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Diversified miner Anglo American achieved a 2% increase in production for the third quarter, ended September 30, which CEO Mark Cutifani largely attributed to planned higher rough diamond production at its De Beers subsidiary, as well as increased production from the Minas-Rio iron-ore project, in Brazil, and improved plant performance at Kumba Iron Ore's operations, in South Africa.

Operating levels were also generally maintained at about 95% of normal capacity during the period.

"We are broadly on track to deliver our full-year production guidance across all products, while taking the opportunity to tighten up the guidance for diamonds, copper and iron-ore within our current range as we approach the end of the year,” Cutifani said on October 21.

Anglo’s copper operations, in Chile, meanwhile, continue to work hard on mitigating the risk of water availability owing to the challenges presented by the longest drought on record for the region, including through sourcing water that is not suitable for use elsewhere and further increasing water recycling.

Copper production decreased by 6% year-on-year to 156 500 t owing to planned plant maintenance at the Collahuasi mine.

Attributable production at Collahuasi decreased by 14% to 65 300 t owing to planned major plant maintenance.

Production from Los Bronces of 79 600 t was in line with production in the third quarter of 2020, as an increase in plant throughput was fully offset by planned lower grades and lower copper recovery.

Production from El Soldado increased by 7% to 11 600 t, which Anglo said reflected a "strong plant performance, partially offset by planned lower grades”.

The year-to-date average realised price of $4.34/lb, includes 171 661 t of copper that as at September 30 was provisionally priced at an average price of $4.13/lb.

Chile´s central zone continues to face challenging climate conditions with a continuation of the longest drought recorded, Anglo reiterated, lamenting that “these conditions are placing significant pressure on water availability and pose an ongoing risk to production at Los Bronces” in the fourth quarter of the year and into 2022.

The full-year production guidance is tightened to between 650 000 t and 660 000 t, compared with the previously guided 650 000 t to 680 000 t, owing to plant performance challenges at Los Bronces. Guidance is subject to water availability and the extent of any Covid-19 related disruption.

DIAMONDS

De Beers' rough diamond production increased by 28% year-on-year to 9.2-million carats in the third quarter, reflecting planned higher production to meet stronger demand for rough diamonds.

Production was mainly driven by the Jwaneng mine, in Botswana, and the Venetia mine, in South Africa, reflecting planned higher production in response to the ongoing consumer demand recovery led by the key US and China markets.

The production guidance for the full-year has been tightened to about 32-million carats, from the previous guidance of 32-million to 33-million carats, owing to continuing operational challenges, subject to the extent of any further Covid-19 related disruptions, the miner said.

PLATINUM GROUP METALS

Subsidiary Anglo American Platinum's (Amplats') own mined platinum group metals (PGMs) production decreased by 4% to 720 000 oz, mainly owing to a decrease of 12% at Mogalakwena from planned maintenance at the Mogalakwena North concentrator and lower-grade material.

Refined PGMs production increased by 39% to more than 1.4-million ounces, and reflects continued strong performance from the Anglo Converter Plant (ACP) Phase A unit following its successful start-up in November 2020.

The ACP Phase B rebuild is on schedule for completion in the fourth quarter of this year.

Sales volumes, meanwhile, increased by 54%, driven by higher refined production.

The year-to-date average realised basket price of $2 868/oz of PGMs reflects strong prices for rhodium and the minor metals, partly offset by higher-than-normal sales volumes...

The world will be unable to meet its zero-carbon targets without the introduction of green hydrogen solutions, says Plug Power chief strategy officer Sanjay Shrestha, at a time when the US has launched a programme to cut the cost of clean hydrogen by 80%.

Nasdaq-listed Plug Power, a pure play green hydrogen company with a commercially successful integrated product line, is building out North America’s first completely green hydrogen end-to-end supply chain network, coinciding with the cost target for clean hydrogen being set at ‘one dollar per one kilogram in one decade’ by the US Department of Energy. The level of $2/kg hits oil price parity and $1/kg attains coal price parity.

