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Mining Weekly Editor Martin Creamer discusses Orion Minerals’ plan to build smaller but get base metals into production much sooner; Rifle-Shot’s Dilley Naidoo's belief that exploration investment is the key to get the country’s economy going; and Exxaro’s plans to build a 68 MW solar power plant in Limpopo.

Financial close is expected at the end of this month for construction in the second quarter of this year of a 68 MW solar power plant at a cost of between R1.52-billion and R1.56-billion, Exxaro CEO Dr Nombasa Tsengwa said during Thursday’s record-earnings presentation by the coal, energy and ferrous markets company.

“We have been building a pipeline of opportunities including the Lephalale solar project, which our board has already approved,” Tsengwa told the results presentation covered by Mining Weekly. (Also watch attached Creamer Media video.)

Lephalale is a coal mining town in the Limpopo province, immediately east of the Waterberg coalfield and South Africa’s other coal province of Mpumalanga is also in the JSE-listed company’s renewable energy sites.

Exxaro’s partnership with independent energy company Enertrag aims to also develop wind and solar solutions for the mining industry in Mpumalanga, with the first preferred site already permitted.

“We are now focusing our attention on commercial and technical workstreams,” Tsengwa said following the reporting of 41% higher revenue at R46.4-billion, which was the main driver of the 78% increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R19 002-million in the 12 months to December 31.

The partnership with Enertrag has a potential pipeline of 700 MW. Furthermore, we are in discussions with various parties to acquire near-permitted sites to further boost our entry into the energy market.

The potential pipeline ranges from 370 MW to 975 MW.

“We are quite mindful of South Africa’s electricity grid constraints, which really remain a challenge in our energy strategy, and a challenge for others in the country as well.

“There are around 9 GW of renewable energy projects under development in South Africa, of which the mining sector accounts for 6.5 GW.

“Closing the electricity gap requires concerted efforts from citizens at large but also more from the likes of our business to make meaningful investments,” said Tsengwa, who reported that the Ebitda margin of Cennergi was a high 80% in 2022, underpinned by the long-term offtake agreements. As Exxaro’s wholly owned energy arm, Cennergi last year generated 671 GWh of electricity.

Tsengwa revealed that, in the past 12 months, Exxaro has pursued eight wind and solar acquisitive growth opportunities, one of which was taken through the company’s formal processes but went no further for strategic reasons and very tight timelines.

Six opportunities were abandoned for not meeting Exxaro’s investment criteria, and one is still subject to a due diligence process review.

OPERATING IN SOUTH AFRICA

Worsening logistics constraints and rising electricity supply shortage have introduced new challenges to Exxaro, in a South Africa that Tsengwa said has become a difficult place in which to do business.

The increasingly difficult South African environment, she said, had demanded significant structural adjustments, which is compelling business to grow new skills of either being self-sufficient or relying on alternative means of doing business.

“This is all outside of the norm of how we used to do business in the country,” said Tsengwa.

Losses of volume were continuing to be faced owing to the loss of rail capacity.

The options of trucking coal to alternative ports were neither sufficient nor optimal to make up for the loss in rail capacity.

In addition, the alternative export channels came at a high cost, which the company had been able to withstand as a result of the high export price.

“As a responsible corporate citizen, we recognise the detrimental impact of the increasing number of trucks on the road, the damage that does to infrastructure and the social impact of that infrastructure damage to the communities around them,” said Tsengwa.

Appreciation was expressed for the collaborative effort being made by Minerals Council South Africa, the Transnet management, and their board, “wherein we are all full participants...

What South Africa’s base metals mining aspirant Orion Minerals has been trying to do over the last two years is to drive a very typical historic project financing arrangement for junior mining.

This very typical historic project financing model involves getting banks in for between 60% and 70% of the project finance and equity in for 30% to 40% and then you build a mine.

But it has been very clear to Orion Minerals that what was a very typical historic project financing model in South Africa no longer works.

The net rate and the cost of finance at which the financial institutions are prepared to lend in South Africa has just become exorbitant.

“The banks want an absolutely risk-free solution,” says Orion Minerals CEO Errol Smart, who spoke to Mining Weekly after the Sydney- and Johannesburg-listed company unveiled plans to raise up to A$13-million in a two tranche share placement to sophisticated and professional investors, cornerstoned by privately owned mining group Clover Alloys, headed by South African mining stalwarts Philip Kotze and Adam Fleming.

