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A study of the characteristics, current commercial activity and potential benefits of transitioning various economic activities along the Limpopo to Johannesburg to Durban corridor to use green hydrogen has concluded that domestic demand is critical to accelerate the development and impact of the nascent hydrogen economy.

The Hydrogen Valley Feasibility Study aimed to accurately define the potential benefits of a progressive transition to using hydrogen along the N1/N3 corridor as a way to define concrete projects that can be implemented to create momentum.

The study did not include other parts of South Africa, but serves as an investigation on the requirements and potential of the hydrogen economy, energy and sustainability management company Engie impact director Vincenzo Giordano said on October 8. He was presenting the report's findings.

The corridor was divided into hubs that were defined in terms of industries and commercial activities present, potential areas of demand and potential production sites, as well as logistics and other considerations, to determine a realistic expectation for the short-, medium- and long-term development of the hydrogen economy along the corridor.

The study developed low- and high-demand scenarios for use by private and public sector stakeholders.

The total potential socioeconomic impact of transitioning areas of economic activity along this corridor to the hydrogen economy could add between $3.9-billion and $8.8-billion to gross domestic product by 2050, as well as create between 14 000 and 32 000 jobs and generate about $900-million a year in revenue.

However, some of these jobs include the preservation of jobs in industries at risk of becoming less competitive owing to demand for green products and the conversion of jobs in high-carbon sectors, such as fossil fuel industries, to low-carbon sectors, such as the hydrogen economy, Giordano said.

"The study concluded that the hubs along this corridor can serve as a starting point for the development of the hydrogen economy in South Africa. The study investigated the applications that are conducive to being switched to hydrogen in the medium term to 2030, as well as the production of hydrogen and, while a green premium remains, how close it was to competitiveness.

"We need to start developing green hydrogen to be ready for development. We also need regulatory and policy enablers. Crucially, we must have collaboration between the public and private sectors, and public-private partnerships are necessary to move into the implementation of this first phase of developing the hydrogen economy," he said.

The team assessed several pilot projects and shortlisted nine of those that were close to being cost-competitive in the market in the area, as well as for their potential to contribute to a just energy transition. The report investigated pilot projects involving buses in major urban areas being converted to run on hydrogen, hydrogen-fuelled mining trucks, the use of hydrogen in ports and port equipment and to power buildings, as well as inputs for industry, Giordano said.

"The volumes associated with these pilot projects amount to about 10 MW of installed hydrogen capacity, but the goal of all these projects is to lead to follow-up projects and a scaling up phase in which the use of hydrogen technologies can be expanded to other sectors to create momentum," he said.

Giordano emphasised that the hydrogen economy requires an ecosystem, as well as public and private actors to realise. The hub model echoes global developments that have seen about 30 hydrogen hubs established in 18 countries.

"No company can develop hydrogen applications alone; at least not during this starting phase of the energy transition. Hubs help to improve investment attractiveness through co-location of demand and supply, and associated economies of scale, and which can leverage shared infrastructure to make investments more secure. Sufficient diversity of offtakers helps to red...

Mining Weekly Editor Martin Creamer discusses fears that South Africa could miss out on another commodity boom; AmaranthCX director Paul Miller calling out private mining companies for not operating with public disclosure requirements; and mining investment being crucial for the South African economy.

When it comes to the future growth of platinum group metal (PGM) producers, some are covering their bases by diversifying into battery metals, while others are looking to benefit from the much-hyped hydrogen economy.

Impala Platinum CEO Nico Muller sees the company’s scope for growth as being more internal at first, focusing on strengthening its existing operations and remaining competitive in future markets.

The company’s longer-term growth plan involves greater local beneficiation, for which it is undertaking feasibility studies, and using cleaner sources of electricity.

Anglo American Platinum CEO Natascha Viljoen, however, admits that the transition happening in mobility brings uncertainty, since PGMs are not used in the production of electric vehicles or its batteries, with the exception being hybrids.

