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Diversified miner Anglo American has reported a 10% year-on-year decrease in production in the first quarter of this year and adjusted downward its full-year guidance for platinum group metals (PGMs), iron-ore and metallurgical (met) coal production.

This “normally slower” first quarter was still impacted by Covid-19-related absenteeism, in addition to high rainfall in South Africa and Brazil, and some operational and safety challenges at the miner’s met coal and iron-ore operations.

The company is also adjusting upward its unit cost guidance for most product groups, to reflect the latest exchange rates and inflationary pressure on input prices, particularly diesel.

For the quarter ended March 31, Anglo’s iron-ore production decreased by 19% year-on-year to 13.2-million tonnes, owing to high rainfall and plant issues at the Kumba Iron Ore and Minas-Rio operations.

Full-year guidance for iron-ore has been revised down to between 60-million and 64-million tonnes, compared with the previous estimate of between 63-million and 67-million tonnes.

Met coal production was 32% lower in the quarter under review at 2.2-million tonnes, owing to the delayed longwall move at the Moranbah operation and the end of production from the Grasstree operation.

However, the suspended Grosvenor operation and Aquila life-extension project both started operations in mid-February.

Operations at the Moranbah mine have subsequently been suspended, following a fatal underground incident late in March.

Full-year guidance for met coal has been set at between 17-million and 19-million tonnes, down from the previously expected 20-million to 22-million tonnes.

Copper production also came in 13% lower year-on-year at 140 000 t for the quarter under review, mostly owing to planned lower grades, while metal-in-concentrate production from the PGM operations decreased by 6% to 956 000 oz, primarily owing to high rainfall at the Mogalakwena operation.

Full-year guidance for PGMs has been revised down to between 3.9-million and 4.3-million ounces, compared with the previously expected 4.1-million to 4.5-million ounces.

Unit cost guidance for the full-year is anticipated to increase to $105/t, compared with the previous cost guidance of $85/t, reflecting the impact of lower volumes, a stronger Australian dollar and inflation, and higher fuel costs.

On a positive note, rough diamond production increased by 25% year-on-year to 8.9-million carats in the first quarter of the year, which reflects a strong operational performance and lower rainfall impact, primarily in Botswana.

Outgoing CEO Mark Cutifani comments that progressing the company’s Sustainable Mining Plan priorities has never been more relevant or urgent, most notably those related to energy security, costs and emissions.

“During the [reporting] quarter, we partnered with EDF Renewables to secure 100% renewable energy for our operations in South Africa. This ecosystem approach is a major step towards reducing our on-site energy requirements, the largest source of our operational emissions, building on the 100% renewable electricity already secured for our South American operations by 2023.

“We also expect to have the world's largest hydrogen haul truck to be in action in the next few weeks, which will displace up to 80% of our on-site diesel emissions.”

London Aim-quoted gold mining company Chaarat Gold is looking forward to “very green and sustainable gold production” coming out of the Kyrgyz Republic, where it is developing two gold projects.

The first of these is Tulkubash, a near-term opencast heap leach project, and the second a far larger, higher-grade and longer-term underground Kyzyltash project.

Chaarat, which operates the Kapan mine in Armenia, is planning to increase its 2021 production level of 63 000 oz gold equivalent to around 450 000 oz gold equivalent a year within five years, at an all-in sustaining cost of $900/oz.

“One of the opportunities that we’ve been talking to the multilaterals about is participating in a project to either produce our own hydroelectric requirements or additionally connect to the grid, which is around 20 km away, which will allow us to have clean power.

“We certainly believe that by the time we get to the Kyzyltash project, that will be resolved and we’ll be able to have a very green and sustainable production out of the Kyrgyz Republic,” Chaarat CEO Mike Fraser, who is well known in South Africa as the former COO of South32, told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)

Among the multilateral developmental institutions active in the Kyrgyz Republic and Central Asia is the European Bank for Reconstruction and Development, which is reportedly very interested in being part of the investability of the Kyrgyz Republic’s mining sector.

