Mining Weekly Editor Martin Creamer says if marketed in a collaborative fashion, PGMs have the potential to create a million jobs in the country and add R8-trillion to the economy. He discusses twelve South African universities researching critical metals to combat climate change, as well as hydrogen's economic potential for Australia.

The Department of Mineral Resources and Energy is engaged in an intensive programme of mineral exploration, particularly in the North West, Limpopo and the Northern Cape provinces, Mineral Resources and Energy Minister Gwede Mantashe said, speaking at the North West Mining and Energy and Investment Conference on March 30.

He indicated that this follows the inaugural North West Mining and Energy Investment Conference held in January 2022, which resolved on the gazetting of the exploration strategy for the mining industry in South Africa; and the progress made following the gazetting of the strategy and its implementation plan in April 2022.

“We are doing this because we are convinced that this is the new mining belt for our country where new mines can be opened on the back of the discovery of new minerals that have been proven to be critical for a just energy transition,” Mantashe highlighted.

He noted that, during the 2023 Investing in African Mining Indaba, the department announced the formation of the R500-million exploration fund by the Council for Geoscience (CGS) in partnership with the Industrial Development Corporation (IDC) to enable junior mining and the emergence of new mines.

“This is deliberately intended to redress the past imbalances wherein the majority of South Africans were systematically marginalised and prevented from owning the means of production, and from meaningful participation in the mainstream economy.

“As we brace ourselves to grow and transform the mining and energy sector, we must be conscious that this will not be an easy task. However, we must ensure that we are not detracted and derailed from growing a globally competitive and transformed mineral and energy sectors,” Mantashe emphasised.

He informed that, on March 24, the department issued a request for bids for a customised mining license system aimed at enhancing efficiency and transparency in the application, granting and management of prospecting and mining rights.

“We believe the system will help us improve the accuracy and accessibility of the significant information needed by the industry to flourish. Moreover, the system is expected to assist in expediting the processing of applications and thus support the efforts by the Department to address the backlog in prospecting and mining applications,” he outlined.

Mantashe also mentioned some improvements with regard to the implementation of the country’s Energy Action Plan, including the reforms made to embedded generation where the licensing threshold has been removed.

“We are pleased that mining companies are increasingly leveraging on these reforms. Following Gold Fields’ success in the construction of a solar plant to boost its energy reliability, Seriti Resources is constructing a wind project in Mpumalanga, and Exxaro is constructing a solar plant to supply electricity to their Grootegeluk mine.

“Through these reforms, government has enabled policy and regulatory certainty, therefore, it is incumbent on individual companies to leverage on them. We hope to see more and more registrations in this regard,” he averred.

According to Mantashe, the country should also move away from protests against the development of alternative industries to power the economy, such as the upstream petroleum industry.

A consortium across a dozen South African universities has the spotlight on critical metals for a low-carbon future.

At a time when the mining world has its spotlight focused firmly on the availability of critical metals to arrest global temperature increases, South Africa’s Centre of Excellence for Integrated Minerals and Energy Resource Analysis (Cimera) is supporting something like 70 research projects a year across the universities.

How to find more of certain commodities, understanding where the metals came from, grasping the geometallurgy of getting the metals out of commodities, and tackling the value chain from extraction to processing are focus areas of students, who are given the opportunity to do an MSc or PhD or a postdoctoral research fellowship.

“We're upskilling the population of geologists who will meet the needs of the future, particularly understanding the fourth industrial revolution and the handling of big data,” says Professor Judith Kinnaird, the visiting professor of the School of Geosciences, and the Co-Director of Cimera at the University of the Witwatersrand, who spoke to Mining Weekly in a Zoom interview. (Also swatch attached Creamer Media video.)

“We’re a consortium across 12 universities. Cimera is jointly run by myself at Wits but the major centre is run by my colleague, Professor Nikki Wagner, out of the University of Johannesburg."

Memoranda of understanding have been signed with South Africa’s Council for Geoscience and various industries and further partners are actively being sought and welcomed.

In addition to highlighting the necessity of more mining to meet the needs of a future low-carbon economy, Cimera is also strongly emphasising the need of the world to recycle more and to design products that for reuse to help ensure a sustainable future.

Mining Weekly: We hear a lot these days about critical metals for a low carbon economy – but what is meant by critical metals?

