve seen press reports that the mining industry is responsible for between 7% and 9% of global greenhouse gas emissions, and trying to reduce that footprint is a nobrainer. Increased environmental regulation and the need for their own ESG imperatives are driving them strongly towards selfgeneration, giving them a more stable supply as well as having a positive impact on the environment.” Certain mines are using this to benefit the communities in which they operate, giving free equity stakes and creating jobs that will uplift them and feed into ESG imperatives, says Pretorius. She believes mines will also look to partner with existing IPPs rather than reinventing the wheel. “There are companies out there that have established thousands of renewable generation plants, and it makes sense to work with them, because they’re good at what they do. I don’t think it makes sense for a business as large as a mine to completely pivot and turn something that would facilitate their main business into their main business.

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Christina Pretorius.

Matt Ash.

Lael Bethlehem.

“Why would a mine turn into an energy generation facility developer? They can support, invest and commission renewable energy plants, but I certainly don’t see them becoming generators themselves,” she says. ■

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ENERGY

MAY AFFECT SA’S COAL MINING INDUSTRY By Benjamin van der Veen

COP26’S AIMS AND AGREEMENTS

COP26 saw many debates, initiatives and speeches concerning how the UNFCCC should approach the goals set out in the Paris Agreement, and solutions to further decrease the effects of global warming by phasing out the use of inefficient fossil fuels. Countries in attendance were asked to present their 2030 emission reduction targets aligned with reaching net-zero by 2050.

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Nations will have to begin accelerating the phasing out of coal, install measures to prevent deforestation, invest in renewable energy and renewable energy research and development, and accelerate the switch to electric vehicles. COP26 is the first time there has been a clear plan to reduce the use of coal. The agreement – known as the Glasgow Agreement – was initially created around phasing out the production and use of coal entirely by 2030. However, a last-minute secret meeting that took place between the United States, Chinese and Indian governments saw the wording of the agreement changed to “phase down” (lower the total use) instead of “phase out”. Developed nations pledged to significantly increase money to help developing countries deal with making the switch to clean and renewable energy and the adverse effects of climate change. South Africa and other developing nations were happy to be told that the $100-billion in incentives promised during the 2009 COP event in Copenhagen would be fully paid out by 2025. Developing countries were also offered the prospect of a trillion-dollar-a-year fund from 2025.

COAL MINING AND CONSUMPTION

To further understand all that happened at COP26 in securing a global net-zero future and South Africa’s coal mining industry, SA Mining spoke to Minnette Le Roux, a principal

“

ith the decision taken to “phase down” the use of coal by 2030, South Africa’s coal industry will certainly have to adapt to a new reality. The United Nations Climate Change Conference (COP26), all a part of the UN Framework Convention on Climate Change (UNFCCC), took place in Glasgow, UK, in November last year. Many had high hopes for COP26 to finally provide concrete answers and actionable plans, where nations would take accountability and come to an agreement to ensure the original Paris Agreement formed at the COP21 in 2015 was kept – or was at least on target to being fulfilled. However, many green activists and nations were left with a bitter taste after the conference. South Africa’s coal mining industry in particular may have a lot to say on some of the agreements delegates committed to fulfilling.

The South African coal mining sector would need to adapt. – Le Roux 24

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HOW COP26 AGREEMENTS environmental specialist and head of the environmental department at NSDV. “Severe impacts of global warming at 2°C have become clear, rather than the Paris limit of 1.5°C warming. Some major highlights of the COP26 are to keep the goal of 1.5°C warming alive by implementing greater actions and taking immediate steps to reduce global emissions. “It is also the first COP where the decision was taken to explicitly target action against fossil fuels, calling for a ‘phase down’ of ‘unabated coal’ and ‘phase out’ of ‘inefficient’ fossil fuel subsidies.” Le Roux further explains that for South Africa to reach the agreements and goals set out, SA’s coal mining sector would have to take certain steps. “The South African coal mining sector would need to adapt. “This can be seen in the recent Mine Closure Strategy under public and stakeholder consultation. This strategy includes a drive for closure of mines to be at least carbon-neutral and for mines to implement carbon-negative plans via sequestrating or offsetting.”

ALTERNATIVE ENERGY – A SOLUTION?

In 2019 South African coal mines produced 258.9 million metric tonnes of coal, equivalent to sales of R139.3-billion. During the same period, the coal mining industry employed 92 230 people, representing roughly 19% of the total employment within South Africa’s mining sector. Therefore, the news of South Africa’s acquiescence to the Glasgow Agreement at COP26 has led to concern within the coal > sector.

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ENERGY

When asked about renewable energy alternatives as a possible solution to South Africa’s coal problem, Nicolas Marsay, an independent specialist in broad-based black economic empowerment, economic development and localisation, said: “Renewable energy, combined with storage and smart grids, is a viable alternative. However, South Africa can further explore utilising more efficient coal power generation technology while reclaiming existing coal waste dumps by using new extraction technologies. “Whereas green hydrogen has gamechanging potential, significant research and development investment is required to bring pricing down to be economically viable. Thorium-based nuclear power is an excellent medium to a long-term alternative too.” The use of carbon-neutral, more efficient coal power generation and rehabilitation planning seems to be the best short-term alternative for South Africa’s coal mining sector. However, the effectiveness of specific renewable energy sources such as solar energy

is entirely dependent on the geography of the power plant. Renewable energy companies and mining companies alike will have to make sure that they research the correct locations for these renewable energy sources to be used to their maximum potential. Coal mining companies Exxaro and Seriti Resources, which supply the state-owned power utility Eskom with over 80% of its annual coal supply, have already begun shutting down and transforming their closed mines and available properties into renewable energy farms. Eskom, Exxaro and Seriti Resources all stated when signing the memorandum of understanding (MOU) between them that the pursuit of this project would create upskilling opportunities for local mine communities situated around their mining operations and additional employment opportunities. It would also allow South Africa to take a step towards a transition to a low-carbon future. The signing of the MOU is a massive step in the right direction concerning upskilling,

■ ■ ■ ■

Secure global net-zero by midcentury and keep 1.5°C within reach. Adapt to protect natural habitats and communities. Mobilise finance. Work together to deliver.

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Renewable energy, combined with storage and smart grids, is a viable alternative. – Marsay

COP26 DECISIONS AIM TO

retention, and the addition of labour within the coal sector. The memorandum also puts South Africa in a better position to fulfil its goals in the Paris and Glasgow agreements and allows for a more effortless switch to renewable energy. ■

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ENERGY

CORPORATE PROFILE HYDAC TECHNOLOGY

FILTRATION in the mining industry By Jannie Botha

FILTRATION CHALLENGES

“The mining industry operates a multitude of different types of equipment that require diesel that is properly filtered to ensure optimum operations. Whether we are talking plant equipment, mine vehicles of all sizes or simple generators, ‘dirty’ fuel is a menace to effective use,” he says. “Improperly filtered fuel affects not only your consumption thereof, but also the quality of service obtained from the

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MARCH / APRIL 2022

equipment, as well as its eventual length of life. It leads to an increase in equipment failure, and to more equipment standing idle for longer periods, which ultimately means your bottom line will feel the impact. “On the other hand, effective fuel filtration most certainly increases availability and reduces downtime, something that is absolutely critical in an industry that is extremely production-driven.” Botha notes that all fuel contains some water in suspension, but because diesel is less refined, it holds more water than other fuels.

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The effectiveness of a diesel engine depends largely on how good its fuel filtration system is. – Botha

“

he last thing a mine needs is for production to be stymied by equipment failures caused by contaminated diesel. Effective fuel filtration solutions can prevent this. The effectiveness of a diesel engine depends largely on how good its fuel filtration system is, particularly as the results of poor filtration are far more problematic than black smoke from the exhaust and a lack of engine horsepower for the vehicle. In a tough economy, rapidly escalating operating costs – not only regarding fuel, but also the expense related to unexpected equipment downtime – along with increasingly strict environmental legislation around greenhouse gas emissions have left organisations with large diesel fuel user bases facing very difficult challenges. Organisations that operate fleets of small to large diesel-powered vehicles need to ensure optimum engine performance and reliability. Most especially, says Hydac Technology sales manager Jannie Botha, particulate and water contamination in diesel fuel must be controlled to acceptable, or within specification, limits.

He says additional water can find its way into the fuel from cross contamination, such as through diesel theft. When fuel is stolen, the missing liquid is often topped up with paraffin or water, he explains, causing trouble for the purchaser’s equipment in the end. “In addition, the storage of diesel fuel also creates an environment that allows for more water contamination, as air containing water vapour gets into the tanks during the dispensing process, and this leads to more water molecules in the fuel as this condenses into water droplets inside the storage tank. “Even once the fuel is on board the

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vehicle, there is still a possibility of the fuel becoming more ‘watered down’, as in the standard operation of the engine a certain percentage of diesel used for injector cooling is returned in a heated state back to onboard diesel tanks, which obviously leads to additional condensation.”

