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Kinetiko reports reserve at pilot field

ASX-listed Kinetiko Energy has announced a maiden gas reserve of 3.1 BCF over its pilot gas production field in South Africa.

An independent gas reserve and resource report has also resulted in a 20% increase in the 2C contingent resource to 3 TCF over the company's' granted exploration rights, with the expectation of further significant upgrades from adjacent application exploration rights.

"This is one of the most significant and exciting moments in Kinetiko's corporate journey to date in South Africa. It should be well understood that the maiden gas reserve was issued on the basis of a very small project. The area considered is minute by comparison to our overall geography (about 0.2%) and yet the economics work out to be substantially positive with 2P certification for the project at about 6.4 BCF of gas," said CEO Nick de Blocq.

"Each time Kinetiko adds commercial production plans within its exploration rights, it will be able to grow reserve certifications by eventual orders of magnitude, with assumptions based on increasingly positive economics driven by deeper wells in the south with potentially higher flow rates, and larger gas contents and better geophysical properties of the sediments to the north," he said in a statement on Monday.

"The company also requested an updated resource assessment due to the results and consistency of recent exploration. The new resource assessment has reflected the upside of the sand-driven gassy reservoirs and returned a substantial 20% increase in 2C contingent resources to just over 6 TCF. It has also added a similar level of prospective resources which will move into the contingent category as further exploration confirms the geological potential."

The report certified 5.8 TCF of prospective resource on the two exploration rights where work is continuing.

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Probably by the middle of next year, if things go well, Exxaro will likely achieve financial close on a renewable energy project, which, from a sizing perspective, will probably be north of 100 MW,and located in Mpumalanga.

This was made clear by Exxaro MD for Energy Leon Groenewald in response to Mining Weekly on progress being made by the Johannesburg Stock Exchange-listed company in its partnership with independent energy company Enertrag.

Last month, financial close was achieved for the 68 MW Lephalale solar project to supply renewable energy to Exxaro's Grootegeluk coal mine in Limpopo. This was announced by Cennergi, a subsidiary of Exxaro Resources, Grotegeluk's owner and operator. Cennergi will supply renewable energy to the flagship mine for 25 years through a power purchase agreement.

Of the Mpumalanga project, Groenewald added: "We're working very hard at it. It's an interesting and tough project, but we're looking forward to that and the good part is that the work is very complementary to the solar profile, so that helps a lot in terms of saving electricity, plus electricity cost and also having Scope 2 reductions. We'll keep you posted as that progresses."

As reported by Exxaro in April, its partnership with independent energy company Enertrag aims to develop wind and solar solutions for the mining industry in Mpumalanga.

"We've basically done all of the permitting exercises, so now we're in the conversation regarding offtake and financing.

"Just to give you some idea, the project per se is a bit more complex than the 68 MW Lephalale solar project because we're looking at multiple offtakers with different life-of-mines and then project financing.

"Where Grootegeluk was one project with a long power purchase agreement, a single off taker and able to be project financed, here we're looking at a different configuration, so it's interesting and we're looking forward to that," Groenewald added.

On Thursday, August 17, Exxaro reported that worsening electricity shortages are presenting opportunities for its renewable energy business, which delivered improved 17% higher half-year revenue. This was on a 28% overall decrease in earnings before interest tax depreciation and amortisation (Ebitda) to R7 661-million for the coal-mining company.

Mining Weekly: Is that wonderful 80% margin that you report on your renewables business sustainable?

Groenewald: Yes, it's an industry norm, but what you must understand so that's an Ebitda margin. On a net profit margin, you've got to take the cost of debt into consideration and that's different, but we seeing 70% to 80% is not outside the norm. If you look at your cost levels, they are fairly low and most of them are CPI linked. It is true that in some cases, you have a bit of pushback in some of your operation and maintenance contracts that have a dollar or a Euro component and that makes it slightly challenging, but over the long term those numbers are, I think, fairly predictable, as 80% is not outside the norm and we see new projects we are testing as well looking to be okay.

As reported earlier by the black empowered diversified resources and renewable energy company Exxaro, the partnership with Enertrag has a potential pipeline of 700 MW. Furthermore, Exxaro is in discussion with various parties to acquire near-permitted sites to further boost its entry into the energy market. The potential pipeline ranges from 370 MW to 975 MW.

It so doing, the company is mindful of South Africa's electricity grid constraints, which remain a challenge.