Kinnaird: Critical metals are simply those metals that are critical to the economy of any particular country. If you're making something like cars, the metals that are critical to your economy might be different from another country whose main output is computers. But what makes a metal critical are several factors, one being the actual availability of supply. For instance, 90% of all platinum group elements come from South Africa, which produces just over 70%, Russia at 12% and Zimbabwe at 7%, so 90% of our platinum group elements come from three countries. The other factor that makes something critical is the political stability of the country. Another factor that makes something critical is if it's mined as a minor commodity of something like zinc, for instance. If we wanted gallium, if we stopped mining zinc, where's that gallium going to come from? Other factors, such as the grade of the metal and the difficulty of processing, all lead towards criticality. We know things have been critical right from early humankind, when we went through the Stone Age, the Bronze Age, the Iron Age, the coal and steam industrial age and the now recently the petroleum age.

What, in your view, can Africa contribute to what is needed when it comes to critical metals?

Africa can produce quite a lot for the global needs. Africa can contribute platinum group metals from the Bushveld Complex, but for batteries, we can produce lithium from Zimbabwe from Namibia and, going into the future, we’ll be producing lithium from the Democratic Republic of Congo (DRC) and Mali. Cobalt is a very important material and 70% of the world's supply comes from DRC but here we have the perception that there's child labour involved and that obviously causes issues. We produce vanadium from the Bushveld Complex from the rocks above where the platinum group elements are. We can produce nickel and graphite so we can make a major contribution to the economy in going into the future for a low carbon society.

It seems that lithium and rare earths are highly critical...

Mining companies need to approach environmental, social, and governance (ESG) principles on a truth and reconciliation footing and be honest about where they are on a scale of one to 10, says Rifle-Shot Performance business development director Dilley Naidoo.

Naidoo, who spoke to Mining Weekly on Zoom, advocates that ESG be a living, breathing, day-to-day reality in mining comanies, which need to be conscious of what has gone on before, where the industry is at present, and how it must move into the future. (Also watch attached Creamer Media video.)

Naidoo’s view of mining’s history over the last century in South Africa is that it has been largely investor-centred but points to the ESG consciousness of today’s generation as lighting up the new path that has to be taken.

He says that miners need to make ESG part of the social fabric and DNA of the company, and take an holistic transformational aproach that is bolted and costed into the business model.

Right from the exploration stage, companies must, he adds, have definitive exit plans that sustain subsidiary industries, employment and economic activity upon mine closure.

Boardrooms and rockfaces must be integrated to ensure that the ESG message is spread across all operations.

Among the many other points made by Naidoo are that:

Communities must be made part of the value chain.

Continuing use of male hostels must be declared unacceptable from a humanitarian perspective.

Mine tailings must be subjected to predictive monitoring to create awareness well in advance of tailings breaches.

Mining Weekly: Are there the countries that are good models to follow?

Naidoo: There are challenges all over the mining world, but I think the countries I'll probably single out are Australia and Canada in terms of starting to do a better job in the areas of environmental, social and governance as part of the business model.

Collaborative marketing of platinum group metals (PGMs) has the potential to add a million more South African jobs and contribute R8-trillion more to the economy as the world greens and lowers carbon intensity.

The combination of green hydrogen displacing natural gas and fuel cell electric vehicles (FCEV) displacing internal combustion engine vehicles, could result in net carbon dioxide savings of up to 11% of the Paris Agreement’s 2030 targets.

A PGMs growth opportunity for South Africa of between 34% and 51% by 2030 from the current annual base of 4.7-million ounces can be provided by FCEVs and hydrogen electrolysers.

Investments in hydrogen of $300-billion to $1-trillion are expected in the next decade or so as demand increases sevenfold up to 2050, with most of that focused on generating green hydrogen at cost-effective rates from electrolysis.

“There are over 30 countries in the world that already have programmes in place around moving the hydrogen economy and quite a few countries have really put their money where their mouths are. Australia has invested $4-billion in growing the hydrogen economy and they are working with companies on getting green hydrogen down from $6/kg to $1.50/kg, which is where the competitive place is going to be,” outgoing Minerals Council South Africa CEO Roger Baxter told Tuesday’s PGMs Industry Day, covered by Mining Weekly. Baxter is also chairperson of the World Platinum Investment Council.

“The journey is on and when you get this critical mass of people focused on the issues with the brightest and best brains in the world, including from a South African perspective, you will see how this is going to change and shape the game in terms of green hydrogen going forward,” said Baxter, who emphasised South Africa’s pre-eminent position as the overwhelming source of global PGMs.