Shrestha, who was addressing the US company’s symposium covered by Mining Weekly, is building out the first green hydrogen network in the US and expanding rapidly into Europe, says Plug Power CEO Andy Marsh, who is advancing the kind of green hydrogen and hydrogen fuel cell ecosystem required to shift the world to a zero-carbon economy.

“A green hydrogen solution is a must if we want to meet zero-carbon targets and the Paris Accord by 2050. Furthermore, green hydrogen can help to accelerate this unfolding energy transition, displace diesel and help to decarbonise multiple industries including power, transportation, traditional energy as well as many industrial applications,” says Shrestha.

“The time for green hydrogen is now, and by the way, the cost of green hydrogen, even from our first plant in 2022, is expected to be substantially lower that what we’re paying for grey hydrogen in the market today,” he adds.

Proton exchange membrane (PEM) hydrogen fuel cells, which are catalysed by platinum group metals (PGMs), are electrochemical devices that convert the energy of a chemical reaction directly into electricity, with heat and water as by-products. Platinum and ruthenium PGMs, which are hosted overwhelmingly in South Africa, play large roles. Unlike batteries, hydrogen fuel cells never "run out", says the International Platinum Group Metals Association on its website.

Plug Power generates green hydrogen, produces and sells the electrolysers required, designs, manufactures and markets PEM hydrogen fuel cells that convert the green hydrogen into carbon-free electricity and has built 165 refuelling stations across America.

The green hydrogen it generates is involved in transportation, materials handling, stationary backup power, stationary power for microgrids and clean-sky electric flying applications.

“Green hydrogen is real and it’s ready now,” says Plug Power chief marketing officer Preeti Pande.

She outlined how the company uses wind, solar or other green generation technologies to store hydrogen in large volumes and to transport it to where it is needed and to convert it at the point of use into a useful form to match business needs.

“We’re working with companies like Amazon, Walmart and BMW, solving big problems sustainably. We’ve learnt that making this work requires an end-to-end solution and an obsessive focus on each customer’s needs. Major benefits are already being realised,” says Pande.

Snam CEO Marco Alverà says that green hydrogen will come down significantly in cost and that Snam and some of the world’s largest companies will present this at the COP26, with a strong commitment to deliver green hydrogen below $2/kg, which is around $50/MWh in the next five years, by 2026.

He says when this plan was presented to the US government, the Department of Energy studied it carefully and came up with the target of delivering green energy below $1/kg, which is about $25/MWh, before the end of the decade.

Fifty dollars per megawatt hour, or $2/kg, is oil price parity and $1/kg is coal price parity.

“In the US, 99% of trains are running on diesel. These can be very quickly switched to hydrogen. The same is true for India, where all the trains are still running on diesel.

“We firmly believe that the main role for hydrogen will be in hard-to-abate s...

Mining Weekly Editor Martin Creamer discusses the need for incentives for the listing of companies on the smaller end of the stock exchange; bringing in the private sector to clear excessive government backlogs; and Jupiter Mines's recent decisions relating to the board.

Global mining executives rank environment, social and governance (ESG), decarbonisation and licence to operate (LTO) as the top three risks and opportunities facing their businesses over the next 12 months, according to the latest EY 'Top 10 Business Risks and Opportunities for Mining and Metals in 2022' report.

The yearly study surveyed more than 200 global mining executives and shortlists the most significant risks shaping the industry.

“While many conversations in the market are currently focused around the energy transition and the road to decarbonisation, our survey respondents saw environmental and social issues as the number one risk.

"While this was initially surprising, we believe it is indicative of miners and stakeholders broadening their perspectives. Miners need to be able to demonstrate their contribution to a sustainable future if they are to access the rapidly growing pool of capital available for strong ESG performers,” says EY Africa energy and natural resources leader Wickus Botha.

Decarbonisation, as the second-biggest factor, has become a major disrupter in the sector, dominating many discussions and presenting both risks and opportunities.

“Our survey respondents have elevated this risk to second place for 2022, up from fourth last year. Decarbonisation needs to integrate into a company’s overarching strategy, rather than be addressed as a separate or distinct path, delegated to a discrete team,“ notes Botha.