MORE EFFICIENT FILTRATION

Besides the challenges this can create, including the costs related to vehicle repairs, a loss of productivity and less efficient fuel consumption, there are other costs for e.g. replacement storage tanks should these tanks rust, he says. Moreover, he says, mining depends on energy, which is problematic in a country that frequently has to deal with load shedding. To overcome this, many mines use backup generators for power, and efficient filtration is also key here, because “dirty” diesel can lead to generator failure, leaving the mine bereft of power during a blackout. “Standard on-board fuel filters today are not really capable of handling high levels of diesel contamination. Therefore, to prevent premature plugging and frequent change-outs of these fuel filters, fuel cleanliness should be controlled throughout the entire fuel supply chain. “To put this into perspective, newly delivered bulk diesel fuel typically has an ISO cleanliness level of ISO 22/20/18 to ISO 21/19/17, but today’s injection fuel systems require a fluid cleanliness level below ISO 14/11/9 – essentially the same level of cleanliness as aerospace fuel.” He says Hydac Optimicron Diesel filter elements have been specially developed for

DIESEL

FILTRATION BENEFITS Supplying quality diesel equipment with clean/dry fuel benefits the organisation in several ways: ■ Improved diesel engine performance and reliability. ■ Improved diesel engine operating costs. ■ Reduced diesel engine maintenance costs. ■ Reduced vehicle downtime. ■ Reduced fuel consumption. ■ Reduced air pollution.

Hydac diesel filtration system.

the filtration of diesel, and are characterised by very high contamination retention capacity, coupled with low pressure drop. This has resulted in extended service life for these elements. Use of the most up-todate materials further guarantees excellent separation rates, even in a single pass, and this continues over the entire element life cycle while in operation, he says. The Hydac Optimicron two-stage diesel dewatering elements use materials specifically designed for coalescing and for separating water from diesel. These elements enable a secure efficient dewatering capability, even at greater quantities of water in diesel.

END-TO-END FILTRATION

“This helps the organisation achieve the lowest cost of ownership, while at the same time significantly improving production, because vehicle breakdowns are reduced. In addition, the equipment will have a longer lifespan,” he says. “At Hydac, our product range actually includes something for every step of the process, from production to consumption. In other words, we can assist with key diesel filtration solutions from the refinery to the ship, and from the tanker to the storage tank on the mining site, and from there to the mobile bowser and into the actual plant equipment.” He says Hydac can also help with “fuel polishing”, which helps to avoid the challenge created by fuel stored for longer periods. Mining sites buy a lot of fuel, which is often stored for lengthy periods, and this can lead to issues with water condensation inside the tank. The fuel is polished by

ISO 22/20/18 to ISO 21/19/17 Typical cleanliness level of bulk diesel fuel shifting it from one tank to another, which enables it to undergo a filtration process. “We also offer on-board filtration solutions that help to filter the fuel between the plant equipment’s fuel tank and the main engine filter.” From a sustainability perspective this is also positive, as all equipment using these filters has lower levels of exhaust emissions, thanks to using cleaner fuel. “Cleaner fuel also ensures your fuel injectors are able to last longer. Ultimately

this means you save costs in respect of reduced equipment repairs, lower levels of fuel consumption, and, of course, fewer major serious equipment failures caused by diesel contamination,” he says. ■

Fuel depot

DIESEL ALL-Around Protection From the Refinery to the Engine

Fuel station

Transportation Refinery

Service truck Usage

Transportation

Intermediate storage

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Emergency power unit

SA MINING

MARCH / APRIL 2022

ENERGY

THE MINING INDABA

RETURNS with a vengeance

Transition. The South African Mining Indaba once again opens its doors, from 9 to 12 May. This year’s overarching theme is Evolution of African Mining: Investing in the Energy Transition, ESG, and the Economies, with the goal of inspiring new approaches, sparking conversations and encouraging partnerships that will transform mining on the continent. For more than a quarter of a century, the Mining Indaba has offered a unique perspective of the African mining industry, bringing together visionaries and innovators across the entire value chain. The recent acquisition of 121 Group adds further diversity and significant value for the Mining Indaba community. The partnership of these prominent platforms will create an experience like no other, attracting more junior, mid-tier and major mining companies, investors, and as always the largest gathering of Pan-African ministers. This year’s Indaba anticipates the attendance of over 6 500 mining experts, with special guests including Botswana’s President Dr Mokgweetsi Eric Keabetswe Masisi, who will share his insights on the diversification of the mining industry and his push for greater innovation in the sector. He’ll also speak about his ambition to develop a vibrant and diversified mineral

SA MINING

MARCH / APRIL 2022

sector that contributes to the sustainable development of the Botswana economy in an inclusive manner that allows for the participation of local indigenous business. Also there will be Zambia’s President Hakainde Hichilema, who is expected to share his vision of a new dawn for Zambia, in which macroeconomic stability is restored and sustainable, inclusive economic growth is promoted. His government is looking to significantly

“

The Mining Indaba will explore the role technology has to play in the Just Transition for coalbased economies.

“

fter two years of significant COVID-19 disruption, 2022 sees the return of the Mining Indaba to Cape Town, with a key focus on sustainability and the Just Energy

increase the production of copper and other minerals so that Zambia can reclaim its place as a leading miner on the continent. To support these ambitions he has already introduced a friendlier mining tax regime and made clear his intention to bring stability to the sector, as well as ensuring regulatory fairness and the elimination of obstacles that stand in the way of new investment.

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KEY TOPICS

The opening CEO keynote address this year will be by Anglo American Group chief executive Duncan Wanblad, who will discuss the 2021 United Nations Climate Change Conference (COP26) impacts. These include decarbonisation of the supply chain, Scope 3 emissions, mining’s role in global electrification, mining materials as the cornerstone of net-zero emissions and the huge potential for South Africa in the hydrogen economy. Global keynote talks featuring Orion Minerals, Rio Tinto and the World Bank will also take place, focusing on the topic of copper, cobalt, nickel, tin and rare earths – battery metals and the energy transition, and will examine African governments’ policies on critical minerals and their current view of the mining sector. This will encompass issues such as how the mining sector sees green metals policy developing and the role of cobalt end-users in supply chain transparency. Among other topics this year is a focus on metals, looking at platinum group metals and the hydrogen economy opportunity, with the goal of understanding the longterm structural change in energy systems that is needed, and the hydrogen solutions being developed to accelerate this energy transition. The Investor Panel will consider ESG Investing – Emerging from the Pandemic into a Better World?, and will ask whether mining’s ESG-focused investment

KEY PRESENTATIONS AT MINING INDABA:

“ This year’s Indaba anticipates the attendance of over 6 500 mining experts, with special guests including Botswana’s President Dr Mokgweetsi Masisi and Zambian President Hakainde Hichilema.

“

environment progressed in reality. It will also look at how the pandemic has shaped the investment environment for metals and minerals, what criteria investors focus on when choosing a mining operator, what disruptors are at play, and whether millennial investors are buying into mining’s sustainable credentials. A panel debate will also take place around the subject of The Accelerated Energy Transition – Is this Africa’s moment?, and will consider what’s next for Africa’s mining sector in the context of battery metals and PGMs. It will also look at how the sector heavyweights will shape it in years to come, and ultimately, what it means for investors, other mining companies and government.

SUSTAINABILITY FOCUS

Sustainability remains a core focus of the industry. A special focus panel will look at the mining industry’s response to COP26, and the financing and economic drivers of global decarbonisation. It will determine how this will impact on the mining sector, commodity prices and the appetite for the critical minerals needed to fuel the green revolution.

There will further be a panel on Mining Sustainability and the Circular Economy Focus. It will take into account recycling in mining and how mining and supply chain industries can work together to tackle waste and sector supply crunches through an ESG framework, and how metals and materials recycling can help ease the supply gaps for the sector. Another sustainability-focused presentation will consider The Just Transition and The Future of Coal in Africa, examining Southern African governments’ policies on coal production and their current view of the Just Transition in an economic context. Naturally, being the African Mining Indaba, there will be a continental focus that tries to understand the Resource Nationalism challenge: How has the global pandemic shaped sovereign state views on resource nationalism and collaboration? This will explore examples of success and why these have worked and how they can be replicated, while also looking into the myriad economic lessons the global pandemic has taught the continent.

