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The Glencore-Merafe Chrome Venture is exploring renewable energy projects to mitigate power shortages and power costs, Merafe Resources CEO Zanele Matlala said on Monday, when the Johannesburg Stock Exchange-listed company elevated its dividend declarations for 2023 to a total of R1 050-million, well up on the R625-million of 2022.

In addition, Merafe FD Ditabe Chocho reported a 114% year-on-year upward leap in chrome ore revenue to R2 222-million as well as a 1% year-on-year ferrochrome revenue increase to R6 885-million. (Also watch attached Creamer Media video.)

Through its wholly-owned Merafe Ferrochrome subsidiary, Merafe has a 20.5% participation in the earnings of the Glencore-Merafe Chrome Venture in which Glencore Operations South Africa has a 79.5% participation.

Regarding 2024 venture-level opportunities, Matlala cited the development of green energy solutions as one of them, along with the implementation of the negotiated pricing agreement (NPA) with State power utility Eskom and national energy regulator Nersa.

However, already at an advanced stage of consideration are alternative technologies for producing electricity from off-gas generated as part of ferrochrome production process, as well as a combination of solar and wind projects that include on-site behind-the-meter projects as well as off-site wheeling projects.

Being finalised are commercial structures and associated risk allocation on the renewable energy project negotiations with the first 100 MW off-site solar projects heading for financial close in the first half of this year.

"We've got co-generation at some of our operations but there are new, more efficient technologies and we're pursuing the use of gas as a continuous process enhancement in terms of generating electricity," Glencore Alloys CEO Japie Fullard highlighted in response to Mining Weekly.

"We've already pulled the execution rigger at one of our operations in terms of behind-the-meter, so we've got a very good model already in place," said Fullard.

At the same time, the venture is also are mulling independent power producer (IPP) and power purchase agreement (PPA) options.

"The third initiative is our IPP versus PPA and in that regard, we're very close to signing our first bankable PPA solution. But in the meantime we're also continuously looking at other and more potential solutions out there.

"By doing that, it allows us then to wheel. A PPA is where there's, let say, a plant being built in the Northern Cape and then you wheel it, so it's a virtual wheeling agreement and all those agreements with the authorities are already in place."

While no price differentiation for green ferrochrome and green chrome is currently in sight, the carbon abatement cross-border C-band mechanism is, Fullard said, being pushed quite hard through Europe.

It is through that mechanism that price differentiation is expected and until cross-border tariffs are enforced, price differentiation is seen as unlikely.

Questions are coming through, however, about how the ferrochrome is being produced, and the clear decarbonisation pathway, with set targets, in place is providing the answer.

Using 2019 levels as a base, a 15% reduction of total scope 1,2 and 3 emissions is targeted for 2026, a 25% reduction of total emissions for 2030, a 50% reduction by 2035, and net zero by 2050.

On potential reversion to green hydrogen to process the ferrochrome accompanied by the use of the PGMs now being produced in-house, Fuller said a commercialised green hydrogen example would need to be in place for others to seriously consider such a solution.

"Also, the PGMs area in which we are playing is small compared with the bigger PGM players. We have various offtake agreements, we don't convert our PGM concentrate into metal and we don't see that currently as a focus area. Our clear focus is on solutions that are already workable, which are solar and wind...

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A major new fuel cell thrust in North America is enlivening the outlook for platinum and helping the world advance further along the road to net zero.

Emphasising that the advancement of the hydrogen economy can significantly move the needle against climate change, North American green mobility company Ballard is setting out to invest $160-million - net of government grants - to build a new manufacturing facility that will have the production capacity equivalent of three gigawatts of fuel cells a year.

The proton exchange membrane (PEM) fuel cell products developer and manufacturer is setting out to be able to produce eight-million membrane electrode assemblies (MEAs), eight-million bipolar plates, 20 000 fuel cell stacks, and up to 20 000 fuel cell engines a year.

Future phases are expected to further increase production scaling and capacity expansion with much lower capital requirements.

Expected government grants will support the construction and build-out of the integrated fuel cell production gigafactory of the zero-emission PEM fuel cells that enable the clean and green electrification of mobility in the form of buses, trucks, trains, marine vessels, and stationary power. PEM fuel cells are catalysed by platinum and demand for platinum from stationary fuel cells and electrolysers is set to rise by more than 120%, according to the calculations of the World Platinum Investment Council.

Ballard Power Systems has announced that it has received government notification that its applications for two grants totalling $40-million, which are under a clean hydrogen electrolysis, manufacturing, and recycling programme have been selected and recommended for negotiation of financial awards.

