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The Minerals Council has noted with dismay the above-inflation electricity tariff increase of 18.65% that the National Energy Regulator of South Africa granted to Eskom in its 2023/24 financial year, starting April 1.

This increase, coupled with the 12.74% tariff increase that is scheduled for the following financial year, will translate into a R13.5-billion, or 33.7%, increase in the mining industry’s electricity costs to R53.5-billion by the end of 2024, the council states.

Over the four years between 2021 and 2024, electricity tariffs would have increased by 46%, the Minerals Council reports, adding that the price of electricity for the mining industry has increased eightfold since 2008.

Electricity will make up 12.5% of the South African mining industry’s costs by the end of 2024, compared with 9% currently.

Minerals Council chief economist Henk Langenhoven says these tariff increases fundamentally shift the intermediary cost structures in mining. Owing to the different electricity consumption densities of various mining commodities, the impact is not the same across the sector, but this is deeply concerning, he adds.

Additionally, the higher cost of electricity means the share of energy in intermediary inputs will increase from 24% to 38% in gold mining, from 22% to 37% in iron-ore mining and from 13% to 19% in the platinum group metals sector.

While the council welcomed the removal of the cap on the size of private sector electricity generation projects, which was declared by government last year, the council says mines still need absolute energy certainty when sending employees underground, to ensure they can return safely to surface. This while smelters require sufficient time to ramp down as sudden losses of power result in catastrophic and expensive damages.

Langenhoven says average input costs were running at above 15% at the end of 2022. The new tariffs could add four percentage points to costs, materially squeezing profit margins, and this against the backdrop of already declining mining production – 6% year-on-year in 2022.

He notes that an adverse operating environment of unreliable and expensive electricity, coupled with a crisis in transport logistics for bulk mineral exports, erodes the mining sector’s global competitiveness and may well culminate in job losses in mining.

Over the medium to long term, these uncertainties bode ill for starting new mines and extending the lives of older, marginal assets.

For mining companies building mines that have lives of decades, it is essential that they have the ability to accurately estimate long-term electricity prices and supply, as well as secure reliable and cost efficient transport, both of which are crucial considerations in deciding whether to start new projects.

SOLUTIONS

The Minerals Council estimates the private sector in South Africa has a total pipeline of 9 GW of energy projects in solar, wind, gas and battery storage. By expediting those projects and reducing reliance on Eskom, the power utility can turn its focus to the critical maintenance and refurbishment necessary on some of its power plants.

The mining industry alone has a pipeline of 7.5 GW of energy projects on standby or in development, which are worth more than R150-billion combined.

The council expects 3 GW of these projects to be completed by the end of 2024.

The mining sector consumes about 14% of Eskom’s total electricity output; adding smelters and refineries, the mineral sector consumes about 30% of Eskom’s output, therefore, Eskom will remain a source of baseload electricity supply for the mining industry nonetheless.

Mining Weekly Editor Martin Creamer discusses lithium sales out of the country this month; the ANC's statement that South Africa should become a green hydrogen centre; and the need for collaboration for a green hydrogen transition in the near future.

Sales of lithium processed out of stockpiles at the Blesberg project in the Northern Cape are expected to commence this month.

“We’re on track for the first delivery of a thousand tons through to the offtake party that we’ve contracted with,” Marula Mining CEO Jason Brewer told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

The first shipment of high-grade 'run-of-mine’ lithium ore is being undertaken under a $5-million lithium prepayment facility to a South African based subsidiary of global commodity group Traxys.

“We're well funded and well supported, and lithium is one of those commodities with tremendous demand growth and price is at an all-time high, so I think we're in a good position to take Blesberg forward into being, hopefully, South Africa's premium lithium operation over the course of the next two to three years,” said Brewer.

Aquis Stock Exchange-listed Marula is a mining and exploration investment company focused on identifying and targeting investments in advanced and near-term production and revenue generating opportunities within Africa’s mining sector.

The company is particularly set on mining investments in commodities that are considered critical to meeting the demand from modern green technologies and the battery metals sector.