Fleming is the former chairperson of gold exploration and mining company Wits Gold and Kotze the former CEO of Wits Gold. (Interestingly, Mining Weekly can report that Ian Fleming, the author of the James Bond spy novels, was Adam Fleming’s father’s elder brother.)

“The banks want to make sure you’ve done a bankable feasibility study and then an optimisation and then you’ve added a risk factor, which is awful, and then you build a mine that is so full of belts and braces that it becomes unmanageable. It becomes a vicious spiral. You just keep going up the capital cost curve and does not come to a solution effect,” says Boksburg-born Smart, 56, who is chairperson of the Junior Mining Leadership Forum of Minerals Council South Africa.

A year ago, Orion realised that it had to find another way and decided the only way to develop was in bite-sized chunks. It had an elephant team and it decided that that team needed to take one bite at a time and not try to build the Prieska mine project in one go.

While it was working on that model, it managed to secure the R87-million funding package from Triple Flag Precious Metals and the R250-million funding facilities from the Industrial Development Corporation of South Africa.

“People started paying attention when we let it be known that we were not going to build this monster mine on day one anymore but were going to start building it in modularised fashion, which will probably be somewhere between 40 000 t a month and 60 000 t a month.

“We will build one section and get it into production and cost positive, and then use that cash flow to cross-subsidise the next section as we build it up.”

As Orion was having those conversations, it began being introduced to parties that showed interest.

These were not foreign investors, but particularly private South African investors, with Orion’s introduction to Clover Capital proving key.

Securing the involvement of Clover Alloys as part of a broad strategic funding package represents a game-changer for Orion.

The combination of a strongly supported A$13-million placement plus an options package that provides a clear pathway to securing a total equity funding injection of A$73-million, puts us in a strong position to realise our growth vision as a major new South African base metals producer,” said Smart.

“Clover Alloys is a highly regarded privately owned mining group with an enviable track record of value-creation and success in rapidly constructing and operating highly efficient processing plants. Clover Alloys’ expertise will be invaluable to Orion as we complete the feasibility studies at Prieska and Okiep and execute our rapid development plan.

“This investment brings huge momentum to our company and, together with the support of our cornerstone shareholders, puts us in an outstanding position to become a near-term producer.

“These are guys who understand junior mining in South Africa. Let’s be...

Diamond mining and marketing company Petra has sold $72.1-million worth of rough diamonds in its fourth tender cycle, which is 12.5% up on the third tender's like-for-like prices and which is viewed as confirming an improving diamond price trend.

Petra CEO Richard Duffy ascribed the positive pricing trend to a recovery in demand from China, coupled with a more buoyant outlook from the recent Hong Kong International Jewellery Show. Stronger demand from major jewellery brands has also supported prices for smaller goods, the London Stock Exchange-listed company that focuses on value over volume said on Wednesday.

“Solid demand for coloured stones across all size ranges was evident in this cycle leading to improved pricing. We continue to expect a supportive diamond market in the medium to longer term as a result of the structural supply deficit. Current levels of demand remain robust, though we are cognisant of possible near-term volatility owing to recent geopolitical and macroeconomic uncertainty,” Duffy stated in a release to Mining Weekly.

The fourth tender cycle recorded sales of 505 398 ct from Petra’s South African operations, with no sales of diamonds from Petra’s Williamson diamond mine in Tanzania, where operations remain suspended following a tailings dam breach on November 7 last year, recorded in this cycle.

The results of the fourth tender bring financial year to date revenue from rough diamond sales to $278.5-million compared with $405.3-million in the first four tenders of financial year 2022.

The lower volume sold in 2023’s fourth tender cycle relative to the equivalent tender last year was driven by lower production from the South African operations, and no production from the Tanzanian operation, with Williamson’s restart planned for the first quarter of financial year 2024.

The like-for-like rough diamond price improvement was the result of double-digit increases in most categories.

The banking sector has a crucial role to play in enabling mining companies to transition to clean energy fully, says Nedbank Corporate and Investment Banking (CIB) principal for sustainable finance solutions Telvina Naidoo.

“Innovative funding structures and sustainable-finance solutions can help make the transition more feasible,” Naidoo states in an Op-Ed to Mining Weekly.

Nedbank CIB partnered with Harmony Gold in the refinancing and upsizing of the JSE-listed gold-mining company's key corporate debt facilities. This was done through a R10-billion sustainable-finance debt package that included a green loan and a combination of sustainability-linked credit facilities with indicators and targets aimed at reducing Harmony's carbon footprint and water usage. The green loan will finance the second phase of Harmony's solar photovoltaic (PV) renewable-energy capacity by 137 MWp.