Of the total $40-million worth of government grants, $30-million relates to advanced PEM MEAs and automated stack assembly, and $10-million to a next-generation flexible graphite bipolar plate manufacturing line.

These government grants have been awarded to implement provisions of a legal infrastructure framework, which provides for the award of $750-million for clean hydrogen electrolysis, manufacturing and recycling.

Ballard has also applied for additional funding under other government funding programmes, which is helping to enable cost-competitive solutions at scale.

"With an increasingly constructive policy environment and growing customer interest, it is critical to invest in this innovative manufacturing line," Ballard chief transformation officer Dr Lee Sweetland commented.

"We've been working hard to develop next-generation, automated production processes for MEAs, bipolar plates, and stack assembly to meet expected future market demand, while significantly driving down the cost of fuel cell engines," Sweetland added.

HYDROGEN ECONOMY DISCUSSION

Mining Weekly can report that at this year's Hydrogen Economy Discussion in Johannesburg on April 11, green hydrogen is expected to be shown as an exceptionally far-reaching economic opportunity for platinum, with the potential demand for platinum group metals (PGMs) from PEM electrolysers and fuel cells being highlighted.

Gradually, demand for PGMs from PEM electrolysers and fuel cell electric vehicles is expected to become a meaningful component of global PGMs demand.

POWER OF COLLABORATION

For the benefit of future generations, the people of the world are duty bound to collaborate to establish an holistic approach to decarbonisation, where PGMs and green hydrogen have the potential to play the most holistic role when compared with all other options.

This week on Second Take, Mining Weekly Editor Martin Creamer talks about he South African gold producer that’s going public through a business combination with a US group; Elemental Energy on a major mission to build hydrogen power systems in developing countries; and a new ticket to ride for the flagging mining sector.

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Group wind power generation last year increased by 8% and the Lephalale solar power project is on its way to being operational in the first quarter of next year, Exxaro CE Dr Nombasa Tsengwa highlighted during the company's presentation of double-dividend 2023 results.

The increased wind performance resulted in 727 GWh of high-margin of green electricity being generated into the market at a high earnings before interest tax depreciation and amortisation (Ebitda) margin - and, were it not for a fault that occurred on the distribution network of State-owned power utility Eskom, there would have been 15 GWh more.

The 2023 Ebitda margin or the energy business was 80% for the second consecutive year, emphasising the stability of the renewable energy business.

Additional good news on the climate change mitigation front is that the 68 MW Lephalale solar power project under construction is poised to provide Exxaro's Grootegeluk coal mine with 176 GWh/y of green energy in the first quarter of 2025 - earlier than the operational date reported by Mining Weekly in a previous report.

Regarding wind energy, Exxaro FD Riaan Koppeschaar pointed out that the project financing of R4.3-billion for the Cennergi wind farms - which will be fully settled in 2031 and which have no recourse to the Exxaro balance sheet - are hedged through interest rate swops at an effective interest rate of 12.8%.

Koppeschaar also noted that hedge accounting is also applied to the Lephalale solar project, which ensures limited volatility on the profit-and-loss account.

The empowered coal, energy, and ferrous-linked company declared a final dividend of R10.10 a share, which is roughly R3.4-billion, and drew loud applause when it announced a special dividend of R5.72 a share, which is about R2-billion as well. Exxaro's shareholder distribution has totalled more than R45-billion over five years.

Exxaro reported its second highest Ebitda performance of R13.4-billion for the financial year ended December 31, despite lower coal export prices and reduced domestic and export sales volumes of coal. Coal revenue decreased 18% to R37-million and coal Ebitda decreased by 36%.

"We remain committed to our sustainable growth and impact strategy as we transition towards becoming a more diversified business," Tsengwa said. (Also watch attached Creamer Media video.)

One of Exxaro's strategic priorities is to grow its energy business and become carbon neutral by 2050, while integrating environmental social governance (ESG).

"We continue to benchmark above our peers on global ESG best practice," Tsengwa revealed.

The R1.6-billion Lephalale solar photovoltaic power plant will provide Exxaro with a 27% reduction in Scope 2 emissions, carbon intensity has been reduced by 20% and a memorandum of understanding has been signed with the Council of Geosciences to explore carbon capture usage and storage to mitigate difficult-to-abate carbon emissions.

'WONDERFUL MARKET'

During the media briefing, Exxaro Energy MD Leon Groenewald provided additional insight into the renewables business in response to Mining Weekly's questions.