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Presidential addresses ■ Hakainde Hichilema, president of the Republic of Zambia and Dr Mokgweetsi Masisi, president of Botswana Opening CEO keynote ■ Duncan Wanblad, chief executive, Anglo American Group Global keynote ■ Copper, Cobalt, Nickel, Tin, Rare Earths – Battery Metals & The Energy Transition ■ Metals Focus: Platinum Group Metals & the Hydrogen Economy Opportunity Special focus panel ■ Post COP26: mining industry response & the financing and economic drivers of global decarbonisation Artisanal mining focus ■ What is industry and government doing to protect and legitimise the millions of artisanal miners who contribute to the metals and minerals economies across Africa? ■ Panel: Mining Sustainability & Circular Economy Focus ■ The Just Transition & The Future of Coal in Africa Technology is becoming increasingly critical in a digital world. A panel will consider the Fourth Industrial Revolution (4IR) and how African mining can position itself for technology growth, given its youthful population. It will also explore the role technology has to play in the Just Transition for coal-based economies like South Africa, and how government and industry should work together to ensure Africa’s mining sector doesn’t fall behind in attracting next-generation technology talent. Finally, another area that requires focus, particularly given its prevalence across the continent, is that of artisanal mining. It’s important to understand what both industry and government are doing to protect and legitimise the millions of artisanal miners who contribute to the metals and minerals economies across Africa. After two years of COVID-19 disruption, the SA Mining Indaba is back with a vengeance, so anyone connected to the mining sector should attend, for its high-impact networking and the opportunities and conversations around every aspect of the industry. Cape Town is the place to be in May. ■

SA MINING

MARCH / APRIL 2022

COMMODITIES

MANY LOCAL COMMODITIES ON THE UP

By Rodney Weidemann

SA MINING

MARCH / APRIL 2022

iron ore prices shooting up. “Our miners have largely been able to benefit from these increased prices. If it wasn’t for infrastructure constraints such as electricity, transport and water, the industry could have performed even better.” He says this increased revenue meant that corporate income tax from the mining sector and mining royalties also outperformed expectations, helping the country to fund its critical socio-economic spend in this period.

“

Commodity prices are now up across the board, with the renewable energy transition a big driver for many metals in this space. – Rossouw

“

espite the impacts of COVID on the sector over the past two years, many commodities are faring well on the back of global supply challenges and demand growth, due to the energy transition and new infrastructure programmes. The past two COVID-19-affected years have had a significant impact on the mining commodities sector. Despite the relative global downturn in this period however, South Africa’s mining sector has done quite well. According to Andries Rossouw, PwC Africa partner for energy utilities and resources, although the initial lockdowns in 2020 led to the temporary closure of some mines, numerous gold and most coal mines were kept open as essential services. “Mining, of course, remains key to the SA economy, so a lot of the other commodities came back on line quite quickly thereafter. Furthermore, the mining industry generally did well to be prepared and ready for such a return,” he says. “There was a proactive focus on implementing vaccinations, health protocols were strictly adhered to, and significant numbers of PCR tests were conducted upfront. What this meant was that although it took time to return the industry to pre-pandemic production levels, we were mostly there by the end of 2020 and have maintained good production levels since.” Among the responses to the economic downturn created by the pandemic, he says, has been infrastructure development – with China leading the way – which has led to

“The other aspect worth noting, besides this excellent financial performance, is that in many rural areas, the mining industry remains the backbone of the fight-back against the pandemic-created challenges. “Whether the mines were providing water and food to communities, or – more critically – continuing to pay salaries during the period they were not operating, they really came to the party. This was a particularly communityfocused approach from the industry, which

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has traditionally operated on a ‘no work no pay’ basis.” He notes that globally, prices went up because supply simply couldn’t meet demand, partly due to the lockdowns, but also because of supply chain constraints. For many operators, obtaining the necessary mining-affiliated products such as reagents and grinding material was difficult. However, because South Africa has a mature mining industry, most of these products were available locally, so there were fewer constraints. “Commodity prices are now up across the board, with the renewable energy transition a big driver for many metals in this space. As for the fossil fuel energy commodities – namely oil, coal and gas – these also did really well. For years, lack of investment in new supply on the back of funding constraints and environmental pressure means that even if demand remains flat, prices are likely to remain strong.” There’s still the challenge regarding renewables, in the absence of large-scale storage, around what to do when there isn’t enough sun or wind. “When this happens, there is a spike in fossil fuel prices, and we can expect this type of volatility to continue for some time during the transition period,” he says.

LOCAL WINNERS

Sandra du Toit, EY Africa energy and natural resources and corporate finance leader, indicates that EY’s near-term outlook for commodity prices is bullish, due to geopolitical concerns and green stimulus.

US$400 per tonne

“Metals are generally likely to gain from the US infrastructure bill and ongoing Chinese stimulus. The energy shortage is causing a surge in fossil fuel demand but equally may put pressure on energy-intensive industries, causing volatility in industrial metal production and prices of raw materials,” she says. “South Africa’s commodities investors have been some of the biggest winners recently, as geopolitical factors have come to dominate markets, and there is an anticipation of decreased global supply of some key commodities, notably in the platinum group metals sector. South Africa’s biggest challenge in being able to fall into this positive global momentum is going to be cost increases, energy availability and logistics constraints.” Du Toit says EY believes that global commodity prices are likely to rise further. Looking at the current scenario, the anticipation is that prices in energy, metal and agricultural markets will probably rally upwards, with crude oil leading the gains. Metal prices will inch higher, due to the cost push from higher energy prices and expected supply disruption as a result of global conflict. According to EY’s most recent edition of the annual EY survey Top 10 Risks and Opportunities for Mining and Metals in 2022, the following can be expected: ■ Miners that manage their impact on the environment and communities can build a positive legacy. ■ Practical, flexible abatement strategies can achieve net-zero – and competitive advantage. ■ Creating long-term value for all

■ ■ ■ ■

■ ■

stakeholders can secure mining’s future. Miners will need to proactively navigate trade wars, new governments and resource nationalism. Bold capital allocation decisions can create opportunities. Building agility can help miners manage price volatility, substitution threats and changing customer demands. Miners are accelerating investment in digital to better address environmental, social and governance priorities and drive innovation. Prioritising digital skills and diversity and creating career pathways can build a future-ready workforce. Miners have a unique opportunity to analyse where the optimal value can be found by changing traditional business models.

COMMODITIES BREAKDOWN

Du Toit notes that there have been record highs in the thermal coal space, with Newcastle coal futures breaking US$400 per tonne, with an overall increase of more than 100% since the beginning of 2022, as a growing swath of sanctions on Russia fuels international energy concerns. “With metallurgical coal, EY sees higher prices in 2021 as a result of various supply constraints, including COVID-19 restrictions in Mongolia, a focus on safety and environment policies in China, and weather impacting supply from Canada and Australia. Prices are anticipated to normalise in the second half of 2022, as supply constraints ease,” she says. “Lithium carbonate prices are up 218%

www.samining.co.za

Newcastle coal futures

year on year, trading at over US$21 000 in December. A widening deficit in the lithium market is expected on tight supply and increased EV demand.” Nickel demand should increase as battery cathode production rises. Indonesia is a key growth region, but the high carbon nature of supply will become an issue. Auto production should also recover as the chip shortage eases, which is, she says, positive for aluminium and the platinum group metals. “We anticipate strong copper fundamentals, based on a current market deficit, and on lower supply due to water issues, protests, declining grades and rising demand. New projects coming on line in 2023 may push the market back into surplus, but as we are still not seeing capex in line with significantly higher prices, the copper market will again be in deficit from 2025.” Lastly, she notes, the gold price briefly eased at the start of the year on more upbeat investor sentiment as the global economy recovers. “However concerns remain for higher inflation, and the longer-term risks of strong responses by governments to aid economic recovery, as well as the Russian invasion of Ukraine, have sent the price skyrocketing.” n

SA MINING

MARCH / APRIL 2022

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EQUIPMENT COVER STORY

GATES EXPANDS

PRO SERIES PRODUCT LINE WITH LAUNCH OF PROV HYDRAULIC HOSES Gates (NYSE: GTES), a leading global provider of applicationspecific fluid power and power transmission solutions, has further expanded its PRO™ Series hydraulic hose portfolio with the launch of the new ProV™ product line. The Gates PRO Series line of professional-grade hydraulic hoses offers performance specifically tailored to hydraulic applications across multiple end-markets, including agriculture, construction, mining, injection moulding, general industrial manufacturing equipment and many others. The new ProV hoses expand Gates’ existing PRO Series hose range, further enabling engineers to evaluate and optimise system designs, to ensure the right solution for each application. “Gates offers hydraulic hose and coupling solutions that blend market leading performance, durability and value to all modern hydraulic applications,” says Tom Pitstick, CMO and senior vice president of strategic planning for Gates. “With our new ProV hoses, we’re continuing to expand and

revitalise our hydraulics portfolio, enabling us to participate in an ever-increasing set of applications in both existing and new markets.”