However, she is optimistic about PGMs demand in the hydrogen space, as demand for hydrogen in decarbonisation strategies is increasing. She mentions that more than $70-billion worth of hydrogen development projects have been pledged by governments across the world and that there are plans for 196 MW of electrolyser installations by 2030.

Viljoen believes there is an opportunity for coexistence between battery electric vehicles, hybrids and fuel cell vehicles and that it is not a question of either or.

She adds that the PGMs industry has taken market development into its own hands before and says it can do it again – it simply has to develop alternative markets for PGMs to grow demand.

Sibanye-Stillwater CEO Neal Froneman says although the company is aggressively expanding on its battery metals strategy, it will not turn its back on PGMs.

Rather, he explains that the company’s entry into the battery metals sector has been a natural evolution for its merger and acquisition value creation strategy, and makes business sense.

Sibanye has, for years, been planning its strategic diversification approach and is “not simply responding to trends of the moment”.

In five years’ time, Sibanye aims to have a third of its earnings generated by gold, a third by energy metals and a third by PGMs.

Meanwhile, Royal Bafokeng Platinum CEO Steve Phiri says PGMs is “certainly not” a sunset industry and that incoming threats should be seen as opportunities.

He maintains that catalytic converter demand will remain as long as internal combustion engine vehicles are on the market, which will still be the case for years to come.

He says the PGMs industry has always been able to regenerate itself through the ups and downs of commodity cycles and market conditions.

The company will, for the foreseeable future, remain focused on being a pure-play PGMs producer.

Platinum producers spoke during the Joburg Indaba hosted on October 6.

With environmental, social and governance (ESG) aspects often related to solving issues in an area or country, thinking is starting to shift away from managing the Covid-19 crisis and vaccine delivery to the just energy transition.

A panel discussion on ESG hosted during the first day of the Joburg Indaba on October 6 highlighted the variety of views stakeholders in the mining sector have on the mining industry’s contribution to a just energy transition.

The Minerals Council South Africa recognised that energy is a critical element of every aspect of human development, but also acknowledged that a just energy transition should take into account the socioeconomic implications of changes, taking care to leave no one behind.

The council says pragmatism must prevail during a transition to minimise disruptions to reliable electricity supply.

Minerals Council CEO Roger Baxter and president Nolitha Fakude stated that the council would like to see policy measures to accelerate the adoption of green hydrogen and renewable energy, as well as support for the development of new clean coal technologies.

Shareholder activism organisation Just Share executive director Tracey Davies, meanwhile, said no one knows yet whether a just transition is possible and that could only be determined by trying to achieve a just transition.

She deemed the biggest barrier to South Africa achieving a just energy transition as the balancing act between energy security and clean energy.

“Our over-reliance on coal will put us in a worse off space in terms of development in the long term.

“Tackling poverty, inequality and climate change are all interlinked. It is the developmental opportunity of our lifetimes to embrace an energy transition across all industries of the economy, not just in coal.”

Speaking to other ESG issues coming to the fore in recent times, Davies explained further that inclusivity and change in society could never be achieved if leadership itself was not inclusive and representative of the broader population.

She said the general 30% women representatives at board level-type targets were still too low and not reflective of the society we live in.

She pointed out that a major problem in the mining industry, holding it back from achieving ESG targets, was culture. Davies explained that it was one thing to attract more women into the mining environment, but another entirely to respect and value their input once they were there.

“Unfortunately, as the crescendo of ESG increases, so does ‘greenwashing’ whereby companies’ ESG efforts only look good on paper, without real change being effected,” she noted.

She suggested that one solution would be for ESG targets to be linked to the remuneration of people making these commitments and holding them accountable for reaching those commitments.

On the energy transition topic, Fakude mentioned that there was not a single solution to reaching net zero carbon emissions by 2050, but rather multiple pathways – some of which are in the mining industry’s control and others necessitating partnerships, including with funders.

“We have to accept that, over time, we will continue to have coal feeding the baseload energy grid, but we must continue looking at viable decarbonisation technologies.”