LTO has lost the top spot, which it held for the past three years, but it is still seen as a top three risk. Miners that can demonstrate their societal value will strengthen relationships with stakeholders and be rewarded in the marketplace with lower costs of capital, better human capital engagement and, in the long run, improved market value.

“Interestingly, two new risks emerged this year – uncertain demand due to energy transition and post-Covid-19 markets at number six, and, at number nine, new business models that need to be considered to capture value amid volatility,” Botha adds.

He says that, while there were fears that the Covid-19 pandemic might slow global progress on sustainability measures, the opposite proved true.

“As stakeholders continue to hold miners accountable for environmental and social practices, purpose, long-term value and sustainability are no longer add-ons to business as usual – they are themselves business as usual. In such an uncertain and shifting environment, we are likely to see greater use of data science, scenario planning and data modelling to guide more intelligent decisions and create differentiation.”

The study also examined the push to develop and deploy new technology for a broader purpose, to further improve on-site health and safety, help miners respond to the challenge of transitioning to net zero and developing “greener” products, as well as an accelerated focus on ESG measures from capital markets.

The study highlighted that responding companies focused on operations during the Covid-19 pandemic but are planning to increase their investment in digital transformation and innovation to help them to diversify and differentiate.

SOCIAL & ENVIRONMENTAL

According to the study, the Covid-19 pandemic has focused particular attention on social inequalities, placing pressure on companies to go beyond their regulatory obligations and take responsibility for driving social equality in the regions in which they operate.

Biodiversity has yet to receive the same attention as other ESG topics, but momentum is building. With future mines set to be carbon neutral and sustainable, the majority of the sector’s environmental risk and liability will lie in closed legacy assets. Progressive closure planning can assist with these challenges.

“Miners that do more to help ensure the long-term, sustainable economic and social growth of the regions in which they operate can leave a positive legacy beyond the life of the mine,” Botha indicates.

DECARBONISATION STRATEGY

Over the ...

The court judgment that the Mining Charter is policy and not law goes a long way towards providing regulatory certainty, says NSDV mining law senior associate Muhammed Khan ­– but it is not the end of the road, he cautions in a 1 500-word analysis entitled The Great Mining Charter Debate.

Khan highlights how the submission that the 2018 Mining Charter is binding subordinate legislation has had the carpet pulled from under it by the full bench of the High Court of South Africa, Gauteng Division. Hoisted high instead was the finding that it is an instrument of policy.

Khan, who will be writing more articles as the issues develop, records the statement of the court that the word 'regulation' would have been used in Section 100 of the Mineral and Petroleum Resources Development Act (MPRDA) had the legislature intended the charter to constitute subordinate legislation – and not the word 'charter'.

Another over-reach was the use of the 2018 Mining Charter to repeal the previous charters and adopt a prescriptive approach by imposing sanctions for noncompliance.

The court stated that the Minister sought to change the interpretation held by all concerned since the commencement of the MPRDA and considered the way in which the original charter was developed as a clear illustration of how the charter under MPRDA’s Section 100 (2) was not published as law.

Under the same section, the court further concluded that the use of the words ‘developed’ and ‘can’ reinforced the policy-not-law contention and not treating it as such would offend against the doctrine of the separation of powers and would amount to a delegation of absolute legislative power generally vested in the legislature.

Kahn highlights the court’s criticism of the argument that the transformation objectives of the MPRDA cannot be achieved unless the 2018 Mining Charter is binding subordinate legislation, and its reasoning that this argument ignores the MPRDA’s inherent enforcement structure.

The upshot is that the charter, as an instrument of policy, does not empower law-making

Accordingly, the court granted the order sought by Minerals Council South Africa and reviewed and set aside several sections that make mining right holders susceptible to mining right suspension or cancellation.

Expanding on this judgment not being the end of the road, Khan stated in the document to Mining Weekly: “The Minister has several options available to him, including appealing the judgement to the Supreme Court of Appeal and/or including compliance with the 2018 Mining Charter as a term of new mining rights. An application for leave to appeal would have the effect of suspending the judgement unless the court, under exceptional circumstances, ordered otherwise.”

