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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?

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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.

Suitor Sibanye-Stillwater has offered a A$30-million lifeline to takeover target New Century Resources, after that company was forced to halt operations at its Queensland zinc mine in early March, following heavy rains.

Operations are expected to remain suspended for a further two to three weeks.

New Century has warned of production losses of 5 000 t to 20 000 t of zinc metal for the 2023 financial year, and has also warned that the production shortfall is likely to impact short-term liquidity.

The ASX-listed New Century said earlier this month that it was engaging with Sibanye-Stillwater on mitigating key operational and business risks, including short-term liquidity issues.

The board of JSE- and NYSE-listed Sibanye-Stillwater has now approved A$30-million in financial support, subject to certain conditions.

Sibanye-Stillwater said on Thursday that it remained committed to working with New Century to ensure the safety of the on-site team and the safe restart of operations. The company also remained committed to working with New Century to ensure that it remained in a position to meet its financial obligations while it recovered from this unforeseen event, subject to certain conditions.

Sibanye-Stillwater has made a A$1.10-a-share takeover offer for New Century, and currently holds an 87.64% interest in the company.

Hydrogen will play a pivotal role in efforts to reach net zero, and investment, collaboration and the roll-out of supportive government policies are intensifying to achieve this, directly benefiting platinum demand, says the World Platinum Investment Council (WPIC).

The council expects more than $300-billion worth of hydrogen investments to occur through to 2030 and demand for hydrogen to rise by seven times by 2050, with two-thirds of production coming from electrolysis.

Added to this, the WPIC anticipates China will have more than one-million fuel cell electric vehicles (FCEVs) on its roads by 2035 and that one in eight newly registered commercial vehicles globally will be powered by hydrogen fuel cells by 2030.

As 30 countries have developed or are in the process of developing hydrogen plans central to their decarbonisation strategies, the yearly global export market for green hydrogen is also expected to be worth $300-billion by 2050.

Moreover, broad-based commercial adoption of FCEVs could add more than three-million ounces to yearly platinum demand in ten years, the WPIC states.

The council explains that the need to decarbonise is more acute than ever and platinum-based technologies have a significant role to play in the energy transition.

Platinum is key to unlocking the hydrogen economy, as proton exchange membrane (PEM) technology uses platinum catalysts in two key applications – electrolysers and hydrogen fuel cells to produce electricity.

FCEVs are a major market for hydrogen fuel cells.

The WPIC says platinum-based PEM technologies that enable the use of green hydrogen in decarbonisation could deliver up to 11% of global carbon dioxide emission reduction targets.

The Paris Agreement set 2050 carbon dioxide emission reduction targets to limit global warming to at least 2 °C or, better still, 1.5 °C above preindustrial levels. PEM technologies could help achieve these important goals, the council states.

Platinum demand from PEM electrolysers and FCEVs becomes a meaningful component of global demand by 2030 and potentially the largest segment by 2040, the WPIC notes.

A new consortium is set to explore the options for developing a maritime green corridor for the zero-emission shipping of iron-ore between South Africa and Europe, the Global Maritime Forum (GMF) announced on March 22.

This initiative is the first of its kind from Africa and is a step forwards in the region’s efforts to decarbonise shipping.

Maritime green corridors – routes between major port hubs where zero-emission solutions are supported and demonstrated – have become recognised as one of the most important tools to aid industry and governments in the decarbonisation of the maritime sector.

The new consortium brings together diversified miner Anglo American, steel producer Tata Steel, as well as other industry stakeholders such as CMB, VUKA Marine, Freeport Saldanha and ENGIE. The consortium is convened by the GMF to assess how zero-emission shipping on the corridor can unlock new opportunities for South Africa’s sustainable development and contribute to a just transition to a zero-emission maritime ecosystem.

“It is fantastic to see this powerful industry consortium come together around a new green corridor with one side in South Africa, particularly as it sends a clear signal of industry action as we go into negotiations at the Marine Environment Protection Committee (MEPC) 80 in July.

"We hope this project will lay bare a viable shipping decarbonisation pathway towards real-world implementation, generating sustainable growth and business opportunities for South Africa and the region, with synergies for other sectors of the economy,” GMF CEO Johannah Christensen said.

The maritime supply chain consortium of iron-ore miners and shippers, the steel industry, ship owners, freeport operators and energy suppliers will explore full-scope concepts for the South Africa-European Union (EU) green corridor development. The work will look at bunkering and offtake arrangements, available green fuel supplies and financial and business model alternatives.

The consortium’s initiative to explore the development of the green corridor between South Africa and the EU builds on a report prepared by P4G and the Getting to Zero Coalition titled ‘Shipping’s Energy Transition: Strategic Opportunities in South Africa’. The report identified promising opportunities for South Africa to establish itself as a key player in the global transition to renewable forms of energy and zero-emission shipping.