“Chaarat, for many people, has been off the radar. It’s a very small company today within the Aim sector. I do believe that there is a dearth of real quality midtier gold miners that have the opportunity to deliver the growth that Chaarat has got in its portfolio.

"The nice thing is that Chaarat is a company that is fairly undervalued in our opinion and for those that stay the journey with us, we believe that Chaarat will be a good place to be.

"If we can deliver on our growth ambitions, this should be a good story. Hopefully people who don’t know us, will start following us,” said Fraser

DISPUTE RESOLVED

When Tulkubash’s bankable feasibility study was put out in May last year, the plan was to kickstart the project in January this year. However, this coincided with the Kyrgyz government taking control of the Kumtor mine from Canada-based Centerra Resources.

The dispute between Centerra and the Kyrgyz Republic was a slow-burn issue. It had been around for many years until the resolution announced on April 4, which involves the Kyrgyz Republic taking over the long-term operation and ownership of the Kumtor mine in exchange for some of the shares it held at the corporate level in Centerra.

“The resolution of that dispute is an important step forward for us. Many of our financing partners were waiting for that resolution to be announced before they would re-engage on the funding and the financing of our projects in Kyrgyzstan,” said Fraser.

Completion of the financing of the Tulkubash project is now expected in the second half of this calendar year, which should give Chaarat the ability to pour first gold by probably the backend of 2024, early 2025, which is perfectly aligned to the company’s overall growth plans.

Tulkubash will provide 95 000 oz to 100 000 oz a year of gold equivalent for between five and ten years as the precursor to the main Kyzyltash, which will provide 300 000 oz of gold equivalent a year for 20 years.

“These will be very low cost and competitive ounces to add to our portfolio,” said Fraser, who believes Chaarat has the capability, experience and capacity to add more ounces to this portfolio.

He believes the share price is trading at a very big discount to its underlying asset value and that progressing the projects will certainly enable the company to create value for all stakeholders.

In the 12 months of 2021, Chaarat lifted its earnings before interest, taxes, depreciation and amortisation by 45%, reported cash on hand of $11.1-million and halved i...

LSE-listed Petra Diamonds has reported a 33% year-on-year increase in revenue to $140.6-million for the quarter ended March 31 – the third quarter of its 2022 financial year.

In an unaudited trading update released on April 20, Petra said the higher revenue was driven by strong prices achieved in the fourth tender in March, with like-for-like prices up 37.6% when compared with the third tender in December.

Revenue for the financial year-to-date (YTD) increased by 43% year-on-year to $405.4-million, driven by exceptional diamond sales contributing $83.3-million, coupled with the upward trend in diamond prices.

Notable for the third quarter was the sale of one exceptional diamond in the March quarter – a 157.88 ct Type IIa white diamond recovered at the Cullinan mine – for $5.5-million.

“Petra has benefitted from strong diamond prices during the quarter, underpinned by a strong operational, cost and safety performance. Although we anticipate some pullback in diamond prices from the elevated March tender levels as a result of the economic impact of the war in Ukraine, the structural shift in the diamond market continues to provide positive momentum.

“This, coupled with our operational improvements driving margin and cash generation, supports a positive outlook for the business with the potential for further reductions in our debt levels,” said Petra CE Richard Duffy.

Notwithstanding the revenue increase, carats sold were down 31% year-on-year for the March quarter and 16% for the YTD, given that there was only one sales tender in the quarter.

Expected sales volumes for the full year are anticipated to remain within guidance, with further tenders to be held in April and June.

Production for the March quarter increased by 18% to 830 456 ct, compared with the 704 498 ct produced for the same period last year, while YTD production increased by 7% to more than 2.6-million carats, compared with more than 2.4-million carats for the same period last year.

Petra attributed the increase in production to a resumption of production following a period of care and maintenance at the company’s Williamson mine, in Tanzania.

Additionally, the remedial steps taken at the Finsch mine, in the Northern Cape, following waste ingress during the second quarter of last year positively affected the quarterly comparison.