On the inclusivity topic, Fakude said a just energy transition also involved socioeconomic issues, such as inclusion of women and black people at all levels of decision-making and operations within a company.

She believed Covid-19 highlighted the fragility of South African society, with spiking youth unemployment and civil unrest amid the pandemic showing the urgency for businesses to consider inclusion when undertaking transitions.

Gold Fields CEO Chris Griffith said the company certainly saw a pathway to carbon neutrality, in terms of Scope 1 and 2 emissions by 2050 and had actively been advancing its renewable energy plans – in power generation and mine vehicles – to that end.

He explained that a just energy transition ...

South Africa’s mining industry is at its lowest level of exploration investment since democracy began in 1994, the Joburg Indaba heard on Thursday.

“Never have we spent less – and this is a pity because significant promises were made about an exploration plan for the country,” Joburg Indaba chairperson Bernard Swanepoel said at the ninth edition of the online event, which attracted 600 day-two attendees. (Also watch attached Creamer Media video.)

The “significant promises” referred to by Swanepoel were those made at last year’s eighth Indaba by Department of Mineral Resources and Energy (DMRE) director-general Advocate Thabo Mokena, who promised that the DMRE would have an exploration strategy in place by early January, which did not happen.

A slide projected on to attendee computer screens showed that investment in exploration in 1994 was four times the R1-billion of 2020.

The slide showed that the very same mining industry that has just saved South Africa from economic collapse is curtailing its own future by failing to replace the resources that it is depleting.

“We saved our economy. We paid three times more than the normal taxes. We contributed single-handedly to a huge balance-of-payments surplus for the country, but we’re also an industry that is not investing in exploration,” said Swanepoel.

“We used to be good at making promises of plans and bad at implementation but I’m not even sure if we are good at making plans anymore,” added Swanepoel at the event covered by Mining Weekly.

Speaking on exploration at last year’s Joburg Indaba, Mokoena told the Indaba that part of the DMRE’s comprehensive strategy would be:

the strengthening of administrative capacity to ensure transparency; and

a halving of the turnaround times for the processing of mining, prospecting and environmental licences.

“Beyond this, we’ll finalise work with the development finance institutions and the private sector in the development of a comprehensive programme to support junior miners and ensure that prospecting rights are actively converted into mining operations and shared value,” Mokoena added at the time.

Speaking on exploration at this year’s Joburg Indaba, Mineral Resources and Energy Minister Gwede Mantashe said that the exploration strategy that had been compiled by the DMRE for tabling before the Cabinet, would aim to secure at least 5% of the global share of exploration expenditure in the next 20 years.

Mantashe said the government itself would be investing in exploration, working with the Council for Geoscience.

“There’s a lot of unknown deposits in the country. Let’s explore and mine and grow the mining industry,” the Minister said.

Interventions would include creating a conducive environment, addressing regulatory bottlenecks and updating the country’s geoscience data.

“Our next step will be in the North West and thereafter in the Northern Cape,” Mantashe added.

The Minister also drew attention to the number of mines on care and maintenance and pointed to the need for the industry to give consideration to reopening these in he light of increased metal and mineral demand and South Africa's need to create employment.

STATE OF APPLICATIONS BACKLOG

In March this year, the DMRE told Parliament that it had 5 326 applications in backlog, which it promised to have fixed by this month. (See attached graphic.)

While Mantashe was addressing the Joburg Indaba, an online call was made for the DMRE to publish the current state of its backlog, about which Mantashe did not give specific detail when questioned.

Diversified industrial group Thyssenkrupp Uhde South Africa and German uranium mining company Wismut have been appointed to execute a prefeasibility study for a renewable underground pumped hydroelectric energy storage (Ruphes) project on a specific but undisclosed site owned by a South African mining company.

Thyssenkrupp Uhde South Africa is collaborating with international specialist companies to facilitate mine repurposing and has already signed a cooperation agreement with Wismut.

The international cooperation has now been expanded through an agreement with Pumped Hydro Storage Sweden to join the project.