There are around 9 GW of renewable energy projects under development in South Africa, of which the mining sector is said to account for 6.5 GW.

Having created renewable-energy company Cennergi in 2012, Exxaro built two wind farms with a combined capacity of 229 MW in the Eastern Cape in 2016, which is underpinning its foray into solar power.

By accelerating its d...

Mining Weekly Editor Martin Creamer discusses the green electrons now flowing into Harmony Gold mine shafts that will reduce carbon emissions by 65 000t; the first phase of Vedanta Zinc International’s renewable energy programme; and Glencore Alloys solar power project.

Decarbonisation of coal mining company Exxaro's operations and entire value chain is an urgent imperative to reduce carbon dioxide emissions, which will result in the additional benefits of avoiding market barriers, fines and the loss of social licence to operate.

Exxaro Resources CEO Dr Nombasa Tsengwa highlighted this on Thursday, August 17, when the Johannesburg Stock Exchange-listed company reported that worsening electricity shortages were presenting opportunities for its renewable energy business, which reported improved 17% higher half-year revenue.

Overall, the JSE-listed black-empowered diversified resources and renewable energy group reported a 28% decrease in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R7 661-million.

"By accelerating our decarbonisation plan, we can also realise cost savings, partnership opportunities and favourable financing terms," Tsengwa said during the half-year results presentation covered by Mining Weekly. (Also see attached Creamer Media video.)

Decarbonisation is described as being central to the strategy of the company, which is looking to contribute "meaningfully" to the energy transition, through renewable-energy generation for its own operations and other customers, alongside the production of critical minerals, such as copper, manganese and bauxite.

Outlined was how the transition to clean energy hinged on clean energy technology supply chains to source critical minerals, as steel from manganese and iron-ore will be required for wind turbines, plus more copper for transmission lines and offshore wind power, and even more aluminium from bauxite to support solar photovoltaic plants.

"We are aware as well of the increasing scrutiny and pressure to which coal companies are subjected. This manifests through the exit of some international investors from the sector, while multinationals reorganised their portfolios.

"As a result, we are happy to report that we have revised our Scope 1 and Scope 2 emission targets to 40% by 2026. We have finalised our value chain Scope 3 analysis with the majority from our Eskom supply, very much around 97% of our Scope 3. Hence we need to pursue other Eskom suppliers to partner with us in dealing with Scope 3 emissions," said Tsengwa.

DEVASTATING WAR

The challenges presented by the prolonged and devastating war in Ukraine, together with its knock-on implications for broader Europe and energy security across vulnerable economies softened volatile commodity prices, and high inflation, were having a significant impact on the mining industry, hurting margins and cash flows.

The 28% decrease in half-year Ebitda to R7 661-million was driven by lower thermal coal prices, which slipped by over 60% from the highs of 2022, and lower production volumes owing to sub-par rail performance and lower offtake from Eskom arising from equipment unavailability.

The company's resilient performance despite lower export sales prices and volumes, and ongoing logistical challenges, has been reported amid:

added uncertainty around the intensity and the duration of global macroeconomic volatility;

the much-anticipated tailwinds from the Chinese economic recovery not yet being realised; and

the continued increase in interest rates by the US Federal Reserve contributing to the lingering retreat of global markets and the softening of commodity prices

Securing a sustainable future remains a key priority for governments and businesses around the world, which translates into intensified opposition to coal mining and coal-fired power generation.

So, too, however, has the need to ensure that the future supply of critical minerals is secured to meet the rush to the net-zero emissions target by 2050.

Given all the market dynamics in play, it is essential that companies have the balance sheet strength to navigate the volatility and uncertainty, which means adopting a bias towards cash preservation in anticipation of headwinds.

"The preservation results in under-...

Platinum-enabled hydrogen fuel cell technology is taking the pollution out of the city of Berlin, as it may in time also do in Johannesburg given the local projects that are under way.

By hailing a fuel cell electric vehicle (FCEV), more than 100 000 customers have chosen to desist from adding to the world's unhealthy transport fume problem.

First launched at the end of 2022, H2 Moves Berlin is Germany's largest FCEV fleet, and forms part of Anglo American's strategy to help accelerate zero emission transport through the deployment of platinum-enabled hydrogen FCEVs.

When used in a fuel cell, platinum serves as the catalyst to generate electricity through a chemical reaction between hydrogen and oxygen. This is then used to power the motor of an FCEV, which can be refuelled in five minutes and drive 650 km without needing to refuel - and it's all squeaky clean.