Mining Weekly Editor Martin Creamer talks about the need for South Africa to promote the use of fuel cell electric vehicles to ensure clean mobility in the heavy-duty vehicle segment; the potential size of the South African hydrogen sector; and a multiyear cobalt supply agreement between diversified miner Glencore and vehicle manufacturer General Motors.

The overall geopolitical situation is lending strong support to the hydrogen evolution, which in turn continues to drive the demand for platinum group metals (PGMs).

Hydrogen Europe and the European Clean Hydrogen Alliance are now calculating that 2030 will see the generation of 320 GW to 400 GW of green hydrogen, at least half of which is forecast to be brought about with the help of PGMs.

If, by 2030/2033, the world reaches the point of 6% of vehicles and many heavy-duty trucks being hydrogen-using fuel cell electric vehicles (FCEVs), the amount of platinum being consumed by the automotive sector will double.

PGMs and hydrogen have such unique chemical performance that many new applications are on the horizon.

The versatility of PGMs is already evident in electronics and their use in batteries is under scrutiny.

In South Africa, energy and chemicals giant Sasol is keen to get the green hydrogen economy going on a big scale, with FCEV mobility scheduled to be showcased in the next 12 to 18 months in partnership with Toyota.

Sasol’s first project will be to produce green hydrogen at its Sasolburg plant, using existing 60 MW electrolysers to make 3.5 t/d of green hydrogen for FCEV mobility and proving to big-fleet users that they have security of hydrogen supply.

Sasol’s sustainable aviation fuel (SAF) project, being carried out under the auspices of the German government, has an ambitious timeline of creating its first green hydrogen-biomass product by 2025 – another boost for platinum which features as a catalyst.

Sasol envisages that every major airport in the world will be able to have its own production facility, making jet fuel at the site of the market possible, and doing away with the jet fuel or SAF having to be transported all over the world.

Sasol is intent on co-creating the energy transition in South Africa through the bolstering of the green hydrogen economy, which is seen as being crucial owing to the positive manner in which it is able to contribute to a just energy transition.

While PGMs will continue to curb tailpipe emissions for some time to come, their stronger-for-longer ongoing traditional use will simultaneously overlap into their new major role of helping the world along the energy-transition path through decarbonisation.

In the years heading up to 2030, proton exchange membrane (PEM) electrolysers are expected by 2030 to have a 50% share of the electrolysis market, which will drive demand for platinum and iridium PGMs.

Hydrogen strategies already opening the way for large FCEVs will in time extend to small FCEVs.

These and many more points were made during this month’s 2022 PGMs Industry Day during a far-seeing webinar in which AP Ventures co-founding partner Kevin Eggers chaired a discussion covered by Mining Weekly, which also saw Heraeus Precious Metals executive VP new business development Dr Philipp Walter, Sasol senior manager sustainability Viran Pillay, Platinum Guild International Hong Kong CEO Huw Daniel, and World Platinum Investment Council (WPIC) CEO Paul Wilson taking part.

Venture capital fund manager AP Ventures has 23 portfolio companies, has investment from companies including Anglo American, Impala Platinum, and the Public Investment Corporation of South Africa, as well as nine others spread across the globe.

Questioned by Eggers on PGMs market development opportunities, Walter singled out hydrogen as the one most prominent right now. “This is really developing and, of course, this will have a positive impact not only platinum, but also iridium and ruthenium.

“Talking more as a chemist, platinum group metals and hydrogen belong together. They have a unique chemical performance and chemical potential. From this perspective, I think there will be more applications coming out also related to hydrogen. There's a lot going on in terms of startups and developments around ammonia. Ammonia synthesis under low pressure, ammonia splitting, and you're also talking about everything you do wit...

Coal miners Thungela Resources and Exxaro Resources have reported in separate statements that they remain in discussions with Transnet, through its Transnet Freight Rail (TFR) division, regarding the contractual terms of long-term coal transportation agreements.