Regarding the Lephalale solar power, he said: "Our aim is to be operational in the first quarter of next year and it will help us, firstly for us as a business, to make some decent money, but also saving some 27% of Scope 2 emissions, and then making a healthy dent in the Eskom monthly account.

"We think the renewables market is quite healthy currently, both for organic and inorganic opportunities, and we are pursuing both," he said, amid the current request for information (RFI) environment.

"We're building a pipeline to participate in the RFIs that are being issued and we are in the market and awaiting feedback on some of these processes, so we're quite bullish.

"On the merger and acquisition front, we're active in most of data rooms, and the moment you're in a data room, the confidentiali...

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Since the new leadership at State rail enterprise Transnet has began engaging with South Africa's mining industry, the level of transparency has been "much, much improved", according to African Rainbow Minerals (ARM) Ferrous CE André Joubert.

Joubert, who was speaking during an analyst question session covered by Mining Weekly, described the industry as being "very active" in engaging with Transnet on rail transportation of iron-ore and manganese ores.

Noting the stance taken by Kumba Iron Ore to adjust its production to lower available rail capacity, Integral Asset Management CIO Bruce Williamson asked ARM about the stance that Assmang would be taking. (Also watch attached Creamer Media video.)

Including the railing of manganese in his answer, Joubert described the new Transnet leadership as almost opening its soul to the industry and recounted how the State rail enterprise had allowed producers to collectively do an independent technical assessment of the rail infrastructure.

The independent technical assessment, he said, had revealed that the state of the rail network had deteriorated to a point where it was going to take a lot of effort and money to get it back to nameplate capacity

This had resulted in the industry collectively working very closely with Transnet with various programmes being implemented.

"Based on that, you are looking at about 87% to 88% of nameplate capacity and we did adjust our rail volume to that.

"We definitely see for the next three to five years that we will be working at that system. Of course, we pray that it will be quicker than that but we can't base our strategy on hope.

"There is going to be more time out so that we can have long-term sustainable improvements on the iron-ore line.

"On the manganese side, we invested quite a lot of capital in our Black Rock mine to produce 4.5-million tons per annum.

"When this year started, we planned for close to four-million tons and we said that the portion that Transnet was not going to do would be transported by road.

"We started off doing that but with the prices dropping, it because very evident that road transport is not profitable and we took the decision to stop the road transport.

"Road haul does not make sense for us so therefore every ton previously road-hauled might as be left underground and expenditure be delayed until such time as Transnet get their act together, and again, this decision was taken collectively.

"There are a lot of projects happening. If you look again, we took a realistic view that the next to year's we'll rail 3.4-million tons of manganese and then we'll push that up to 3.7-million tons and then to four-million tons.

"Our mine is set up for that, we can do that, but for now we have to look at repurposing our mine and setting out to manage the grade.

"That's our strategy and we are marrying that strategy exactly with the information that we have from Transnet. So, for us, road hauling is done only if there is a serious emergency and we need to fill a ship," Joubert explained.

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Dr Patrice Motsepe, the founder and chairperson of diversified mining company African Rainbow Minerals (ARM), has expressed confidence in the direction being taken by South Africa's State transport enterprise Transnet.

The executive head of the Johannesburg Stock Exchange-listed ARM is also confident in the direction he believes that State electricity utility Eskom will take.

"I'm confident that the right things are being done with Transnet and I'm confident that the right things will be done with Eskom," Motsepe emphasised during question time at the ARM's latest presentation of dividend-yielding half-year financial results, covered by Mining Weekly. (Also watch attached Creamer Media video.)

"We're pleased with Transnet's progress, and Eskom is crucial for our business as well, and we are hoping for an Eskom that, in the not too distant future, succeeds in providing the cheapest electricity, which will be good for industry.

"But one other important point is that Eskom is crucial for South Africa's poor people and it's critically important that all of us work together to protect Eskom, and to make sure that Eskom is a world-class electricity company. But, in my view, the most important thing is that it serves the poor, who need electricity that is as cheap and as reliable as possible," said Motsepe.

Regarding the emergence of independent power producers (IPPs) and their generation of mainly renewable electricity, he added:

"The issue of the IPPs is in relation to the technology that has been developing which will have an impact on the competitiveness of utilities such as Eskom.

"But the bottom line is that we all have to work together and make sure than Eskom is a competitive provider of electricity and the single most important issue for me in relation to Eskom is the poor. We should hope that Eskom should provide cheaper electricity for the benefit of the poor.

"South Africans are compassionate people and you cannot have a successful mining industry without an improvement in the living conditions of poor people.

"We've got to clearly understand that if electricity is expensive, it has an impact on our capacity to create jobs, it has an impact on the competitiveness of the mining industry.

