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Published by tasch, 2020-01-22 08:03:24

SA Mining February 2020

Keywords: SA Mining,Mining,SA,February

R96bn: Value of platinum sales in 2018 $100m: DPA marketing budget for 2020

w w w. s a m i n i n g . c o . z a

R39.90 (incl VAT) International R44.50 (excl tax)

■ Carbon tax
Precious metals ■
Diamonds Resource nationalism
Base metals
Iron ore ■ Prospecting ri■gIhRtPs


(Un)intended consequences

VP for Worley’s Mining, Minerals and
Metals Services for Africa, Robert Hull


Worley moves mining to 7D

Over 25 Leading
year track independent

record African law




2020 vision: bottom of the
cycle or more to come?

Gold continues to shine. MMP drives mining R&D.

R96bn: Value of platinum sales in 2018 $100m: DPA marketing budget for 2020


IN BRIEF w w w. s a m i n i n g . c o . z a COVER STORY: PAGE 32
Renergen lists on ASX R39.90 (incl VAT) International R44.50 (excl tax) Engineering firm Worley
Bushveld Minerals eyes acquisition of Enerox is well placed to provide
FEATURES OUTLOOK MATTERS from 3D modelling through
■ Carbon tax to 4D, 5D, 6D and 7D at the
10 Global economic growth and metals demand Precious metals ■ Resource nationalism 2020 Investing in African
A er slumping in 2019, the global economy is forecast to grow Diamonds Mining Indaba conference,
by 3.4% in 2020, says Christie Viljoen – PwC economist. Base metals ■ Prospecting ri■gIhRtPs says Worley’s Robert Hull.
Iron ore
18 Are platinum initiatives su icient for a better outlook?
Can platinum defy the WPIC’s prediction of a market surplus MINING
of 670 000oz in 2020 to end in balance? SA Mining chats to CEO REGULATIONS
Paul Wilson to find out.
(Un)intended consequences
20 Diamonds: what to look for in 2020
If the global economic picture stabilises, the diamond industry JANUARY / FEBRUARY 2020 VP for Worley’s Mining, Minerals and
could finally be on a more stable footing by mid-2020, says Metals Services for Africa, Robert Hull
analyst Paul Zimnisky.
22 Base metals outlook
In 2020, CRU is expecting a return to growth for commodity Worley moves mining to 7D
demand, increasing to 2.2% in 2020 and recovering further to
2.8% in 2021. 46 The (un)intended consequences of toughening mining
regulations in Southern Africa
28 Unpacking options for clean coal technology The enforcement of new legislation has seen the growth of
Professor Rosemary Falcon talks to SA Mining about the future the artisanal mining sector, which is having a considerable
for coal and the extent to which clean coal technologies are impact on local beneficiation, says IOA’s Ogi Williams.

18 R96bn: Value of platinum sales in 2018
20 $100m: DPA marketing budget for 2020


4 Out of Africa
62 Column by Peter Major

Visit SA Mining at or at


w w w. s a m i n i n g . c o . z a


MADE IN WINTER Nelendhre Moodley Tel: 011 280 5782
Email: [email protected]
Nelendhre Moodley
Yes, one puts in the work for those sleek sexy “a grumpy 2020 for global growth”, citing US Stacey Visser Tel: 011 280 3671
bodies when it’s cold out there. political clouds and wider climate and digital Email: [email protected]
The tough times are just the right time transformations that will a ect global growth and
to plant the seeds for the success for the result in a decline to 2.9% – the lowest level since ART DIRECTOR
Shailendra Bhagwandin Tel: 011 280 5946
years to come, to weed out the rubbish and the world recession of 2009. Email: [email protected]

clear the path. It is just the right time to mobilise the The International Monetary Fund, however, was ADVERTISING CONSULTANTS
Ilonka Moolman Tel: 011 280 3120
catalysts for “fixing”. With so much wrong in South a little more positive, forecasting growth of 3.4% in Email: [email protected]
Noël van Breda Tel: 011 280 3456
Africa today, it is the perfect breeding ground for 2020 but cautioning of a “synchronised slowdown Email: [email protected]

innovations and invention. and uncertain recovery”. PRODUCTION CO-ORDINATOR
Gail Mortinson
The time for crying is long past, the time for Tel: 011 280 5369 Fax: 011 328 2226
doing is now. It is exactly the right time to heed Time POWER PLAY – NO POWER, NO PLAY Email: [email protected]
magazine’s youngest poster child Greta Thunberg’s Even South Africans who have come to expect
load shedding as the norm were recently caught SUB-EDITOR
call for sustainable solutions; just the right time to off guard when the power utility announced stage Andrea Bryce
develop power solutions and just the right time to 6 load shedding with expectations of stage 8,
develop innovative water solutions. which could see some suburbs left in the dark for FREELANCE PHOTOGRAPHY
up to 12 hours a day. Jeremy Glyn
And a gentle reminder for those who have
Load shedding is estimated to cost BUSINESS MANAGER
“forgotten just how innovative South Africans can Claire Morgan Tel: 011 280 5783
be when the chips are down – local petrochemical the economy between Email: [email protected]

giant Sasol’s coal-to-liquid The di erence R420-million and R2.1-billion GENERAL MANAGER MAGAZINES
a day. Following Eskom’s Jocelyne Bayer
technology was prompted
by South Africa’s apartheid- between a stumbling stage 6 load shedding call, SWITCHBOARD
Harmony Gold had to cancel Tel: 011 280 3000
era isolation in 1955.
WINTER IS COMING block and a stepping shi s – given the call “for Gail Mortinson Tel: 011 280 5369
Yes, keep walking … when “ power usage to be reduced Email: [email protected]

you move, you can’t be stone is how you use to levels required only for PRINTING
cold. the maintenance of essential Hirt & Carter

If you were hoping for a them. services”.
better year in 2020, think And if news on the

again – industry pundits — Unknown grapevine is correct, Eskom
are forecasting a tough will be asking Nersa for a

year ahead. Feng Shui and he y power price increase in

Destiny consultant, “grand master” Raymond Lo, the near future.

says that 2020, the Year of the Metal Rat, brings So all those with power solutions to take Arena Holdings,
PO Box 1746, Saxonwold, 2132
with it the pessimistic energy of Water and the consumers o the grid, please put your hands up.
Copyright Arena Holdings. No part
symbolic emotion related to fear. “The general Energy expert Ted Blom, who expects the energy of this publication may be reproduced, stored
in a retrieval system or transmitted in any
economic atmosphere is entering a bearish cycle crisis to continue over the next five years, is busy form or by any means, electronic or
mechanical, without prior written permission.
and the pace of growth will slow significantly.” developing a chemical energy DIY unit, which uses Arena Holdings is not responsible for the views of
its contributors.
The Water Element cycle, associated with chemicals as fuels instead of gas or coal.

pessimism, cynicism, and despair, will remain with According to Blom, the unit has a capacity

us for the next four to five years. of around 5kW “available on demand, with free

So which industries are expected to thrive water heating as a by-product – all at one fixed

in a bearish market? According to Lo, these are charge of around R2 500 a month”.

industries belonging to the Fire Element which “This is at a flat cost of around R1.30kWh for

include energy, power generating, restaurants, an average four-person house vs Eskom tari that

and entertainment; earth industries (real escalates per season/peak demand/and does not

estate, land development, mining, insurance, include fixed and line charges.”

computer so ware, and technology and metal The unit is in its final testing stages, and is

industries (automobiles, engineering, banking, expected to be launched sometime in 2020.

and machinery). However industries related to Meanwhile this edition of SA Mining is packed

shipping, transportation, communication, fashion, with a host of interesting topics, including economic

media, books and the environment are set for a and commodities outlooks (pg 10-26), columns by

rough ride. industry leaders o ering insight into key issues as

In addition, the Organisation for Economic well as our cover story, Worley, which is pioneering

Co-operation and Development has forecast industry-leading technology (pg 32). ■



MALI AIM-listed KEFI Minerals subsidiary Tulu Kapi Gold Mines
(TKGM) recently launched the Tulu Kapi Gold Project with its
Canadian-listed African Gold Group reports high-grade Ethiopian private and public sector partners.
intersections from its first drill hole from the Kobada Main
Shear Zone of the Kobada project, an advanced gold project, The project is ready for the start of development. KEFI has
in Mali. strong local partners, principal contractors and an on-the-
ground team, the company says. The project’s 24-month
“This high-grade mineralisation in the central zone of the development schedule is expected to start in January 2020
Kobada main shear confirms our belief that the resource is and the project consortium action plan has been agreed.
bigger with better thicknesses than suggested in previous
studies,” said Dr Andreas Rompel, VP Exploration. “We are now GUINEA, WEST AFRICA
in a better position to design a very robust open pit in this area.”
The phase 1 drilling programme is designed to build on the Canadian-based mining company SRG has been awarded the
existing mineral resource estimate of 1.2 million ounces of gold mining permit for its Lola graphite project located near the
at 1.1 g/t gold in indicated and 1.0 million ounces of gold at 1.0 town of Lola in eastern Guinea, West Africa.
g/t gold. Sites for the planned phase 2 drilling campaign are
currently being prepared. The 15-year renewable permit was granted by the
Government of Guinea. “With the receipt of the mining permit,
CÔTE D’IVOIRE we will now work closely with the government in order to
negotiate and finalise a mining convention in accordance with
Drilling results from Mako Gold’s latest drilling initiatives at the mining regulations,” said Ugo Landry-Tolszczuk, COO of SRG
the Tchaga Prospect of the Napié Project in Côte d’Ivoire has Mining.
delivered “exciting results”.
The latest drilling programme intersected 36m of gold
mineralisation, which is the company’s largest width to date. Dual-listed Lucara Diamond recently received positive
Mako’s MD Peter Ledwidge said: “The repeated wide gold results from an underground feasibility study to expand its
zones we have intercepted to date, combined with the lateral 100%-owned Karowe diamond mine.
and vertical continuity of gold mineralisation demonstrated
through this latest drill programme, increases our confidence The Karowe mine is one of the world’s most prolific
in our geological modelling and is another step towards producers of large, high-value-type IIA diamonds and the only
outlining a JORC compliance resource.” diamond mine in recorded history to have produced two +1 000
carat diamonds, the company says. The underground expansion
BOTSWANA at Karowe is expected to double the mine life, and generate
significant revenue and cash flow out to 2040. Highlights include
ASX-listed Tlou Energy is achieving significantly higher gas flow a life-of-mine production of 7.8 million carats out to 2040; a
rates than initially announced. resource that remains open to depth; $5.25-billion in gross
revenue and a payback period of 2.8 years extending the mine
The company reports above gas flow rates of around 20 life 15 years (including stockpiles).
Mscfd (thousand standard cubic feet per day) from each of the
Lesedi 3 and Lesedi 4 production pods. Tlou Energy is focused on
developing gas-to-power projects in Southern Africa using coal
bed methane (CBM) from its gas field in Botswana. The current
operational objective of the lateral well dewatering process is to
attain sustained gas flow rates at commercial levels, the company
says. It is aiming for a minimum sustained gas flow rate in the
region of 80-100 Mscfd from each production pod.




JSE-listed emerging producer of liquid helium natural gas resource and one of the richest
and liquefied natural gas, Renergen, recently helium concentrations globally. CEO Stefano
commenced trading on the Australian Securities Marani (pictured) said: “Renergen provides to
Exchange. The company provides investors investors a unique exposure to helium; a rare,
with exposure to both natural gas and helium finite commodity with strong demand and supply
through its proven reserves and existing o - fundamentals. Renergen owns 90% of Tetra4
take agreements. Funds raised will be used Proprietary Limited (Tetra4), the holder of the first
for further exploration and expansion of the and only onshore petroleum production right in
Virginia Gas Project, which contains a significant South Africa, giving it first mover advantage.”