TFR on April 8 notified coal export parties (CEPs) with which it has long-term coal transportation agreements that the factors previously communicated to the market regarding its inability to perform services at its stated system capacity – such as the ongoing legal proceedings relating to the irregular locomotive acquisition and maintenance contracts, as well as the rife vandalism on the coal line – continue and are beyond its reasonable control.

TFR believes these circumstances will continue to detract from its ability to perform for at least the next six months.

Thungela states that TFR has reiterated its commitment to continue providing rail services and has recently confirmed its commitment to work with the CEPs and the Richards Bay Coal Terminal (RBCT) to optimise and improve its performance.

The CEPs, including Thungela, are accordingly engaging actively with TFR to clarify the contractual position and ensure the stability of coal deliveries to RBCT to continue to take advantage of the current strong market demand for South African coal, the company says.

“Through these engagements, Transnet has confirmed its intent to conclude an addendum to the agreements which Transnet believes will assist it in addressing certain factors affecting its performance, but reaffirmed its commitment to the existing material commercial terms and it is therefore unlikely that these developments would have any material commercial impact on Thungela,” the company says.

With coal rail services and export sales continuing, notwithstanding the ongoing discussions between the CEPs and TFR, Thungela does not currently envisage this development to have a material impact on the group’s 2022 operational outlook.

Thungela says it continues to engage with TFR to clarify its contractual position.

Exxaro, meanwhile, says TFR had served Exxaro’s subsidiaries with letters stating that, owing to circumstances beyond TFR's reasonable control, it has been unable to perform a substantial part of the services it was contracted to.

Relying on certain force majeure provisions contained in the long-term rail transportation agreements, TFR notified that those agreements for the transportation of coal to the RBCT have terminated.

Exxaro says TFR has expressed the intention to finalise new five-year agreements with affected parties by June 30.

TFR indicated that, during this period, Exxaro's allocated capacity will remain in effect until a new agreement is concluded and that it will continue to render transport services to Exxaro in terms of its standard conditions of carriage.

After consultation with its legal advisers, Exxaro is of the view that the events relied upon by TFR do not constitute force majeure events, that the agreements did not terminate and TFR's reliance on any purported termination is invalid.

However, Exxaro and the other CEPs are engaging with TFR and other stakeholders to discuss this matter and to seek a mutually acceptable resolution, the company said.

Both Exxaro and TFR have expressed their intention to negotiate in good faith to address the issues of concern to TFR.

The potential impact on Exxaro cannot be determined until finalisation of the negotiations, which may result in amendments to the agreements.

THUNGELA SHARES

Meanwhile, the Public Investment Corporation (PIC) has again increased its holdings in Thungela to 11.22%.

This follows less than a week after having increased in shareholding in Thungela to 9.925% on April 8, from 8.033% previously.

The London- and Johannesburg-listed company is doing so amid half of its Scope 3 emissions relating to its iron-ore business.

About 77% of its Scope 3 emissions are from the steelmaking value chain. (Also watch attached Creamer Media video.)

Scope 3 emissions impact indirectly on a value chain, and are beyond the boundaries of a company’s Scope 1 and Scope 2 emissions.

The decarbonisation of steelmaking is, thus, key to Anglo’s reducing its Scope 3 emissions, which it is intent on halving through partnership and collaboration by 2040.

“We’ll continue to work with the steel industry towards achieving the 1.5°C pathway, which will reduce our Scope 3 emissions by around 80% by 2040, against the 2020 baseline,” Anglo CE Mark Cutifani said on Thursday during the company’s Sustainability Performance 2022 April Session covered by Mining Weekly.

The ecosystem approach Anglo used to deliver renewable energy to mines instead of a mine-by-mine approach will provide opportunities to connect the Scope 3 value chain participants and, therefore, directly impact on their emission profiles. (Also see attached graphic.)

The high-quality iron-ore in the Anglo portfolio suits clean and modern steelmaking. The quality helps to allow for a 20% to 25% reduction in carbon emissions in the steelmaking process, compared with a 58% reduction achieved from an iron-ore blend, for example, from other areas.