Situated along busy international shipping routes, South Africa has the highest volumes of maritime traffic in Africa outside of the Mediterranean region, as well as one of the best-connected port systems on the continent that support the trade of valuable commodities. The development of the green corridor could help drive forward South Africa’s decarbonisation ambitions and serve a range of wider national and international objectives at the same time.

As the International Maritime Organisation prepares to revise its strategy for decarbonisation at the upcoming MEPC 80 meeting, the consortium’s initiative to explore the development of the green corridor between South Africa and Europe shows that the industry is preparing for a rapid shift to global zero-emission shipping.

“Cross-industry collaboration is the key to shaping a sustainable maritime industry. We are looking forward to joining other industry leaders in exploring pathways to zero-emission shipping of iron-ore between South Africa, where our Kumba mines produce high-quality iron-ore, and Europe, where many of our customers are located.

"An important step toward wider industry decarbonisation, this initiative also aligns with Anglo American’s ambition to reach carbon neutrality for our controlled ocean freight by 2040,” Anglo American Marketing Business CEO Peter Whitcutt said.

Tata Steel chief group shipping Ranjan Sinha said the company was committed to zero-carbon shipping and that its participation in the South Africa-Europe green corridor for iron-ore was a step in that direction.

“We be...

Ferrochrome company Merafe is considering proposals for the construction of renewable energy facilities and is in discussions with power utility Eskom to secure a negotiated pricing agreement (NPA) to mitigate against unsustainable high electricity costs, the JSE-listed company reported on Monday.

Rising electricity tariffs, coupled with general inflation, and higher ore prices and reductant prices, pushed up the total unit cost of ferrochrome production by 30% in 2022.

The cost of electricity went up by 9.61% in 2022 and the latest approved electricity tariff increase of 18.65%, which will come into effect next month, would “certainly add more cost pressures”.

CEO Zanele Matlala said that if an agreement could be reached with Eskom on an NPA, it would go “some way in providing certainty on pricing”.

Regarding renewable energy projects, she said that the idea was for a third party to finance a facility, with Merafe paying a fee for full use of the electricity produced. The company is in discussions with several independent power producers, Matlala said, noting that an agreement would likely be reached by the second or third quarter.

Despite the “unprecedented” increase in costs in 2022, Merafe still recorded profit after tax of R1.41-billion, driven by higher commodity prices and a weaker exchange rate. This was a decrease from R1.67-billion in 2021.

Merafe’s income is primarily generated from the Glencore-Merafe Pooling and Sharing venture, which is one of the global market leaders in ferrochrome production, with a total installed capacity of 2.3-million tonnes a year of ferrochrome. Merafe shares in 20.5% of the earnings before interest, taxation, depreciation and amortisation (Ebitda) from the venture.

Despite a 1% increase in attributable ferrochrome production from 379 000 t/y in 2021, to 384 000 t/y, Merafe reported a 2% decrease in revenue to R7.94-billion from R8.06-billion.

The company also reported a 12% decrease in Ebitda to R2.14-billion.

The company’s headline earnings a share fell from 67c in 2021, to 56.4c in 2022.

Merafe announced a final cash dividend of 13c a share, a sharp decrease from last year’s 22c.

Total dividends for the year reduced by R100-million to R625-million.

While presenting the company’s financial results, Matlala noted that disruption and volatility characterised the markets over the last two years.

“First there was Covid-19 which was followed by the Russia/Ukraine conflict. This led to inflationary concerns and contributed to supply chain challenges which were already prevalent in the aftermath of Covid-19 lockdown relaxations. Energy insecurity and global recession concerns now present risks that businesses and nations across the world have to deal with,” she said.

Matlala noted, however, that the risks associated with Covid-19 had reduced significantly from prior years, with no significant impact on operations being experienced. Mitigation measures were now part of its operating standards.

Looking at 2023, Matlala said that it would likely be another challenging year.

“There is an expectation that global recession will affect commodity prices negatively. On the positive side, the reopening of China after their zero Covid-19 policy suggests that there might be compensating increased economic activity from that region.”

She noted that the forecast growth in stainless steel demand, underpinned by growth in Asia and Europe, was positive for the ferrochrome industry.

Matlala assured that the company expected efficiencies achieved in its operations to be sustained. However, she said that Merafe’s production profile would be influenced by several factors, including Eskom’s inability to meet the country’s electricity demand and the company’s stock holding levels.

The company reported a 14% improvement in total recordable incident frequency rate to 2.40, down from 2.802 in 2021. The Venture was fatality free for the year 2022 and remained so for the first two months of 2023.

“This is the best pe...

Technology metals mining and exploration company Andrada anticipates completion of its lithium bulk-testing pilot facility in June this year, the London Aim-quoted company said on Monday, March 20, when it provided fourth-quarter and 12 months to February 28 production updates for its Uis tin, lithium and tantalum mine in Namibia.