Siemens and the renewable energy developer juwi have
entered into a strategic technology partnership to focus on SK Innovation recently signed a six-year agreement with
microgrids in the mining industry. The two companies aim to diversified miner Glencore for up to 30 000 tonnes of cobalt
roll out and continually develop the advanced microgrid control contained in hydroxide between 2020 and 2025. According to
system that enables the seamless integration of power from SK Innovation cobalt is core to battery production and in short
renewable energy to a mine’s o -grid power supply. “Microgrids supply. “SK Innovation stands ready to produce the batteries
can bring high levels of reliability and improved energy quality required to meet the significant anticipated battery demand.
to energy-intensive industries such as mining; and are an The electric vehicle (EV) battery market is growing fast and the
attractive alternative when autonomous power supply is total market size will be $150-billion in 2025, larger than the
needed,” said Robert Kla us, CEO Digital Grid at Siemens Smart semiconductor market. Accordingly, cobalt demand will keep
Infrastructure. According to juwi COO Stephan Hansen, “The increasing. We assume global cobalt demand for EV batteries
centrepiece to this is the juwi Hybrid IQ system. It enables us will be 32kt in 2020 and 92kt in 2025. With this contract, SK
to provide hybrid power that goes far beyond what has been Innovation can produce batteries for three million EVs.”
industry practice until now.” The cooperation between juwi and
Siemens has already resulted in the successful delivery of the
solar power plant at Agnew Gold in Australia.

Robert Kla us, CEO Digital Grid at BUSHVELD MINERALS
Siemens Smart Infrastructure and COO EYES ENEROX
of the juwi Group, Stephan Hansen. ACQUISITION

MIKE HENRY AIM-listed vanadium producer Bushveld Minerals has signed
an agreement to acquire Enerox from CellCube Energy Storage
BHP’S NEW CEO Systems. Enerox is one of the world’s largest researchers,
developers, manufacturers and distributors of vanadium redox
BHP has appointed Mike Henry as flow batteries (VRFB). It has installed VRFBs at over 130 sites
its new CEO e ective from 1 January globally. The transaction will see the Bushveld Consortium
2020, replacing Andrew Mackenzie acquire Enerox for €11 000 000. Fortune Mojapelo, CEO of
who retired at the end of December Bushveld Minerals, said: “The potential acquisition of Enerox
2019. Henry has 30 years’ experience is in line with Bushveld’s strategy of establishing a VRFB
in the global mining and petroleum investment platform through which the company will mobilise
industry, spanning operational, commercial, safety, technology additional capital from third party funders to help credible VRFB
and marketing roles. He was appointed to his current role of OEMs build scale to respond to a growing stationary energy
president operations Minerals Australia in 2016, and has been a storage market opportunity.”
member of the executive leadership team since 2011.


menarsocial @menarsocial menarcapital

Our vision for South Africa
in numbers by 2022

R7-billion in total investment*
5600 jobs to be created
4 provinces to share investment
1 new manganese mine in Northern Cape
2 new coal mines in Mpumalanga
2 new coal mines in Gauteng
1 new anthracite mine in KwaZulu-Natal

Accelerating SA Investment

*Dependent on regulatory approvals


DRDGOLD’s golden goose

By Nelendhre Moodley to phase 2 and extend the project life to TSF opens up the prospects of treating
approximately 20 years. material available regionally, over and
Surface gold tailings retreatment above the current resource.
specialist DRDGOLD is looking to FWGR phase 1 entails processing 30mt
leverage its recently completed of material over five years while phase 2 “The cost will definitely be more than
phase 1 of its Far West Gold will process 210mt over a further 15 years. R1-billion; however the understanding
Recoveries (FWGR) project to is that we will spend only what we can
start development on phase 2, which will “We plan to use the success of phase a ord. We have time on our side and a
see the miner bump up gold production 1 to seamlessly and cost-e ectively significant number of options that we can
from 500 000tpm to 1.2mtpm, says develop into phase 2. Already much explore.”
DRDGOLD CEO Niël Pretorius. work is under way, in terms of bankable
feasibility studies and investigating how Options include accessing cash flows
In 2018, the dual-listed gold producer best to expand plant infrastructure to gain already being generated from phase 1 of
acquired the West Rand Tailings maximum value.” the project, additional income from an
Retreatment Project from Sibanye- extremely favourable gold price and the
Stillwater in return for a 38% stake in Taking into account a construction potential o ered if Sibanye-Stillwater
DRDGOLD. period of three to four years, Pretorius acquires a further 12% of the company.
hopes to complete phase 2 sometime in
According to Pretorius, the transaction, 2024/5. “Should Sibanye-Stillwater do so, at
which almost doubles DRDGOLD’s the current share price, the transaction
reserves, is essential for the company’s “We are looking to start initial work in will add another billion rand of capital to
future growth. roughly 18 months,” he says. DRDGOLD’s co ers,” says Pretorius.

“Our immediate strategy is to The cost of developing phase 2 is Completion of phase 2 will li
optimise operations and leverage our dependent on whether the project will production from 500 000tpm (which
existing footprint and relationship with involve building a second plant and translates to around 110-115kg of gold)
Sibanye-Stillwater as we believe that tailings storage facility (TSF) or whether to 1.2mtpm and extend the life of the
the relationship is conducive to further it will be purely expanding existing operation from five to 20 years.
growth and new opportunities.” plant and TSF capacity. A new plant and

The miner reached commercial R330-million
production on phase 1 in April 2019 and
planned throughput of 500 000tpm during Value of DRDGOLD’s infrastructure investment to
the first quarter of the 2020 financial year. get FWGR o the ground
DRDGOLD invested around R330-million
on infrastructure development to get the
project o the ground.

Following completion of phase 1,
which has a potential life of operation of
12 years, DRDGOLD is eager to progress

DRDGOLD highlights the success of
its ongoing vegetation programme
to contain dust pollution.


“ “

FWGR phase 2 will bump up gold production ENVIRONMENTAL MANAGEMENT
from 500 000tpm to 1.2mtpm. DRDGOLD has an ongoing programme
– Pretorius to contain dust pollution at its

According to Pretorius, barring the barrage Industry pundits are forecasting a DRDGOLD’s Brakpan tailings
of challenges faced by the mining industry, favourable gold price in 2020 – this on deposition facility.
the company performed fairly well, the back of global economic tensions,
achieving encouraging volume throughput including Brexit and US-China trade increasing appetite for gold is fortunate
and metallurgical performance following tensions. for gold producers, given that very few
completion of phase 1 of the FWGR companies are actually producing more
project, which delivered positive cash “The future for gold is rosy given gold from existing operations.”
flows early on in the project. that the fundamentals are increasingly SAFETY
supportive of gold and less so for fake Following a robbery at DRDGOLD’s
“For many years we have been working currency,” notes Pretorius. premises in October when an estimated
specifically on handling these particular 17kg of gold was stolen, the company
issues, including the uncertainty of He explains that following the 2008 has subsequently upgraded its security
electricity supply, issues around labour global economic collapse, instead of systems.
protests and concerns around labour creating value and allowing economies
productivity as well as water supply. to right themselves, governments “There is a di erent contractor on-site
As such, all of these aspects have been began issuing bonds and creating debt who is better suited to put up a line of
factored into our risk matrix,” he explains. instruments, e ectively throwing money defence and look a er sta in particular.
DRDGOLD’s Far West Gold Recoveries at the problem – which distorted the As a company we are serious about safety
DP2 plant near Carletonville. economic balance and compromised the and are in discussion with government,
integrity of paper money. Minerals Council South Africa and industry
leaders, to find solutions. As a country we
Furthermore, there are increasing need to act more decisively in handling
concerns that the debt instruments such criminal elements,” says Pretorius. ■
created based on gold, such as derivatives
and exchange traded funds, don’t actually
hold all the gold they claim to hold.

“There is a fear that if called to deliver
on the physical gold that banks say they
have in store, they will not be able to
do so. ‘Smart money’ is becoming more
and more concerned about the massive
government debt that is out there. As
always, in such situations, investors
turn to gold as a store of wealth. This

Reclamation of mine dump slimes material
ahead of retreatment at Ergo to extract gold.




IN 2020
Concerns over global economic
growth and metals demand

A er slumping in 2019 to the By Christie Viljoen – PwC Economist world and the market perception about the
slowest rate of growth (3.0%) mining industry’s ability to respond.
since the global financial crisis, while industrial demand for copper is being
the global economy is forecast dampened by concerns over the health of the MIXED OUTLOOK FOR SOUTH AFRICAN
to grow by 3.4% in 2020. In global economy. ECONOMY AND MINING
the October 2019 edition of its semi- South Africa is not isolated from these global
annual World Economic Outlook (WEO), the Weak global automotive sales are challenges. But despite the increased risk of
International Monetary Fund (IMF) said it weighing on prospects for lead: three- operating in the country (see below), South
expected more robust growth from non- quarters of global lead demand is to Africa is o en looked at as a commodity and
commodity exporters in 2020 while the produce vehicle batteries. In the October macroeconomic hedge by benefiting from a
performance of commodity exporters was 2019 edition of its semi-annual Commodity weaker rand in times of trouble – with most
projected to remain lacklustre. Markets Outlook, the World Bank warns that producers recognising dollar-based revenues
this already lacklustre outlook for metals against rand-based costs.
(See Figure 1: Improved growth also faces risks to the downside. A larger-
forecasts for 2020) than-expected global downturn – i.e. the The IMF commented in October that
weakness in 2019 carrying through to 2020 – economic growth in several BRICS countries
However, the multilateral organisation would further dampen industrial demand. – inducing Brazil, Russia and South Africa –
also warned that the growth forecast declined sharply in 2019 due to idiosyncratic
for 2020 was precarious, tilted towards Not surprisingly, PwC’s Mine 2019 report reasons, but that growth was expected to
downside risks to the outlook. These include found that global mining stocks have failed recover in these economies during 2020.
trade barriers (US vs China) and heightened to keep pace with that of equity markets The IMF expects South African growth to
geopolitical tensions (e.g. Brexit) that could overall. Mining companies certainly do not accelerate from 0.7% in 2019 to 1.1% in 2020
further disrupt industry supply chains and measure their success based solely on their on the back of an anticipated 3.1% increase
hamper business confidence and investment share price performance. Nevertheless, the in the volume of goods exported.
share price movement relative to the rest of
“implementation. the market is an indication of the market’s (See Figure 2: Improved growth
On the mining front, the World Bank has view of the industry’s attractiveness. prospects for BRICS – except China)
warned that metal prices are forecast to
decline by 1.4% in 2020 due to expectations Investors seem concerned about mining’s But to be honest, the forecast
of subdued global industrial demand. For negative publicity, the future of certain improvement in South Africa’s growth
example, aluminium demand is under commodities and the industry’s ability to during 2020 is nothing to get too excited
pressure from large overcapacity in China, manage stakeholder expectations. PwC about for miners. While the finalisation of
believes that the under-performance relates the third version of the Mining Charter will
to the risk and uncertainties of a changing allow producers and investors to become
“ cautiously optimistic, PwC’s SA Mine 2019
Growth forecast for 2020 was precarious, tilted report identified a slew of other economic
towards downside risks. challenges that will hold back the minerals
–IMF sector in 2020. These include rising input
costs, capacity constraints at Eskom, labour
FIGURE 1: IMPROVED GROWTH FORECASTS FOR 2020 Source: IMF disputes, skill shortages, and declining
India resource grades.
■ 2020f
China ■ 2019f In response to the domestic and
Emdeevrgeilnogpimngarekceotmaineds international economic climate, the South
African mining industry will in 2020 continue
Sub-Saharan Africa transitioning from a deep-level, labour-
intensive, conventional mining environment
World to a mechanised, shallower, technologically
USA advanced industry. Alongside this change,
safety is also improving: mines are reporting
Advanced economies fewer fatalities and a reduction in the lost-
time injury frequency rate.
Euro area
United Kingdom A risky mining jurisdiction to do business
in PwC’s Mining Risk Index incorporates
South Africa
elements of overall policy attractiveness, >
0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00


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© ISTOCK – claffra

operational environment challenges, Metal prices are forecast to decline by 1.4% in “
surveyed risk perceptions, as well as 2020 due to expectations of subdued global
regulatory factors. The latest available data
from the Fraser Institute, Fitch Solutions and industrial demand.
MiningJournal enabled the calculation of the – World Bank
aggregate index for 31 countries. (A higher

From a regional perspective, Europe and 2015 2016 2017 2018 2019f 2020f Source: IMF
North America are the least risky places for
resource companies. South Africa is ranked n Brazil n Russia n India n China n South Africa
20th out of 31 countries in the index with a
score of 54.37 out of 100, placing it slightly ownership discourage investment. The vice country that contribute to South Africa’s
behind BRICS member Brazil (54.53) and only president of another exploration company disappointing ranking in PwC’s Mining
marginally ahead of African copper giant commented (also anonymously) that the Risk Index include policy uncertainty,
Zambia (54.36). revised Mining Charter continued to be a intermittent power supply, and the high
deterrent for exploration companies. cost of labour (as a percentage of total
The Fraser Institute Annual Survey costs). There is little scope for this to
of Mining Companies 2018 (published in Apart from this, other general change during 2020. n
2019Q1) noted recent improvements in operational environment challenges in the
policy perceptions among South African
respondents, reflecting decreased concern
over uncertainty regarding protected areas,
the taxation regime, as well as regulatory
duplication and inconsistencies. This is good
news with the eye on 2020.