With the increase in renewable energy generation, there is an increased need for energy storage, and Ruphes, coupled with solar and wind power, “can reliably provide green energy when it is needed”, Thyssenkrupp said.

Repurposing depleted gold mines for Ruphes enables short construction schedules and significantly reduced costs. The main reason for going this route, the companies explain, is that gold mining has already created the underground water storage reservoirs that are usually the mostly costly component of pumped hydro plants.

These reservoirs just have to be adapted to their new purpose.

This is where Pumped Hydro Storage Sweden gets involved, as it is currently developing a 2 MW or 8 MWh underground pumped energy storage project in an abandoned iron mine in Aland, Finland.

The project has the support of both the European Commission and the Swedish Energy Agency, and they are planning to commission the project in December 2023.

This project demonstrates the reduced construction schedules and costs associated with using mine tunnels for pumped energy storage as did a similar project at the Kidston gold mine, in Australia.

JSE-listed platinum group metals (PGMs) miner Anglo American Platinum (Amplats) has selected the Pele Green Energy – EDF Renewables South Africa consortium as the preferred supplier to build a 100 MW solar photovoltaic (PV) plant at its Mogalakwena mine, in Limpopo.

Pele Green Energy develops, owns, procures, builds and operates renewable energy power projects, while EDF Renewables South Africa has global expertise in renewable energy technologies such as wind, solar PV and battery storage.

Construction of the PV plant will start in the fourth quarter of 2022 and it is expected to be operational by the end of 2023. It forms part of Amplats' goal to achieve carbon neutrality across its operations by 2040.

Amplats has included a 10% free carry, which has no requirement to contribute equity capital for the shares, equity ownership into the consortium that will build, own and operate the facility for the life of the plant. This is designed to result in dividends attributable directly to the company's host communities over time, it said in an October 6 statement.

“Our selection of Pele Green Energy – EDF Renewables South Africa gives us further momentum towards our environmental goals set out in our Sustainable Mining Plan, designed specifically to drive business efficiency, resilience and agility,” said Amplats CEO Natascha Viljoen.

“We are particularly excited about the prospect of using plentiful solar energy to produce green hydrogen at Mogalakwena, as part of a broader project to convert our mine haul trucks to run on zero-emission hydrogen fuel cells.

“Not only will this reduce our environmental footprint, but these technologies rely on PGMs, which are an essential component in proton-exchange membrane (PEM) fuel cells and PEM hydrogen electrolysers. In turn, this could stimulate additional future demand for PGMs as these technologies roll-out,” she highlighted.

“[The consortium is] excited to progress this project in the renewable energy industry, while creating lasting social impact. We look forward to being part of Amplats' significant carbon neutrality strategy,” Pele Green Energy MD Gqi Raoleka said on behalf of the consortium.

A much more enabling environment is needed to ensure that South Africa does not miss out on yet another commodity boom, the Joburg Indaba heard on Wednesday.

“We know that we’ve missed at least one commodity boom,” Foskor chairperson, Industrial Development Corporation director and founding AngloGold Ashanti CEO Bobby Godsell recalled during the opening session of the ninth Joburg Indaba covered by Mining Weekly.

“We should be poised to fully take advantage of a boom now. We’ve got to be candid and honest that mineral deposits deplete over time. but beyond what geology does to us, what have we done to ourselves?” Godsell asked his panel made up of PwC Africa CEO Dion Shango, Minerals Council South Africa president Nolitha Fakude and Impala Platinum independent nonexecutive director and former Cabinet Minister Dr Sydney Mufamadi, during the 700-audience online event, chaired by mining stalwart Bernard Swanepoel.

“Are we going to miss this next boom. There’s a serious demand-led commodity boom. We’re a supplier. Are we going to miss it?” Swanepoel reiterated, in directing his question to Shango, whose PwC this week stated in its thirteenth edition of 'SA Mine 2021' that the extent to which South Africa could benefit from the current demand growth was dependent on the country’s ability to address bottlenecks in supply.