In the last few months, the pioneering South African lithium project has gone from zero employees to 50, of which over 90% are from the local community. The feasibility of developing a openpit mine once stockpile resources are depleted is under way, which would generate more local employment should it go ahead.

Stockpile processing is taking place at the active operation, with residues being moved to a new stockpile site, owing to the existing stockpiles being on top of the pegmatite from which lithium could in future be extracted.

“This is almost like a pre-strip operation we've got at the moment, just by removing those stockpiles. Our contractors, Southern Metals Processing, are doing a great job.

“We've got between 250 000 t and 400 000 t of stockpiles there. Blesberg was a former mine mostly for tantalite, so there's 80 years of intermittent mining activity out there.

“We're looking at between two and three years of just reprocessing those stockpiles. That gives us a good base upon which we then look at the broader exploration and hard rock mining potential that exists at Blesberg,” said Brewer.

Blesberg is located in one of South Africa's biggest mineralised lithium pegmatites.

“That's been the subject of a lot of historical work and its proven. It's now about how we can, in the current strong commodities environment, take this forward and build a long-term, sustainable ten- to 15-year-plus mining operation, which will have big implications for the mining sector in South Africa,” said Brewer.

Marula secured initial interest in the beginning of July. The fenced area has accommodation, ablution blocks, a mobile crushing screening plant, several dump trucks and excavators as well as gensets ahead of a longer-term renewable energy solution, which will likely involve solar power and possibly also wind power.

“The wind at Blesberg is quite significant. We've had to solve a number of dust issues with the processing that we're doing, so wind is also an alternative but solar is clearly high on our list and we've been approached already by a number of groups to provide our longer-term power requirements,” said Brewer.

Mining Weekly: What are your plans for the operation beyond stockpile mining?

Brewer: We've already got our exploration plans together. The existing mining operations and the stockpiles have come from the Noumus l pegmatite. That's one of a whole swarm of pegmatite’s in that region. There's the parallel Noumus ll and we will be doing further drilling, a lot of bulk sampling and a lot of trench work there. The idea is to establish a long term 10-, 15- to 20-year mining hard rock openpit mining operation.

How much lithium is in the stockpile...

The implementation agreement for Namibia’s planned multibillion-dollar Hyphen Hydrogen Energy project is scheduled to commence in the first quarter of this year, Namibia President Hage Geingob revealed in his 2023 New Year’s message.

Egypt has granted approval for two green hydrogen projects in the industrial zone of Ain Sokhna, a port town on the Red Sea.

Africa can produce 50-million tons of green hydrogen a year by 2035 with the help of the platinum group metals (PGMs) that the continent hosts in world-leading quantity, a study by European Investment Bank, International Solar Alliance and the African Union highlights.

South Korea intends creating six hydrogen cities that will use hydrogen in buildings and transport as part of daily life, Hydrogen Insight reports.

Scotland has let it be known that it will call for green hydrogen proposals early this year as part of installing 5 GW worth by 2030.

Inner Mongolia is poised to begin construction in the upcoming 12 months of facilities to generate green hydrogen for long-distance piping to the Sinopec Beijing Yanshan Petrochemical Complex, where hydrogen for last year’s Beijing Winter Olympics was purified.

Canada, and especially its western province of Alberta, is poised to become a hydrogen power leader, says Resource World.

Greenland has unveiled a plan to produce green hydrogen on a ship linked to a 1.5 GW wind farm.

Portugal has invited its first national green hydrogen tender.

India plans to introduce green hydrogen mandates for heavy industry after passing enabling legislation.

Green hydrogen generation potential in Australia is described as being huge by Dr Thomas Hillig of THEnergy.

Stationary hydrogen fuel cells, using the same technology that provides clean electricity to mobile fuel cell electric vehicles (FCEVs), will be used in South Korea to supply clean electricity to battery electric vehicles (BEVs), which creates a new rapprochement that has been lacking between FCEVs and BEVs.

Scaling up hydrogen in key industrial basins worldwide is the stated priority of French gas company Air Liquide, which has clinched a joint venture with Lotte Chemical to provide green hydrogen to passenger and commercial vehicles at a proposed filling centre in Seoul.