"Our focus, as a country, has to be that we will only succeed if poor, unemployed South Africans also have a future. You cannot have rich people and rich companies living side-by-side with poor people who are unemployed.

"All of us only succeed when poor people and unemployed people have a future. We have a long-term duty and we are not judged by what we say but on how the unemployed, the poor, are impacted by what we do.

"Many of the mining companies are retrenching because their businesses are under stress and I've got no doubt that every single one of those mining companies is looking at what they have to do in the context of their long-term commitment to their employees and to the country.

"We sometimes do the most incomprehensible and inexplicable things and again, in the context of Eskom and Transnet, we have been doing the wrong things.

"We now have to do the right things and I'm confident that the right things are being done with Transnet and I'm confident that the right things will also be done with Eskom," Motsepe emphasised.

ARM's wide-ranging contribution to the development and upliftment of poor rural and urban communities in South Africa includes educating students from these communities.

ARM also sponsors an endowment that will be invested in perpetuity to support research in the Faculty of Engineering and the Built Environment at the University of the Witwatersrand.

It has also partnered with Stellenbosch University to establish a geometallurgy research chair.

RENEWABLE ENERGY AND DECARBONISATION

ARM is committed to confronting climate change accompanied by what it calls a just and a fair transition.

On the renewable energy front, a 132 MWp ...

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Full ownership and execution of factors that are within management's control are being elevated to the highest possible level by African Rainbow Minerals (ARM) CEO Phillip Tobias.

ARM has sharpened its pencil in as far as things that are within its control are concerned and success is being achieved tackling costs, increasing volumes, and managing grades.

"Your cost curve will really determine how far you are going to run so we want to be in the first quartile and it will come through hard work and we really want to commend our workforce, and our leadership as well, for heeding the call.

"When the clarion call was made, they really heeded it, and we've seen some improvement. It's not over. It's a continuous improvement. It's like sweeping water uphill, so it's a daily thing.

"We need to continue to look for those opportunities and any slight improvement in cost, volume and grade can be seen on the bottom line," Tobias emphasised in an interview with Mining Weekly. (Also watch attached Creamer Media video

While ARM Ferrous reported 12% higher headline earnings, ARM Platinum reported a loss owing to the sharp fall of platinum group metals (PGMs), and ARM Coal was 85% down compared with the corresponding period of last year.

It was the iron-ore division that made the big contribution earnings before interest, taxes, depreciation and amortisation (Ebitda).

But major effort is being made to improve what is under management control at the PGM operations.

"I'm pleased to say that there has been a 4% increase on the Modikwa mining grade and we've also seen some marginal improvement on the Two Rivers mining grade although we are still mining the split reef.

"We have, to a certain extent, been able to optimise our cut and we are quite pleased with that because it's an ongoing thing because that is basically the nature of the beast.

"We are now on the split reef area. The two operations Modikwa and Two Rivers have respectively shown an improvement of 2% and 3% year-on-year, which is quite pleasing," said Tobias.

Making sure that an enabling environment is created for ARM employees and is simplifying things for employees to perform to the best of their ability is also an ongoing priority.

"Global competitiveness is what is going to differentiate us, especially when there's a price squeeze.

Mining Weekly: In circumstances like the present, how beneficial is ARM's diversified portfolio of mining assets?

Tobias: If you look at our results, you'd see that even from the Ebitda segment that iron-ore delivered about 80% of that. Previously, it was almost an equal distribution between iron-ore and the PGMs business but with PGMs falling to about 8%, the outcome was that iron-ore took a big chunk of that split and we are quite grateful that it was not only price related but there was an improvement in terms of volume of sales and production. We saw a 1% improvement on that and the cost as well. If you look at the unit cost on the iron-ore side with Khumani, it was just a 3% increase compared with the corresponding period. That's quite helpful considering that we've seen a shortfall of approximately 40% in the PGMs basket price. You do need the cushion that diversification provides because mining is cyclical.

To what extent is ARM rationalising capital expenditure?

As we announced in our previous results, we've concluded capital expenditure on Black Rock, so now the focus is more on the PGMs business. What is very important is that in as much as the Two Rivers Platinum Merensky capital project of 200 000 t has been approved, we need to continue to make sure that we really focus on differentiating between the needs and the wants. The wants are what we can park and the business will still basically continue, and then, at the right time, when the price is right, you can bring in the wants. That is the rationalisation that is taking place. Also, regarding Bokoni, the bo...

