MASSIVE PUSH TO RENEWABLES DRIVES DECARBONISATION STRATEGY

Listed on both the Johannesburg Stock Exchange (JSE) and the London Stock Exchange (LSE), Tharisa is a major player in mining, providing China, the world’s biggest stainless steel producer, with some 10% of its annual chrome needs.

To realise its vision of an environmentally and socially responsible future, Tharisa’s board established the Climate Change and Sustainability Committee in 2021 to oversee its climate change and sustainability strategy, policies and functions across its operations at the highest level. This is in addition to existing committees such as the Safety, Health and Environment Committee, Social and Ethics Committee and the Risk Committee.

When it comes to making investment decisions, says committee chair and independent non-executive director Dr Carol Bell, the board factors in ESG criteria. For the 2022 financial year the group’s focus was on energy security.

Tharisa’s goal is to create a circular economy, beneficiating its products and producing critical metals for the decarbonisation of the global economy.

One of its big moves, in February 2022, was the signing of a memorandum of understanding (MoU) with Total Eren, a renewable energy independent power producer that is part of the Total group, and Chariot, an energy company listed on the Alternative Investment Market (AIM) in the UK, to develop a solar photovoltaic project at Tharisa. Under the MoU, Total Eren and Chariot will develop and maintain a solar photovoltaic project that will supply Tharisa mine with 40MW (peak), set to increase over the life of the mine. The renewable energy partners will also develop a solar power station that will provide up to 300MW in Zimbabwe. This switch to renewable energy forms an important part of Tharisa’s strategy to reduce carbon emissions by 30% by 2030 and become net carbon neutral by 2050.

Bell says energy storage is also seen as a vital component of the sustainability strategy. “Arxo Metals (a subsidiary of Tharisa based in Cyprus) is also actively researching battery technology solutions utilising our own mineral products. We expect to develop our energy storage business over the years, which will greatly assist our decarbonisation efforts and make our business part of the circular economy.”

Bell believes Tharisa’s detailed ESG efforts will be well received by investors and financiers who pay particular attention to efforts to generate clean energy. “We believe that Tharisa will be viewed as a responsible supplier of its products.” That’s important because it enables access to a wide range of capital to finance and grow the business.

Tharisa’s decarbonisation strategy forms part of a fast-growing trend among mines globally. According to BMO Capital Markets’ trends summary from its 2023 BMO Global Markets, Mining & Critical Minerals Conference held in Florida, US earlier this year, global mining management teams are closely managing ESG-related risks and opportunities. There is a shift, particularly, towards energy transition and an emphasis on the critical role played by minerals to mitigate risks relating to climate change.

“We were surprised at the level of detail that some companies went into when explaining their ESG programmes and performance, particularly some of the smaller-cap miners,” BMO Capital Market’s Doug Morrow states in the report. “Several mining companies told us that they are frustrated with their ESG rating from the mainstream providers. Several said that their rating is either missing the mark or based on poor technical understanding of the issues.”

To avoid any misunderstandings and even unfair ratings, Bell says Tharisa emphasises the importance of providing relevant information to its stakeholders and to keep improving over time as plans become operationalised. She notes though that corporate disclosures in this area are in their early stages of development but the group is committed to disclose accurate information that carries an appropriate level of assurance.

For its “SDG 6: Clean water for all” outcome, it recycles and reuses grey water, has implemented boreholes and pollution control dams while also reducing reliance on municipality supplied water. Recyling waste is among the priorities to achieve SDG 12 outcomes (ensuring sustainable consumption and production patterns). To address climate change, it regularly monitors and calculates greenhouse gas (GHG) inventory to ensure compliance as set out in SDG 13: Take urgent action to combat climate change and its impacts.

The company has been reporting on its scope 1, 2 and 3 emissions for more than six years, which Ilja Graulich, Tharisa’s head of investor relations and communications, says not even some of the major miners have managed. Scope 1 covers direct emissions from operations; scope 2 covers indirect emissions from power generation; and scope 3 covers all other indirect emissions.

While taking care of the environment is among the top priorities set out in the ESG strategy, an emphasis is also placed on developing the group’s workforce and communities.

Safety First

Here labour disruptions form part of the risks to the execution of the ESG strategy. Graulich notes that the mine has not lost a single day to industrial action since it commenced construction over 12 years ago. Tharisa has committed to providing a safe working environment with no casualties. The group’s 2022 integrated annual report lists safety as a key performance indicator for all executives and managers across operations. It aims for a zero-harm working environment.

One of the initiatives put in place is a short-term cash bonus scheme for all employees to adopt a culture of safety and have a zero tolerance for noncompliance. Through the cash bonus scheme, employees at all levels are incentivised to comply with all safety requirements in support of injury-free, sustainable operations. Despite the various measures to ensure safety, one fatality was reported in October 2022, the first fatality in over seven years.

Governance

Employing 3,965 people (including contractors) across subsidiaries in South Africa, Zimbabwe and Cyprus, Tharisa declared turnover of R11bn with net profit after tax of R2.6bn for financial year 2022. In addition to keeping its workforce safe, it instils a culture of learning that drives engagement while continuously investing in the professional development of its employees.

Bell says Tharisa also strives to improve the lives of employees and their communities. “We have a direct and indirect impact on our employees and the greater community and we believe the role we play will ensure a better environment for all on a long-term sustainable basis.”

