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The Fraser Institute’s Annual Survey of Mining Companies for 2021 finds that Zimbabwe now ranks as the least attractive jurisdiction in the world for investment.

Other African countries scoring low on the survey’s Investment Attractiveness Index (IAI) are the Democratic Republic of Congo (DRC), Mali and South Africa.

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.

This year’s survey provides an evaluation of 84 jurisdictions.

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 (PPI) – 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.

The companies that participated in the survey reported exploration spending of $2.51-billion in 2021.

Compared with the 2020 survey’s IAI, some African countries’ scores dropped dramatically, with the DRC’s score having dropped from 58.12 in 2020 to 29.67 in 2021; Botswana’s from 81.48 in 2020 to 48.61 in 2021; Mali’s from 76.27 in 2020 to 33.05 in 2021; South Africa’s from 56.33 in 2020 to 37.88 in 2021; and Zimbabwe’s from 49.52 in 2020 to 26.55 in 2021.

“While geologic and economic evaluations are always requirements for exploration, in today’s globally competitive economy where mining companies may be examining properties located on different continents, a region’s policy climate has taken on increased importance in attracting and winning investment,” Fraser states.

This implies that many African countries’ immense mineral potential is not enough to save them a better spot on the IAI, and they are severely lacking either stable mining regimes, competitive taxation or political certainty, a combination of these attributes or all of them, it adds.

The median score for Africa on the IAI showed a decrease of almost nine points in 2021. With a median score of 51.87, Africa is the second least attractive region for mining investment, when accounting for both mineral potential and policy, according to the survey respondents.

All African jurisdictions, barring Namibia, Tanzania and Mauritania, saw declines in their policy scores.

Botswana lost its ranking as the top African jurisdiction in terms of policy, ranking thirty-first in 2021, compared with fifteenth in 2020.

Botswana’s significant decrease in its PPI score – a 22% drop – reflects increased concerns over the uncertainty in respect of protected areas, its political stability, its labour regulations and employment conditions and its tax regime.

South Africa in 2021 ranked in the IAI’s bottom ten at seventy-fifth, down from the position of sixtieth in 2020 and a far cry from the fortieth position it enjoyed in 2019.

Morocco, which did not feature in 2020’s survey, was the highest ranked jurisdiction in Africa in 2021, and the second-highest ranked jurisdiction globally based on policy.

The Fraser Institute explains that Mali’s PPI drop from thirty-seventh in 2020 to sixty-sixth in 2021, related to concerns over the country’s regulatory duplication and inconsistencies, its socioeconomic agreement and community development conditions and its legal system.

This while the survey respondents noted fewer concerns over Tanzania’s regulatory duplication and inconsistencies, uncertainty on administration of existing regulations and uncertainty on disputed land claims. The country ranked sixty-third in the 2021 survey, compared with seventy-second in the 2020 survey.

The Zimbabwean issues relate to administration, interpretation and enforcement of existing regulations, its legal system, its taxation regime, its infrastruc...

Trade unions the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU) have agreed to intensify strike action against precious metals miner Sibanye-Stillwater in a dispute over wage increases at the company’s South African gold mines.

Additional protest marches will be held to “garner public support and increase pressure on Sibanye”, the unions say.

The unions convened a meeting, in Johannesburg, on April 11 to discuss the ongoing protected strike action at Sibanye’s gold operations, which entered its second month in the first week of April.

Their joint planned protest action includes protest marches to the JSE in Sandton and the Union Buildings in Pretoria, as well as the head offices of prominent media houses, including the South African Broadcasting Corporation (SABC).

The unions intend to protest outside the SABC offices because of its alleged “business-biased” reporting and lack of coverage of the strike thus far.

In addition, the NUM and AMCU have also agreed to give notice of a secondary strike at Sibanye’s platinum operations at Rustenburg and Marikana, where the unions says wage talks are currently under way. With this strike action, NUM and AMCU say about 35 000 platinum miners will down tools.