Completion of the bulk testing pilot facility will enable Andrada, formerly AfriTin, to expedite lithium production, the company, headed by CEO Anthony Viljoen, stated.

A process that could produce a lithium concentrate suitable for buyers’ specifications in industrial and battery feedstock markets has been identified through metallurgical test work done by independent Geolabs Global test facility in South Africa.

Drilling to investigate the visible spodumene mineralisation began in January and mapping of drill targets has been finalised, with a detailed exploration update scheduled for release in June.

Andrada is exploring several options for achieving early lithium revenues in the second half of the 2023 calendar year, including concentrate production from the bulk pilot plant.

Lithium’s use in batteries for electric vehicles and large stationary storage applications is driving growth.

Most tantalum growth is expected to arise from chemical applications and tantalum mill products, while capacitors remain the most significant current application, and tin is being researched for potential use in newer technologies, including lithium-ion batteries, smart home devices, electric vehicles, and the 5G network.

The target of Andrada, named after Brazilian mineralogist Professor José Bonifácio de Andrada e Silva, is to fast-track lithium production as it expands its footprint in Namibia, where mining accounts for 25% of national income.

In the 12 months, the company produced 19% more tin concentrate to 960 t and 18% more contained tin to 586 t. In the final quarter, production of 361 t of tin concentrate, containing 214 t of tin metal, was achieved at the lowest quarterly all-in sustaining costs (AISC) of $18 236/t. Full-year AISC fell by 9% to $24 939/t year-on-year.

Cash balance at the end of February 2023 increased by 16% to £8.6-million.

Being guided is tin concentrate production of between 1 400 t and 1 500 t, an expected increase of between 45% and 56%, on the plant expansion ramp-up.

“The recently commenced drilling programmes on adjacent licence areas are designed to confirm our belief that the Erongo region is one of the emerging tech-metals provinces globally,” Viljoen stated in the release to Mining Weekly.

Mine safety is absolutely essential. Stopping injury and fatality in mines just has to happen. How can South Africa achieve the zero harm that is needed?

This was Mining Weekly’s opening question to Dilley Naidoo, the director of business development at Rifle-Shot Performance. (Also watch attached Creamer Media video.)

“I’m so glad you raised this topic. How we minimise harm and injury and ensure the safety of people is something that is very close to my heart.

"These are workers who have families within their communities. If we look at South Africa, and we look at the way the mining sector was originally created, I think we need a little bit of truth and reconciliation in terms of the selfish self-interest of investors.

“Yes, investors need to get their return, but without workers, we cannot operate and creating an environment that can almost guarantee that the people come first, is a must.

“We now see that a number of the mining companies have tagged the slogan of zero harm and I think that is fantastic. The mining industry in particular has done a tremendous job and must be applauded in terms of the initiatives they've taken over the past several years now to look at the importance of zero harm and safety of the workers.

“However, there is a lot more that can be done. We had a high of some 600 people in past years that were killed in the mining sector. I am so glad that at the end of 2022, South Africa had a total of 38 deaths. But again, that's too many deaths, so will we achieve zero harm?

“It's a good objective to aspire towards, but we know that in the process, there could be opportunities for potential harm. The key is how do we work in what we call the control of employees work in the operations.

“These are very harsh environments. They are very dangerous environments, and they are running 24 hours a day, seven days a week and 365 days a year in some cases. A number of these casualties take place during the shift changeovers,” says Naidoo.

Some implemented systems give employees access that matches the task work order assigned to them, while also being linked to maintenance systems to ensure that the equipment being worked with is being maintained. These systems are being implemented using digitalisation and the Internet to be able to help minimise employee control of work incidents.

Mining Weekly: Can these digital systems be fiddled with and when there's an incident involving safety breaches can people turn the details around? Or, is it really hard and fast that people can't change things? And is it fully transparent?

Naidoo: That's a good question. As you know, with technology, you can always get smarter hackers if they choose to do harm, but vis-a-vis paper-based systems and looking at our case studies of the companies where we've implemented the electronic permit-to-work systems, there's almost been zero incidents in those companies, so, clearly, all things being equal, we have helped.

It's very difficult to manage downtime and the impact of that on paper. Does this change when you use a digital method?

Absolutely. If I had to make a comparison with the financial services sector, the Internet is being used to do banking and it is almost instantaneous. With a digital system, one client has told us that with the savings on the contractor wait times, they’ve paid for the system itself.

What new era can mining companies enter by going fully into this live, transparent, easily audited system that you say is there for the taking?

If you look at the entire mining value chain from pit to profit, from exploration, through to operations, from stockyard, to inventory, to operations, going to ports, and then looking at the metals accounting, one of the key things around all these touchpoints is the people side of things. This cuts across the entire operations of the mining sector. There are already companies, particularly in Australia, and in Canada, who are leaders, and others that are using our South African-based techn...