Anglo is working to improve iron-ore product qualities still further as it levers what it can directly control.

“Certainly, [there is] a very strong case for our niche position in iron-ore and certainly one that supports our high-margin delivery from the business as well. We also continue to work with our customers to advance technologies in these areas and others,” said Cutifani.

For example, Anglo’s 65% iron (Fe) iron-ore quality is being viewed against German company Salzgitter Flachstahl’s embarking on a big transformation programme to move away from steelmaking based on blast furnaces, towards steelmaking based on carbon efficient direct reduced iron or, DRI, pellet feed.

As part of this, Anglo is working with the company to study if its lump ore can be used in its process, and if so, how much.

In response to Barclays analyst Ian Rossouw comments regarding Anglo’s 2040 Scope 3 targets and the consequences of its iron-ore and metallurgical coal mine lives extending beyond 2040, Cutifani said what Anglo was trying to do with iron-ore, in particular, was is to position itself as a favoured supplier to green steel producers through the quality of the products it produces.

In his swansong sustainability presentation before passing on the baton to CE-designate Duncan Wanblad, Cutifani outlined the quality of the group’s iron-ore operations of Kumba Iron Ore in South Africa – where he referred to work being done by Bulk Commodities CEO Themba Mkhwanazi and current Kumba Iron Ore CEO Mpumi Zikalala – as well as to the quality of the iron-ore at Minas Rio, Anglo’s iron-ore operation in Brazil.

“At Minas Rio, we are at 67% Fe and attempts are being made to reduce silica and use technology to reduce other deleterious elements in the ore,” said Cutifani.

The difference between the 67% Fe Minas Rio product and a Pilbara 58% Fe product from Australia is about 25% to 30% in terms of Scope 3 emission reduction.

In the case of Kumba, whose product is about 64.5% Fe, with a bit more silica and other issues, the Scope 3 improvement potential is only 20%. Effort is also being made to make Kumba’s product more attractive to go into the green steel mix so that Anglo becomes part of the solution to 2040.

“What we want is to have the best iron-ore product so that it is improving and enhancing values for us and margins. If you look at the margins of Kumba and Minas Rio today, their improvement, compared to lower-grade alternatives, is significant, and that’s also driven a big improvement in our returns to shareholders, so it’s a virtuous circle and were going to keep on...

The Minerals Council South Africa says it is “deeply disappointing” that South Africa now ranks, for the first time, among the world’s ten least attractive mining destinations globally, as per the latest Fraser Institute Annual Survey of Mining Companies.

The council says it serves as a warning that the country is heading in the wrong direction when it comes to attracting investment in the resources sector.

The survey, which is sent to more than 2 000 exploration, development and other mining-related companies around the world, aims to assess how mineral endowments and public policy factors, such as taxation and regulatory uncertainty, affect exploration investment.

South Africa slipped sharply down the ranks when measured in the Investment Attractiveness Index (IAI), falling to seventy-fifth out of the 84 jurisdictions surveyed in 2021.

This compares with a position of 60 out of 77 countries in 2020 and a position of 40 out of 76 in 2019. South Africa ranks twelfth out of 15 African jurisdictions in the IAI.

The IAI is derived from combining a Best Practices Mineral Potential Index, which rates regions based on their geological attractiveness, and a Policy Perception Index – a composite index that measures the effects of government policy on attitudes toward exploration investment.

Respondents to the Fraser Institute’s survey have consistently indicated that about 40% of their investment decision is determined by policy factors and 60% by mineral potential.

The Minerals Council says the 2021 ranking of South Africa on the IAI is the worst since 2009, but admits that the country has been consistently in the bottom half of the rankings since then.

“It is worrying that the trend remains downward rather than stabilising or improving. We must revitalise our efforts to address the underlying challenges informing this trend,” states CEO Roger Baxter.

The backlog of more than 4 000 mining and prospecting rights, as well as mineral right transfer applications within the department, is of major concern to the Minerals Council, as is the slow progress to replace the failed South African Mineral Resources Administration, or Samrad, cadastral system with a modern, transparent, corruption-free online system.