Australian engineers have figured out how to run diesel engines on a mix of diesel and hydrogen to lower emissions.

Hydrogen is expected to grow sevenfold in support of the global energy transition, reports the World Platinum Investment Council, which points out that platinum-based proton exchange membrane (PEM) technology has a significant role to play in the global transition to green energy. PEM is used in PGMs-based green hydrogen electrolysers as well as in the fuel cells that power FCEVs.

Cummins will be supplying a platinum-based PEM electrolyser system for Linde’s new hydrogen production plant in Niagara Falls in New York – and the list of global green hydrogen initiatives, projects and ventures could go on, which underpins a joint study on patents just released by the European Patent Office (EPO) and the International Energy Agency (IEA).

Technologies motivated by climate change accounted for nearly 80% of all patents related to hydrogen production in 2020, states the joint EPO and IEA report, which covers hydrogen supply, storage, distribution, transformation and end-use.

Hydrogen from low-emissions sources is described in the report as having the capacity to play an important role in clean energy transitions by replacing fossil fuels in industries where few clean alternatives exist.

“This study shows that innovators are responding to the need for competitive hydrogen supply chains, but also identifies areas – particularly among end-users – where more effort is required. We will continue to help governments to spur innovation for secure, resilient and sustainable clean energy technologies,” says IEA executive director Fatih Birol in the release to Mining Weekly.

Harnessing the potential of hydrogen is a key par...

A 3% gain in December, owing to a weaker dollar, took the value of gold to $1 814/oz, resulting in a year-on-year gain of 0.4% – something the World Gold Council (WGC) says looked unlikely to many just two months ago.

The WGC says 2022 provided a “textbook” example of how diverse sources of demand and supply can counterbalance one another and provide gold with its uniquely stable portfolio-additive performance.

In addition, the WGC says gold’s resilience in 2022 was a result of its often ignored multifaceted sources of demand and supply.

Institutional investing demand, such as exchange-traded funds (ETF), over-the-counter (OTC) and futures, was weak but retail demand was strong and central bank net buying performed even better, the WGC reports.

As such, gold’s volatility remained close to its long-term average of 16%.

However, as a result of these factors, many questioned the WGC on why gold did not perform better than it did, taking into account multi-decade-high inflation.

The WGC responds that two factors played a major role, the first being long-term inflation expectations remaining well anchored in 2022. This, the WGC says, suggests that investors were confident that central banks could control inflation.

The second factor was that institutional and professional investors were likely more interested in how they are compensated for inflation, and hence taking more cues from monetary policy, as opposed to inflation developments.

Counteracting this institutional malaise, the WGC points out that retail investors were significant buyers of gold in 2022, with demand for the first nine months of the year having reached an eight-year high.

The WGC’s analysis suggests that retail investors, especially in emerging markets, which make up about 60% of the sector, are more wary of inflation, as well as the level of prices, taking into account low access to protection.

Particularly for non-US investors, gold proved a lucrative investment in 2022, gaining well in other local currencies.

In Europe and the US, retail investment stayed buoyant despite inflation and heightened geopolitical risk.

“Arguably the most surprising development in the gold market in 2022 was the level of demand from central banks,” the WGC says in a statement.

By the end of the third quarter of 2022, 673 t of gold had reportedly been added to reserves – a historical high – while in October and November, gold additions continued but at a slower pace.

However, a substantial proportion of additions remains unreported, making it difficult to determine the date of purchase, the WGC says.

Central banks also acquired 50 t of gold in November, up 47% month-on-month.

Going forward, the WGC forecasts a stable but positive outlook for gold prices, taking into account a mild global recession playing out. Other influential factors for gold this year include a weaker dollar, decreases in inflation, pressured equities and continued geopolitical risk.

Regionally, Chinese gold demand experienced a seasonal rebound in December, with the average daily trading volume being 38% higher month-on-month.

Indian retail demand remained muted during the seasonally quiet month of December, while higher gold prices remained a key headwind for gold demand during the month impacting both wedding and regular purchases.