“Certainly for me, it depends on the degree to which mining, as an industry, can make tangible progress in building better trust with government,” said Shango.

“Bobby referenced earlier that we have missed booms before, so it is not impossible. But certainly, building better trust with government should result in a more amenable policy setting ­– and a much more enabling environment will be critical, in order for us to not miss that boom. For me, that is what lies at the heart of it,” added Shango.

Mufamadi, who was South Africa’s Minister of Safety and Security from 1994 to 1999 and Minister of Provincial and Local Government from 1999 to 2008, commented that it was the responsibility of the mining industry to engage government “to facilitate each other to a higher level of understanding of the challenges that we face as a country. We should not throw in the towel. We have to invest in serious engagement.

Mufamadi, who is also chairperson of the Zimplats platinum operation in Zimbabwe, revealed how Zimplats had been in discussion with the government of Zimbabwe, in part because it had some growth ambitions to present.

“Without having to strain to convince them about their need to relook the incentives that are currently in place, the Zimbabwe government itself started saying that it wanted to incentivise our growth ambitions because it could see the contribution that they would make to the Zimbabwe economy.

“Unprompted, they really started coming up with ideas that improved incentives, not only for us but also for industry-wide application. It is our responsibility to engage government,” Mufamadi reiterated.

Fakude outlined four issues that had probably prevented the South African mining industry from being able to unlock the huge opportunity that comes from mining being an economic catalyst.

The first is the need for infrastructure such as railways, roads and ports being up to scratch to ensure that the mining industry can get its goods to market.

The second is the slowing down of exploration to unlock the trillion dollars worth of resources locked in the ground.

The third is regulatory delay, which slows down the rate of investment, and the fourth is the perception that South Africa’s regulatory framework is unpredictable.

Members of the International Council on Mining and Metals (ICMM) have committed to a goal of net zero Scope 1 and 2 greenhouse-gas emissions by 2050 or sooner, in line with the ambitions of the Paris Agreement.

This landmark commitment was made in an open letter signed by the CEOs of ICMM company members.

ICMM CEO Rohitesh Dhawan on October 5 said that, as the suppliers of the minerals and metals that are critical to decarbonisation and sustainable development, “[the industry] has a particular responsibility to minimise the impact of operations on the environment”.

Speaking with one voice, representing about one-third of the global mining and metals industry, emissions reductions at a significant scale are to be expected.

“ICMM members have and will continue to set meaningful short and/or medium-term targets to build clear pathways to achieving this goal, while also accelerating action on addressing Scope 3 emissions and enhancing disclosure,” Dhawan said.

The ICMM also encouraged other mining and metals companies, suppliers and customers to decarbonise commodity value chains so that climate action can be collectively accelerated in the wider industry.

Although individual decarbonisation targets, in some cases, go beyond the ICMM’s collective commitment, the commitment from ICMM member companies represents a joint ambition.

“The rate and nature of the ultimate decline in emissions will vary across the different commodities and geographies represented by our diverse membership. Yet our approach to individually setting and meeting targets will be consistent and include the following, no later than the end of 2023, where these do not already exist,” said Dhawan.

These commitments are additional to and have been incorporated into an update of the ICMM Climate Change Position Statement, which had several pre-existing commitments on performance and disclosure.

Action on climate change is an integral part of the ICMM’s Mining Principles, representing the comprehensive commitment to a responsible mining and metals industry.

MINERS' RESPONSE

In separate statements on October 5, miners Barrick Gold, Gold Fields and PJSC Polyus endorsed the ICMM's collective action on climate change.

"Reducing emissions to counter the causes of climate change requires strong collective action by the mining industry," said Barrick president and CE Mark Bristow.

He added that the collective commitment "represented an integrated approach that struck the right balance between environmental, social and economic needs".

Barrick is a member of the ICMM and its Climate Change Advisory Group.

Barrick already has a clear scientifically based emissions reduction roadmap which targets a 30% cut by 2030 against its 2018 baseline and a net-zero outcome by 2050, in line with the ICMM’s targets.