However, Sibanye-Stillwater spokesperson James Wellstead tells Mining Weekly wage negotiations at its South African platinum operations have not even started, and are only due to start in June/July “as per the norm”.

“We have not received notice of a secondary strike at our South African platinum group metals operations,” he states.

The presidents and national office bearers of the NUM and AMCU have also mandated NUM president Daniel Balepile and AMCU president Joseph Mathunjwa to request the urgent intervention of President Cyril Ramaphosa to resolve the current labour dispute with Sibanye.

The NUM and AMCU state that their about 30 000-member strike has been peaceful and disciplined thus far.

SIBANYE’S OFFER

Sibanye is standing firm in its wage increase offer of February whereby category four to eight underground workers will receive an R800 increase in monthly wages, increasing by this amount for three consecutive years.

This increase comprises a monthly increase of R700 and a R100 increase in living out allowances.

For miners, artisans and officials, Sibanye offered to increase wages by 5% a year, for three years from 2021 to 2023.

However, the NUM and AMCU want a R1 000 increase a month for category four to eight underground workers for the three-year period.

Diversified mining and marketing company Glencore and General Motors (GM) on Tuesday announced a multi-year sourcing agreement in which Glencore will supply GM with cobalt from its Murrin Murrin operation in Australia.

The agreement represents initial strategic collaboration between the two companies regarding a metal that provides electric vehicle (EV) batteries with energy density and longevity.

This comes against the backdrop of GM’s EV supply chain strategy prioritising environmental sustainability and climate change mitigation.

Cobalt processed from Australia will be used in GM’s Ultium battery cathodes, which will power EVs such as the Chevrolet Silverado, GMC Hummer, and Cadillac LYRIQ.

The agreement builds on a commitment both companies share to create strong, sustainable and resilient supply chains through collective industry and multi-stakeholder platforms, Glencore stated in a release to Mining Weekly.

Both Glencore and GM are members of the Responsible Minerals Initiative, and Glencore’s Murrin Murrin operation is conformant with the Responsible Minerals Assurance Process.

“We are delighted to announce this collaboration and support General Motors in delivering its electric vehicle strategy,” Glencore US cobalt marketer and trader Ash Lazenby stated.

“Future-facing commodities like cobalt play a pivotal role in decarbonising energy consumption and the electric vehicle revolution. Glencore is already a leading producer, recycler and supplier of these commodities, which underpin our own ambition of achieving net-zero total emissions by 2050,” Lazenby added.

GM and its suppliers are building an EV ecosystem that is focused on sourcing critical raw materials in a secure, sustainable manner, GM VP global purchasing and supply chain Jeff Morrison stated.

“Importantly, given the critical role of EVs in reducing the carbon footprint of the transportation sector, this agreement is aligned with our approach to responsible sourcing and supply chain management,” Morrison added.

Cobalt, a metal that makes up only 0.001% of the earth’s crust, is known for its heat-resistant properties and is added to lithium-ion battery cathodes to improve energy density and battery longevity.

By the end of 2025, GM plans to have capacity to build one-million EVs in North America, and has announced a series of actions to create a new and more secure EV supply chain.

Projects targeting key EV materials and components include:

cathode active material with Posco Chemical. GM and Posco are building a new facility in Quebec, Canada, as part of their joint venture to produce cathode active material for GM’s Ultium batteries;

lithium with controlled thermal resources to secure lithium produced by the first stage of its Hell’s Kitchen Project in California;

rare earth materials with GE, to develop a rare earth value chain;

alloy flakes with MP Materials, who will establish the first North American processing site for alloy flakes. The company will then expand into magnet manufacturing around 2025 at its new production facility in Fort Worth, Texas; and

permanent magnets with large permanent magnet producer VAC, which will establish a North American footprint to support GM’s magnet requirements starting in 2024, including locally sourced raw materials and finished magnet production.