“Let’s not beat around the bush. Let’s just appreciate that 87% of the world’s known reserves are locally based. If you include Zimbabwe, it takes it up to over 90%,” he said.

The focus of the National Platinum Strategy for South Africa, developed by the Minerals Council, is to add R8-trillion to South Africa’s economy by 2050 and a million additional direct and indirect jobs.

PGMs are already playing a growing role in the global energy transition to net zero, with 30 countries deploying hydrogen strategies to decarbonise their economies.

“This is a sector that has incredible potential, but it needs incredible collaboration to take place between government, the mining industry, organised labour and communities on how we tackle the short-term issues.

“We have made some progress on the electricity front in unlocking private sector investment in electricity, security and rail constraints. Ten per cent of the average basket price of the PGMs mining sector is chrome-related. Only 30% of our chrome is being transported by rail at the moment. The rest is going on road, as an example,” Baxter told the in-person and online event, chaired by mining stalwart Bernard Swanepoel.

“A concerted and coordinated effort between the public and private sector, supported by the framework of the National Platinum Strategy, is needed to fix the short-term issues and then to focus on the long-term issues to realise the promise that PGMs offer.

“I’ve lived my life according to this phrase that comes from President Mandela, Madiba, the father of our nation, who said, ‘a vision without action is just day-dreaming, action without a vision is merely passing time. But a Vision with action can change the world'.

“I really do believe that we can change the world if we work with government collaboratively to take Africa’s PGMs industry forward,” said Baxter.

In 2021, the 277 t of PGMs produced by 172 159 direct employees for R347-billion, represented nearly 40% of the total minerals sold by South Africa.

“This is an industry that really does matter for the economy, with R67-billion worth of wages paid. My estimate is that roughly 500 000 people have job...

JSE-listed engineering and construction company Murray & Roberts (M&R) has announced developments that could result in it regaining control of RUC Cementation Mining Contractors (RUC), its Australian mining subsidiary that was lost to the group when its Australian holding company, MRPL, and Clough entered administration in December.

In a statement to shareholders, it was reported M&R, MRPL and the administrators had, on March 24, entered into a binding Deed of Company Arrangement (DOCA) term sheet that could result in RUC reverting to M&R’s ownership by the end of June.

The DOCA is subject to several conditions precedent, including approval by MRPL creditors and credit approval. The terms remain confidential, but will be made available in the administrators’ report to creditors ahead of a meeting that is expected to be held in mid-May.

“Should the conditions precedent to the DOCA be met, it is expected that the DOCA will be implemented by 30 June 2023,” M&R said in a statement.

“The execution of the DOCA term sheet reflects an important first step in the group’s efforts to regain control of RUC.

“Should the DOCA complete, RUC will be reinstated within the group and the full scale and capability of the group’s multinational mining platform would be re-established.”

The process represented a significant development for M&R, which had previously described its loss of control over RUC as having been a “particularly tragic” consequence of the MRPL administration process.

The loss of RUC meant that the group’s mining platform currently comprised only two regional businesses in Africa and the Americas, which had combined orders worth R14-billion at the end of December.

CEO Henry Laas initially expressed pessimism about M&R’s prospects for regaining control in a bidding process, with the DOCA now representing an alternative to such a process.

He also reported that a startup business had been registered in Australia with the intention of restarting a mining business in that territory should it fail to regain control of RUC.

However, he also stressed that regaining RUC was first prize, as it previously contributed about one-third to its mining platform.

With the loss of Clough, the mining platform formed the core of the downscaled M&R, which had also retained a unit in sub-Saharan Africa, which focused on a power, industrial and water projects.

That platform had an order book of R2-billion at the end of December, arising mainly from renewable energy and transmission projects in South Africa.

At the end of the day, South Africa will overcome its rail transport and electricity availability issues, and confidence in both Transnet and Eskom will be fully restored, Menar MD Vuslat Bayoglu predicts.

“I’m confident that Transnet’s problems will be solved because South Africa’s got great rail infrastructure,” Bayoglu told Mining Weekly unequivocally in a Zoom interview on Monday. (Also watch attached Creamer Media video.)

“As long as it is maintained, and Transnet is doing that currently, we really have world-class infrastructure,” said the head of Menar, a private multi-commodity mining investment company.

While the concept of having third-party involvement, if implemented, would make things much easier for Transnet, even as is, the railway lines are in good nick: “If you look at the iron-ore line, manganese line, coal line, and the line that takes the chrome to Maputo or to Richards Bay, they’re all in good condition.