The company’s group sustainability executive Grant Beringer said a series of carbon-reducing initiatives was already being implemented across Barrick’s global operations.

At Nevada Gold Mines (NGM), which is operated and majority-owned by Barrick, reducing initiatives include projects such as the construction of a new solar power plant and the conversion of the TS power plant from coal to natural gas. These projects will support NGM’s transition from coal power to a dual energy solution which will reduce the complex’s carbon emissions by as much as 50%.

Gold Fields CEO Chris Griffith, meanwhile, said the collective commitment was critical as "climate change is the defining societal issue of our time".

"As humankind we must, therefore, act collectively and decisively to turn around the global warming trajectory, which is currently well in excess of 2 ˚C, before it’s too late,” he said.

Gold Fields will continue to invest in large-scale renewable energy projects at its operations, as it has done at Agnew and Granny Smith, in Australia, as well as the projects it has under way at Gruyere, in Australia, at South Deep, in South Africa, and at its Salares Norte project, in Chile.

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Investment in the mining industry is crucial to ensure its continued contribution to the South African economy, says PwC in its thirteenth edition of SA Mine 2021, a series of publications that highlights trends in the South African mining industry.

In a year of doom and gloom on so many fronts, the mining sector delivered a sterling performance with value delivered to all stakeholders, PwC Africa energy, utilities and resources leader Andries Rossouw stated. (Also watch attached Creamer Media video.)

PwC mining division partner Marcia Mokone stated that in order to prepare the workforce for future roles and to upskill employees with the skills and competencies they needed to stay relevant, upskilling and learning and development within mines needed to be carefully rethought with rapid technology adoption in mind.

Net profit grew to R274-billion, which represents a 285% increase, because of the increased commodity prices and improved production after mines largely returned to pre-Covid production levels.

As global supply and demand jostled to find their way back to pre-pandemic levels, demand and therefore prices were the outright winner, Rossouw said.

With record rand prices for gold, the platinum group metals (PGMs) basket, iron-ore and more recently, coal, it was no surprise that the industry’s financial performance exceeded expectations on most fronts, he added.

The global low-carbon energy and Fourth Industrial Revolution agendas would result in increased demand for a number of commodities, with global constraints in the supply of these increasing prices and the need for investment in supply.

Stakeholders often refer to the need for a just transition when faced with massive demand shifts away from fossil fuels. Globally though, the pace of the transition, he said, was likely to be limited by the availability of resources needed for the transition. Understanding the supply constraints would be key to mapping a realistic transition for the future.

“In South Africa, we stand to benefit from the demand growth. Whether South Africa and other resource-rich countries will benefit to the full extent will depend on their ability to address bottlenecks in supply,” Rossouw said in the presentation covered by Mining Weekly.

“There is an obvious need to invest in the right skills, infrastructure, energy and water and, in general, creating an enabling environment for exploration, mine development and production,” he said.

“Realising the full potential benefit of our resources and creating long-term sustainable outcomes will depend on our ability to mine cost competitively and to integrate various value chains profitably.

“The excellent financial performance resulted in mining companies being in a very strong financial position. Debt has largely been repaid and returns to shareholders reached record rand levels for many companies. The fiscus benefited from increased direct and indirect taxes and mining royalties to the extent that it could support ongoing socioeconomic support during the pandemic.

The remaining free cash flow and available cash resources leave mining companies with interesting capital allocation decisions.

The growth in the mining industry confirms the resilient nature of the sector and the opportunities that exist in rebuilding the South African economy, PwC stated in its overview.

The South African economy started rebounding in the third quarter of 2020 (July–September) coinciding with the easing of Covid-19 lockdown restrictions.

All industries recorded an increase in economic activity compared with the second quarter of 2020. Mining was the strongest contributor to growth among all sectors, recording 271% growth in the third quarter compared to the second quarter.

This growth was attributable to an increase in the production of PGMs, iron-ore, gold, manganese ore and diamonds, as well as strong commodity prices.

The latest gross domestic product numbers show that the mining sector has once again recovered, record...