This has all been brought about by Anglo, Toyota Germany and taxi operator SafeDriver Group-ENNOO.

H2 Moves Berlin, which is leveraging Berlin's existing hydrogen refuelling infrastructure and the Uber ride-hailing platform, currently has 115 Toyota Mirai vehicles in use, with the fleet looking to expand to as many as 200 vehicles in the coming months.

"The last few months have shown that our passengers are very enthusiastic about the sustainability and comfort that FCEVs can provide," SafeDriver Group MD Thomas Mohnke stated in a release to Mining Weekly.

"Our drivers meanwhile appreciate the driving performance of an electric car with the range and refuelling speed of a combustion engine. As a fleet operator looking to minimise cars' downtime while delivering zero emission mobility, FCEVs simply make sense," Mohnke highlighted.

The Mirai's long range and short refuelling times have proven popular with both drivers and users, with the FCEV fleet providing significantly more rides per vehicle than other zero emission ride-sharing options. Beyond the Uber platform, the project has also been supporting Berlin's public events calendar by providing shuttle services at high-profile events such as the Berlinale, Greentech Festival and the Special Olympics.

"H2 Moves Berlin proves that alternative drivetrains and everyday use go hand in hand. In more than 100 000 trips across the capital, the Mirai taxis have easily covered more than a million kilometres. This milestone underlines the reliability of hydrogen-powered vehicles," Toyota Germany president and MD André Schmidt stated.

Initiatives like H2 Moves Berlin help the uptake of FCEVs both by aligning end-user demand locations with the supply of vehicles and infrastructure access, but also by providing passengers with the opportunity to directly experience the benefits and convenience of hydrogen-powered mobility. In addition to its existing activities in Berlin, Anglo is identifying future light-duty FCEV deployment opportunities in Europe, China and the US.

Anglo market development head Benny Oeyen described hydrogen fuel cells as critical technology for zero emission electric vehicles. "We believe that FCEVs are particularly well suited to vehicle fleets, such as taxis and buses, as well as to heavy duty trucks that require the range and rapid refuelling times without the weight of batteries. At the same time, we are also seeing that FCEVs offer relief to increasingly pressured battery minerals supply chains and hence can contribute to the stability and sustainability of electric vehicle supply.

"As a leading producer of the platinum needed for fuel cell technology, we have been an early supporter of the potential for a hydrogen economy and will continue to actively support the emerging ecosystem of hydrogen-powered transport in Germany, and beyond," Oeyen added.

South African mining company Vedanta Zinc International has begun the first phase of a renewable energy programme.

The company has signed a power purchase agreement with independent power producer Enernet Global to build, own, operate and maintain a 12 MW direct current solar photovoltaic plant for Vedanta Zinc International's Black Mountain Mining operations in the Northern Cape.

Construction of the solar plant, which will generate about 29 gigawatt hours of electricity a year, is scheduled to start in the first quarter of 2024 and take nine months to complete.

Along with construction, the 25-year operational tenor of the plant is poised to generate direct and indirect employment opportunities for communities within the Khâi-Ma municipal area and the broader Namakwa District.

Through its renewables energy programme of reducing carbon emissions and enhancing energy reliability and security, Vedanta Zinc International has further decarbonisation advancement on the way, with Phase 2 of the programme encompassing entry into a new power purchase agreement.

Executive director and CFO Pushpender Singla highlighted environmental social and governance (ESG) as the company's key focus. "In line with our agenda to transform the planet for the greater good, we have committed to reducing carbon emissions by 35 000 tons and installing 76% renewable energy by 2027. Our goal is carbon neutrality by 2040," Singla stated in a release to Mining Weekly.

Enernet MD Africa Bart Haverkamp expressed excitement at being the company's long-term partner for power on its decarbonisation journey, working together on the roadmap, phasing, and roll-out of renewables.

The mining company's ESG thrusts are on community programmes, workplace enhancement and green zinc advancement.

Chrome ore has been headlined by ferrochrome and chrome producer Merafe Resources as the star of the show in the six months to June 30.

Production volumes of ferrochrome and chrome were lower in the six months to June 30 and production costs increased by double digits as power and logistics challenges persisted, Merafe CEO Zanele Matlala reported on Tuesday, August 15, when company FD Ditabe Chocho presented dividend-yielding R1-billion-profit half-year financial results. (Also watch attached Creamer Media video.)