“What we’re missing is locomotive availability and we’re having issues with cable theft and some leadership challenges in Transnet. I think we need to be realistic and work very closely and I think the solution is between top management of Transnet and the management of the mining companies.

“By talking and collaborating, we will resolve the issues of Transnet and I believe the same is going to happen with Eskom, because we will pass these stages of loadshedding and we will pass the stages of having issues on the iron-ore line or coal line or manganese line.

“Eventually we’ll win. As the mining industry, there’s been opportunity cost, but at the end of the day, we’ll overcome the issues and have confidence again in both Transnet and Eskom,” he forecast.

While in his speech to the Mining Indaba in February, in Cape Town, President Cyril Ramaphosa made the right commitments, Bayoglu expressed the view that the President’s great skills of diplomacy and South Africa’s cordial relationship with the Chinese president is key to the unlocking of crucially needed locomotive availability in South Africa.

On the prospect of the new Monitoring and Evaluation Minister in the Presidency, Maropene Ramokgopa, ensuring speedier implementation, he said: “If she follows up on what the President has committed and monitors and evaluates what needs to be done, I think that will make investors very happy.”

Mining Weekly: Road transport has made up for some of the poor rail performance in past months. With prices of bulk commodities now moderating, will resorting to road transport still be as economically viable as it was when the prices for bulks were considerably higher?

Bayoglu: Road transport won't work anymore. If you look at the past, what happened with iron-ore, for instance, when iron-ore prices hit $200/t, people were even trucking iron-ore to Durban from the Postmasburg/Sishen area. But when the iron-ore price softened $120/t and $130/t levels, then it stopped because it no longer works. Iron-ore now relies purely on Transnet’s performance to move the product, and the same applies to coal. At $200/t and $300/t coal price levels, it was okay to truck call to Richards Bay or Durban. We even heard that some people were trucking coal to Namibia to move the product through Walvis Bay to the markets. But currently, with the coal price sitting at between $200/t and $120/t, depending on the quality, it's becoming very difficult now. We are seeing that the number of trucks on the roads are getting less and less. But if Transnet railed the product, there wouldn't be any need for putting any coal on the road, no matter whether the coal price is up or down. The way to move any bulk commodity, in any country, is by rail, there's no other way, and by putting coal or iron-ore or manganese on the roads, we’re not being fair to our road infrastructure.

Red tape has been a major investment inhibitor. Have you seen any meaningful removal of red tape obstacles?

We need to create employment in this country and removing the red tape creat...

Despite the impact of ongoing rail constraints, thermal coal producer and exporter Thungela Resources managed to deliver good results for the 2022 financial year, with earnings before interest, taxes, depreciation and amortisation having increased three-fold year-on-year to R29.5-billion and net profit 162% higher year-on-year at R18.2-billion.

Revenue increased by 93% to R50.7-billion and the company declared a final dividend of R40 a share, bringing the full-year dividend to R100 a share.

This meant it returned R13.8-billion to shareholders, equating to about 76% of adjusted free operating cash flow for the year, which was well ahead of its policy to distribute a minimum of 30% of adjusted free cash flow to shareholders, Thungela CEO July Ndlovu noted on March 27.

"We generated adjusted operating free cash flow of R18.1-billion during the year, compared with R3.9-billion in the prior year. This outcome is in large part owing to strong coal prices, but is also testament to the agility of our people in operating in a severely constrained rail environment.

"A more than four-fold increase in cash generation is a remarkable achievement given the loss of close to three-million tonnes of export saleable production volumes as a direct result of the poor [State-owned] Transnet Freight Rail (TFR) rail performance," he said.

The company is collaborating with Transnet to address the constraints and shares a weekly performance dashboard with the rail operator.

"This is the single most important issue, and mitigating the constraint of logistics is a priority. We continue to manage the Transnet constraints in a smart way to maximise earnings. We also continue to prioritise sending everyone home safely and controlling [what we can]," he said, describing the company's outlook for the current year in a call with investors.

Given TFR’s deteriorating performance since 2021, and the especially poor performance in 2022, Thungela had to reset its production outlook for 2023.

Its export saleable production guidance for 2023 had been set at between 10.5-million and 12.5-million tonnes, as it planned to draw down on the high on-mine stockpiles, to the extent that the rail performance exceeded production levels, Ndlovu noted.

This compares with saleable production of 13.1-million tonnes in 2022.