The bank also partnered with mineral sands mining company Tronox to conclude R3.1-billion in debt funding for two 100 MW solar PV projects for the supply of solar power to five Tronox facilities through wheeling arrangements with Eskom. The solar plants will deliver up to 40% of Tronox's South African power requirements and reduce its carbon emissions by an estimated 13%.

The three factors that Naidoo highlights as key drivers of renewable private power generation in mining are:

the urgent imperative for mining companies to meet their carbon emissions reduction targets;

the need for mines to ensure electricity reliability; and

the affordability and price predictability that self-generation provides.

Incentivising the transition is the recently introduced 125% tax rebate on the project cost of renewable energy installations in the first year of the project investment.

While the more conducive regulatory environment has extended self-generation considerably, it has not yet led to mines being able to declare complete energy independence, with load curtailment still being a negative necessity that lowers output.

However, available to provide clean power during national grid power outages is battery storage, which Naidoo highlights as an effective solution to counter unreliable electricity supply.

While a combination of renewable energy generation and battery storage is being considered and adopted by mining companies with large operations, the full transition to clean energy transition is seen as being some way off, with financial and logistical hurdles associated with it still needing to be scaled.

“The banking sector has a crucial role to play in enabling mining companies to overcome these obstacles and make the necessary investments in renewable energy. Innovative funding structures and sustainable-finance solutions can help make the transition more feasible for mining companies,” says Naidoo.

Funding for the R2.5-billion construction of the Mintails tailings project has been completed, with Pan African Resources managing to capitalise on the current attractive rand gold price to secure the final component of the full funding package without any dilution to its shareholders.

“We’re excited to commence with the project’s construction in the next months,” Pan African CEO Cobus Loots stated in a release to Mining Weekly on Monday.

The London- and Johannesburg-listed Pan African is finalising the project’s detailed engineering optimisation studies for the Mintails project, with environmental authorisation and related permitting expected within the next four months.

Construction is expected to begin by June 2023, with steady-state production forecast by December 2024.

Largely the same internal teams that completed Pan African’s previous three fast-payback tailings retreatment projects are undertaking the Mintails project, for which a R400-million ($21.6 million) transaction with FirstRand Bank division’s Rand Merchant Bank (RMB) forms the final component to the funding package for the project’s construction.

This follows the December issue of the group’s inaugural domestic medium term note programme of R800-million and receipt of a R1.3-billion credit approved and underwritten term sheet from RMB for the senior debt tranche of the project’s funding.

Under the terms of the transaction, the company will sell 4 846 oz of gold a month for 24 months starting this month at a fixed price of R1 025 000/kg ($1 723/oz), and receive an upfront premium of $21.6-million (R400-million). The effective price at which the group sold the 3 617 kg of gold, representing about 30% of annual group 200 000 oz production, over the 24 months, is R1 135 604/kg ($1 909/oz).

The senior debt facility is at drafting stage with the intention of this becoming effective by next month.

Pan African expects Mintails to contribute significantly towards Pan African’s future gold production over its 20-year life-of-mine.

Let us re-pursue the exploration investment that catalysed South Africa’s economic growth more than a century ago as a means of helping to rebuild South Africa’s struggling economy.

That is among the ardent messages put over by mining sector performance enhancer Dilley Naidoo, the director of business development at Rifle-Shot Performance, who spoke to Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

Naidoo recalled how it was investment in gold and diamond exploration more than 100 years ago that led to so much non-mining growth in subsidiary industries across the value chain and a myriad of mining catalysed services – all of them collectively creating an enormous number of jobs.

And it all began with exploration, funded from outside the country.

Right now, there is considerable potential to repeat what set the economy moving all those years ago ­– but in an infinitely better inclusive manner that floats all boats.

Critical deposits in areas yet to be exhaustively explored are there for the taking with the help of new modern exploration technologies.

Also there for the taking – from highly successful mining jurisdictions – are today’s ways of attracting exploration funding.

Naidoo views investment in exploration for long term sustainability as being a tremendous potential contributor to the gross domestic product (GDP) of South Africa, but other mining jurisdictions are investing five times more capital expenditure (capex) in exploration.

Mining Weekly: How can South Africa do as well as other mining jurisdictions in attracting investment in exploration?