Nonetheless, the president of an
exploration company was (anonymously)
quoted in the Fraser Institute survey report
as saying that the rules around mining


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Gold continues to appeal This explained the rise in gold ETF buying geo-political uncertainties – for example
– a whopping 260 tonnes in Q3 of 2019. Gold- reflected in the trade tensions and tari s
GBy Nelendhre Moodley backed ETF holdings recently reached record – have caused consumers to question
lobal economic challenges and assets under management in volume terms, their spending power and hold back from
uncertainty saw gold deliver a of 2 900 tonnes. purchasing.
sterling performance in 2019. SA
Mining recently caught up with The other major story shaping demand Consumer demand for gold in Q3 was
John Mulligan, a director at the was the continued very strong buying of therefore particularly weak.
World Gold Council, to chat about gold’s central banks – having purchased around 590
performance in 2019 and the outlook for tonnes year to date – reflecting a sustained WHAT IS THE OUTLOOK FOR GOLD
2020. trend of strong monthly purchasing. IN 2020 AND WHAT WILL DRIVE THIS
HOW DID GOLD PERFORM IN 2019? This was driven by the ongoing need of The initial months of 2020 are likely to be
The gold price up to the end of November central banks to further stabilise and protect a continuation of the trends over the last
at 1 456 US$/oz rose 14.5% in 2019. But if o icial reserves against an increasingly quarter of 2019.
we look at gold in other currencies, a wide vulnerable global outlook and, in many
range of countries have experienced gold instances, policies to further diversify away We may, however, also see stronger private
prices at or near record highs. And gold is still from US dollar holdings. investor demand for gold bars and coins.
relatively strong – that is, outperforming the
US$ price – in euros, Indian rupees, Chinese On the flip side, elevated or record local This has been particularly weak in recent
renminbi, Turkish lira, South African rand and prices and a backdrop of economic and quarters, dampened by uncertainty over
the Australian dollar.

A relatively strong gold price and weaker
local currencies have helped miners in many
countries and contributed to healthy margins
and cash flow.

The major movement in the gold price
occurred in the summer when it broke out
of an extended period of sideways trading,

“between US$1 150 and US$1 350/oz, to rise

to its current range of between $1 450 and
$1 500/oz.

This was driven, to a large extent, by
investor interest in gold and a return to the
gold market of US investors, who for several
years have largely neglected gold.

Current annual

production levels

are 9% higher than

they were five years


– Mulligan


John Mulligan.

© RANDGOLD The Kibali plant. Gold bar preparation.

local price trends. combined with local currency weakness Processing plant.
But some of these factors are temporary and lower consumer confidence, dampened
that demand as the year progressed, but
and the heightened risk awareness that professional investor interest then surged as
has caused institutional investors to return gold in the ETF vaults rose.
to gold may filter through to individuals
and private wealth managers as they seek And central bank buying was strong
protection and stability. across the year.

HOW DID THE DOWNSTREAM GOLD Combined, this has resulted in overall
SECTOR PERFORM IN 2019? levels of demand being comparable with
The year overall was relatively stable but recent trends, even if the drivers of that
there was a significant shi in the sources of demand shi ed in H2.
downstream demand.
Consumer demand for both gold CARDS FROM THE WGC?
jewellery and bar and coins in the early part We are constantly engaged in working to
of the year were healthy but not particularly ensure the overall market infrastructure for
strong. gold is a fair and e icient gold market.

As stated earlier, the price rise in summer, You are therefore likely to see a number

of initiatives over the next year or so

focusing on these issues – that is, how gold

is accessed and traded and the policies

shaping these activities, to ensure the

market is fit for purpose for the broadest

set of participants and investors.

Recently, we’ve launched the

Responsible Gold Mining Principles and

will be striving to ensure those gold mining

companies and their investors and wider

stakeholders understand what defines

responsible gold mining practices and how

this can be clearly demonstrated now and

in the future.

We’ve also recently launched the latest

stage in our work on gold and climate

change and will continue to strive to ensure

all gold supply chain and participants are >
aware of the opportunities for the sector to



decarbonise and gold’s potential benefits © ISTOCK – serefozdemir
as a climate-risk mitigation asset.
These countries remain the sites of current WHAT CHALLENGES HAS THE SECTOR
And finally, our research outputs and focus and activity for many gold miners and EXPERIENCED? WHY IS THIS?
data sets have recently been enhanced – their investors. Gold mining is increasingly being shaped by
they’re now all accessible via our Goldhub a number of factors, many of them reflective
platform. Gold mining, if it can flourish in a relatively of broader social and environmental trends.
stable and sustainable fashion, can have a
We also launched the first version of significant beneficial impact on the socio- Gold miners increasingly need to be
an exciting new tool – the Gold Valuation economic development of these countries. able to clearly demonstrate responsible
Framework – which should allow practices and their ability to deliver social
sophisticated investors and analysts to Some of this production will, however, value in addition to delivering solid returns
arrive at rational risk-return expectations be small-scale and artisanal in nature and to investors.
for gold based on both macro-economic there are clearly o en many social and
scenarios and supply and demand factors. environmental challenges with such informal The expanded geographic diversity
production, although it is also likely to be a of operations across the globe has also
WHAT HAVE BEEN THE GLOBAL substantial source of regional employment. diversified the range and nature of the
PRODUCTION TRENDS OVER THE PAST demands of host nations and communities
FIVE YEARS? “But generally the development of gold on the mining sector.
Global gold production has been inching
higher for quite a few years now – and mining across the African continent has been Gold mining companies now need to be
current annual production levels are 9% strong – five-year growth in regional gold far more sensitive and responsive to these
higher than they were five years ago. production of 20% and 10-year local factors.
growth of 41%.
South Africa’s production, however, has
been in reverse and steadily declining – it Gold mining across the African continent “
is now 23% lower than it was five years ago has been strong – five-year growth in
(and 38% lower than in 2010). regional gold production of 20% and
10-year growth of 41%.
In 2018, SA ceased to be the leading – Mulligan
African producer, with Ghana now the largest
regional producer.

Wider African gold production (beyond SA)
has been far more robust, with strong growth
over the past five years across the continent.

Ghana, Sudan, Mali, Burkina Faso,
the Democratic Republic of the Congo,
Zimbabwe, Ivory Coast, Senegal, Nigeria and
Gabon have all reported annual production
growth (over the past five years) of well
over 20%.

© ISTOCK – ipopba


© ISTOCK – SafakOguz

The Gold Valuation Framework will allow investors to arrive at “
rational risk-return expectations for gold based on macro-economic

scenarios and supply and demand factors.

– Mulligan

Additionally, the funding base for stricter criteria to how they evaluate disregarded or turned away from the
gold mining has changed over the past and select assets, integrating ESG sector over the past decade.
decade, with a rise in passive funds and (environmental, social and governance)
with far fewer active funds providing considerations into their thinking, and The gold mining sector is,
equity financing. gold mining needs to be able to adapt fortunately, now also embracing new
accordingly. technology with enthusiasm and what
The industry is still seeking how may have looked like a very substantial
to recover its appeal to the generalist But this may represent a major challenge a few years ago – to
investor and compete on equal terms chance for the industry; if it can show modernise the industry and transform a
with other sectors and asset types. leadership and demonstrate its high complex set of physical operations and
standards and wider socio-economic analytical processes – is increasingly
This challenge may require the contributions, it may also be able to being grasped as an opportunity.
gold mining sector to change how it attract a new set of investors, helping
communicates its wider strategic value. compensate for those that have This should, ultimately, lead to a far
cleaner, safer, more efficient industry. n
Investors are now applying far




CEO Paul Wilson.
Are they sufficient to overturn the WPIC’s
Can platinum defy the World platinum surplus forecast in 2020?
Platinum Investment Council’s
prediction of a market surplus By Nelendhre Moodley
of 670 000oz in 2020 to end in
balance? estimate a year ago of a 675 000oz surplus to help market South African gold.
Key initiatives promoting the use of and its revised estimate in September of a According to Wilson, the WPIC
platinum include the World Platinum surplus of 345 000oz, citing a “substantial
Investment Council’s (WPIC) wider 12% increase in total demand driven by was instrumental three years ago in
engagement with investors and roll-out of record ETF buying, which more than o set encouraging the UK’s Royal Mint to produce
new partnerships and platinum investment the expected demand decreases in the one-ounce platinum coins.
products. automotive (-5%), jewellery (-6%) and
industrial (-1%) segments to post total At that stage the Royal Mint, which is
Platinum demand growth in 2020 is supply growth of 2% for full-year 2019”. 1 000 years old and the world’s largest
expected to continue from long-term export mint, had never minted a platinum
growth due to technological advancements “So if any of the three or four positive bullion coin.
in industrial and medical fields, including aspects come to fruition, we could easily
initiatives by the Hydrogen Council and see the market being in balance again; The Royal Mint platinum coins in one
the global drive to lower carbon emissions. but our initial forecast is that it will be in ounce and in 1/10th of an ounce have done
Material short-term growth also appears surplus of 670 000oz in 2020,” Wilson states. much to li the profile of platinum globally,
likely from developments in the automotive selling very well in North America. Over
industry. Among the new initiatives on the cards is 120 000 coins have been sold since their
the long-awaited roll-out of a South African launch in 2017, says Wilson.
According to the WPIC chief executive platinum coin, which Wilson expects will be
o icer Paul Wilson, the forecast for 2020 is launched by February 2020. The one-ounce Furthermore the Hydrogen Council,
based on a conservative estimate which has coin featuring South Africa’s Big Five game a global CEO-led initiative of 60 leading
not made any allowance for aspects that animals (lion, leopard, rhinoceros, elephant energy, transport and industry companies,
cannot yet be measured such as an increase and Cape bu alo) is being developed by the which was launched in January 2017,
in platinum demand from higher sales South African Mint, he says. has been driving investment in the
of diesel cars in Europe, as automakers development and commercialisation of the
scramble to avoid heavy fines on fleet CO2 It is hoped that the platinum coin will hydrogen and fuel cell sectors.
emissions, as well as substitution of much be just as successful as the Krugerrand, a
higher-priced palladium by platinum, for South African gold coin introduced in 1967 Fuel cell electric vehicles currently use
instance. some 30g of platinum and this is expected
to reduce to between 10 and 15g at scale.
“We have also taken a cautious view of
what investors might do in 2020. We believe T2ON5N9ES R96.1 89%
investment demand will be strong and
well above the 10-year average but we are -1.2% BILLION © Source: Minerals Council South Africa
forecasting less than half the level that it -1%
was this year.” Toyota recently entered into a
partnership with Kenworth Truck The UK’s 1oz Platinum Black Bull
Following market changes in 2019, Company to produce fuel cell trucks of Clarence bullion coin 2019.
the WPIC revised its forecast for 2019 to for the Californian market.
reflect a deficit of 30 000oz compared to its