MCCLOSKEY R155 SCALPER

MEETS RECYCLING CONTRACTOR’S EXPECTATIONS A year after taking delivery of its first ever McCloskey machine from Kemach Equipment, Crush-It Green (CIG) reports that the R155 scalper, deployed at one of its crushing sites in Gauteng, has lived up to expectations. Although CIG is still active in its founding concrete and rubble recycling business, the company has, in recent years, expanded into crushing and screening of virgin material, working on several sites in Gauteng - including Nigel, Soweto and Germiston. The scope of projects entails screening of gold-bearing dumps for a client and then crushing the rock to produce aggregates for the construction industry. On the back of an expanding project portfolio, CIG went into the market for a new scalper early last year to bolster its fleet. Having traditionally been devoted to a certain premium brand, for several reasons CIG decided to go the McCloskey route and took delivery of its first ever McCloskey R155 scalper in March 2021. “We have always run a certain brand, but our usual supplier didn’t have stock at the time, and we wanted a scalper quite urgently. We were not keen on a second-hand unit and could also not accommodate the Covid-19 influenced long lead time,”

SA MINING

MARCH / APRIL 2022

says Clint Rodwell, partner at CIG. A key factor in CIG’s buying decision was the versatility of the machine. By its very nature, says Rodwell, the McCloskey R155 can be used as a scalper or a final screen. Central to the versatility of the machine is also the feeding arrangement, which offers customers the choice of either an apron or belt feeder. “McCloskey offers both options – apron and belt feeder – to suit different customer needs. This is based on our understanding that customers require different feeder arrangements for different applications,” says Karolus. Further machine versatility is achieved through the interchangeable top deck of the machine. “The machine’s top deck can be configured with a grizzly, mesh or punch plate. McCloskey is one of the few OEMS offering such a range of options,” says Rodwell. Another crucial factor in CIG’s decision was the fact that McCloskey runs common components, such as engines and hydraulics. “McCloskey runs a Cat engine, which is a common motor in the market and the parts are easily accessible from different suppliers,” concludes Rodwell.

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TRANSPORT & EARTHMOVING

CORPORATE PROFILE VERMEER EQUIPMENT

LEVERAGING

THE EFFICIENCY OF SURFACE MINERS

SA MINING

MARCH / APRIL 2022

payload that can be hauled by an individual truck is also higher.” In fact, adds Beerthuis, the expenses around running haul trucks are quite significant, so the payload improvements – which can increase haulage efficiency by 7% to 10% – can also generate huge cost savings.

“

By replacing drilling and blasting with the use of a continuous surface miner, safety is improved, along with the mine now being able to operate on a 24/7 basis. – Beerthuis

“

urface mining equipment offers numerous advantages over the traditional drill-and-blast method of open-pit mining. Open-pit mining traditionally uses the drill-and-blast method, which – while effective – remains time-consuming. This is due to the obvious safety measures required when utilising significant amounts of explosive, not to mention the lengthy process surrounding the efforts to move the blasted material to the processing plant. Of course, notes Frank Beerthuis, MD at Vermeer Equipment, there is an alternative: making use of surface mining machines known as terrain levellers. He points out that by replacing drilling and blasting with the use of a continuous surface miner, safety is improved, along with the mine now being able to operate on a 24/7 basis, without the need to evacuate employees, due to blasting. “These terrain levellers also eliminate the time-consuming step of needing excavators with hydraulic hammers to reduce the size of the boulders broken up by the explosives. These machines offer particles of 300mm or smaller, thereby eliminating the need for a primary crusher that has both a high wear component and a high cost to run,” he says. “This makes it possible to mine the material more cost effectively, while reducing the overall number of steps in the process. Furthermore, the mere fact that with terrain levellers the particle size distribution is smaller and more uniform means that the

IMPROVED PRODUCTION RATES

“Some of our clients have found that because of the uniformity in particle size distribution, their processing lines in their plant can also run at a higher capacity, meaning that there are efficiency gains

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Vermeer surface miner in action.

throughout the value chain when using this technology and mining method.” These machines are particularly effective for greenfield mining operations, he says, because here it is easy to undertake a full capital expenditure comparison between the investments needed to acquire drills, excavators with hydraulic hammers and a large heavy duty primary crusher, and those needed to invest in a surface miner. It is then easy to identify the cost savings generated. Beerthuis adds that when Vermeer has an enquiry about a terrain leveller, the company prefers to get on-site as early as possible in order to clearly understand the local conditions, what the customer’s operation looks like and to undertake a series of rock tests and samples. “We then analyse these and are able to understand the rock’s tensile strength, its abrasive capacity, and are able to determine the amount of energy required to break the rock. We can then offer the client a fairly accurate prediction of the kind of production rates that they will be able to achieve.” The rock strength is the ultimate determiner of what the organisation’s production rates will be, he says. “We have supplied equipment to mines working in conditions with extremely hard rocks, where they achieved rates of around 300 tonnes per hour. On the other hand, with softer materials like coal, we have seen customers achieve rates of nearly 2 000 tonnes per hour,” he says. ■

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Vermeer Corporation reserves the right to make changes in engineering, design and specifications; add improvements; or discontinue manufacturing at any time without notice or obligation. Equipment shown is for illustrative purposes only and may display optional accessories or components specific to their global region. Please contact your local Vermeer dealer for more information on machine specifications. Vermeer, the Vermeer logo, Terrain Leveler and Commander are trademarks of Vermeer Manufacturing Company in the U.S. and/or other countries. © 2022 Vermeer Corporation. All Rights Reserved.

TRANSPORT & EARTHMOVING

ELECTRIC MINING FLEET to help decarbonise the industry By Itumeleng Mogaki

he importance of decarbonising the mining sector is clear – but is there a place for electric vehicles in a sector renowned for operating under strenuous conditions? Even though using battery-powered electric vehicles (BEVs) in efforts to decarbonise the mining industry is useful, overall a one-size-fits-all approach is not possible because of how vast the industry is. Added to that, going green with mobile machinery is dependent on the size, infrastructure and unique operational needs of each mine. These are some of the views that came across when SA Mining spoke to leading technology and business development experts in the field of mining. Peter Snellink, export manager at AutoX, says it’s important to first clarify that with every underground mining or openpit (above ground) mine, the individual operation will have different requirements around machinery or vehicles. “For any underground mining, the industry does not allow for the use of diesel-fuelled propulsion on machinery such as forklifts and other smaller modes of transport. Rather, only specialised lithium batteries or conventional batteries, including above-surface generated electrical sources, are used to power up their underground transport fleet – for health and safety reasons,” says Snellink.

EMISSION CHALLENGES

Dick Kruger, strategic adviser at Mandela Mining Precinct, says BEVs are not a new concept in the mining sector. “Battery electric-powered locomotives have been used for quite a while in mining and are specifically found underground where there are rail trains, and that decision is for ergonomic reasons and the general safety of underground workers,” he says. “Big mines deploy diesel-powered

SA MINING

MARCH / APRIL 2022

vehicles above ground because there’s at least open air, but the danger remains of the emission of toxic gases into the environment, which is a problem for the green society.” Snellink says with batteries, there are very few to no emissions, except some water or hydrogen gases, which – while not especially harmful – are and can be explosive if not treated in the correct manner. “Harmful carbon dioxide gases are generated and expelled mainly from the engine operations and exhaust discharge of the engine. Large excavators such as Caterpillars, Komatsu, Hitachi and Hyundai often operate in open-pit, opencast or stripmining grounds, and these currently run on either full diesel or hybrid-fuel electric systems, which will be a focus of future development.” The challenge with specialist mining vehicles is that they emit high levels of carbon dioxide and that can be harmful to the general environment, he says. “Underground machinery is run mainly off electricity, on rail trains and forklift systems driven by battery-electric power, and that will come in the form of two 36-volt to 48-volt systems.”

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PROS AND CONS

To date, notes Alex Fenn, head of technology and innovation at Sibanye-Stillwater, the adoption of electric vehicles has been slow. This is because the only real alternative to diesel is battery electric vehicles. But there are a couple of constraints with the deployment of BEVs. “The batteries used for industrial BEVs have a low energy density. This means that the energy capacity is limited and the operating time of a vehicle is reduced. When the battery is depleted, the charging time is also an issue, as it takes a lot longer than filling a unit up with diesel. “The limitation in technology means that BEVs are not necessarily fit for purpose in the context of highly efficient mining. You don’t want to take something off the production line for four to six hours a day, as you would have lost that time to the process.” Fenn says that given the carbon emissions associated with diesel-powered equipment, there is a need to move to some form of electric vehicle to mitigate those emissions, and to realise carbon neutrality. “The mining industry is broadly committed to carbon neutrality; therefore electric vehicles

A CLEANER ENVIRONMENT

Alex Fenn.

“

The mining industry is doing a lot of R&D to provide other alternatives too, such as renewable energy – namely wind, solar and hydro power – for a cleaner mining environment.