If compliance with the 2018 Mining Charter is included as a term of new mining rights, this inclusion, Khan stated, would likely constitute administrative action which could be subjected to judicial review.

The MPRDA could, he added, also be amended through the enactment of an amendment Bill to place an obligation on the holders of mining rights to comply with the 2018 Mining Charter.

“It is compliance with the 2018 Mining Charter, as amended by this judgement, that will be included as a term in new mining rights. Remember, that for the grant of new mining rights, the Minister must still be satisfied that the granting of such mining right will further the objects referred to in section 2(d) and (f) of the MPRDA in accordance with the charter contemplated in terms of section 100(2) of the MPRDA.

“Considering the various moving parts (the declaration that the 2018 Mining Charter is an instrument of policy and the effect of any potential appeal) the mining industry should still take cognizance of the 2018 Mining Charter, particularly in relation to the application for new mining rights,” Khan concluded.

A “flare up” in mining resource nationalisation from 2020, is set to continue this year and into 2022, reports financial risk management, solutions and insights firm Fitch Solutions Country Risk and Industry Research (Fitch Solutions).

Over the past 12 months, resource nationalism in top mining jurisdictions has flared up around the world, mostly in emerging markets – a trend it expects to continue over the coming few years, as underlying drivers of resource nationalism and government intervention will remain in play.

Fitch Solutions explains that resource nationalism can take several forms, including the renegotiation of existing mining contracts to get better terms (such as that currently taking place in the Democratic Republic of Congo, or DRC, and Mongolia) and an increase in taxes or royalties on the mining sector (such as in Chile, Peru and Russia).

Also, resource nationalism can be in the form of asset nationalisation (such as forced equity transfers) or the threat thereof (such as in Zambia, Mexico and Zimbabwe), in-country beneficiation (such as in Indonesia), or export restrictions.

From 2020 to present, Fitch Solutions has noticed a rise in resource nationalism or the risk thereof in an extensive and fast-rising number of countries, mainly in sub-Saharan African countries, including the DRC, Mali, Zimbabwe, South Africa and Guinea.

In addition, the firm also saw growth in resource nationalism in places like Latin America, including Mexico, Peru and Chile; the US; and in Europe and Asia, including in Russia, Indonesia and Mongolia.

NATIONALISM DRIVERS

According to Fitch Solutions, a number of factors will incentivise governments to consider intervening in the mining sector and tightening mining regulations – a number of which have been clearly accentuated in recent quarters, mostly by the Covid-19 pandemic.

The rally in mineral and metal prices in 2020/21 has revived the interest in the mining and metals sector and boosted potential tax and royalty returns for governments – a trend Fitch Solutions forecasts to remain elevated in 2022.

Further, improved prospects for green energy transition minerals (which include copper, nickel, lithium and cobalt, besides others), amid the ongoing acceleration in decarbonisation efforts at multiple levels, are resulting in a sharp rise in investment in new projects.

In turn, this is prompting governments to ensure their countries benefit from these trends, says Fitch Solutions.

Also, the firm says, increased economic/fiscal hardships, and rising social inequality in the wake of Covid-19, are providing strong incentives for a rise in government intervention in the mining sector.

Another key driver of resource nationalism is political risk linked to elections. In this regard, the recent election of left/social-leaning governments in the US and Peru for example, is a factor behind potential changes to mining regulations in these countries, says Fitch Solutions.

Sudden changes in governments, which has happened in some countries recently, also usually increase the risk of a change in regulation.

In this regard, the firm points out that, in Mali, two coups were effected in 2020 and 2021.

Another driver of mineral nationalism is contested campaigns, which serve to increase nationalism rhetoric ahead of elections to gain support. This, Fitch Solutions says, happened in Zambia in 2020/21 for example, when former President Edgar Lungu used nationalistic rhetoric ahead of the August 2021 elections.

While elections happen on a regular basis, their convergence with economic hardships and social tensions over rising inequalities pose an increased risk of resource nationalism, the firm states.