But buoyed by logistics constraints in South Africa and port stocks remaining low in China, chrome ore prices increased significantly, in the six months to June 30.

China, which sources 80% of its chrome ore from South Africa, imported 3% more chrome ore in the period.

On the other hand, ferrochrome prices were weaker, owing to subdued demand and over supply.

Ferrochrome prices have been trending lower, with current Chinese prices just below $1/lb.

Ferrochrome is a main ingredient of stainless steel and only China showed growth in stainless steel production, amid a 2% decline in global production of the corrosion-resistant metal.

China continues to dominate stainless steel production, accounting for almost 60% of global stainless steel output, and 65% of global ferrochrome demand.

Only China registered ferrochrome demand growth, while globally, half-year uptake showed marginal decline.

Contributing to ferrochrome over-supply was a 6% increase in production by China and Kazakhstan.

In reporting an 11% increase in revenue to R4.8-billion, Chocho referred to the weakness of the rand for most of the half-year reporting period being one of the key contributors to Merafe's financial performance.

Despite the 10% reduction in prices achieved, Chocho drew attention to ferrochrome revenue increasing by 5% to R3.8-billion on marginally lower ferrochrome sales volumes.

"Chrome ore was the star performer this time around," he said during the online presentation of results covered by Mining Weekly, with the higher prices holding up during the reporting period and higher volumes sold resulting in a 49% revenue increase to R936-million.

Platinum group metals (PGMs) revenue of R35-million was negatively affected by feed and yield production issues as well as PGM prices being under pressure.

Sustaining capital expenditure increased by 56% to R222-million as a result of capital expenditure rolled over from the previous years and price increases. Expansionary capital expenditure of R5-million includes R0.3 million spent on the PGMs processing plant.

The main focus of the business of the Johannesburg Stock Exchange-listed Merafe is on the 20.5% participation of wholly owned subsidiary, Merafe Ferrochrome and Mining, in the earnings before tax, depreciation and amortisation of the Glencore-Merafe venture, in which Glencore has a 79.5% participation.

The use of hydrogen in difficult-to-electrify applications is being assessed at Worsley Alumina, the integrated bauxite mining and alumina refining operation in Western Australia, which supplies alumina to Hillside Aluminium in South Africa, Eskom's largest single industrial customer.

However, production costs, markets and associated infrastructure will need to develop substantially for it to become a viable alternative, South32 stated in an emailed response to Mining Weekly, on the prospect of the company using green hydrogen to lower the carbon factor in producing alumina, as is being piloted by Rio Tinto and Sumitomo, for example, to build Gladstone hydrogen pilot plant to trial lower-carbon alumina refining.

Work to date has indicated that electrifying steam generation is likely to be preferable to the use of hydrogen. However, hydrogen may have a role to play in achieving the high processing temperatures required for calcination.

The Sydney-, Johannesburg- and London-listed South32, as a founding member of Australia's Heavy Industry Low-Carbon Transition Cooperative Research Centre (HILT CRC), partnered in five of HILT CRC's QuickStart projects in its 2022 financial year, covering topics such as low emission calcination and steam generation, energy storage, regulatory implications, and emissions profiling. HILT CRC, a collaborative venture between industry, government and research organisations, was formed to develop and accelerate technologies for heavy industry to transition to net zero.

On the steps taken so far to self-generate clean electricity at Hillside, South32 described its near-term decarbonisation initiatives at Hillside as being focused on energy efficiency, while it investigates options for an alternate low-carbon energy solution to transition Hillside's energy source from coal-based power supplied from South Africa's national electricity grid to secure, reliable and affordable low-carbon energy in the medium-term.

It is seeking to partner with entities that focus on utility-scale energy projects and support their investments through long-term power purchase agreements, subject to them being financially viable.

"We continue to work with Eskom, government, and commercial partners to develop and implement an energy solution at the scale required for a large aluminium smelter.

"Core streams of work to decarbonise Hillside Aluminium include engaging with Eskom to explore opportunities to convert our existing power agreement to low-carbon energy, and investigating options for sourcing and securing low-carbon power through power purchase agreements with independent power producers and aggregators of renewable energy," said South32, headed by CEO Graham Kerr.

Mining Weekly: How much has South32 benefited over the years by being allowed to pay electricity tariffs very well below the going rate at Hillside?