In the US, two highly anticipated announcements in December appeared to send gold sentiment in opposite directions, the WGC says. The first was the release of the consumer price index – the data of which showed that headline inflation rose only 0.1% in November from October, bringing the year-on-year gain to 7.1% – the lowest since December 2021.

The council says many investors assumed that the good news on inflation would have a notable impact on the US Federal Reserve’s policy, but that the release of the December policy meeting statement – the second anticipated announcement – followed by US Federal Reserve chairperson Jay Powell’s press conference, sent gold lower.

ETFs

As fo...

Global mine supply of platinum will fall by 500 000 oz to a million ounces as South Africa’s power shortage lowers production from 2023 to 2027, independent precious metals consultant Dr David Davis calculates in a summary report on platinum group metals (PGMs) production and Eskom.

Davis, who has been associated with the South African mining industry and mining investment industry for the past 45 years, also expects Russian PGMs supply to decline by 5% to 10%.

Compiled for Auctus Metal Portfolios of Singapore, Davis’ review points to the danger lower PGM supply presents to global decarbonisation efforts and prices.

He describes the precarious concentration of world platinum supply from power-hit South Africa at around 73%, Russia at about 10% and Zimbabwe at some 8%, as being exacerbated further by Russia’s Nornickel being unable to guarantee its 2023 production targets.

In his view, the decline in global platinum mine supply is not being given the attention it deserves.

In addition to inadequate supply of fossil-fuel power, South Africa’s power grid limitations stand in the way of connecting new generation from areas with the best solar and wind resources.

Moreover, recurring PGMs inventory build-up will likely overwhelm temperature-sensitive smelting and refining operations causing exponential production cost increases that will put a squeeze on margins.

Davis expects a "structural change" in the operations of the South African platinum mining industry to maintain power-supply equilibrium, which will likely result in a decline in mine output.

All this comes amid PGMs-based green hydrogen becoming a key decarbonisation pillar and platinum being inextricably linked to vehicle emission standards, which are being progressively tightened worldwide.

Europe is boosting its green hydrogen ambitions as it looks to secure energy independence and continuous platinum buying will further contribute to upward price pressure as platinum supply dwindles.

A new trade and technology centre dedicated to the growth of the PGMs market is being established in China, already the single largest consumer of PGMs, accounting for more than 25% of total demand.

Anglo American, Honeywell and the World Platinum Investment Council (WPIC) are among nearly 70 organisations that have signed strategic cooperation agreements with the Lin-Gang Group and other related parties in support of the Platinum and Precious Metals Centre, or PPMC, which is being established in the Lin-Gang Special Area of Shanghai.

PPMC is made up of a PGMs research institute, venture capital fund, industrial park and offshore trading market, which will be developed in sequence to support new PGM applications and to grow an industrial cluster.

As part of its commitment to PPMC, WPIC will move its Asia Pacific headquarters to the Lin-Gang Special Area, where, from 2023, the annual Shanghai Platinum Week, which it co-sponsors, will take place. WPIC will also join the proposed PGMs research institute as a founding member and participate in a joint venture to oversee the development of the industrial park.

So, demand is set to build up and platinum miners and recyclers need to ensure that supply can be sustainably met.

As a result of short-term price drivers, such as the ongoing Covid-19 lockdowns in China, monetary policy in the US and the fallout from the energy crisis caused by Russia’s invasion of Ukraine, most commodity prices sold off sharply this year – a trend that is likely to ease in 2023, says Eurasian Resources Group (ERG) CEO Benedikt Sobotka.

He adds that the global market likely overreacted to these price pressures and that it is at odds with actual state of most commodity markets.

“We anticipate that the demand structure for many commodities is undergoing a fundamental shift driven by the global net-zero transition,” notes Sobotka.

As for cobalt, he says that, despite strong supply growth this year, which is estimated to have increased 20% year-on-year, production of the commodity is facing significant downside risks in 2023, some of which have already been realised. “This could mean flat, or even negative, mine supply growth next year.”

This is in stark contrast to cobalt demand where, for example, new-energy vehicle (NEV) sales are set to supersede the ten-million-unit mark by the end of this year.