While Africa is blessed with great natural sun and wind resources, it has about 600-million people living without access to electricity, which is one of the biggest impediments to the continent’s economic growth.

Renewable energy is available to put an end to this impediment, as it is able to provide large-scale electricity access in a decentralised, low risk, modular and quick-to-deploy manner. It does not require economies of scale.

Renewables provide an “energy for all” opportunity, plus entry into the far-reaching fields of green hydrogen and green ammonia, which are poised to decarbonise heavy transport and major industries.

Solid risk-adjusted returns are already being achieved – with societal returns being significantly greater.

Nedbank Corporate & Investment Banking (CIB) group managing executive Anél Bosman made these and many other points during a Zoom interview with Engineering News & Mining Weekly, which has, over the years, observed the positive role that the bank has been playing in helping to fund South Africa’s energy transition.

In fact, Nedbank CIB has thus far funded 42 of the 92 large independent power producer procurement programme projects in mainly the Eastern Cape, Western and Northern Cape.

The megawattage of these projects totals a considerable 3 446 MW, with Nedbank providing R33-billion worth of funding for them. A further R1-billion in funding also went into financially underpinning 75 embedded generation projects of under 1 MW each.

Currently, the bank is working with clients who are planning to close – in 2022 – many of the projects that are positioned within what is described as "a strong pipeline of projects" that are all bigger than 1 MW. (Also watch attached Creamer Media video.)

“In addition to addressing climate change, and the imperatives around that, renewables are democratising the energy sector, and giving us the opportunity to have energy for all, because we can do many, many small projects,” said Bosman, who elaborated that, in the South African context, renewables are driving a significant amount of long-term investment “with domestic and international capital – and that is so positive for us”.

Regarding the outlook for green hydrogen and green ammonia development, Bosman added: “We are tracking various projects with a view to supporting them in the future and we are very excited by this opportunity.”

Are there adequate sources of funding to support a rapid transition from coal to green energy in the South African context?

There are many investors who want to participate in renewable energy projects, and from a Nedbank perspective, we have significant appetite and credit limits to continue to be a key supporter of this energy transition. We have seen the corporate sector applying their balance sheets to the transition as well, primarily through entering into the long-term power purchase agreements for captive renewable projects. So, there is further support for this transition. What is more difficult is securing and sourcing long-term funding for the investment to enable the infrastructure such as transmission, and this is key to actually support the renewable energy programme.

What criteria are applied when decisions are taken to fund green energy projects?

It's obviously a long process and we work with our clients’ sponsors as well as the offtakers. We start with our energy and sustainability and other policies that we need to look at. But then there are also a few other important considerations to determine the bankability of these projects. The one is the experience and the financial standing of the sponsor that we partner with. Then obviously, it's the credit rating of the offtaker and in some of these programmes, the government actually guarantees the offtake agreement. Then also the experience and the credit rating of the engineering, procurement and construction contractor, after the project has been built, the operator and maintenance contractor. We need to use proven tec...

Energy and chemicals company Sasol senior sustainability manager Viran Pillay has reiterated that the group already has the technology to produce green hydrogen, which will form a key part of its strategy to transitioning from being the second-largest greenhouse-gas emitter in South Africa to net-zero by 2050.

Speaking at the 2022 PGMs Industry Day, in Johannesburg, on April 6, Pillay said Sasol had full logistics trains in place to support the production of green hydrogen.

He said Sasol’s strategy was to collaborate with others to co-create the hydrogen economy in South Africa as part of the just transition away from fossil fuels.

He explained that Sasol’s first approach was to use existing assets to manufacture the hydrogen, such as electrolyser units and ammonia plants. The hydrogen manufactured this way would be aimed at servicing local demand.

The second approach, which would come later down the line, was to build greenfield projects dedicated to green hydrogen manufacture for export.

Pillay said the timing of the implementation of these approaches was difficult to pinpoint currently because it depended on numerous factors, such as electrolyser costs and energy transmission infrastructure requirements.