R96-billion Source: Toyota
Source: UK Royal Mint
Value of platinum sales
in 2018


This is appreciably above the 4 to 6g of Direct employees Employee earnings Royalties paid
platinum or palladium in current internal
combustion light duty vehicles. -3% -2% 6%

“Fuel cell electric vehicles fuelled by © Source: Minerals Council South Africa
hydrogen can travel distances of over
700km before being recharged – the less CO2 emissions than petrol-powered we expect to see the development of this
‘recharging’ process, or filling the tank with vehicles and the mild hybrid diesel vehicle investment vehicle.”
hydrogen gas, takes around three to four appreciably less,” he says. SOUTH AFRICAN PLATINUM SECTOR
minutes. Battery-only electric vehicles take CHINA The local platinum mining industry
up to 10 hours to charge, without undue The WPIC’s initiatives in China continue continues to face headwinds, with cost
battery degradation from repeated rapid to increase the awareness and ownership pressures at the top of the agenda,
charging, but have ranges closer to 300km of platinum as an investment asset. In including those associated with labour
dependant on temperature and load.” 2018, the WPIC announced two joint and operating costs, which have increased
venture partnerships – with platinum bar significantly above the rate of inflation.
According to Wilson, the manufacture of manufacturers CNOOC Taiyuan Precious
large fuel cell electric trucks and heavy- Metal and Shenzhen Hengfu Yingjia. “Following high cost pressures coupled
duty vehicles, including city bus fleets, are with a relatively low platinum price,
driving the growth of platinum demand “The WPIC collaboration and platinum producers have experienced
in hydrogen fuel cell vehicles in the short partnerships with large Chinese declining margins, which is reflected in the
term, particularly where large truck fleets organisations such as the Bank of China, little to no investment in new mining and
are confined to an area like major ports Agricultural Bank of China and China exploration initiatives,” says Wilson.
or cities, where a few hydrogen refuelling Gold Association are raising public and
stations service a large fleet. institutional awareness of how to invest Published WPIC research shows
in platinum. There are now four of our platinum supply from mining in South
Meanwhile, developments in the electric partners producing and selling platinum Africa flat since 2015 and that 2020
vehicle space continue to gain traction , bars in China; enhancing retail availability production is forecast to be 2.5% lower
with three fully electric vehicles already and choice. We have a strong pipeline of than in 2015.
available for sale in South Africa, the Nissan new partners and products that will assist
Leaf, the BMW i3 and the Jaguar I-PACE, in enhanced awareness and distribution of On a more positive note though, the
with expectations of the launch of the platinum in China in 2020 and beyond,” it platinum sector in South Africa is a major
Mercedes-Benz EQC imminent. By the end said in a statement. contributor to the economy.
of 2019 around 1 000 EVs were on the road
in South Africa. In addition, the WPIC has trained over Figures published by the Minerals
1 000 managers in the Bank of China Council South Africa show that in
“We believe that the fuel cell to promote consumer consideration of 2018 platinum mining had over
phenomenon will start to reflect in platinum as an investment. 160 000 direct employees
platinum demand in the next two years who earned over
and that this will have a positive impact Although the WPIC has been R48-billion.
on the market view for platinum use in the aggressively promoting platinum’s
automotive sector,” says Wilson. investment case in the Asian market, having Platinum mining
set up an o ice in Shanghai, China, the companies paid
He adds that in 2020 Europe’s green world’s largest platinum consumer market R851-million
energy drive takes a big step when average with 2moz of platinum used per annum, in royalties
fleet CO2 will be measured with heavy fines it has yet to foster the establishment of and the total
for exceeding targets legislated in 2009. exchange traded funds (ETFs) there. sales exceeded
“Automakers trying to avoid these fines, R96bn. ■
and frustrated at the low portion of battery “While ETFs are not an option at the
vehicles in their fleets, are expected to moment in China, in the next few years
promote uptake of diesel-fuelled vehicles.
The new diesel cars sold in Europe are
finally very clean and have the chance
of winning back consumer trust. Diesel-
powered vehicles currently produce 20%

Medical devices, including pacemakers,
contain platinum components.

Source: Johnson Matthey
Source: PGI

© ISTOCK – Sunshine Seeds




By Paul Zimnisky - Diamond Industry Analyst

Following a strong first half of 2018, end-consumer markets, has stifled the Upstream players, led by De Beers and
the balance of the year and most process. Further, widespread, multi-month ALROSA, began building inventory in the
of 2019 was disappointing for protests in Hong Kong, referred to as the second half of 2019 in order to support the
the diamond industry. The most Anti-Extradition Law Amendment Bill market. However, both players were starting
recent 18-month stretch has been Movement, have impacted retail sales in the from relatively normalised inventory levels
described by some in the industry as a “very ever-important market and also interfered at the time and the excess stock recently
challenging environment” and even a “crisis”. with business-to-business industry trade. accumulated should be manageable as it is
The third significant industry lull in the In addition, a broad economic slowdown not estimated to exceed 2015 levels, the high
decade and a half since the dismantling of in Europe and a global trend towards watermark in recent years following the mid-
the De Beers monopoly seemingly indicates negative interest rates have boosted the decade slowdown in China.
that the diamond industry is yet to find US dollar which has also pressured global
sound, sustainable footing in a new era. end-consumer diamond demand in recent While macro-economic developments,
A tightening of credit to diamond quarters. including some of those mentioned above,
manufacturers following the widely will continue to impact end-consumer
publicised alleged $2-billion fraud by well- $100-million diamond demand and play a major role in
known Indian industry titans Nirav Modi the health of the industry in 2020, here are
and Mehul Choksi in mid-2018 in part led Value of DPA marketing three industry-specific catalysts that could
to accelerated industry-wide mid-stream have a noticeable impact on the trade as
inventory deleveraging through 2019. An budget for 2020 well:
estimated at $10bn, or approximately 25%
of all inventory held by the mid-stream Looking to 2020, if the global economic THE DPA’S THREE BILLION YEARS IN THE
segment of the industry, was forced to picture stabilises or hopefully even improves, MAKING CAMPAIGN
downstream as many manufacturers the US would need to avert a recession and In Q4 2019, the Diamond Producers
couldn’t retain previous levels of finance and China would need to maintain a mid-single- Association (DPA), the diamond industry’s
were pressured to scale down operations digit growth rate, and the diamond industry joint category-marketing e ort, debuted
and shrink balance sheets. The flood of could finally be on a more stable footing its latest campaign titled The Diamond
excess mid-stream supply more than o set a by mid-year as industry-wide inventories Journey with the tagline Three Billion Years
5% year-over-year decline in mined diamond approach much more sustainable levels. At in the Making. 2020 marks the fi h year
volume in 2019. an estimated $30bn of inventory, mid-stream since the group was established and the
While the industry has since actively stocks are the lowest since 2011, coincidently third consecutive year that the budget has
worked through the indigestion, demand the last time diamond manufacturing was exceeded $50-million. The 2020 budget
challenges including an acceleration of notably lucrative. alone is estimated to approach $100m, the
the trade war between the United States highest yet, but is still short of the estimated
and China, the industry’s two largest $200m to $250m that De Beers was spending
annually during the monopoly era via the A


Rough and polished diamonds INDUSTRY CATALYSTS IN 2020
from Rio Tinto’s Argyle mine. ■ The DPA’s Three Billion Years in

the Making campaign.
■ ALROSA’s Luminous Diamonds

■ Argyle o icially closing.

© Rio Tinto

Diamond is Forever campaign. The result of as a negative attribute as it can make a Paul Zimnisky.
large category marketing strategies such as diamond appear “milky” or “oily” in direct Paul Zimnisky is an independent
this can be slow and gradual in nature but sun or UV light, the characteristic also makes diamond industry analyst and
can leave a lasting impact on a consumer’s a diamond mysteriously glow under a black consultant based in New York. For
perception of a product if communicated light, ideal for a club or party scene. This regular analysis of the diamond
e ectively. It has now been over a decade fits well with the industry’s intention of industry, subscribe to his State of
since the A Diamond is Forever campaign directing more marketing towards younger the Diamond Market, a monthly
was retired and consumers’ positive demographics. Further, most natural industry report.
perception of diamonds has faded. However, diamonds fluoresce blue, while most man-
now a few years into the reintroduction of made diamonds fluoresce orange, green or
generic diamond marketing, results should blue-green, so fluorescence is potentially
begin to show especially in the three primary another attribute that the natural diamond
markets being targeted: the US, China and industry can use to di erentiate its product
India. from man-made. ALROSA says it expects the
product line to be available in early 2020,
ALROSA’S LUMINOUS DIAMONDS with the US and China being the initial target
CAMPAIGN markets.
In September ALROSA said it was in talks
with several jewellers about joint-marketing ARGYLE OFFICIALLY CLOSING
the company’s strongest fluorescent Easily the industry’s most anticipated supply
diamonds as Luminous Diamonds. catalyst, Rio Tinto’s Argyle Diamond Mine
Fluorescence is most prominent in Russian in Australia is finally set to o icially close in
and Canadian diamonds, which notably tend 2020. In June 2019, management told media
to be found near the Arctic, but fluorescence outlets that in “late 2020 we’ll be stopping
is also found in stones outside of the far operations and will start the rehabilitation
north and is estimated to be present in as of the site”. The mine, which at one point
accounted for almost half of global diamond
“much as a third of all diamonds globally. output in volume, has produced 10-15
million carats in recent years, representing
Diamonds with “strong” fluorescence, the a high-single-digit percentage of the world’s
focus of ALROSA’s campaign, represent as output. An estimated three quarters of
much as a 5-10% of global supply. While
traditionally fluorescence has been seen “

Argyle mine will o icially close © ISTOCK – Ivan-balvan
in late 2020.
– Zimnisky

© ISTOCK – demerzel21 Argyle’s output is brown in colour, lower in
quality or smaller in size – the categories of
diamonds that have been under the most
price pressure in recent years. Argyle supply
coming o line will further balance what has
been an oversupplied diamond market for
most of the last decade. The implication,
which will probably be seen as a positive
catalyst for the industry, will probably garner
a sizable amount of media attention which
could boost industry sentiment and reinforce
consumers’ perception of natural diamonds
– that they are a fleeting, non-renewable
resource, and thus are rare and valuable. ■



2020 VISION:


By Peter Ghilchik: Head of Production and © ISTOCK – ipopba
Multi Commodity Analysis at CRU