Global passenger NEV sales reached a new all-time record of 1.1-million units in November, after exceeding the one-million units mark in September for the first time ever, he adds.

In 2023, automotive forecaster and analyst organisation Rho Motion predicts, global electric vehicle (EV) sales will continue to surge to 14.4-million units, meaning that 17% of all car sales will be electric – up from 13% in 2022, and more than double their 8% penetration in 2021.

“This immense sales growth in 2023 will be underpinned by stronger growth in Western Europe of 21% year-on-year, as supply chain bottlenecks recede and new manufacturing capacity comes online,” says Sobotka.

The market is also observing a huge uptake of lithium-ion batteries in the EV space, with total battery capacity from this sector expected to reach 37.3 GWh – an increase of more than 17% year-on-year in 2023 according to Rho Motion.

As such, Sobotka says, the continuing surge in cobalt demand from the EV sector, a recovery of demand from the portable electronics and aerospace sectors, prospective buying by China's State Reserve Bureau and major supply headwinds, the cobalt market looks set to transition from a moderate surplus in the second half of 2022 to a deficit in 2023.

According to commodities analyst CRU, lithium-ion batteries currently account for almost 45% of total cobalt demand and are expected to increase to around 60% in five years’ time. Just ten years ago, this figure was only 10% of total demand, says Sobotka.

In terms of copper, Sobotka says there is currently a consensus view that a surplus market in 2023 is rapidly shifting to one of deficit, with total visible copper stocks being down 36% year-on-year. This is less than a quarter of the average level of 840 000 t at this time of year in the 2015 to 2019 period leading up to the pandemic.

On the supply side, the above-average rate of mine disruptions experienced in the market this year looks set to extend into 2023, with numerous pronounced guidance reductions already announced for the coming years by major miners, says Sobotka.

However, he points out that copper consumption increased markedly in the second half of this year, with expectations this trend will continue in 2023, especially in China, by the easing of Covid-19 restrictions and roll-out of vast economic stimulus.

“In view of the[se] dynamics, the market is increasingly shifting away from an outlook of a surplus in 2023, to one of a deficit.

“This shift is already well reflected in the annual benchmark premiums for 2023 copper cathode supply, which have risen markedly, indicating a tightening of cathode supply,” says Sobotka.

Regarding aluminium, he says a broadly balanced market in 2023 is expected following strong price volatility.

“The global aluminium market had a strong year both in terms of price volatility and a shift in its mediu...

Aim- and AltX-listed Jubilee Metals Group has completed a water infrastructure upgrade at its Roan copper concentrator, in Zambia, and continues to advance cobalt and copper production from waste at its Sable refinery, which is also located in Zambia.

The Roan copper concentrator had faced persistent water supply interruptions that severely hampered the project’s ability to operate at design throughput levels. The upgrades will help the plant resume nameplate capacity production levels.

Meanwhile, the company continues to progress the ramp-up, to commercial level, of new extractive methods for the recovery of copper and cobalt from historical waste at the Sable refinery. These developments provide unique solutions to unlocking value from the project.

In particular, Jubilee has been focused on a direct leaching approach to copper production at the Sable refinery, which bypasses the need for traditional power-intensive smelting of copper sulphide concentrates.

These trials have been effective and have enabled significantly lower operating costs, as well as the production of copper from mixed materials, such as copper sulphide and copper oxide ores.

Jubilee believes this new approach to extraction offers significant growth opportunities in the country.

As a result, the company is examining new run-of-mine material agreements with third-party producers, which offer the potential to further enhance growth for its operations at the Sable refinery.

In terms of cobalt production, Jubilee is targeting 50 t of contained cobalt metal production initially, which is the equivalent of about 220 t of final product. The company intends to ramp this up to 1 200 t/y of contained cobalt metal, which equates to about 5 200 t of final product.

With Jubilee’s efforts to solving the technical challenges, it places the company in a unique position to pursue "tremendous" potential growth opportunities in the efficient recovery of cobalt from historical wastes, including from mixed copper/cobalt materials, the company says.