The limitation in technology means that BEVs are not necessarily fit for purpose in the context of highly efficient mining. – Fenn

“

are absolutely critical to reducing emission and achieving that objective,” says Fenn. He does however say that if you electrify a mining fleet, one of the key constraints in South Africa is a shift from scope 1 to scope 2 emissions, where the bulk of electricity supplied by the local utility is still relatively carbon-intense. Echoing the same sentiment, Snellink adds: “Unfortunately in South Africa, even for the mining sector, the implementation of electric vehicles that need to recharge after use also means that the electricity to charge these vehicles ultimately comes from coalfired power stations with carbon emissions, so systems are still going to take a while to introduce.”

THE FUTURE OF ELECTRIC SYSTEMS IN MINING Asked if we could see the use of electric vehicles as an inevitable future for mining fleet, Fenn says there’s no question about

it. “If we are seriously considering carbonneutrality and environmental performance, we are not going to get it through the continued use of diesel. “There are many benefits that come with electric vehicles, such as lower maintenance costs, lower maintenance requirements and beyond decarbonisation, improved environmental and ergonomic conditions for people – this includes cleaner air, lower vibration, reduced noise, and lower temperatures.” Careful not to commit to a specific timeline, Kruger agrees, saying: “The future is electric as far as mining fleets are concerned and we may see the end of diesel someday.” He says besides BEVs, renewable energy is also highly considered as an alternative solution to decarbonising the industry. “The mining industry is also doing a lot of research and development to provide other alternatives such as renewable energy

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Peter Snellink.

– namely wind, solar and hydro power – for a cleaner mining environment. This will play a significant role in decarbonisation efforts and in reducing the load on the national grid.” Snellink concurs, but cautions that this means cutting out diesel components completely and unfortunately it is not to be realised any time soon. “The mining sector will eventually run using (initially hybrid) electrified systems, powered by batteries, and the challenge will be the big excavators and mining trucks used in surface operations,” he says. “That said, I don’t think the global mining industry is ready for that big of a change, at least not for now. It will need researchers and developers to innovate longer-lasting, sustainable and reliable battery and charge systems.” ■

SA MINING

MARCH / APRIL 2022

TRANSPORT & EARTHMOVING

RETIRE,

OR RE-TYRE? By John Martin

TYRE REPAIR

“The technology makes use of the wellknown pyrolysis process, to reduce tyres down to their four basic components, as mentioned earlier. All the products from the thermal conversion process can either be repurposed, or sold into the open market. The plant has been designed and

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MARCH / APRIL 2022

constructed to meet the highest safety and environmental standards and can therefore be replicated, by virtue of its scalable design, anywhere in the world.” He says Kal Tire also fully supports the adoption of an OTR tyre repair strategy that accommodates both preventive and reactive repairs being undertaken. “This is because minor injuries to a tyre, if not attended to, can negatively impact the life expectancy of a tyre over time, should preventive tyre repairs not be undertaken in a timely manner.”

“

A tyre repair strategy should focus on maximising the production hours that can be generated from the casing and the remaining tyre tread. – Martin

“

ith an increasing focus on the environment, it should be obvious that rubber tyres should be repaired if they can be, and recycled in a sustainable manner if they can’t. The United Nations’ definition of the circular economy focuses on the principles of reuse, recycle, repair and share. Applying this concept to tyres may seem somewhat strange, notes John Martin, vice president Southern Africa at Kal Tire’s Mining Tire Group, however it certainly is possible to recycle all rubber tyres. “This can be done in a manner that returns end-of-life tyres to their basic components, allowing them to be reused, or repurposed into a number of different manufactured products,” he says. “In our modern recycling process, a tyre can be reduced to its four basic components of oil, steel, carbon black and synthetic gas – all of which are sought-after commodities. Not only does tyre recycling support the circular economy, but so do tyre repairs, which in principle prevents tyres from prematurely going onto the scrap heap.” To this end, continues Martin, Kal Tire has a fully installed and operational thermal conversion plant in the Antofagasta Region in Chile. It is designed to process all sizes of mining tyre, including the giant off-the-road (OTR) tyres up to 63 inches.

Large tyre injuries, which may require steel cord replacement, can be repaired and the damaged tyre can be returned into service within days, he says. “The entire purpose of a tyre repair strategy is to manage all needed repairs in a manner that maximises the production hours that can be generated from the casing and the remaining tyre tread. In doing so, the dependence on new tyres reduces dramatically and the net return on the investment in tyres is maximised,” says Martin.

INCLUDING THE COMMUNITY

He says it’s important to remember that

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the circular economy includes the local community. With this in mind, Kal Tire and its business partners have, for a number of years, sponsored the daily meal of all scholars at a primary school in a rural area close to where one of its mining branches operates. “Thanks to the generosity of a local farmer supplying all the needed vegetables, along with Kal Tire’s funding for their daily portion of protein, the children at this school receive a healthy daily meal.” Additional assistance has been provided to other schools around the country too, “including the installation of elevated water storage tanks for improved hygiene in the school ablutions, as well as school apparel for sporting events”, says Martin. Furthermore, he points out that the company’s annual intake of internal and external learners continues to add value to its ongoing recruitment and development programme, with a high absorption rate of the external learners into new roles within Kal Tire operations. “We have recently expanded our learning opportunities to include an additional set of external, disabled learners. Due to the nature of our business, some learners will be absorbed into Kal Tire and we trust the balance will find employment in the open market in the near future.” “I believe that it is everyone’s responsibility to contribute towards the circular economy, in whatever form possible, whether it be recycling from home or in the workplace. The reality is that constant focus and innovation in support of the global sustainability goals is required. Kal Tire remains committed to playing its part in driving this requirement forward,” he concludes. ■

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TRANSPORT & EARTHMOVING CORPORATE PROFILE CSI CONSOLIDATED HOLDINGS

THE IMPORTANCE OF

ELECTROWINNING By Eric van Dieman.

SA MINING

MARCH / APRIL 2022

“

Eric van Dieman.

The demand for copper will grow even more as the demand for electric vehicle batteries and semiconductor wiring increases. – Van Dieman

“

ne of the best methods for extracting base metals from ore, electro-winning will continue to have a strong future in the mining sector. The importance of electro-winning to the mining industry should never be underestimated, as it’s considered one of the most cost-effective and efficient ways to extract base metals. According to Eric van Dieman, CEO at CSI Consolidated Holdings, electro-winning – while sometimes used for precious metals – is ideal for large-scale extraction of base metals. “Its importance is highlighted by the fact that globally in 2020, some 20 million tonnes of copper were extracted from the earth for commercial use, demonstrating that the need for effective electro-winning operations remains significant,” he says. “Large tankhouses with efficient processes play a huge role in effectively extracting or electro-winning base metals. While this means a large capital investment is required, the return on investment from the economies of scale created by such a project make it a worthwhile one to invest in.” Van Dieman adds that his company offers a solution known as the UNICELL, which is a proprietary offering from Europe, with CSI the only organisation in Africa to utilise this technology. “The UNICELL, unlike many of its contemporaries, has been designed in a manner that makes the entire cell acidresistant, as well as easy to repair. With the right maintenance and care, these cells can last for up to 20 years. For us, quality is key, so although our offering is more costly, it is also significantly stronger and more robust. The same can be said for our cathodes, which are tougher and are specifically

designed to withstand the acid ingress for longer periods and the tough environment of the tankhouse. I would say that the longterm benefits of our quality products far outweigh the short-term gain obtained from slightly lower costs.” Van Dieman notes that CSI is one of the first organisations to design and utilise a PMC insulator block – which is a pressuremoulded block designed to keep the anode and cathode separated and provide correct spacing. Should an anode and cathode

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touch, it can cause problems and impact on the plating process, he says. CSI can design and manufacture longlasting, quality, fire-retardant, acid-resistant PMC insulator blocks according to the design of the cell layout and busbar design – dog bone, u-shoe, square or triangular – enabling the mine to increase its copper yield per cell. CSI has manufactured and supplied more than 150 000 insulator blocks and over 30 000 cathodes in the market already. “Despite the continuing increases in the cost of electricity, I believe the electrowinning process will be around for a long time to come. At CSI, we continue to design and develop innovative technologies and products to further improve the electrowinning of base metals. “We are working on replacing the traditional lead anode with one made from titanium. We are developing new-type insulator blocks, and new modular manufacturing of cells to make transportation of these cells more costeffective. Although our cathode is the best on the market, we continually strive to improve even more. “Electro-winning remains one of the most economical methods of extracting or ‘winning’ copper, and the future of copper itself remains strong. It has a bright future in the medical field, where copper is viewed as an anti-bacterial metal that is ideal for areas where bacteria can easily accumulate. “The demand for copper will grow even more as the demand for electric vehicle batteries and semiconductor wiring increases. When you couple the fact that the future of copper is secure with the continuing promise demonstrated by electro-winning, it goes without saying that CSI believes it has a big role to play in this future,” says Van Dieman. ■