Following 2018, a year when almost Whenever world IP falls, metals demand demand but this will not necessarily result in
all commodity prices fell, CRU’s falls proportionately. Since around 1990, rising commodity prices. For that to happen
forecast for 2019 was for commodity the relationship between the IP and metals we also need to see supply tight enough to
prices to do little more than dri . demand series has been around 1:1 – so a 1% cause a constraint. So, generally speaking,
Economic uncertainty surrounding fall in IP is o en accompanied by a 1% fall in in 2020 the market should be looking to
trade wars, weak demand and environmental average metals demand. This implies that supply for indicators of price performance of
policy were, as we expected, the headwinds the outlook for IP is also a good gauge for commodities.
that prevented commodity prices from doing future metals demand.
anything more than hold their ground. A STORMY SITUATION FOR STEEL AND
NICKEL In 2020, CRU is expecting a return to growth SOMETHING EXCEPTIONAL WILL
With the exception of nickel, which rallied for commodity demand as world IP growth HAPPEN IN THE CHINESE ALUMINIUM
from mid-year (up 58% in the first three recovers from a cyclical low of just 1.5% MARKET IN 2020
quarters of 2019) due to supply disruption in 2019, increasing to 2.2% in 2020 and China will see robust aluminium supply
of ore exports from Indonesia, and steel and recovering further to 2.8% in 2021. However, growth in 2020. This might sound pretty
cobalt prices, which fell by up to 35%, most risks are heavily skewed to the downside. normal for China, but what makes it di erent
commodity prices were trading at year-end Our number one risk is that the US could fall is that demand is now rising at just 1% to 3%
slightly up or down on where they started into recession in 2020, which would push out per annum. China’s government-led supply
the year. a global industrial and commodity demand reform for aluminium saw 8% of operational
recovery until 2022. plants close in 2017 which led to production
2020 RETURNS DEMAND GROWTH TO losses in 2018 and 2019. The replacement
COMMODITY MARKETS FOLLOWING DEMAND DRIVES THE MARKET BUT plants for those that were closed as part of
WEAK 2019 (SEE FIGURE 1) SUPPLY DETERMINES PRICE the restructuring will start production from
There is a high correlation between Our base case scenario of an IP recovery 2020. CRU’s China-based analyst team have
world IP and average metals demand. in 2020 will feed through to commodity strong relationships with these smelters. The
plants are built, they are profitable and they
FIGURE 1 Global base metal demand by will ramp up.
8% sector, % and year-on-year change
Furthermore, in 2019 we saw a record
6% level of disruption from flooding in
Shandong, and unexpected outages in
4% Xinjiang and Inner Mongolia. This returning
capacity together with the new supply will
2% move China’s aluminium market balance
into surplus and pressure prices globally.
0% Our view for aluminium therefore is that a
supply surge is due to collide with a weak
-2% Refined lead Primary Refined Primary Finished DATA: CRU recovery in demand, which will force price
Refined zinc aluminium copper nickel lead


Nineevdestto Timacetto Clzoosnuere FIGURE 2 © ISTOCK – Funtay


roughly 10% lower causing the London Metal the same period, we expect steel demand to DOCTOR COPPER TO REMAIN
Exchange three-month (LME 3M) price to cut grow by around 120mt. BELOW $6 000
deep into the 90th percentile of the business For those looking for a metal-specific
cost curve. Certainly some of this planned new reason to go long copper will point to
capacity will be delayed but much of the new the low level of exchange and bonded
STEELMAKERS ARE AT CRISIS POINT investments are in Asia and we expect this to warehouse stocks, which reached the lowest
RIGHT NOW – PRODUCTION CUTS HAVE be mid to low curve, which will threaten higher level since September 2010 at the start of
BEEN TOO LITTLE, TOO LATE cost steelmakers, such as those in Europe October. However, visible inventories are an
The steel market is in a similar crisis position already facing challenges to sustainability as incomplete measure, and macroeconomic
to that of 2015. Steel HRC prices in Asia are the drive to decarbonise grows. and geopolitical news continues to shape
now at the 11th percentile of the cost curve. near-term price formation. Above-average
Nine out of 10 steelmakers are unprofitable IRON ORE PRICES HAVE PEAKED, supply disruptions in 2019 appear to have
at the current Asian HR coil import price. Half FURTHER DECLINES TO COME been ignored.
of steelmakers cannot cover variable costs at In 2019, iron ore prices traded at a peak of
the current price. Although steel output has $120 per dry metric tonne (dmt) in July; but In 2020, as in 2019, the copper market will
fallen, many producers have tried to ride out prices soon crashed as macro concerns and a be in a mathematical surplus but essentially
the storm rather than act. Output cuts have weak steel market coincided with improving balanced, and it is difficult to project
been too little, too late, and oversupply has supply. But let’s put this price “crash” in anything other than a relatively flat profile
led to an unsustainable level of profitability. context. The annual average 62% Fe is for the copper price. We project LME 3M at
expected to be $93 per tonne in 2019. At this $5 900/t in 2020, although this is around
STEEL DEMAND GROWTH DOES NOT price, the vast majority of producers should $500/t above the cash cost net of by-product
OFFSET PLANNED INCREASES IN STEEL be making a good margin. for the 90th percentile mine.
A theme running through CRU’s Steel Market Although we see improving supply and Measured in real terms, the end point for
Outlook recently has been about planned demand fundamentals in 2020, the market our medium-term (five-year) copper price
increases to capacity across the industry. will remain relatively tight and the price level forecast is still below the incentive price
Overcapacity is a problem that isn’t going will yet again be above the 90th percentile required for new projects; hence our concern
away soon. In fact, it looks like it is going to on the cost curve. The situation will not be as that some probable and possible projects
get worse before it gets better. bad as 2019 as we expect prices to average may be delayed or cancelled. If that were the
$78/dmt in 2020. In the following years, case, the long-held deficit story for copper
The period of high profits in 2017-18 especially after the decommissioning of could still emerge sooner rather than later.
provided cash for the steel industry to upstream tailings dams in Brazil, supply will
kickstart an investment cycle. We expect improve further and India will return to its
more than 200mt of capacity to be restarted position as a net exporter. We expect prices
or built between 2019 and 2023. Some of this to gradually decline throughout our forecast
has already come online this year, which has period and move below the 90th percentile
helped create the current supply glut. Over as supply increases from Vale, FMG and other
projects shift the market to oversupply.
New or restarted steel capacity before 2023, Mt

One of the reasons behind the strong rise in

nickel prices in the second half of 2020 was

the Indonesian government’s initial decision

to bring forward a ban on nickel ore exports.

The impact is two-fold.

DATA: CRU First, it will temporarily stall the
Note: capacity includes flats and longs
previously inexorable rise in global nickel

pig iron production, as China, the largest

producer, will be adversely affected by the

loss of Indonesian ore. In the absence of

supplies from Indonesia, Chinese nickel pig

iron production is forecast to drop back from

peak levels in 2019 and stabilise at a much

lower level by 2021. >
The other important effect of the ore


BASE METALS © ISTOCK – wingedwolf

ban, and higher price environment, is the
expectation that investment in new nickel
pig iron capacity in Indonesia will start to
accelerate. Several companies are already
bringing new Indonesian capacity online
and several have plans for more. Elsewhere,
higher prices are also forecast to encourage
growth in class I nickel. Some of the capacity
that was taken offline when prices were low
will be brought back on-stream. In addition,
investment in new hydrometallurgical
projects, specifically using high-pressure acid
leach technology, should be forthcoming.

The bringing forward of the ore ban has
not materially changed our assessment of
the market balance for 2020 which stands
at a 35kt deficit. The small deficit will see


© ISTOCK – AnnaElizabethPhotography

industry stock levels above 13 weeks of DATA: CRU
consumption and thus we believe some of
the speculative froth will be removed from We can try to understand the 2017-2018 the demands of the transition to e-mobility.
the market. We forecast the 2020 annual cobalt boom with the benefit of hindsight And the cobalt metal market, which has
average LME 3M nickel price above $15 500/t, and studying the movements of cobalt prices traditionally been dominated by western
which is 9% above our current forecast for over the past 100 years, identifying potential players, is increasingly seeing Chinese metal
the full year 2019, but down somewhat support levels and average price trends. We gaining market share. As of 2019, all four
below the peak of $18 620/t from September have identified five occasions in the past 100 major Chinese metal producers are listed on
2019. years when prices reached 2018 levels and the LME, and exports of Huayou and Yantai
have given historical context for the causes Cash materials into the European market
WHAT IS THE ‘NORMAL’ PRICE FOR of these jumps – as well as drawn parallels in late 2018 were instrumental in bringing
COBALT? between them and 2018. prices down to normal levels.
In the wake of the collapse in prices in the
past year, “What is the ‘normal’ price for The 2017-18 cobalt boom has stimulated WHICH HORSE ARE YOU BACKING?
cobalt?” was the most frequently asked changes across all three of the key sectors (SEE FIGURE 4)
question by CRU clients in 2019. The usual of cobalt supply: the intermediate market Looking out to 2020, we see a weak return to
approach when forecasting the long-term in the Democratic Republic of the Congo demand growth with risk heavily weighted to
price of a commodity market is to use a (DRC), the chemicals market in China and the downside. In steel, the low prices reflect
cost-based approach, but cobalt’s status the global market for cobalt metal. In the current oversupply and we see more supply
as a by-product means cost analysis can DRC, artisanal mining has reinstated its coming to the market which will cause a
often obfuscate price indications rather than position as the de facto swing producer in stormy year ahead. Copper has a balanced
clarify them. If one uses a net by-product the market and a new wave of mine supply market which makes it difficult to forecast
cost assessment of the cobalt market, costs firmly in the pipeline. The Chinese cobalt anything more than flat prices at this stage.
look far too low due to the contribution of chemicals sector, which has typically been If you were to pick a winner, either based
copper and nickel by-product credits. If one a fragmented and low-volume market, on past performance (in 2019) or on market
uses a pro-rated cost assessment, costs look has transformed and consolidated into fundamentals, nickel would be a safe horse
far too high as too much of the mining costs an efficient, vertically integrated machine to back. n
are allocated to cobalt revenues. which has proven well-equipped to handle


good chemistry

Intelligently providing an integrated
Mine-to-Mineral Solution. |



ITA expects recovery in the demand
for tin in 2020.

By James Willoughby – International Tin Association Market Analyst

The tin price dri ed lower last year, more traditional tin chemicals used in
reaching three-year lows of electroplating, ceramics and many other
US$15 900 in September on the markets were negatively impacted to give
back of weak demand. Despite an overall decline of 3% in tin chemicals in
this, the International Tin 2019. Tinplate continued its long-term steady

Association sees demand recovering this decline while lead-acid use grew around 1%. James Willoughby.

year, and picking up in the medium- to long- The net e ect of the trade dispute and

term future. other macroeconomic issues is that global Chinese solder demand lags white goods

SOLDER USE DISRUPTED BY TRADE tin demand was forecast to fall by around 5% White goods production (YoY growth) 30% ■ White goods production 115 Chinese solder demand (‘000 tonnes refined tin)
STORM in 2019. However, roughly 2% of this decline growth 110
Solder demand has been particularly may have been due to reductions in invisible
stock held by tin users, with real consumption 25%
■ Solder demand




impacted by fluctuations in electronics falling by some 3%. In response, major 5%
markets and dislocation of supply chains smelters announced significant production

related to the United States-China trade war. cuts to the tune of 8% of global production, -5% 95
Semiconductor revenues are normally a good although this didn’t help to reinvigorate the -10%
indicator for solder demand because solder tin market.
is used to join the components together. -15% 90
According to the World Semiconductor WHAT NEXT FOR TIN? 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Trade Statistics (WSTS) group, global sales In semiconductors, the WSTS group forecast
three-year highs and could dampen any move
of semiconductors were forecast to fall by sales to rebound by some 4.8% in 2020, and as upwards. Furthermore, major producers,
which cut production last year, can quickly
some 13% in 2019, a er having risen by a a result we expect solder markets to recover restart tin smelters and fill increased demand.
Overall we are expecting a finely balanced
similar amount in 2018. Although part of the to some 3% growth, closer to its fundamental market this year with prices recovering
somewhat from the lows of last year.
decline was due to destocking related to the rate. Chinese white goods production, which
lesser-known trade dispute between Japan also strongly correlates with solder use, was In the longer term there are multiple
opportunities for tin use in new
and South Korea over semiconductor raw growing rapidly last year (~7%), adding further technologies, including 5G, automation and
electric vehicles. It can also be expected
material supplies, the strong fundamental upside to solder demand forecasts. Although that miniaturisation of electronics – which
has long held back solder demand growth –
growth rate in electronics markets had been there is continued weakness in some tin-using may come to an end over the next decade,
a er which solder demand should match
“knocked o course, significantly impacting markets we still expect consumption to return the typical 5% growth for electronics. These
to growth, likely around 1% year on year. factors are likely to substantially increase
solder demand last year. Should tin users start to restock, demand for demand for tin to above forecast production,
Other tin markets in chemicals, tinplate tin could jump considerably. despite smelter capacity increases this year.
While tin may remain subdued in the short
and lead-acid batteries have been more However this doesn’t necessarily mean term, it does appear to have a bright future
balanced. Tin-based polymer additives ahead. ■
have continued to grow, despite the prices will rocket. Stocks on exchanges

poor economic environment. However, towards the end of last year were sitting at

Tin use in new technologies, include 5G
automation and electric vehicles.
– Willoughby


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Unpacking options for
clean coal technology

By Nelendhre Moodley

Coal, as a significant contributor © ISTOCK – Veronique DANSAC-BON
to polluting the environment,
continues to face global and local Opportunities lie in South Africa developing
headwinds. Is there light at the its own clean coal technologies.
end of this rather dark tunnel for
this particular commodity? © ISTOCK – VanderWolf-Images

SA Mining recently caught up with
Professor Emeritus Rosemary Falcon from
the Faculty of Engineering at the University
of the Witwatersrand to determine whether
there is a future for coal and the extent to
which clean coal technologies are viable.