Moreover, he said the right enabling policy and regulation frameworks needed to be developed, which was of critical importance.

Moreover, further investment was required to scale up production and improve efficiencies to reduce production costs.

“Green hydrogen is expensive today. We’re going to need an offtaker who will come in as an earlier adopter and pay premiums for these products so that companies like Sasol can make more investments and put green hydrogen into the market,” he said.

Sasol’s first green hydrogen production would be using existing 60 MW electrolysers to create 3.5 t/d of green hydrogen for the local market.

An offshoot of this would be a hydrogen mobility project, which Pillay said would involve putting a green hydrogen fuel into a vehicle and showcasing its viability and encourage investment.

“We expect this demo to take place within the next 12 to 18 months,” he said.

He said Sasol had also launched a company to license its proprietary hydrogen technology around the globe.

“Sasol has technology that the world can use,” he said.

Mobility in mining is perfectly suited to kickstarting the domestic hydrogen adoption process, according to Minerals Council South Africa CEO Roger Baxter, who drew attention during the PGMs Industry Day conference to several mining companies that had already played a leadership role in the hydrogen field.

All the options pointed to the hydrogen economy being an “incredibly exciting opportunity” for the mining industry to continue on its journey towards:

reducing the carbon intensity of its production processes;

lowering the particulate emissions from particularly its large-scale diesel vehicles;

helping to change the face of large-scale train and shipping mobility; and

to play a major role in helping the ongoing industrialisation of South Africa.

“If we can fabricate domestically and develop the intellectual property domestically and then obviously export it, it also can play a very significant role domestically,” he said. (Also watch attached Creamer Media video.)

The government departments involved in the conversation, he said, included the departments of Trade, Industry and Competition, Mineral Resources and Energy, Science and Innovation and Public Enterprises.

He highlighted the fleet of hydrogen-fuel-cell-powered forklifts already in operation at Impala Platinum’s refinery in Springs and Anglo American Platinum’s 300 t articulated dump truck, powered by a hydrogen fuel cell with a lithium-ion battery buffer, at an advanced stage of development at the Mogalakwena platinum group metals mine in Limpopo.

In his view, Anglo’s hydrogen-powered dump truck was on its way to being a big-kit global mobility game-changer, not only applicable to large mine trucks but also coming back into rail, shipping and other forms of bulk transport.

Mobility was already a considerable area of focus in discussions at the International Council of Mining and Metals and the impacts from it have the potential to cross into other sectors.

“We think it’s going to be a big demand driver over time on our platinum sector and that’s why it’s one of the components that we’ve been pushing and we’re focusing on developing a set of ideas on what the next practical steps are that we’ll be taking back into the next meeting of our hydrogen leadership forum taking place in June.

“Then we’re going to be looking at how we forge those partnerships to see how we can develop scale and how we take the whole process forward. I think government, as the chief enabler, is going to be a critical component of this entire process,” said Baxter.

“I think we are focused on the right sort of issues and now we are also starting to see some of the right enablers coming through on the renewable energy side, with a dedicated focus by government on unlocking our investment on the renewable energy side,” he said.

South Africa had some catching up to do with the Australians and the Chileans.

“We are going to get this convergence around energy security, reducing our carbon footprint, exporting the opportunity of the hydrogen economy, making sure that it is linked to our significant platinum resource and reserve endowment, and creating interesting opportunities for investment in platinum, as we go forward,” Baxter said.

On the need to tap into the renewable energy space, he spoke of “seeing how we can massively scale up that renewable energy capability”.

“We have to ensure that we have sufficient water in place, and there are some interesting debates around the fact that South Africa is a water-scarce country and where we are going to get the water from but just remember that we are producing about 80 megalitres to 100 megalitres of water out of deep-level gold mines in the Wits basin alone, which could be an interesting opportunity in itself.

“Let’s look at this holistically in terms of what some of our opportunities are. We need to have the infrastructure in place, which includes power networks which would often have to be viewed in clusters in the Northern Cape or in the Western C...