Graulich says this impact is achieved through structured developmental programmes that are made available to assist all employees, irrespective of their level of education.

“We have a highly educated workforce. All employees at Tharisa need to have a matric certificate with mathematics and science, otherwise they cannot work for us. We are one of the few companies that provides a private medical aid to all our employees and they all belong to a company-wide provident fund,” says Graulich.

Empowerment

Though it is registered in Cyprus, the board falls short on both SA’s racial and gender diversity goals with 80% of board members being white while only 20% are female. Tharisa has, however, fully committed to meeting or exceeding the targets set out in the Mining Charter for ownership, procurement and enterprise development in relation to the communities living around the mine. And through its transformation initiatives it contributes substantially to community upliftment.

Now wholly owned, Tharisa plc previously held 74% of Tharisa Minerals, acquired from its black women black economic empowerment (BEE) partner, Thari Resources. It took advantage of the court ruling in South Africa that clarified the “once empowered always empowered” position for mining companies and saw an opportunity to acquire 100% of Tharisa Minerals, while allowing the BEE shareholders to benefit from the wider and diversified asset portfolio of the Tharisa plc group. This subsidiary, says Graulich, is fully compliant with the requirements of the Mineral and Petroleum Resources Development Act.

The new deal converted the 6% share previously held by the Tharisa Trust in Tharisa Minerals to 1%, or 3-million shares, of Tharisa plc and will remain throughout Tharisa Mine’s lifespan. Thari Resources controls ~4% of the group and has not indicated any immediate plans to sell down.

Community

Situated in the Bojanala District Municipality close to Marikana, communities surrounding Tharisa Minerals are marked by high unemployment and poverty levels. Tharisa’s social strategy is pegged on socioeconomic upliftment, with a view to empower these communities in their different capacities as shareholders, suppliers and employees. The communities neighbouring the mine’s operations are Mmaditlhokwa and Lapologang and about one-third of employees and mining contractors are from these communities.

Also, explains Bell, the host communities’ social and economic advancement is informed by the local municipality’s integrated development plan (IDP) and translated into action through local initiatives incorporated into each mine’s social and labour plan. The company’s SLP focuses on addressing job creation, poverty alleviation, basic infrastructure, education and development needs.

Skills development training was one of the key focus areas and received a considerable budget from the CSI spend. Thousands of youth and community members benefited from a variety of human development interventions provided by Tharisa Minerals. These included basic numeracy and literacy training; learnerships and internships; and portable skills initiatives such as driving licence programmes and career guidance exhibition programmes to expose learners to various careers available in the mining industry.

Tharisa’s preferential procurement approach also contributes to socioeconomic upliftment, in line with its operating licence. It creates efficiencies in the supply chain to ensure reliable access to critical supplies, in the process creating shared value in the communities.

“Our procurement department assists our SMME suppliers to grow their businesses and we try and create more businesses for services that are required on site and those SMMEs are paid within seven days to eliminate cash-flow problems. All our other suppliers are paid within 30 days, with SMMEs paid in less than seven days,” says Graulich.

Community Activism

The various initiatives are aimed at building a bridge between the communities and the mine but there is growing mistrust between the parties involved. Residents surrounding the mine’s activities have raised a number of concerns, among them high levels of noise and dust pollution from the mine’s drilling activities. Graulich, however, says this is simply not true.

Aubrey Winfried, deputy chairperson of the Mine Host Communities in Crisis Network which addresses issues in mine-affected communities, alleges that Tharisa Minerals does not comply with its SLPs and has expanded its operations to encroach on the communities. “They have expanded operations and blast within a short distance from the community, sometimes 35 metres away from the shacks”.

Graulich says the relocation programme being undertaken is comprehensive and being conducted under the auspices of an expert consultancy in conjunction with legal advice and oversight from a leading law firm. On blasting, Tharisa has strict controls in place while DMRE directives determine the entire process, from how blasting takes place to informing communities, with which the company strictly complies.

Danjelle Midgley, attorney at the Centre for Environmental Rights, has also weighed in on the effects that blasting at Tharisa Mine has on the surrounding communities, saying the “ground and air vibration shockwaves” have significant impacts on neighbouring communities. Graulich points out that Midgley has never visited the mine nor afforded Tharisa the opportunity to respond to the centre’s allegations.

Responsible for the activist support and training programme at the centre, Midgley has called on the DMRE and its Mine Health and Safety Inspectorate to investigate the blasting activities and ensure compliance with conditions contained in blasting permits issued to mines, and to work harder to meet demands from mining-affected communities for transparency and consultation.

“It is time that government re-examines the formal regulation of mine blasting. At present mine blasting is not well regulated in South Africa. For instance, there are no legally binding mine blast standards which provide limits for the shockwaves generated by the explosions,” says Midgley.

Graulich disagrees. He says: “The allegations that certain people make are frustrating. I wouldn’t put too much credence to those reports because they can’t even get their facts rights. For example there’s an organisation that referred to pollution coming from our No 4 shaft. We run an open pit and we don’t have shafts.”

He says Tharisa is fully compliant with all directives by the DMRE and stopped blasting voluntarily to investigate various matters with the DMRE “and they gave us the all clear to continue blasting”.

He points out that Tharisa Minerals conducts a quarterly, half-year and an annual survey on noise and dust pollution through an independent third party that monitors systems around the broader area, not just on site. He says the data is independently audited and analysed and made available in the company’s annual report.

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