The company is considering options to increase the production of cobalt through the potential acquisition of refining infrastructures to expand its cobalt footprint in Zambia.

The additional cobalt revenue offers the company further opportunities to secure metal-backed funding in support of the implementation of its Northern Refining Strategy.

The company further announces that it has undertaken a restructuring of its executive team in line with its expanding production profile, and ahead of its next phase of growth in Zambia through the Northern Refining Strategy.

In this regard, Jubilee has expanded its commercial and financial management teams in South Africa and Zambia to both further strengthen its corporate governance as well as dedicate commercial teams to Zambia in support of its project execution team.

Among the changes include the company appointing chief strategy officer Pedja Kovacevic as group CFO effective immediately, succeeding outgoing CFO Peet van Coller.

CEO Leon Coetzer says the company has managed to bring the entire Southern Copper Strategy into nameplate production and that the next quarter will see a new source of revenue for Jubilee in the form of cobalt sales.

“We now focus our attention on unlocking the potential of the Northern Refining Strategy in Zambia,” he notes.

State-owned freight utility Transnet and the Minerals Council South Africa have agreed to form joint collaborative structures to ensure all possible actions are taken to stabilise and improve the throughput of South Africa’s rail and ports systems.

Transnet recognises the integrated nature of the mining industry as part of the logistics system and has agreed to mutually focus on stabilising the whole system’s performance.

The parties agree that stabilisation and recovery of the ports and railways are in the interest of all parties in the value chain.

The entities will establish an oversight panel and a recovery steering committee, as well as continue with the work being done through channel optimisation teams for each of the country’s major commodities – coal, iron-ore, manganese and chrome.

The oversight panel will include principles and office bearers of the Minerals Council and the Transnet board, while the recovery steering committee will be jointly chaired by Minerals Council president Nolitha Fakude and Transnet chairperson Popo Molefe.

The five-a-side recovery steering committee will also comprise Transnet board members, the Minerals Council CEO and CEOs of companies that produce bulk commodities.

The channel optimisation teams, which already exist, will continue seeking priority practical solutions to improve flows across the system organised across corridors.

Fakude says the council is determined to find practical solutions to the rail and port challenges of the country and to ensure that all producers enjoy inclusive growth that comes from an improved logistics system.

Molefe adds that Transnet looks forward to an equally open and constructive relationship with the Minerals Council and key Transnet customers to stabilise the performance on the channels, for the benefit of the country.

JSE-listed gold miner Harmony Gold reports that its acquisition of the Eva Copper project from Copper Mountain Mining Corporation, has been finalised, with the R3-billion ($170-million) payment due to be made before the end of the week using cash and available revolving credit facilities.

The acquisition of the Queensland, Australia-based 2 295 km2 worth of tenements also comprises a R1-billion ($60-million) contingent payment.

The acquisition of Eva Copper will add 1.72-billion pounds of copper and 260 000 oz of gold to Harmony’s mineral reserves and extend the company’s diversification into copper – a future-facing metal critical to the energy transition.

The Australian Foreign Investment Review Board notified Harmony on December 13 that it has no objections to the acquisition, while Copper Mountain Mining Corporation received bondholder approval under its senior secured bonds on November 28. These were the only conditions precedent required for completion of this acquisition.

Harmony’s Brisbane-based project team is currently undertaking a detailed review of the existing feasibility study, while contractors have been mobilised in support of this work.

As part of the project review and enhancement process, which is expected to take up to 12 months, Harmony will determine the most effective way of executing the project and financing the capital requirements to bring the mine into production.

Harmony CEO Peter Steenkamp says the conclusion of this acquisition marks the beginning of the miner’s strategic diversification into copper. “Eva Copper will further de-risk the business as it provides entry into a tier 1 jurisdiction, counter-cyclical diversification of revenue and meets Harmony’s investment criteria.”

In addition, he says Eva Copper is a fully-permitted project and meets all environmental, social and governance requirements, demonstrating responsible stewardship.

Harmony reports that it remains comfortably within its debt covenants following the conclusion of the acquisition.