Mining Weekly Editor Martin Creamer unpacks SFA Oxford’s Stephen Forrest's belief that hydrogen is the key to long-term use of platinum; former President Kgalema Motlanthe's statement that the process to appoint public-service managers should be reformed; and Castillo Copper's argument for copper potential in Zambia with its latest survey.

Minerals Council South Africa CEO Roger Baxter has said South Africa’s hydrogen sector has the potential to be three times larger than the country’s iron-ore industry.

Speaking at the 2022 PGMs Industry Day, in Johannesburg, on April 6, he said this would only be achievable if the country were to “get things right and exploit the opportunity as ‘South Africa Inc’ and focus on the business of making this a real business proposition for the country”.

According to the Minerals Council, South Africa’s iron-ore industry was worth about R86.5-billion in terms of total sales, comprised of exports and local sales, in 2020. This made the iron-ore industry the third-largest in the country, beating out the gold sector by about R129-million. Only the coal sector at about R130.5-billion and the platinum group metals sector at about R190.4-billion were larger.

Baxter’s comments were reflective of the findings presented to the Minerals Council by research consultancy Singular.

Baxter said Singular’s research revealed what the hydrogen economy could look like for South Africa, and highlighted what needed to be done to showcase the value proposition and then foster discussions on the way forward, with the Minerals Council to play a leadership role in driving the agenda.

“Our view is that collaborative partnerships of the willing are going to take us forward a lot faster than the current pace,” he said.

This coalition of the willing would be driven by the private sector, in particular, with Baxter saying he expected to start seeing this trend emerging as more large industrial players worked together.

BUILDING BLOCKS

He said the opportunity for hydrogen investment was ripe because South Africa had some “fantastic building blocks”.

“We already have significant scale. Grey hydrogen production is taking place. [Energy and chemicals company] Sasol accounts for about 2% of global total grey hydrogen production through its coal-to-liquids and gas-to-liquids processes,” he pointed out.

Further, the country already had a significant endowment of renewable energy resources, which was perhaps three times less expensive than in countries such as Japan and Germany, for example.

“We do have significant industrial capability and private sector capability, and we also have a significant private sector drive in terms of understanding what we need to do to get the hydrogen economy going,” he said.

MINERALS COUNCIL ROLE

Baxter said the Minerals Council was at the early stages of developing its key action points for its own hydrogen strategy, which he said would have a number of different components to it.

He added that an internal hydrogen “champion” had been appointed – Minerals Council modernisation and safety senior executive Sietse Van Der Woude – who would be tasked with leading progress on the issue.

Baxter also said the terms of reference were being approved by the Minerals Council board for the establishment of a hydrogen leadership forum.

“I'm pleased to say that, last week, we had our inaugural meeting of the African leadership forum within the Minerals Council, and we've also been linked up with the Energy Council of South Africa,” he said, adding that discussions had also been had with Sasol CEO Fleetwood Grobler about how to partner up and take the ideas for the hydrogen economy forward.

Baxter said discussions between the Minerals Council and Mineral Resources and Energy Minister Gwede Mantashe had highlighted that there needed to be ‘smart tape’ in place, not red tape, when dealing with the hydrogen economy.

“Government should work with us in partnership as our chief enabler – not our a chief red-taper. It’s going to be a critical component of this entire process,” he concluded.

Mineral Resources and Energy Minister Gwede Mantashe told delegates at the 2022 PGMs Industry Day, in Johannesburg, on April 6, that the roll-out of a state-of-the-art online central cadastral system – which the mining and exploration industry has been begging for over the past decade – was one of the Department of Mineral Resources and Energy's (DMRE’s) “biggest nightmares”.

He blamed the ongoing lack of implementation of a mineral rights cadastre on the sluggishness of the legal system.

“I gave the responsibility [of the cadastral system] to a lawyer, who has moved very slowly on it,” he said.