The negotiated pricing agreement (NPA) in place at Hillside was approved by National Energy Regulator of South Africa (Nersa) in 2021. At the time, Nersa publicly outlined its rationale for supporting the agreement, stating that there was a "net benefit to the rest of the customer base in putting this agreement in place."

The pricing agreement helps the smelter to remain internationally competitive so it can continue to deliver benefits in South Africa.

Eskom has outlined in detail its rationale for the NPA with South32 in a publicly available submission to Nersa in February 2021. In its submission, Eskom noted Hillside's role in supporting stability of the electricity grid.

Hillside plays an important role in keeping the electricity grid stable and helping to manage loadshedding given its consistent level of electricity consumption and the interruptibility provision in its energy supply agreement. During times of high strain on the national grid, Eskom interrupts around 450 MW of supply to Hillside's potlines to support the grid, which means less load-shedding for other customers.

Taking into account Hillsides...

The decarbonisation and solar power plans of Glencore Alloys are coming to the fore with the first 25 MW solar plant on the way, Glencore Alloys head Japie Fullard told Mining Weekly at question time during this week's media call.

Glencore Alloys is a large producer of ferrochrome and a major producer of primary vanadium.

"We've got all our approvals in place so we will be starting to build that at the Rhovan vanadium operation," Fullard said.

Rhovan is situated about 30 km to the northwest of Brits, in South Africa's North West province.

On Glencore Alloys' other renewable energy projects, Fullard said that as part of a virtual power purchase agreement process, the company is working with two independent power producers (IPPs) where the company will be receiving wheeled energy.

"With one of our IPPs, we're about 95% complete and with the other about 40% complete. On the one IPP, we're talking about 200 MW and on the other 150 MW solar. It's quite substantial," Fullard added.

Glencore Alloys produces and markets chrome ore, ferrochrome and vanadium, as well as manganese ore and alloys.

Forming part of Glencore Alloys' decarbonisation commitments are potential on-site projects involving possible cogeneration, which involves turning currently wasted operational offgas into electricity.

Elaborating on the company's overall decarbonisation implementation, Glencore Industrial Assets head Peter Freyberg described Fullard's South African ferroalloys team as the poster boys for getting things done on the decarbonisation front, driven by necessity.

The London- and Johannesburg-listed company, which set a short-term target of a 15% reduction in total Scope 1, 2 and 3 emissions by 2026, is on track to achieve those targets, and has works in place to achieve what it is saying it needs to do by 2035.

"We've got a broad range of initiatives worldwide, the main ones right now being focused on Scope 2 emissions, which are one-third of our Scope 1 emissions, and are probably the quickest that we can do to switch from carbon-intensive electricity that we're buying around the world, to renewables. This is happening whether it's in South America, Australia, Europe or wherever, and making sure that we take this initiative early and lock-in those reductions.

"In terms of Scope 1, we're also doing a lot of work around waste heat and the electrification of mining fleets. We expect in the next 18 months or so to be running trials. We're looking at fuel switching where that's possible and also, where feasible - and this is going back to Scope 2 - we have solar projects worldwide," said Freyberg, who added that in South Africa, there are a wide range of initiatives within Astron Energy to make that refinery more efficient and reduce its carbon.

Regarding the extent to which the winddown of South Africa's coal operations will be balanced by participation in the Just Energy Transition, Glencore Coal CEO Murray Houston said: "Our amount of assets and our life-of-mine long-term planning to 2026, 2035 and ultimately 2050 strategy fits very well within the early stages of the Just Energy Transition.

"We're engaged by the coal leadership forum at the Minerals Council South Africa on this transition because it's going to be a huge focus regionally on the Highveld, and a massive challenge with that concentration of economic activity there. Along with the coal industry, it's also hugely important that Eskom's part of that, but also key players in the Highveld area like Transnet and Sasol.

"It's relatively early days of this holistic engagement and the intensity is still evolving but that's the picture in terms of how we see our business fitting in with that country transition," said Houston.

On Glencore's vision for petroleum supplier company Astron, Glencore CEO Gary Nagle said: "Astron is up and running. We've got a terrific management team that has done a terrific job in rebuilding the refinery, and motivating the team.

The refinery is operating at full cap...

Mining Weekly Editor Martin Creamer discusses major global mining companies choosing Africa as their biggest and best investment destination; metals and minerals from Africa vital for fight against climate change; and Namibia catching the eye, yet again, as a country of choice when it comes to foreign mining investment.