ENGINEERING &

PROJECT MANAGEMENT

CONTRACT MANAGEMENT AND COMPLIANCE critical to mining operations By Benjamin van der Veen

anaging contractors, especially in respect of health and safety issues, is a critical aspect of mining operations. Digital compliance management tools may offer a better way. In 2020 the mining sector accounted for 8.2% of the national GDP. For the mining sector to continue growing and generating an even more considerable contribution to the GDP, mine owners need to ensure that their operations are successful. The right contract management companies or tools can help increase successful business practices and ensure smoother business operations. “Mining is a dangerous business, and as such, under the Mine Safety Inspection Act 1994, the act enforces the general duty of care provisions to maintain safe and healthy conditions at mining operations to protect people at work from the dangers. “So when a mine engages contractors to perform work, effective contractor procurement and management are essential to ensure the duties to the contractor are met,” explains Ingrid Osborne, an electronic engineer and one of the two founders of the KwaZulu-Natal-based Saryx Engineering Group. Osborne says: “Likewise, contractors also have a duty as workers under the Mine

SA MINING

MARCH / APRIL 2022

Safety Inspection Act 1994 to take reasonable care for their health and safety and take reasonable care that their behaviour does not affect the health and safety of others. “To manage this process and ensure that all parties, the employer and the contractor, are playing their part, contractor management is essential.” A vital factor of any contract would relate to health, safety and environmental legislation, but how would compliance management tools assist with occupational health and safety (OHS) issues and other aspects of contract management? She notes that compliance management tools – such as Saryx’s own HSEC Online – provide a digital framework that holds all the information pertaining to compliance for the company and its contractors. With this digital bird’s-eye view of the mine, the system can start to communicate with stakeholders and highlight future potential issues that need attention. A digital tool creates situational awareness of the OHS issues that may arise and create an opportunity to mitigate these risks. “OHS is all about engagement and awareness, and contractor management tools like HSEC Online provide effective means of communication. Communication with all parties creates awareness and promotes action.”

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MANUAL VERSUS DIGITAL

Stakeholders are constantly engaged, which creates a platform of trust and security, continues Osborne. This type of environment leads to a healthy and safe mine. Further explaining why compliance management software is so vital to successful business practices, she says: “The phrase ‘regulatory compliance’ is often accompanied by images of stacked lever-arch files, waiting in long queues, heaps of paperwork and a never-ending list of compliance requirements. Then there is the continuous monitoring of these items throughout the lifespan of the contract, for the company, every employee and every piece of equipment.” This can be almost impossible to do, is costly and time-consuming, and the outcome is not guaranteed – as mistakes can be made and details overlooked. Digitising this process takes the risk of non-compliance out of the equation and will change the risk profile of the business. “More and more, business is recognising that legal and regulatory compliance is one of the key strategic pillars. It can affect your licence to operate and prevent costly incidents, but as important is that guaranteeing regulatory compliance through a digital solution speaks to the integrity, reliability and ethics of the company.”

“ Guaranteeing regulatory compliance through a digital solution speaks to the integrity, reliability and ethics of the company. – Osborne

“

■

Osborne suggests that to address the compliance issues facing a mine or business, it is imperative to select the correct solution, and one that fits the purpose. “The complexities of compliance, especially in the mining sector, is something that is sometimes underestimated, but it must be taken seriously. And that’s exactly the problem that these tools, such as HSEC Online, solve.” The software takes the complexity out of compliance management and helps an organisation confidently achieve regulatory compliance. This enables these organisations to demonstrate to their stakeholders that they have met all the standards.

SETTING STANDARDS

Mining companies are expected to obtain two regulatory compliance certificates: the ISO 19600 and ISO 31000. To understand the importance of these certificates, Theo von Bardeleben, MD of Titan Global Wheel, says: “ISO gives companies a standard set of guidelines and rules to manage the business. This assists customers and suppliers alike to know that the products from that company are produced to these internationally recognised standards.” ISO 19600 is a compliance management system that helps the company with

introducing and managing compliance and risk within the company, he says. “Both ISO 19600 and ISO 31000 are closely related in that ISO 31000 is also a risk compliant quality system, but it can be used as a link between all management systems of an organisation complementing the recommendations and requirements of specific management system standards.” He says the ISO certifications allow companies to compete globally due to certification showing that the companies’ business and products are at an international standard. Von Bardeleben explains how a company can become ISO certified: “A company needs to have an internal quality management system to manage the business. This system needs to be aligned with the ISO standards. The company needs to conduct internal audits to ensure that these are aligned. “Once this is done, and the company is functioning to these practices and processes, external ISO auditors are called to audit the company. If the company is compliant with the ISO standards, then the certification is awarded.” When asked if Saryx Engineering Group’s HSEC Online software could help business and mine owners achieve ISO certification, Osborne says: “Yes, SEG has five certifications, and we manage this process

www.samining.co.za

■

Accounted for 8.2% of the national GDP. Employed more than 451 000 people.

each year through HSEC Online. For example, when implementing standards within a business to achieve ISO certifications, it’s not just about ensuring that items on a checklist have been met. “What essentially is happening is that it is changing the culture within the business to affect behavioural outcomes, which is then supported by documentation that can then be checked. For this to happen, compliance management software is essential, and the software should be a tool that becomes part of daily work life. “Once this has been implemented, certifications are simply a milestone each year, just a standard check to ensure that your organisation is on the right track and they are nothing to be afraid of.” ■

SA MINING

MARCH / APRIL 2022

ENGINEERING &

PROJECT MANAGEMENT

THE IMPORTANCE OF

CONTRACT MANAGEMENT Cherine Hoffman.

SA MINING

MARCH / APRIL 2022

“ The most common difficulties in managing mining-based contracts relate to the management of expectations, and around the issue of change management. – Snyman

“

ining projects are often derailed because expectations between the mining company and the contractor who has been brought on board are not properly managed upfront. Mining contractors are an important part of mining operations, often appointed for both core and non-core services. Under such circumstances, good contract management is necessary to manage risk around areas such as workforce availability, occupational health and safety, and environmental incidents. The challenge facing mines is that too often, proper contract management is left on the backburner, suggests Ludwig Snyman, project commercial manager at UMS. This is concerning, as effective contract management ensures that both parties are aware of the risks and ensures that they become properly mitigated to the benefit of both the mine and the contractor. “Contract management is thus vitally important, because if these risks are not highlighted, they can come as a shock should they arise, creating new challenges for both parties,” he says. “The most common difficulties in managing mining-based contracts relate to the management of expectations, and around the issue of change management. This is an industry renowned for unexpected changes in project scope, often due to geological or hydrological reasons that could not be foreseen. So there is an obvious need to manage expectations around what may change in respect of physical conditions encountered underground.” Snyman notes that contracts must always be managed by both parties, so there is a need to ensure collaboration to resolve any challenges that arise. “It is vital to ensure someone on both sides has ‘ownership’ of the contract, as close communication is critical in the event of a problem arising. It is also worth mentioning that it is not always only about what is communicated, but also how it is communicated.”

It is also about the timing of the communication – the earlier an issue is communicated, the better, while it is also important to track communication, especially if it is undertaken electronically, he says. “To this end, there are certain software packages that can assist with contract management, especially in terms of correspondences relating to time frames for documents to be submitted and by when responses need to be provided. These tools aid the parties in key aspects such as the issuing, receiving and time-stamping of documents.”

THE LEGAL ANGLE

According to Cherine Hoffman, UMS group legal counsel, some of the key areas of focus highlighted in such contracts include matters relating to project delays, damages and/or penalties, failure to meet deadlines and the costs of overrun. “With contracts, it is all about the management of both risk and expectations. From the legal side, we highlight the schedule of terms and explain what these are. Then, in terms of the contract ownership, this is a mutual responsibility that falls on both client and contractor.