South Africa’s mineral rights are currently managed through the South African Mineral Resources Administration System (Samrad), which has been called dysfunctional and has been blamed for discouraging investment in South Africa’s mining industry and encouraging corruption owing to its opacity.

“I must admit that we need [a mineral rights cadastre]. It is urgent. If we don’t move on it, it is not going to happen. I hope that somebody who is technically astute will be able to take it over and do it [and] make it happen,” he said.

A cadastral system would reduce human inputs by incorporating automated processes, thereby significantly enhancing the reliability and transparency of the mineral regulatory system in South Africa.

By creating a system that applies to the entire mining life cycle, mining cadastres provide a tool by which governments may regulate the industry effectively, as well as monitor and regulate it through checks, balances and automated record keeping.

Several other African countries, including Botswana and Mozambique, have already implemented cadastral systems for managing mineral rights.

A cadastral system would log all properties in the country, specifying who is permitted where, for which commodity, where a right’s borders are and the expiry date of those rights. A minerals cadastre would list available mining or prospecting rights, properties currently under a mining or prospecting right and the expiry of currently held rights and ownership thereof.

However, what pundits have said would make minerals cadastres particularly useful for the mining industry, particularly the junior mining and prospecting sector, is that they would also contain all historical prospecting data generated by pervious exploration parties.

“I don’t sleep when I think of it because it makes the industry look very mediocre,” Mantashe lamented.

This came after he said in his speech that the DMRE was “ready to support measures that will boost international investment and ultimately South Africa's Economic Reconstruction and Recovery Plan”.

To build a capable State, the way public-service managers are appointed should be reformed, says former President Kgalema Motlanthe.

By doing so, the country would be assured of selecting the best available talent, added Motlanthe, who was speaking to Centre for Development and Enterprise executive director Ann Bernstein in a webinar covered by Mining Weekly.

The former President of the Republic of South Africa for eight months until the general election of 2009 said that proper statecraft placed emphasis on experts being engaged to conduct interviews when public-service managers are appointed.

Currently, if a director-general (DG) vacancy arises, the line function Minister invites two colleagues from Cabinet, and the three, together with a DG from another department, then constitute themselves into an interviewing panel.

The post will have been advertised, but that is as far as transparency goes. Thereafter, everything else is not transparent and not rigorous, he said.

The recommendation of the statecraft expert he quoted was that the President should delegate his authority to the Public Service Commission, which should not act as an interviewing panel but rather put together experts and practitioners in the fields concerned to conduct the interviews and make recommendations.

“If you don't, the Ministers may not even have a sense of whether a well-certificated candidate is fit for purpose. You need experts and practitioners in the field to conduct the interview,” he emphasised.

DEPARTMENT OF SCIENCE AND INNOVATION

By way of illustration, Motlanthe singled out South Africa’s Department of Science and Innovation as the best department in government.

“It’s because the director-general and all the senior managers have been there over the years. It's the Ministers who come and go, and not the other way around,” he said. As a result, the Department of Science and Innovation retained valuable institutional memory and the requisite expertise. “It's always been like that,” he added.

In all the other departments, there is a high turnover of senior managers, from DGs down. “Every other day, they leave, and Ministers want to appoint new people, and that's what is being misunderstood and misconstrued as cadre deployment,” said Motlanthe, who served as ANC secretary general for ten years before being elected ANC deputy president in 2007.

“It's not cadre deployment. That's something else. It’s just the wrong way of exercising the authority of appointing senior personnel,” said Motlanthe, who now leads his own foundation, and serves as chair of several ANC committees.

Bernstein: So, in short, you would be saying that the reason we had such inappropriate people heading up the State-owned enterprises throughout most of the 2010s, was because of inappropriate appointment processes, and that it had nothing really to do with ANC deployment?

Motlanthe: It had absolutely nothing to do with ANC deployment. The ANC was already captured.

He said unqualified people had been thrown into the deep end, where they were highly indebted to those who appointed them, and thus failed to take up principled positions.