"We have seen some improvements in the performance of rail over the past few weeks. The upper end of the export saleable production guidance is aligned with the expected performance of what TFR was able to achieve last year," Ndlovu said.

The production guidance is also in line with what the company has seen from TFR during the first quarter of the current financial year, which was at the upper end of TFR's performance during 2022.

Thungela planned to draw down on its 3.2-million tonnes of stockpiles to the extent that the rail performance exceeded the upper end of the guidance, he noted.

The company's share price on the JSE fell by nearly 10% by 11:50 on March 27.

Meanwhile, the exceptional cash generation resulted in a net cash position of R14.7-billion at year-end, R6-billion higher than in the prior year.

Further, while the acquisition of the Ensham coal mine, in Australia, will be paid for from cash on hand at year-end, it will materially change the overall structure of the group, including its liquidity needs.

"Accordingly, we have secured access to R3.2-billion in credit facilities with leading South African banks to reflect this change, as well as to bolster our resilience against continued poor rail performance by maintaining a sufficient level of liquidity," Ndlovu noted.

The Thungela board, in line with its strategic priority to maximise the full potential of its existing assets, approved the development of the Elders production replacement project, in South Africa.

"We also continue to progress the feasibility study for the Zibulo North Shaft life extension project and expect to submit this for board consideration in 2023. We are also evaluating...

Without the addition of new platinum group metals (PGMs) projects, production will continue to fall, PGMs producer Northam Platinum CEO Paul Dunne has said.

“With platinum, we see an accelerating contraction in supply as the South African production base ages. The market may not necessarily believe this, but it is inevitable from here on out, and it's compounded by a particularly challenging operating backdrop in South Africa,” he said while presenting the company’s interim financial results for the six months ended December 31, 2022.

He added that the company’s current forecast for palladium was one of flat supply until 2027, with a moderate decline thereafter.

“New applications are leading to additional demand that was not foreseen a few years ago, such as use in the hydrogen economy, food preservation and new medical technologies.

"Moreover, the evolving quest to reduce carbon released into the atmosphere also requires growing amounts of a range of metals,” he said on March 24.

However, he noted that the cost of building new mining operations continued to rise, while regulators and lobbyists delayed and even prohibited new mine development. The barriers to entry were increasing, not decreasing, he said.

“South Africa is the key to ongoing supply into the long future of PGMs. There are resources in the ground – many millions of ounces sitting in the ground, which are untouched,” Dunne said.

He explained that starting a new mine could take as long as seven or eight years before entering production.

“If you wake up tomorrow and want to build a mine, you're looking at something like 2030 before you’ve got a chance of producing significant ounces into the market. But that is work that must be done if we we're going to bridge that gap. If we're going to flatten the depletion curve, which has to have an impact on price,” Dunne explained.

He said that, if price was affected positively, there would be more incentive to build new mines.

“But it takes money. And it takes a lot of time. And it takes a lot of expertise. I would say the time is more valuable than the money. Capital around the world is available, but time is not,” he said.

Northam reported a 44.9% year-on-year increase in revenue to R20.1-billion for the period under review. Operating profits also increased by 55% to R9.1-billion.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 54.5% year-on-year to R10-billion.

With net debt of R12.4-billion, Northam ended the interim period with a new debt to Ebitda ratio of 0.62, which is further away from the company’s target of 1 than it was at the end of the 2022 financial year - June 30, 2022 - when it was at 0.97.

During the period, Northam suffered three fatalities at its Zondereinde mine, with one of them currently under investigation by the South African Police Service.

In terms of electricity generation, Northam has ramped up its diesel generator use over the interim period owing to increased grid instability. Dunne said it was a difficult time managing the company’s greenhouse-gas emission reduction target of 27% by 2030 and carbon intensity reduction of 60% by 2030 when faced with the need to consume an additional 2.5-million litres of diesel fuel over six months to run 56.7 MW of back-up generators across the company’s operations.

Northam has installed 1.125 MW of rooftop solar at its Booysendal and Eland operations. Additional solar installations have been earmarked at Eland and Zondereinde, with environmental studies under way.

Northam said it was also investigating the possibility of pursuing wind farm energy projects by partnering with third-party service providers.

Mining Weekly Editor Martin Creamer unpacks why South Africa is not garnering global exploration spend; youth skills and businesses remain key in the Just Energy Transition; and Exxaro's considerable progress in generating its own electricity to run its operations.