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Designated persons from both sides must be nominated to actively drive the process forward – and this must always be done with the project’s ultimate benefits in mind,” she says. Proper contract management, continues Hoffman, relies on regular and effective communication between the parties to ensure there are no unexpected surprises or challenges that arise by virtue of one party not receiving notification when they should have. This, she says, is the essence of an effective contract management process. “This is imperative, as there is a cost impact for the contractor if delays are experienced. If delivery times are not met, there will be penalties, and good contract management is ultimately about avoiding potential curve-balls that may otherwise affect the contract and lead to such penalties being incurred.” Recognising the importance of a good proactive contract management approach between the mine and the contractor is invaluable in ensuring that contracts are ultimately executed effectively, within quality, time and cost expectations, she says. “Mines and contractors alike do not want to spend valuable time and resources on post-contract litigation.” ■

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MININGSTORY WITH THE MAJOR COVER

SOUTH AFRICAN PGMS ON THE UP

FOR NOW

SA MINING

MARCH / APRIL 2022

www.samining.co.za

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

hitting $30 000 an ounce from its 80-year real espite recent challenges like COVID-19, average of $3 100. And iridium trading at $4 000 an broadly speaking South Africa’s platinum ounce with its long-term real average at $1 000. group metals have witnessed massive gains, although these are unlikely to last. THE WAY AHEAD When COVID-19 began spreading At those prices, rhodium was responsible for 55% globally in February 2020, South Africa’s platinum of South Africa’s platinum industry revenue, with mines started showing excellent prices for their palladium coming second at 22%. Platinum was a metals. distant third at 14%, with other metals making up After working through four years of slightly the remaining 10%. Essentially, one could say that below-average metal prices from 2015-18, South Africa’s PGM mines are making 72% of their alongside tough strike action, and labour, revenue from just rhodium and palladium. community, electricity and regulatory hurdles, The start of the war between Russia and South Africa’s platinum group metal (PGM) industry Ukraine has sent metal prices racing up again, finally found itself entering a period of good PGM Peter Major although this time more for palladium than prices and relatively calm labour and community Mergence Corporate rhodium. relations in 2019. This was even better in 2020. Solutions Director: Mining Russia produces just over 38% of the world’s Their average run of mine (ROM) contained newly mined palladium, translating into 23% of metal had witnessed its dollar/tonne value rise by world demand per annum. Remember that recycling provides 3.5 40% in 2019, from the average prices of the previous four years. In million ounces of palladium annually, compared to Russia’s early 2020, that ROM dollar/tonne value jumped again – this time from 2.6 million ounces. Russia produces only 8% of the world’s newly $250/t to $350/t between January and March. Everything seemed just mined rhodium annually, compared to South Africa’s 83%. South too good to be true, not just for SA’s PGM miners, but for their fellow Africa also produces 73% of new mine supply of platinum and 39% of PGM miners the world over. The environment just couldn’t be better. newly mined palladium. Or could it? So the question is – where COVID-19 emergency do we go from here? After all, measures by the South African Russia’s contribution to world government shut down most PGM demand is not going to fade, of the country’s PGM miners by let alone disappear. Its mines will April 2020, just as the basket continue to produce and their ROM value fell from $350 to production will still find its way $250 per tonne. But neither into world offtake demand, albeit situation persisted more than a for far less in price than they few months. By October 2020, would have received before being SA’s PGM producers were nearly sanctioned, and now having to back to normal production, channel sales though avaricious while their ROM ore value was middlemen who are always willing almost back to $350/t. and available to help a metal But the good news wasn’t trader in a bind. about to stop there. By late The PGM prices we are seeing February and early March, the today are, in fact, too good to last. PGM ROM basket was over Reversion to the mean is nearly $500/t, hitting a high of $560/t. as powerful and hard to get away PGM producers were now from as gravity itself. showing profit margins that And while PGM prices may not until then had only existed in revert back and “settle” at their the sportswear and information long-term averages, it beggars technology industries, with ROM belief that these prices will $/t value up from an average “settle” at current levels that are of $140/t from 2015-18. The exponentially greater than their benefits to the producers were 80-year averages. Even the market almost incalculable. They had seems to believe this. all pared capex way back and taken on heavy debt loads during those After all, the higher these PGM prices rise, the larger the price four lean years. earnings ratio (PE) discount to “the market” the PGM producers Furthermore, most of them had been hedging and streaming their trade at. Currently the SP 500 PE is 25, the ALSI 40 is 12.5 and all of by-products – usually about 10% of total revenue – for many years. SA’s producers are at single digits – from Impala, Tharisa and RBP on Some producers had even been hedging and/or selling forward parts six PEs, and AMS on 8.5, to Northam and Sibanye at about 9.5. The of their mainstay palladium and platinum production as well, just to market sees great profits and margins right now. survive. However, these PEs suggest much lower metal prices, profits Whoever could have imagined that COVID engulfing the world and margins, and hugely increased mining costs in around six to 12 would have provided such a boon to PGM producers, raising the price months. Only time will tell, but expecting a third rise for the industry of their metals by multiples over their long-term averages? Palladium this year seems to be a bridge too far. ■ hitting $3 000 an ounce from its 80-year average of $550. Rhodium

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EURASIAN RESOURCES GROUP COVER STORY

underscored by stellar demand growth from the ast year certainly proved to be one for the EV segment, just a year ago most of us would have commodity markets history books. While sniggered with disbelief at the prospect of EV sales we expected a much better year compared more than doubling in 2021. Yet it is now a reality, to the COVID-hit 2020, we did not envisage and the pace of EV adoption shows few signs of the strongest returns of the broader losing momentum, being supported by the global commodities sector in over a decade. transition to a greener future. Copper, iron ore and natural gas prices hit We firmly believe that future EV sales will all-time highs; the price of aluminium surged to a continue to exceed analysts’ expectations, driven 13-year high, gaining over 40% year on year; and by governments’ ambitious adoption goals and the price of cobalt more than doubled, reaching its manufacturers’ aggressive sales targets. highest level since 2018. Based on these announcements alone, we The main driving forces for these markets believe that EV sales’ market penetration should have been supply chain disruptions, production exceed 50% by 2030, which is in stark contrast to restrictions in China, the energy crisis, a stimulusBenedikt Sobotka most analysts’ currently conservative forecasts led consumption boom in the United States (US) CEO of Eurasian of around 30%. Perhaps an even more powerful and depleted inventories. Resources Group: Metal force for change will be consumers’ booming Going forward, the outlook for the sector receptiveness to EVs, incentivised by their remains constructive, with most base metals still performance benefits, lower running costs, improving range, strong trading above historical levels, albeit lower on average compared to environmental credentials, and – perhaps most importantly – falling 2021. The fading pandemic and the tightening US monetary policy prices relative to their petrol and diesel counterparts. both still have the potential to deliver economic setbacks. But Yet the cobalt market will not rely solely on the EV sector for persistent supply chain challenges, a changing inflation landscape strong demand growth in 2022 and beyond. The use of cobalt-bearing and the energy transition should, overall, create a bullish environment lithium-ion batteries is burgeoning across a spectrum of end-use for industrial commodities. sectors, from mobile electronics to e-mobility and battery energy Even more encouraging are early signs of policy easing in China, storage systems. which should filter through to the real economy by mid-2022. Even demand from traditional ALUMINIUM: SOLID GAINS cobalt metal end-use sectors, STILL EXPECTED which account for around a We believe that aluminium has quarter of overall consumption, strong potential to outperform looks set to undergo a boom this other London Metal Exchange year, spurred by the recovery base metals in 2022, having of the aerospace sector. The again breached the important International Air Transport milestone of $3 000/tonne at Association forecasts that global the start of this year. The market air travel demand will grow by will remain in a sizeable deficit 52.5% year on year in 2022, while for the second consecutive year, industry heavyweights Boeing and with visible inventories at the Airbus have announced ambitious lowest level since the global production targets for this year. financial crisis. Meanwhile cobalt supply China’s aluminium supply is increasingly unable to growth will be constrained keep pace with demand. The by the country’s strict energy underlying reason behind this consumption controls and a slow ramp-up of idled smelting capacity. is straightforward: as gigafactories pop up at record speeds (BMI Moreover, the world’s accelerated decarbonisation efforts and soaring predicts that global battery production capacity will quadruple energy prices limit capacity additions outside China. between 2020 and 2025), developing industrial-scale mines still takes At the same time, aluminium demand is supported by China’s 10 to 15 years on average. infrastructure investments, while the focus on renewables, rising Importantly, downside risks surround the timely commissioning electric vehicle (EV) production and recyclable aluminium packaging and ramping up of many existing projects, in view of global shortages should ensure aluminium demand growth is exceeding supply growth of mining equipment and the adoption of the historically troublesome globally. As a result, we could see the highest aluminium prices in over high-pressure acid leach technology at numerous mine projects in 30 years. Indonesia. Furthermore, the responsiveness of artisanal cobalt supply to THE STAGE IS SET FOR COBALT TO CLIMB TO NEW HEIGHTS elevated prices has been reduced by consumers’ growing scrutiny of Cobalt’s 119% price surge through the course of 2021 emanates a very the cobalt supply chain, facilitated by new tracing solutions. These loud and clear message: the market is severely short of the blue metal. include the Battery Passport and REiSource, and the Democratic Moving into 2022, there are no discernible signs of any fundamental Republic of the Congo government’s efforts to introduce stronger easing, with prices remaining on an upward trajectory as consumers controls to the sector. scurry to secure sparsely available spot units – a situation that will Finally, the movement and availability of cobalt raw materials undoubtedly persist throughout 2022 and beyond. continue to experience logistical disruptions, which are likely to While it seems obvious to us today that much of the tightness is persist throughout the year. ■

SA MINING

MARCH / APRIL 2022

www.samining.co.za

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

METALS OUTLOOK FOR 2022

NEW MEGA-MINE WELL POSITIONED TO AID IN ELIMINATING LOADSHEDDING In other words, he says, the country cannot afford to radically transition to renewables, as this would cause profound challenges for the country. South Africa accounts for less than 1% of greenhouse gas emissions, and Cronje feels the country’s responsibility to combat climate change must be proportional to its contribution to the problem.