There is little talk about this anywhere that I
have been or have had access to, however:  

Medupi and Kusile boiler plants are
designed to operate at high e iciency with
low emissions, so CO2 output is planned to
be considerably lower than that emitted
by other subcritical boilers in the Eskom
fleet. FGD plants for SOx capture have either
already been installed or soon will be. Low

“NOx burners have been fitted to these boilers

and to most of Eskom’s other boilers.
The SA Centre for Carbon Capture and

Storage (SACCCS) is working on pilot or demo
scale drilling to experiment with CO2 storage
in rocks in the Zululand site but this does not

Coal is a vital source“ appear to have gone too far at this stage. tax legislation but funds and incentives are
for the production of Some boiler plants are burning biomass required for full-scale implementation. The
thousands of products technologies are available to do so.
so its use as a major which reduces their CO2 emissions, either
chemical element must be co-fired with coal or alone – this would be IS INDUSTRY INVESTING SUFFICIENTLY
recognised, nurtured and sugar industry. CLEAN COAL TECHNOLOGY?
protected. Far more research and development are
– Falcon Some companies are employing the required in clean coal technologies, but
system of co-generation – i.e. the method funding is woefully limited. The needs
whereby excess heat produced in the plant or and conditions in this country and the
furnaces is re-used in the process rather than options available are not being discussed
lost to the atmosphere. or advertised or promoted su iciently. This
may well be because the coal “industry”
The many thousands (>6 000) of small- (producers and users of coal) have had
scale coal-fired industrial boilers in the
region will need to reduce their emissions
in the time frame suggested by the carbon


Carbon is one of the most valuable
Far more research chemical elements in the world.
and development Coal can be used in numerous
are required in clean valuable ways.
coal technologies, but Chemical products from coal tar and
funding is woefully gasification include:

limited. ■ Pharmaceuticals and medicines,
– Falcon
insecticides, varnish.
their heads in the sand in the hope that WHAT ARE SOME CHALLENGES RELATED
environmental pressures would simply “go TO CLEAN COAL ADOPTION AND WHERE ■ Rayon, nylon, pigments,
away” or just not happen. DO OPPORTUNITIES LIE?
Key challenges include lack of interest, dispersants, benzene.
It is interesting to note that this country support, knowledge and funding.
(SA) is famous for its mining, extraction and ■ Fertilisers, paints, plastics.
beneficiation of all our precious minerals Opportunities lie in South Africa ■ Food, cosmetics.
and metals, but that is as far as it has developing its own technologies and ■ Petrol, diesel, para in.
gone. Beyond the mine gate, little or no processes – including the adaptation of ■ Methanol which is converted to
further research or development in fields certain concepts from abroad to suit the
as such environmental impact or emission conditions in this country. I am aware of olefins, polymers, polypropylene,
prevention have been funded, supported, some key coal-fired technologies such as polyethylene, polyester.
encouraged or developed.   circulating fluidised bed combustion and New carbon products from coal:
gasification from abroad that would be
This is a major gap in the country and the answer to the normal use of coal with ■ Carbon for activated carbon –
one which may or may not be solved by a clean coal process that makes use of all
technologies brought in from countries of the GHG and CO2 emissions for the production pollution control (water and air).
north. SA should be developing technologies of valuable commodities. It produces clean
of its own, suited to its own conditions, and air as its final emitted “product” and is truly ■ Carbon fibres – high-strength,
applied to its own products, processes and clean coal technology.
legislations. light-weight.
How does one put costs to all this? A THAT YOU WISH TO IMPART? ■ Carbon electrodes – arc furnaces,
major roadmap should be developed and Only that coal is a vital source for the
steps drawn up with appropriate funding production of thousands of products apart aluminium, silicon manufacture.
to solve these issues, managed by people from electricity so its use as a major chemical
experienced in the situations pertinent to ■ Carbon composites – used in
this country (region).

■ Carbon nanotubes – a $2-billion

market in new strong materials.

■ Graphene – new material with

valuable high-strength properties.

■ Carbon pitch fibres – used

in sport, civil construction,
aerospace, robotics, automotive.
Rare Earth Elements (REE) from coal
– these are needed in all high-end

■ Aerospace, ceramics.
■ Automotive, magnets.
■ Energy storage.
■ Lighting.
■ Petrochemicals.
■ Alloys.

© ISTOCK – Petmal
© ISTOCK – bondsza
element (C) for such manufacturing must
be recognised, nurtured and protected. But
such manufacturing cannot continue without
clean coal technologies. It is vital that South
Africa encourages, supports (financially) and
develops the means whereby this valuable
commodity can continue to be used cleanly
for a long time to come.  ■




What are the options?

By Nelendhre Moodley

Are there any quick fixes on hand © ISTOCK – ToscaWhi
that can help o set the constant
threat of load shedding, and what e iciency is also the lowest capital cost way Many companies and home users have the
options do South Africans have of increasing available capacity (for example disposable income and are willing to pay
with regard to “green energy”? one million energy-e icient light bulbs a premium for green energy but have no
SA Mining recently caught up with liquefied are cheaper than the generator required means to. Eskom could determine how many
natural gas and helium company Renergen’s to power the energy saved). Ideas like this kWh of green energy will be generated in a
CEO Stefano Marani, for his view on the aren’t new. calendar year, and auction them o to the
situation. highest bidder in a simple online platform
One approach that could help bridge the with a minimum reserve price. The price paid
HOW WOULD YOU DESCRIBE divide between the perceived “high” cost of per kWh in an auction for “green” energy
SOUTH AFRICA’S CURRENT ENERGY renewables vs traditional coal generation, would be significantly above that of dirty
CIRCUMSTANCES? an issue that has been laid forward as an power, which means it would be financially
The easy answer is dire, but that is not a argument against bringing more renewables beneficial for Eskom to get as much clean
helpful response. More practically speaking, online, is to introduce a free-market system. energy on the grid as possible as this would
one needs to focus on our strengths and become more profitable than coal-generated
weaknesses, and develop a plan from that CNG filling station. power.
Liquid fuels are in good shape TO THE ECONOMY AND HOW WELL IS
(barring some minor issues which are not RENERGEN POSITIONED IN THE ENERGY
insurmountable) and coal reserves are MARKET?
plentiful. Gas and electricity need work. No single energy source presents the
Renewables had a good start, but political proverbial silver bullet, but globally gas is
ideology seems to be an inhibitor to current becoming a critical component to the world’s
growth in the sector. energy mix for many reasons, primarily for
its low carbon footprint. As an economy we
WHAT QUICK FIXES CAN WE IMPLEMENT already fall far behind many other countries
TO TURN THE POWER SITUATION when it comes to how widely gas is used,
AROUND? and this puts us at a distinct disadvantage.
The term “quick fix” is almost an oxymoron As climate change initiatives grow, it is not
in that fixing the cause takes time. Only the impossible to see a scenario where products/
symptom can be repaired quickly. South countries experience boycotts on exports as
Africa’s challenges require taking di icult a result of the carbon footprint. Look at Greta
decisions which would contradict ideology. Thunberg’s “flight shame” movement and
We can tweak at the margin with a few how quickly it gained traction.
simple wins like simplifying home use and
small-scale solar and o ering incentives to In South Africa gas could easily be more
install this kind of generation. Improving important with the right policy reforms,
but for now gas remains almost impossible
to extract locally (Renergen has the only


“ “

Eskom could auction o green energy to the
highest bidder in a simple online platform.

– Marani

onshore petroleum production right, and will join seven other nations to export the © ISTOCK – kodda
there are no plans to issue more), and critically important element helium.
importation is technically very challenging
at this stage due to infrastructure and The company also began drilling a
legal constraints. Ironically the result is horizontal well into the sandstone trap in the
that Renergen has a distinct first-mover Virginia Gas Project, which has the potential
advantage in domestic supply, but this to become an energy game changer locally.
also means we are pioneering the local gas
economy at our expense which is a challenge WHAT IS YOUR STRATEGY FOR 2020/21
we relish and feel good knowing we are AND WHAT DO YOU HOPE TO ACHIEVE IN
making a di erence to the planet. THE NEXT TWO YEARS?
Complete exploration of the new gas
WHAT ARE SOME OF THE LATEST reserves in the sandstone and to plan the
DEVELOPMENTS UNDER WAY AT second phase of the Virginia Gas Project,
RENERGEN? while bringing phase one online in 2021.
Construction of the plant has begun, which
means the clock is now counting down to ANY OTHER INFORMATION YOU WISH TO
South Africa having its first commercially IMPART?
available LNG. It also means South Africa Gas reduces a truck’s running costs by over
25%. This has the potential to more than

Aerial view of the
Virginia Site.

double the truck’s profit margins or reduce
logistics costs which directly results in a
reduction in the custody chain of retail
goods. The more diesel is replaced by gas in
logistics, the better for the country overall
financially and environmentally. ■


ASX-listed Resource Generation © ISTOCK – papa1266
(Resgen), through its subsidiary
Ledjadja Coal (LCL), has signed a The key terms of the Transport of Transnet capacity o ers.
Transportation of Coal Agreement (TCA) Coal Agreement are set out below:
with Transnet SOC for the delivery of ■ A concessional tari arrangement
3.6mtpa of export-quality coal to a ■ The TCA has a 10-year term
Richards Bay terminal on a “take or for the first 40 months of the
pay” basis. commencing from 1 June 2022 on a agreement, however there is a
“take or pay” basis. subsequent alignment (if necessary)
Transnet has the Waterberg rail with the whole-of-industry
capacity expansion process with the ■ Contracted tonnage of 3.6mtpa arrangement that will commence
Revised Stage 2-3 of the Waterberg from 1 April 2024.
Expansion Programme already under with the ability to move additional
way, the company said. tonnage from time to time based on

The expanded rail capacity
will ensure that coal from LCL’s
Boikarabelo Coal Mine and other future
neighbouring mines is transported to
the intended end users.

Papi Molotsane, interim CEO,
said: “This is an important milestone
towards achieving financial close for
the project.”