Naidoo: If we just backtrack and we look at the experience that I've personally had in the mining sector, both locally as well as in Africa and globally, my experience has been that the mining sector is a challenging sector. It is tough, right from the funding side to convince investment. It is challenging from an operations perspective. It is challenging from the policies at various government levels, and it's also challenging from a labour perspective. But when you look at the initiation that took place in South Africa over 100 years ago . that was from an exploration perspective to go and say there was an opportunity in South Africa. and that made a major contribution to South Africa in terms of driving innovation, manufacturing, creating skills and job opportunities.

What do we do to set exploration investment off once more?

I'm a passionate South African and I'm a passionate mining industry sector person who believes that the mining sector, if we invest in exploration for long term sustainability, can be a tremendous contributor to the GDP of our country. If we look at from a global perspective, our understanding is there's approximately 5% of capex in mining that's going into exploration, that's looking at new opportunities, new minerals, and some of the new renewable energy opportunities that's driving new minerals resources. If we look at South Africa, we've done a dismal job in terms of investment of capex into exploration. My understanding is it's less than 1%. To be exact, it's 0.75%. Clearly, there is a big need to move and convince funders to invest in the exploration sector. Now, that's easier said than done. If we look at, from an investment perspective into exploration, we now have global challenges and African challenges from an investment exploration perspective in South Africa. Despite the challenges in countries like DRC, investors are grudgingly investing in terms of new commodities in areas like DRC. If you look globally, in South America, Canada, Australia and even Asian countries, investors are investing in those countries, so here is an appetite to invest, generally speaking, if globally there’s 5% of capex going into exploration. So, what's the issue? Why are they not investing in South Africa? If truth be told, I think we need to, via our South African government, firstly, create an environment of investor friendly po...

This week, Mining Weekly Editor Martin Creamer discusses the prediction that the total cost of ownership of platinum-based hydrogen fuel cell electric vehicles will be unrivalled by 2023; he notes that the World Platinum Investment Council is forecasting a material deficit in the platinum market by 2023; and he unpacks African Rainbow Minerals's belief that SA’s energy and logistics threats should be turned into opportunities.

Yet another just energy transition initiative has come flying out of its starting blocks in the form of Just Green AfrH2ica, the promoter of the just energy transition to green hydrogen in Africa, the continent with the distinctive potential to benefit exponentially from low-cost renewable energy to produce green hydrogen as well as its derivatives such as green ammonia.

“This can be done for both domestic and external markets,” Hydrogen Infrastructure: Department of Science and Innovation National Centre of Competence director Professor Dmitri Bessarabov tells Mining Weekly in highlighting Just Green AfrH2ica’s superb opportunity to cross-fertilise African Union (AU) and European Union (EU) policies and development roadmaps.

Far-reaching discussions took place in Brussels last month aimed at helping to unlock funding, expertise, technology, policy and regulation to unleash AU/EU cooperation.

“Green hydrogen could indeed become the booster of a sustainable development of the continent, enabling African countries to reduce their environmental impact,” adds Bessarabov, who functions from South Africa’s North-West University, which is investing around R35-million in strategic funding to advance green hydrogen research over the next five years.

Hydrogen technologies have a special meaning for South Africa as most of the platinum group metals (PGMs) that are needed for the related hydrogen technologies, such as water electrolysis and fuel cells, are mined in South Africa.

Moreover, South Africa offers excellent sources of renewable energy, with electrolytic green hydrogen generation also being one of the cornerstones of the activities mentioned in South Africa’s Hydrogen Society Roadmap.

African green hydrogen development as a continental whole could be outstandingly helpful for European hydrogen transition, which is why it is so important that both EU and AU hydrogen policies and development roadmaps are conceived in a cross-fertilising manner.

The latest Just Green AfrH2ica initiative comes amid the battle against climate change being emphasised more strongly than ever as a global responsibility.

Decarbonisation at the fastest possible rate is essential, given that the world is on a trajectory to reach 2.7 °C of warming above pre-industrial levels, which is a long way mathematically from the 1.5 °C that is required by the Paris Agreement.

Africa has a growing population of nearly 1.3-billion, with an average annual increase rate of 2.5% for the last ten years.

The growing population of the continent directly implies growing demand for energy and expanded infrastructure to match the growth. The overall sustainable development of Africa and indeed the global effort to reduce climate degradation will stem from a holistic energy system driven by renewable energy and requiring joint efforts and partnership across borders to find feasible climate-friendly solutions, Bessarabov points out.