“

Destabilising coal usage will result in power outages that have the potential to cripple our economy and worsen our current conditions. – Cronje

“

he opening of Bekezela Colliery in Springs, Gauteng, will produce coal that could assist in the fight against load shedding. Canyon Coal has announced that the R1.5 billion Bekezela Colliery, which will open in the near future, will create around 320 direct job opportunities for local community members. According to Gerhard Cronje, Menar’s head of projects, Bekezela will be an opencast mine producing 600 000t/m of coal at steady-state production with a life of mine of about 20 years. Of course, anyone who has paid attention to the recent 2021 United Nations Climate Change Conference (COP26) conference will know that the decisions taken there around coal could potentially impact this project. “At COP26, nations adopted a Glasgow Climate Pact that commits the 2020s to be a decade where carbon emissions are drastically reduced. COP26 asserted that if we are to battle climate change, all countries must be willing to make an effort to reduce emissions, even if doing so may pose economic hardship. “From SA’s point of view, it has 16 coal-fired power stations that account for 75% of the country’s electricity generation. Destabilising coal usage will result in power outages that have the potential to cripple our economy and worsen our current conditions. “The anti-coal rhetoric is already affecting investment in the coal sector as all major banks have taken a negative view of coal. I believe we have to learn from the recent stages of load shedding that most economic activities are halted when there is no electricity, and this negatively affects the performance of our economy.”

RESPONSIBLE USE

“What South Africa needs to do is to commit to mining and using coal responsibly and investing in developing green coal technologies that will allow us to burn coal in a much cleaner way. Abandoning coal is not our priority as we have an economic crisis to deal with,” he says. “We need to generate jobs for our restless youth, alleviate poverty, expand opportunities for our population, and build an inclusive economy. For these reasons, we

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believe it is socially just for us to prioritise economic development amid genuine calls to phase out fossil fuels.” He says the company is committed to building new coal mines in a sustainable manner that will create new job and business opportunities for mine-hosting communities, along with associated benefits such as community development projects through social licensing plans and bursaries, internships and learnerships. “In fact, the new Bekezela Colliery will create about 320 direct job opportunities for local community members,” says Cronje. “The new mine will be a single-pit opencast coal mine that will require a variety of newly built supporting infrastructure. The investment value of the Bekezela Colliery will be about R1.5-billion.” The infrastructure will feature a brand new beneficiation plant, capable of processing the thermal run-of-mine coal into saleable products on-site. Bekezela can supply reasonably priced coal to domestic users, he continues. “Power supply infrastructure, fuel storage, haul roads, workshops, offices and ablution facilities will also be constructed on the surface. Moreover, nine new 90-tonne excavators will be bought for the mine, as well as 27 new 60-tonne articulated dump trucks.” “Six dozers, two graders and three water bowsers will also be added to the fleet, while environmental concerns will be dealt with by the construction of two pollutioncontrol dams for the containment of dirty water. In addition to the dams, clean water storage facilities will also be built at Bekezela, along with a sewage treatment plant,” says Cronje. ■

SA MINING

MARCH / APRIL 2022

8TH ANNUAL EDITION

1 - 2 JUNE 2022 www.junior indaba.com FOR EXPLORERS, DEVELOPERS & INVESTORS IN JUNIOR MINING

Resources 4 Africa is pleased to announce the 8th edition of its annual Junior Indaba taking place on 1st and 2nd June 2022 as both an in-person and an online event. A popular meeting place for junior miners, the Junior Indaba is enjoyed by all for its incisive, informative and frank discussions tackling the challenges and opportunities for exploration and junior mining companies in South Africa and elsewhere in Africa. Mining Industry Partners:

Sponsor:

For more information please contact, Carina Willemse: Tel: +27 (0) 61 421 9492 Email: carina@resources4africa.com or Stuart Alderson-Smith: Email: stuart@resources4africa.com The 2022 Junior Indaba, for explorers, developers and investors in junior mining, is brought to you by Resources 4 Africa, the organisers of the Joburg Indaba.

MAKING MINES WORK

GATES EXPANDS PRO SERIES PRODUCT LINE WITH LAUNCH OF PROV HYDRAULIC HOSES

UNIVERSITY OF PRETORIA

USES SIMCENTER TO HELP MINES REDUCE NOISE LEVELS The University of Pretoria selected Simcenter, part of Xcelerator, a comprehensive and integrated portfolio of software and services from Siemens Digital Industries Software, to lower all mining equipment noise levels to help reduce hearing loss in mine workers. The Simcenter Sound Camera system offers an instant overview of sound sources on any noise-generating object. It combines hardware and software to efficiently localise and quantify sound sources for all types of sound fields. The university achieved tangible results through the use of Simcenter, enabling it to reduce testing and measuring to 10 minutes instead of days, identify machines/equipment exceeding 110 decibels, and provide more precise measurements and helpful insights into sound sources.

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Gates, a leading global provider of applicationspecific fluid power and power transmission solutions, has further expanded its PRO™ Series hydraulic hose portfolio with the launch of the new ProV™ product line. The Gates PRO Series line of professional-grade hydraulic hoses is designed to offer performance specifically tailored to hydraulic applications across multiple end-markets. These end-markets include sectors such as agriculture, construction, mining, injection moulding, general industrial manufacturing equipment and many others. Leveraging Gates’ deep application knowledge, materials science expertise and process engineering capabilities, the full line of PRO Series products delivers the performance, reliability and design flexibility to meet the wide range of demands seen in today’s hydraulic systems. “Gates offers hydraulic hose and coupling solutions that blend market leading performance, durability and value to all modern hydraulic applications,” said Tom Pitstick, CMO and senior vice president of strategic planning for Gates.

SA MINING

MARCH / APRIL 2022

MAKING MINES WORK

CORPORATE PROFILE TWOOBII SMART SATELLITE SERVICES

THE ADVANTAGES OF

SMART SATELLITE CONNECTIVITY

ining generally takes place in remote and inhospitable areas. It is for this reason that satellite connectivity and communication remain high on the radar for local mining operations. Mining is one of the most critical pillars of the South African economy, and while it continues to contribute significantly to GDP and job creation, it is an industry that faces unique challenges. Many of these are due to the remote locations in which mining operations typically take place – far beyond the reach of conventional communications technologies such as fibre, LTE or 4G/5G. Despite this, the operational demands of mining, and the pressure on profit margins, means that alongside continuous rotating shifts, being in constant contact with suppliers, service providers and senior management is an essential aspect of modern mining. This is particularly true with bulk ore mining, where vast quantities of material need to be moved according to a strict timetable. Without communications functionality, this scheduling would soon break down, leading to confusion and costly delays. A further factor related to the remoteness of mining operations is that repairs to mission-critical equipment cannot be carried out easily. This places an onus on the reliability of the technology used, including of course its links to the outside world.

SA MINING

MARCH / APRIL 2022

There is a clear requirement for an availableanywhere, always-on and highly reliable connectivity solution with zero or near-zero downtime. “We were delighted to be contacted by a major opencast iron ore mine in South Africa’s Northern Cape province. They were looking for an effective alternative to their existing, very limited telecoms infrastructure,” says Dawie de Wet, group CEO at Q-KON, the leading satellite engineering enterprise behind Twoobii Smart Satellite Services. “Their need for a very reliable communications link led to them contacting Twoobii in search of a solution.” Just as their requirement was clear, so too was the answer, he notes. Twoobii implemented a custom-designed 1+1 highavailability solution that consisted of dual satellite terminals (primary and secondary

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circuits), each offering 99.95% uptime in an automatic failover configuration. In the absence of mains power, a hybrid solar and generator solution was engineered to provide a cost-effective way to ensure near 100% uptime. In order to service all the operational locations within the mine complex, additional wireless links were included in the installation. The impact in terms of business efficiencies was immediate and profound, as André Slabbert, general manager of the opencast iron ore mine, explains: “Our business suffered by not having communications at the mine, but since we have had the high-availability Twoobii satellite solution installed, we are now in constant contact with our employees, and our business processes are running in a semiautomated fashion.” ■

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SA Mining March/April 2022

Articles inside

The Mining Indaba returns – with a vengeance

Can – and should – mines go o the grid?

Caterpillar autonomously hauls more than one billion tonnes of material Promotions at NSDV Third-party rail access now a reality University of Pretoria to launch research centre for mechanised mining systems

Contract management and compliance

Finance and legal