JSE-listed coal exporter Thungela Resources says that, following an initial recovery in the performance of Transnet Freight Rail (TFR) subsequent to the yearly maintenance shutdown in July, rail performance has continued to deteriorate in the second half of the year.

Thungela consequently implemented actions to mitigate the impact on its business. Third-party sales, which use the rail entitlement of Thungela, have been reduced from 926 000 t in the first half of the year to an anticipated 25 000 t for the second half of the year.

The group has also optimised its export equity sales mix, prioritising the railing of lower volumes of higher-margin products, recognising continued rail constraints, it adds.

Moreover, it notes that the coal industry has assisted TFR to implement improved security measures, which are expected to contribute to an improvement in rail performance.

This follows several instances of cable theft and related rail interruptions.

The coal industry continues to engage TFR on opportunities for further improvement.

Notwithstanding the actions already taken by Thungela and TFR, given the current and expected rail performance levels, some of its operations may become constrained as a result of reaching stockpile capacities from November.

Thungela says it continues to monitor rail performance and its potential impact on its operations and to explore further actions that could be required to mitigate such impacts.

Full-year export saleable production guidance is accordingly moderated to 14.8-million to 15.2-million tonnes, from the 15-million to 16-million tonnes previously guided.

Unless there is an improvement in rail performance, Thungela is expected to build additional export inventory stock levels of about 1.3-million tonnes during the period.

Thungela says it continues to work with the rest of the South African coal industry and TFR to improve the levels of infrastructure availability and performance.

Thungela’s share price on the JSE fell by more than 4% on Monday morning.

An incentive is needed for companies on the smaller end of the stock exchange, which is facing an existential crisis, said AmaranthCX director and owner Paul Miller on Monday.

Reacting to the groundswell of headlines about delistings and lack of listings on the Johannesburg Stock Exchange (JSE) in a Zoom interview with Mining Weekly, Miller pointed out that stock markets become successful as venues for primary capital raising when the small end of the market is incentivised. (Also watch attached Creamer Media video.)

Australia, for example, has recorded 63 new listings so far this year, while South Africa has had 20 delistings, with another nine scheduled for next year.

“We’re sleepwalking into a situation where the stock exchange will have less than 100 listed companies in 20 years. That is the trajectory and unless we make a change to something, that trajectory will continue,” said Miller.

“Our problem here is the structure of savings industry is anti-entrepreneurship, and until we address that, we will see a continuing decline in the number of smaller companies on the stock exchange. It will effectively become a market for secondary listings of foreign companies for the Top 40 and for listed products, exchange traded notes and exchange traded funds. It will no longer serve its societal purpose as a source of primary capital for growing and expanding companies, be they mining, technology or retail companies,” he said.

The JSE, which was created in Simmonds street in downturn Joburg in order to raise primary capital to build the gold mining industry, is no longer a source of primary capital and no policy makers seem to care.

“Look, we can't be blind to the general context and that is a business unfriendly State, negative economic growth, and an appallingly poorly managed and administrated minerals sector. That is the bigger picture, we can't escape that,” Miller said.

But savings reforms introduced have not only had very serious unintended consequences but were being so intensely accentuated that the small end of the stock exchange no longer stood a chance of attracting funds.

Less than a dozen institutions, all members of the Association of Savings and Investment in South Africa (ASISA), as will as the Public Investment Corporation of South Africa now control 90% of South Africa’s R9-trilion of savings.

ASISA members in particular are subject to rules that direct investment into the big end of the stock exchange, to the virtual exclusion of its small end.

To take it a step further, asset consultants who advise pension funds, use benchmarking and indices to choose, monitor and provide risk management services to asset managers. As a result, everything in the pension fund space has become very benchmark centric.

“That has also moved into wealth management for independent financial advisers and stockbrokers, where they are also creating constructive portfolios for high-net-worth individuals, for example.

“What that means is that any company that is not significant in one or other index is almost uninvestible. Of course, it’s always small companies that are underweight indices, by definition.