“Both these issues are curtailing much-needed investment in exploration and the development of the mining sector,” Baxter notes.

He affirms that the council is working closely with officials in the Department of Mineral Resources and Energy, and the Presidency, to address the many challenges mining companies are facing.

The enactment by more governments of policies to enable greater hydrogen fuel cell mobility would be a massive boost for South Africa’s platinum group metals (PGMs) sector, Mining Weekly can today report.

Adoption of hydrogen fuel cell mobility has already been significantly enabled by the German government to the extent that hydrogen refuelling is no longer an issue, even for private cars travelling anywhere in Germany. (Also watch attached Creamer Media video.)

Given that the PGM mining industry is inextricably linked to the automotive industry, the direction taken by it is crucial for the South African economy.

Many countries have hydrogen strategies which have opened the way for large fuel-cell trucking and coming with that is an envisioned eventual logical extension of this to hydrogen cars, which would put the PGMs industry in a very good place.

To achieve this, adequate hydrogen refuelling station accessibility needs to be fostered by government policies.

Also needed is continued investment in green hydrogen fuel cell technology, which makes use of platinum and ruthenium PGMs, and proton exchange membrane electrolysers (PEM), which produce green hydrogen from renewable energy with the help of platinum and iridium PGMs.

These and many more points were driven home forcefully by Anglo American executive head market development Benny Oeyen, BASF senior VP global previous metal services Timothy Ingle and Umicore AG senior VP precious metals management Bernhard Fuchs during a during last week’s 2022 PGMs Industry Day.

Internal combustion engine (ICE) vehicles are the biggest users of PGMs, which serve as pollution-combatting catalysts in the exhaust systems of ICE vehicles.

But receiving the strongest policy support from governments are battery electric vehicles (BEVs) – even if the electricity they end up using is fossil-fuel based.

Needing much firmer government support, which would likely then be followed by greater original equipment manufacturer (OEM) take up, are fuel cell electric vehicles (FCEVs).

FCEVs that make use of green hydrogen guarantee emission-free mobility and environmentally friendly heavy-duty transport.

A sword hanging over the head of South Africa’s PGM mining industry is the ban under a variety of timeframes of ICEs and the announcements by OEMs of their plans to reduce ICE production over time, or even eliminate ICE investment altogether, and to focus on BEVs instead.

This is why South African Inc needs to shout out the benefits of FCEVs from the rooftops as the world’s sole provider of clean and green heavy-haul, long-distance transport – and to get going rapidly to demonstrate this on the proposed green hydrogen corridor from Limpopo, through Gauteng to Kwazulu-Natal.

Giving the South African PGMs industry some lucky breathing space is the overwhelming viewpoint that PGM-using ICE vehicles will be around across the world for many decades to come, and a mixture of lower-carbon ICE hybrid vehicles for even longer, which will keep up demand for palladium, rhodium, and platinum.

In the interim, South Africa Inc should put its foot flat on the green hydrogen production pedal using exclusively PEM electrolyser technology.

All mining companies with water flooded underground mines should be encouraged to turn those into hydropower plants that, with the help of solar and wind power, generate green hydrogen electricity for operational mobility as well as for nearby communities without power.

“Fuel cells are very important,” said Oeyen during the PGMs Industry Day covered by Mining Weekly.

“We talk a lot about how hydrogen will save the PGMs industry. That’s not true. What is true is that fuel cells are going to save the PGMs industry, because it is in fuel cells and PEM electrolysers that you have a lot of demand PGMs. Hydrogen by itself is just a tool, it’s an enabler for the deployment of fuel cells, which will be the catalyst for the acceleration of PGM demand,” said Oeyen.

“My question is how are fuel ...

Mining Weekly Editor Martin Creamer talks about a pipeline of renewable energy projects Nedbank clients plan to close this year; how full mining licence transparency is needed to revive exploration in South Africa; and the need for National Treasury to urgently incentivse mining exploration.