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South African gold producer Aurous, which owns and operates the Blyvoor gold mine and the Gauta tailings retreatment project on Gauteng's West Rand, has announced plans to go public through a business combination with US-based Rigel Resource Acquisition Corp.

The transaction, which puts Aurous at a pre-money equity value of some R6.76-billion ($362-million), is expected to enable Blyvoor to expand its underground infrastructure, enhance surface infrastructure, and optimise operations through economies of scale.

"This transaction and associated influx of foreign investment into South Africa has the potential to enable further meaningful job creation, continued revitalisation of the local community and recapitalisation of Africa's precious metals industry, all of which we expect will be well-received by the relevant South African authorities," Aurous CEO Richard Floyd stated in a release to Mining Weekly.

Aurous is described by Rigel CEO Jon Lamb as a cash-positive, debt-light target that already has impressive operational milestones under its belt.

Making up Aurous are Blyvoor Gold Resources and Blyvoor Gold Operations and New York-listed Rigel is a special purpose acquisition company sponsored by a fund managed by Orion Resource Partners. The two companies have entered into a definitive business combination agreement that will result in Aurous becoming publicly traded.

On completion of the proposed business combination, which is subject to customary closing conditions and regulatory approvals, the resulting company is expected to be named Aurous Resources and is to ultimately list on NASDAQ.

Floyd and Aurous executive chairperson Alan Smith will continue to lead the business, the principal asset of which, the Blyvoor mine, is a long-life underground gold mine in the Witwatersrand region, west of Johannesburg.

Since the restart of Blyvoor production in 2022, Aurous has been able to re-employ some 1 500 workers who had been unemployed following closure of the mine in 2013.

"We've worked diligently over a few years to find a quality business to combine with and are pleased to have arrived at this merger agreement which is expected to deliver a value-accretive transaction to all stakeholders," Rigel president Nate Abebe noted.

Rand Merchant Bank is acting as financial adviser to Aurous and Milbank LLP and ENS as legal counsel to Aurous.

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African Rainbow Minerals (ARM) executive chairperson Dr Patrice Motsepe said during Friday's presentation of dividend-yielding results that his diversified mining company is committed to confronting climate change.

"Our policies are part of what we call a just and a fair transition," said Motsepe of the Johannesburg Stock Exchange-listed company, which is engaged in iron-ore, manganese, platinum group metals and coal mining.

On being in Miami two weeks ago at the meeting of the International Council on Mining and Metals (ICMM) with the CEOs of the largest mining companies in the world, Motsepe expressed great pride in the work that the ICMM is doing and the commitment to partnering with community stakeholders.

"Our commitment to ESG and climate change is to a large extent expressing the principles of the top mining companies of the world that are part of the ICMM - BHP, Rio Tinto, Anglo American, Vale and many others.

"The clear commitment of the transition to zero emissions, which is the ultimate objective over time, also entails the training, educating and the transition of those currently dependent on the coal industry who will be needing new training, new jobs, new opportunities and a good future," said Motsepe.

Regarding local coal logistics requiring much improvement, ARM is encouraged by the appointment of the new CEO of Transnet, Michelle Phillips, which the company sees as emphasising what it has often reiterated.

"You have to employ the smartest and the brightest and the best. Meritocracy is non-negotiable and making sure that some of the top positions are occupied by the smartest women in this country and we've got equally smart black, white, Indian and Coloured South Africans.

"If you grow up in a business, you have a solid understanding of what the challenges are and we have to focus on those, particularly during this time that we have now to make sure that those who have got the experience, those who have got the track record, get the jobs, and I think we are moving in the right direction," said Motsepe.

He described Transnet and Eskom as being crucial to the entire mining industry and the ability of ARM to create value for its shareholders.

"An efficient Eskom that sells the cheapest possible electricity is very important for industry as well as South Africa's poor people and it is critically important that all of us work together to protect Eskom and to make sure that it is world-class.

"Of course, Eskom is very important for business but in my view, Eskom is crucial for the poor, who need electricity that is as cheap and as reliable as possible. The issue about the private sector and the independent power producers in particular is in relation to the technology that has been developing and that will have an impact on utilities such as Eskom and others.

"But the bottom line is, we all have to work together and to make sure that Eskom is a competitive provider of electricity and, as I said, the single most important issue for me in relation to Eskom is the poor,' Motsepe emphasised during the presentation covered by Mining Weekly.

In this week's episode of Second Take, Mining Weekly Editor Martin Creamer unpacks Menar’s memorandum of agreement with Gabon; high platinum demand owing to an expected 7-year high in the automotive sector; and a week-long event in China to boost platinum group metals.