“In this sense, Just Green AfrH2ica will put together AU/EU experiences to explore the potential of green hydrogen as a key energy vector and energy option in a joint effort to make AU/EU cooperation sustainable at both environmental and social levels,” he adds.

South Africa’s mining companies alone are at the ready to provide 10 GW of renewable solar and wind power, with London- and Johannesburg-listed Anglo American prepared to do up to 5 GW on its own.

Anglo American already has its huge green hydrogen haulage truck doing its paces at the Mogalawena PGMs mine in South Africa’s Limpopo province. The large mining group is also working with partners including Bambili Energy, Sasol and TotalEnergies, to create the country’s first hydrogen corridor, with a focus on trucks and buses that use hydrogen.

Bambili Energy CEO Zanele Mbatha believes South Africa will have fuel cell trucks on the road by 2024, 2025, and Anglo American Platinum CEO Natascha Viljoen has pointed out that South Africa’s proposed hydrogen corridor will create 14 000 new jobs.

The ...

The total cost of ownership (TCO) of platinum-based hydrogen fuel cell electric vehicles (FCEVs) is forecast to be less than that of battery electric vehicles (BEVs) by 2026, and less than that of internal combustion engines (ICEs) by around 2027, with an overall estimated 50% FCEV cost decline in the next ten years.

Furthermore, FCEVs are demonstrably greener and cleaner and more environment-friendly across their entire lifecycle than BEVs and ICEs, with more improvements to come as hydrogen production shifts toward a broader role in renewable energy development.

Platinum-based fuel cells are already used in various mobiity applications.

TCO-wise they might not yet compete with BEVs in the passenger vehicle sector, but significant advantages exist for high loads and when longer ranges are required.

Responding to a series of questions on queries around the technical and economic viability of platinum-based fuel cells, Heraeus Precious Metals executive VP new business development and innovation Philipp Walter highlights to Mining Weekly that the current landing zone for fuel cells is primarily in the heavy-duty bus, train and perhaps maritime areas.

With the expected economy of scale, cheaper green hydrogen through scale and optimisation and an infrastructure converted to hydrogen, fuel cells, Walter says, will also hit the passenger vehicle sector and compete with BEVs and ICEs head to head.

“It’s basically not reasonable to predict the future of fuel cells based on the past, as several parameters have changed. Today’s fuel cells are significantly improved in terms of cost and performance compared with those of the first generation.

“A journey that has started and has not reached its end so far. Sustainability and decarbonisation became a strong impetus to energy and mobility strategies of various regions and countries, giving a significant push to alternatives to ICEs, including FCEVs.

“BEVs have their space in the future mobility concepts, as do FCEVs and ICEs will not fade away overnight. Comparing the life cycle of BEVs with a range up to 250 km it can be stated, depending on energy mix, that they are environmentally more friendly.

“However, BEVS with big battery packs are burdened with a heavy carbon dioxide rucksack (battery capacity above 50 kWh). Especially for trucks and larger passenger cars, FCEVs are the more climate- and customer-friendly solution.

“For applications where ICEs are under replacement due to decarbonisation efforts and long ranges and constant use of a vehicle is demanded, FCEVs are the way to go anyhow," he says.

A study by Deloitte and Ballard entitled ‘Powering the Future Mobility’ provides answers to the economic viability of FCEVs and highlights hydrogen as once again taking centre stage in humanity’s quest for energy sources.

Taking a bottom-up approach of TCO analysis across the US, China, and Europe over a 13-year timespan in FCEVs forecast leadership at the TCO level, the study forecasts that the energy efficiency of FCEVs will see dramatic improvement.

Furthermore, the authors of the Deloitte Ballard study describe their TCO superiority conclusion as being relatively conservative in several aspects.

“For example, as history would show with emerging technologies, production costs often decrease much more dramatically than forecast. We have also not included any government subsidies and incentives (acquisition, infrastructure, or operational) in the TCO model.

“When looking at the specific case scenarios in Shanghai, California, and London, the cross-over of FCEVs with BEVs and ICE vehicles are much faster, due to a variety of subsidies on FCEVs in each geography, or additional taxes on ICE vehicles or fuel,” the study states.

Ballard Power Systems CEO Randy MacEwen notes that society has consistently proven that when it comes to innovation and disruption, it’s always slow – until it’s not. His expectation is that the energy transition, including the adoption of low-carbon hydrogen and fue...