Worley drives the agenda Rapid prototyping example. of a project, while 7D visualisation o ers

By Nelendhre Moodley Starting with a 3D model, 4D adds the the capability to include operational and
benefit of a project schedule, providing
Digitalisation and sustainability greater insight into the project schedule maintenance-related technical data in the
will be the hot topics discussed throughout the design process. 5D
at the 2020 Investing in African visualisation adds cost and budget live model.
Mining Indaba conference. As components to the 4D model and provides
sector leaders in Technology and projects with greater control and visibility of Each dimension of data o ers customers
Building Information Modelling (BIM), Robert costs.
Hull, vice president for Worley’s Mining, a fuller understanding of their project, from
Minerals and Metals Services for Africa, The benefits of 6D and 7D come to light
believes Worley is well placed to provide at handover and provide end users with a generating accurate programme data to
insight into the highly successful BIM process, better understanding of the lifecycle and
which extends from 3D modelling through to sustainability of their assets. 6D integrates the producing accurate estimate costs, and
4D, 5D, 6D and 7D. data related to the optimal commissioning
While BIM was originally developed for the ultimately providing a digital data bank that
building industry, Worley invested heavily in
adapting the methodology for the mining, can be used to drive e icient operation and
minerals and metals sector.
“Following Worley’s decision a number management, and better business outcomes.
of years ago to pioneer the development of
digitalisation in mining, we have become BIM manager for Worley, Russell du
the leader in delivering BIM solutions to the
mining sector,” says Hull. The company uses Plessis, explained that while South Africa’s
the BIM process to take 3D design right up
to 7D by integrating 3D intelligent design
data mapping with di erent engineering
design processes and programmes to create
a simulated operational facility model, or
a “digital twin”, which may also be a virtual
or augmented reality model of the designed
facility that is enhanced with operational

mineral and mining processing sectors have

6D and 7D traditionally focused on upfront capital costs,

Worley will showcase related projects at the BIM allows a planned, pro-active approach
Mining Indaba in February
to assets that are significantly beneficial,

especially in terms of costs.

But, like many projects that showcase a

revolutionary step change, there is o en an >

initial resistance to adoption.


Engineering and project management services
to the mining industry

• Innovative solutions • Concept-to-completion
• Efficient digital asset management • Design expertise
• Project capabilities for all minerals
from design through construction to • Mining centre of excellence

Visit Worley
Mining Indaba 3- 6 February 2020

Stand 504

Exploration Mine Mining & Mine Materials
& Evaluation Planning Development Handling

Mineral Tailings & Waste Hydrometallurgy Pyrometallurgy
Processing Management

Transport to Environment Non-Process
Market & Approvals Infrastructure



“Just as when engineering moved from WORLEY’S STRATEGIC VISION
the drawing board to the computer, there When discussing Worley’s business
was initial resistance to change which gives acquisitions and its strategic vision
way to acceptance once the initiative delivers in a recent interview, its CEO Andrew
extraordinary results. Our customers are Wood said the company was shaping
now seeing the insight they can have into its strategy by understanding the
their project’s safety, costs and optimisation mega trends influencing the world in
upfront, and are on board with the process,” which they operate, by listening to
notes Hull. its customers and working alongside
them to address their challenges
Hull adds that a number of Worley’s tier and by engaging their people. The
one mining customers “are on board with the company is seeing contract awards
BIM process as a whole”. across all sectors, geographies and
phases of projects, which provides
A digital twin. them with a solid platform of early
positions for the next wave of
“ investment. Worley is now seeing its
customers move into that next phase
of investment.

Customers are now seeing the insight they can have into “
their project’s safety, costs and optimisation upfront.
– Hull

INVESTING IN AFRICAN MINING achieved by adopting 6D and 7D modelling.
INDABA 2020 “At the moment we are rolling out two
With this being Worley’s first Mining Indaba
conference post the acquisition of Jacobs’s projects related to 6D and 7D and will have
Energy, Chemicals and Resources division in show reels (visuals) that demonstrate
2019, key executives from Australia, the UK this success at the Indaba, including the
and Chile will be representing the company cost advantages and benefits related to
at the event, including Worley’s president for sustainability,” says Hull.
Mining, Minerals and Metals Services, Andrew
Berryman, and its head of Africa, Europe and Sustainability is a key topic at the
Middle East, Denver Dreyer, who is scheduled conference and with Worley’s BIM 7D model
to deliver a presentation on digital twinning which is focused on sustainability and
on Wednesday, 5 February. operation, the company is well positioned
to discuss the opportunities related to
Worley will use the conference as an achieving operational sustainability
opportunity to engage with their existing throughout a project’s lifecycle.
and potential customers to explore further
opportunities in Africa as the industry “One of the fundamentals of engineering
continues to grow. design is sustainability and as mines have a
determined life of mine, sustainability has
Meanwhile, having already extolled the always been top of the agenda for mining
benefits of adopting 4D and 5D models on customers. Moreover, sustainability has for
mining projects, the company will focus years been driven by the Mining Charter and
on highlighting the benefits that can be Worley continues to drive these requirements
with passion,” says Hull. ■



© ISTOCK – ergeyryzhov

MMP drives mining R&D
In the past, R&D activities were accused of being divorced from real
Research and development remains the cornerstone of needs and being purely biased towards academic qualifications and
progress, and for the mining sector in particular, which recognition. The research programmes undertaken at the Mandela
looks for opportunities for improved e iciency, safety and Mining Precinct are fully aligned to industry needs and guided by
productivity. SA Mining recently caught up with Mandela senior members from mining companies thus ensuring that the
Mining Precinct co-director Navin Singh to chat about the research is focused and directed. This is critically important to
importance of R&D in the mining sector and initiatives under way at ensure that there is uptake of research outputs.
the precinct.
The South African Mining, Extraction, Research, Development
DECADE? focused and directed towards industry-
The South African mining R&D landscape has been in a state of identified needs and challenges and aims
decline in the past decade. Funding has “to maximise the returns of South Africa’s
been limited with research projects being mineral wealth through collaborative,
sourced via competitive bidding or tender- sustainable research, development,
based approaches. Since the collapse of the innovation and implementation of mining
Chamber of Mines Research Organisation and technologies in a socially, environmentally
its successor CSIR Miningtek, there has been a and financially responsible manner
steady and continuous erosion of mining R&D that is rooted in the well-being of local
capability and capacity in the country. communities and the national economy”.

When one assesses the challenges IS THE RISE OF THE 4IR INFLUENCING
facing the sector, in particular for R&D IN MINING?
occupational health and safety, decreasing The current gold and platinum mining
productivity, increasing costs, it is clear industries are faced with ever-increasing
that the development and deployment challenges. Besides the challenges
of technological solutions hasn’t made detailed by the SAMERDI programmes,
significant inroads to assist the industry. additional and current challenges relate to
future-proofing the industry in terms of 4IR, digitalisation, artificial
HOW IS THE MANDELA MINING intelligence, autonomous machines, and preparation in identifying,
PRECINCT FOSTERING R&D? designing, developing and implementing new ways of interacting
The degradation in research capacity resulted in various research with data/information systems. The Real Time Information
entities being established that provide niche solutions to challenges Management Systems (RTIMS) programme under SAMERDI thus
in mining. There is not one entity that has all the solutions or all the aims to find solutions through the use of improved technology and
o erings. It is on this basis that the Mandela Mining Precinct works – research to minimise the risk of mine closures.
the principle of collaboration with identified research partners from It is focused on ensuring that the right information is sent to
academia and research organisations that draws on the collective the right person at the right time. This is important to allow for
capability. Hence the motto “Minds for Minds”. the management of mines to be done proactively rather than
reactively as it will allow for better use of assets to ensure maximum
The second approach to fostering R&D is that the collaboration exploitation of the mineral resource.
is also at stakeholder levels (that is, state and the industry).
This ensures that there is coordination of research needs and
importantly consolidation of resources (both human capacity and


© ISTOCK – abadonian
© ISTOCK – EunikaSopotnicka

Mandela Mining Precinct’s research
programmes are aligned to industry needs.

IS SA COLLABORATING WITH MINING INSTITUTIONS IN OTHER technologies to a prototype level (or technology readiness level
(TRL) 6). The Mining Equipment Manufacturers of South Africa

At this stage the collaboration is within the borders of the country. The (MEMSA) is geared as a potential commercial partner to pick up
these technologies and see this through to commercially available
approach was that we need to find South African-centric solutions to
products (or TRL 9).
South African-centric problems. This is essential to rebuild and regain
MEMSA is housed at the Mandela Mining Precinct and research
South Africa’s status as being a world leader in mining R&D. programmes and progress are shared with MEMSA members to keep
The SAMERDI strategy is focused on:
A database has been developed called TARA (Technology
“■ Longevity of Current Mining operations (LoCM): The focus is to Availability and Readiness Atlas) that allows for MEMSA members

increase the e iciency of extraction, improvement in occupational to showcase their product o erings in a coordinated manner. TARA

health and safety and reduction in costs of is available to mining companies who

current conventional mining operations. There has been can then search the database for specific
products or in categories and will then
■ Mechanised Drill and Blasting (MD&B): To
develop fully mechanised mining systems that promote SA mining equipment. This is
will allow for remote drilling and blasting of a steady and intended to allow for more local products
narrow hard-rock mines (in particular the gold continuous erosion of to be purchased and deployed in mines.
and platinum mines). mining R&D capability This could reduce operating costs of
“ mines, allowing for preservation of jobs,
■ Non-Explosive Rock Breaking (NERB): and capacity in the and also allow for an increase in sales at
the manufacturers and thus potentially
To develop complete mining systems for
extraction that are completely independent of

the use of explosives. increase jobs.

■ Advanced Orebody Knowledge (AOK): This country. HIGHLIGHT RECENT DEVELOPMENTS
project aims to make “glass rock”, so that IN R&D AS RELATED TO MINING?
instead of mining blind, an accurate 3D A massive win has been the fact that
there is a consolidated single strategy for
real-time model can be used for safety and – Singh mining R&D.
There is commitment to build research capacity and
■ Real Time Information Management Systems
(RTIMS): The focus is on ensuring that the right information is sent to
capability by funding post-graduate studies at universities via the
the right person at the right time. establishment of SAMERDI research centres.

■ Successful Applications of Technology Centred Around People The innovation challenge for developing a new lightweight,
(SATCAP): The programme focuses on the challenges around
quieter, faster, more e icient rock drill – the Isidingo Challenge – has
technology implementation and the impact on people.
identified three potential solutions.
MEMSA ASSISTED LOCAL EQUIPMENT MANUFACTURERS IN Work is under way to develop a resource atlas for gold and

REDUCING JOB LOSSES? platinum operations to identify where mining opportunities could

From the outset it was identified that there needs to be strong and exist from previous mining areas as well as unmined areas.

direct linkages between the R&D fraternity and SA’s local mining Key geophysical tools have been identified that could assist in

equipment manufacturers. developing a 3D picture of the rock mass around the stope area
The R&D activities of the Mandela Mining Precinct are to develop
that will have significant impact on hazard identification and in >
ameliorating the hazards from falls of ground.


Collaboration is important across all spheres in the mining industry. The pooling of resources
is key in leveraging opportunities.
It is imperative that we ensure we minimise our environmental footprint, by reducing the
demand on resources such as water, energy etc.

Through the NERB programme for example, we aim to minimise the extraction of waste
material from underground mining. Not only will this have an impact on the surface deposits
of waste but also imply less demand for electricity to remove the waste rock from great depths
to surface.

The reduction of the use of water in a water-scarce country is important. Also to ensure that
water taken out from mines is clean (reducing acid mine drainage effects).

Reduction in carbon emissions such as reducing the dependency on diesel usage etc. will
require significant investment into R&D to find the appropriate solutions.

The efforts at the Mandela Mining Precinct will take the industry forward as it:

■ Builds on existing RD&I capability to create capacity.
■ Is focused research towards delivery and impact.
■ Is aimed at restoring SA as a world leader in mining RD&I.
■ And is highly dependent on all stakeholders’ support.

As the prices across all the mining commodities continue in a downward slump, marginal
mines face the ever-increasing risk of mine closure and thus the rehabilitation and regeneration
of mine land post-mining is another critical issue that needs to be addressed now.

Lack of R&D programmes and adequate funding will exacerbate the degradation of R&D
capability in the country and hinder the ability to find solutions that will allow mines to operate
cheaper, safer and more efficiently.

While SA has a large mineral endowment, the country remains vulnerable to the market’s
needs and prices. To ensure that there is a diversification of contributions to the GDP, the
development of capabilities for manufacturing of mining equipment for local as well as exports
markets is viable.