“So, we’ve seen this massive move into the big end of the stock exchange. We’ve also seen a huge concentration in the way assets are managed,” said Miller.

As a consequence, the big institutions have got very big and dominant, with two of the biggest poised to merge into an even bigger, more concentrated asset manager – moving it even further away from the mid-tier and smaller end of the stock exchange.

That public interest factor has not even been mentioned in the reporting on this upcoming merger. On the contrary, it is being done against the backdrop of asset managers being officially encouraged by National Treasury to get bigger and more concentrated

National Treasury is plainly not interested in stock exchanges being places where primary capital can be raised.

The background to the demise of the small end of the JSE, Miller said, wa...

The hydrogen fuel cell has an inexhaustible future as a means of maintaining the planet’s high standard of living, said Fortescue Metals Group chairperson Andrew Forrest during a global online symposium this week.

“Our little planet’s cooking, the world’s impatient and there’s any amount of capital, provided your projects are great,” said Forrest, who was in discussion with Plug Power CEO Andy Marsh.

Forrest described Fortescue Metals Group as a heavy carbon-emitting, heavy manufacturing and heavy industry company – “like the thousands of others out there which cause global warming. But that’s our opportunity – to make our company green and then to take on the fossil-fuel sector, which is even bigger and uglier and hairier than the big iron-ore and major miners of the world, which we took on 15 years ago.

“But we know how to do this. We’re going to produce green hydrogen, green ammonia, green electricity in proportion to them but, of course, ours won’t be polluting the planet,” said Forrest during the symposium covered by Mining Weekly.

Marsh questioned Forrest about why he thought green hydrogen and green ammonia were great solutions for the mining industry when many regarded them as pipedreams.

“It’s that miracle molecule,” said Forrest, referring to hydrogen.

“We invented the world’s first hydrogen fuel cell haul truck in three and a half months. You can come over and drive it around. At the same time my team were inventing that truck and changing the drive engines of these huge trucks to hydrogen fuel cells, they were also putting green ammonia into a ship’s engine and green ammonia into our train engines and seeing them run successfully up to nearly 100% green ammonia.

“You use green ammonia when you want slow revolutions, like the huge ships which go all over the world. They run between 60 and 100 revolutions per minute. Really slow, perfect for zero-pollution ammonia. The whole shipping world has to switch to it.

“Then, of course, with hydrogen, that’s what we can run our trucks on, our vehicles on. I said it’s a miracle molecule and wherever you’ve got mobility, or wherever you need to transform hydrogen to something else, like into ammonia and into fertilisers, into iron, into steel, you just can’t get a better molecule.

“But it’s got to be green. You’ve got real hydrogen and then you’ve got the fake hydrogen for environmental purposes. Fake is when you’ve got carbon in the supply chain. Real is when there’s no carbon in the supply chain, and that’s renewable electricity,” he said, pointing out that solar, wind, geothermal, hydro “and all sorts of other free renewable energy all over the world” are available as clean energy sources to ensure that the hydrogen involved is green hydrogen,” said Forrest.

Platinum group metals- (PGMs-) catalysed hydrogen fuel cells are electrochemical devices that convert the energy of a chemical reaction directly into electricity, with heat and water as by-products. Platinum and ruthenium PGMs, which are hosted overwhelmingly in South Africa, play large roles. Unlike batteries, they never "run out", says the International Platinum Group Metals Association on its website.

On his intentions to ship green ammonia around the world, Forrest said in response to Marsh that putting green ammonia into coal-fired power stations can right now halve emissions overnight using the most basic technology.

He said South Korean vehicle manufacturer Hyundai , which wants “green hydrogen for everyone, everywhere, for everything”, would make green hydrogen fuel cells available to all cars by 2027.

“We think that green ammonia and green hydrogen have such a huge future,” said Forrest.

Mining Weekly Editor Martin Creamer unpacks the need for South Africa to ramp up critical minerals exploration as the world decarbonises; Sibanye-Stillwater's underground pumped energy storage prefeasibility study; and concern that the country’s mining boom is papering over structural issues.