If there is no R&D then this opportunity and capability for manufacturing would be lost and
further impact on creating new job markets. n




Following wet processing equipment “Many of our former apprentices are Our CDE Apprenticeship Programme
manufacturer CDE’s longstanding the driving force behind some of the most provides young people with the opportunity
partnership with local colleges in Northern ambitious and significant projects we have to play a significant role in the future of
Ireland to upskill the next generation of delivered in recent years,” he said. “They the company and the development of its
engineering talent, today almost one-third have progressed within the company to pioneering technologies.”
(30%) of its global Design Team is made up senior design engineer roles and are working
of graduates from its CDE Apprenticeship towards management and leadership roles. Testament to its success, the programme
Programme which is responsible for the boasts a 100% retention rate for all
design of almost 2 000 wet processing plants “An important part of CDE culture is to apprentices who have progressed to full-time
across the globe. support and encourage innovative thinking. roles in CDE.

Since the programme was launched, CDE
has recruited 45 apprentices, including 14 in
its 2019 intake. Among them is its first female

At the company’s manufacturing facility
in greater Belfast, CDE has also partnered
with Northern Regional College to tackle
skills shortages and equip apprentices with
traditional engineering skillsets such as

Sean Kerr, chief operating officer at CDE,
said it was an important resource for the
company as it equipped future recruits with
the skills and knowledge to lead the way in
the wet processing industry.


By ENSafrica’s Lloyd Christie, Director: Natural Resources and
Environment and Mansoor Parker, Executive: Tax

The Integrated Resource Plan “green metals” and the utility of these metals Lloyd Christie.
(IRP) which was released on 18 rely on their extraction and that, in turn,
October maps out the country’s relies on a mine being established. Mansoor Parker.
current and future electricity priorities and the impact of climate change in
demand and provides for nine The South African Planning Commission’s achieving them.
policy interventions to ensure the pragmatic National Development Plan envisages the
security of South Africa’s electricity supply. South African transition to be to a low- The carbon tax will impact mining
carbon, resilient economy and a just society companies in two ways. The first is the
The need exists because of doubts in which all sectors of society are actively direct carbon tax liabilities which mining
about the ability of the world energy supply engaged in building a competitive, resource- companies will be required to pay to the
infrastructure to meet the rising global e icient and inclusive future.
demand in circumstances where the present
trends in energy consumption are neither The transition to a low-carbon economy
secure nor sustainable. is o en portrayed as being in conflict with
mining and it is generally assumed that
But “energy drives the world” and an natural resource-based economic activities
energy transition is therefore inevitable, and have no future in a low-carbon economy.
socio-economic implications unavoidable.
However the transition will rely heavily
Thus the urgent call has been sounded for on the availability of the metals and minerals
this transition to be a just transition; not just necessary for the manufacturing of clean
in South Africa, but globally. technologies.

Sustainable mining, within a green The question then is how sustainable
economy, will continue to o er a solution. investment can be attracted, in order to
develop our green metal resources, in the
The current energy system relies face of carbon mitigation measures such as
overwhelmingly on fossil fuels and the carbon tax.
associated combustion technologies.
The Carbon Tax Act 15 of 2019 (the
The transition from a fossil fuel base to an act), which commenced on 1 June 2019, is
alternative energy system relies, in particular, a bold step in the national debate about
on metals to manufacture and maintain what sustainable development means
energy-conversion technologies. in the context of the nation’s economic

“These low-carbon technologies rely on “

An energy transition is inevitable and
socio-economic implications unavoidable.

– ENSafrica

© ISTOCK – vlastas


© ISTOCK – Chaiyaporn1144

South African Revenue Service. The second the introduction of the carbon tax for the first However a voluntary carbon offset
is the increased costs that mining companies phase will not have an impact on the price scheme may develop which will enable
will face as their suppliers reprice their goods of electricity. This will be achieved through a companies and individuals to purchase
and services to include the carbon tax. tax credit for the renewable energy premium carbon offsets on a voluntary basis outside of
built into the electricity tariffs and a credit for the carbon offset compliance market.
Informal evidence which we have the existing electricity generation levy.
collected thus far suggests that mining As indicated in the Carbon Offsets Paper,
companies’ direct carbon tax liabilities will As these relief measures are withdrawn the purpose of introducing a carbon tax is
generally be fairly low during the first phase during the second phase of the carbon tax intended to send the necessary policy and
of the carbon tax (which ends in 2022). mining companies will experience the effect price signals to investors and consumers
of increases in the price of electricity. to ensure that future investments are more
The situation may change during the climate-resilient.
second phase of the carbon tax as the In order to reduce the impact of direct
generous level of tax-free allowances may carbon tax liabilities, section 13 of the act But in the South African context where
be reduced which would have the effect of (read with schedule 2) provides for carbon there is an electricity crisis and the economy
increasing the effective rate of carbon tax for offset allowances. is struggling, the transition to a greener
mining companies. economy will need to be a gradual process
Depending on the industry involved that balances various stakeholders’ interests.
In addition, in order to achieve alignment and the activity/sector undertaken,
between the carbon tax and the soon-to- companies will be able to reduce their Developing a stronger carbon offsets
be-legislated carbon budgets, which will carbon tax liability by using offset credits market in South Africa could be one of the
be administered by the Department of up to a maximum of 5% or 10% of their GHG mechanisms used to effect this transition.
Environment, Forestry and Fisheries, it is emissions.
proposed that all emissions that are within However, change also brings opportunity.
a mining company’s carbon budget will According to the Carbon Offsets Paper The carbon offset market will bring about
be taxed according to the current rate of (April 2014, published by National Treasury) opportunities for green mining companies
carbon tax (R120 per ton of carbon dioxide (Carbon Offsets Paper), carbon offsets will to use their considerable technical prowess
equivalent emissions) while emissions which incentivise investment in projects that to develop green technology methodologies
exceed the carbon budget will be taxed at a can generate considerable sustainable and approved offset projects.
higher rate of carbon tax. development benefits in South Africa, Proactivity is key in identifying potential
including channelling capital to rural opportunities for investment and capital
Mining companies whose current carbon development projects, creating employment, growth in an emerging market that values
tax liabilities appear low should take into restoring landscapes, reducing land sustainable development. n
account the likely future increases to the cost degradation, protecting biodiversity, and
encouraging energy efficiency and low
“of carbon tax and plan accordingly. carbon growth.
The second area in which mining
companies will feel the effect of carbon tax is Carbon offset allowances in the context
through their supply chain. of the carbon tax regime will kick-start the
carbon offset market in South Africa, with its
To cushion the potential adverse impacts mandatory demand and supply.
on energy-intensive sectors such as mining,

Carbon offsets will incentivise investment in “
projects that can generate considerable sustainable

development benefits in South Africa.
– ENSafrica

© ISTOCK – Zolnierek





Add pressure on the mining industry

By Chris Stevens: Head of the LEX Africa Mining Practice Group

As if mining by its very nature community’s consent before granting a population as a whole, rather than the need
is not di icult enough mining right. The applicants also relied for returns on capital investment. “Creeping”
from a technical, financial, on international laws for their contention nationalism is o en used as a political tool to
environmental and labour that mining rights may only be granted woo the electorate.
point of view, African mining with the traditional community’s consent.
companies face added pressure due to The court held that having regard to the This drive towards nationalism is most
increasing community-related obligations overall purpose of the IPLRA and the Mineral o en achieved by changes in legislation.
and the general tendency of increased or Petroleum Resources Development Act For example, The Democratic Republic of
“creeping” resource nationalism. (MPRDA), and given the status of customary Congo recently amended its legislation to
law under the South African constitution, extensively increase royalties, taxes and other
One should caution in believing that there was no reason that the two acts obligations, provide for the designation of
these issues are unique to Africa as the same couldn’t operate alongside one another strategic metals and substantially increased
tendencies apply in many other countries and the MPRDA didn’t trump the IPLRA. The royalties and abolish clauses in mining
including South America and Russia. court held that the minister lacked any lawful agreements giving fiscal stability for 10 years.
authority to grant a mining right to TEM,
Mining o en occurs in rural remote areas without complying with the IPLRA. Tanzania has substantially revised its
with indigenous communities. There is also mining code by imposing extra obligations,
a tendency for communities to mushroom In a 2018 Constitutional Court case, increased royalty rates and increased
around mines once a project develops due Maledu v Itereleng Bakgatla Resources, the government participation. Local content
to potential job opportunities, o shoot court also considered that the IPLRA and regulations were also imposed.
industries and procurement for the mining the MPRDA should be interpreted and read
operations. harmoniously and that communities had a Zambia and Kenya have also increased
right to decide what should happen to their royalties, increased state participation and
There are two prime examples in South land and must consent before they may be imposed extra obligations to the benefit of
Africa where issues with the host community deprived of their land. the state.
have resulted in delays. The first involves
the Xolobeni mineral sands project of A further issue is the resettlement of Resource nationalism is a hot topic in
Transworld Energy and Mineral Resources communities on land over which a mining South Africa. Radical change was brought
(TEM), an Australian mining company. right is granted. An example of a successful about in 2004 by the MPRDA which converted
Ultimately the disputes with the Xolobeni relocation in South Africa is the Mogalakwena the private mineral rights system into a state
community resulted in a high court ruling. Mine, one of the most profitable platinum licencing system with state custodianship
mines in the world. The biggest issue was the over mineral resources.
The applicants relied on the Interim relocation of graves and an improvement in
Protection of Informal Land Rights Act living standards. South Africa also introduced the concept
(IPLRA) and the requirement that their of historically disadvantaged South Africans
consent is needed before they may be Many mining operations worldwide have (HDSA) and a mining charter to incorporate
deprived of their land. They argued that been detrimentally a ected by the state’s HDSAs into the mining industry including
such consent must be fair and informed. desire that mineral reserves and resources in respect of ownership thereof. From
The Department of Mineral Resources are used to benefit the country and its 1 March 2010, royalties are payable to the
did not ensure the applicants had the state on all mining operations and dra
amendments to the mining legislation
© ISTOCK – Jacek_Sopotnicki proposed restrictions on exports and
requirements to beneficiate. At this stage
there is no state participation in mining
projects, but there is a state mining company
that is more involved in mining operations
than ever before.

Many African mining operations are
successful notwithstanding the burdens
imposed on mining companies. However a
balancing act must harmonise the interests
of the state, the community and the mining
company. O en this delicate balance is
disturbed by the actions of one or more
of the stakeholders and then o en to the
detriment of all concerned.

LEX Africa is an alliance of law firms
formed in 1993 and with over 600 lawyers in
25 African countries. ■




The views expressed are the author’s own and do not necessarily reflect SA Mining’s editorial policy.A REVIEW OF
© ISTOCK – vencavolrab

South Africa finally has a new Integrated such decisions, the ministers must take into
Resource Plan (IRP) (October 2019) account all relevant considerations, including
which brings some certainty. According environmental principles and the interests of
to the plan, our dependence on local communities. This High Court decision

coal will continue but there is to be is binding since the Supreme Court of Appeal

more focus on clean coal technologies and dismissed Atha-Africa’s application for leave to

assistance for Eskom to meet the minimum appeal.

emission standards. Laudable goals, but time The Mining Charter was successfully

and the national budget will tell whether this challenged by the SA Minerals Council in

is achievable. The increased allocation for Chamber of Mines of South Africa v Minister of

renewable energy is encouraging, as is the Mineral Resources and Others on the “once

specific recognition of the contribution of empowered always empowered” principle, but

small-scale embedded generation, which would the Department of Mineral Resources and Energy

certainly help the mining industry as many such has sought leave to appeal at the Supreme

projects are already under way in the sector. Catherine Warburton Court of Appeal. Concerns have been raised
There is also talk of reducing the cost of supply from the mining industry regarding this appeal,
to specific users and it will be interesting to see Warburton Attorneys on the basis that more support is needed from

whether this may come to the aid of certain cash-strapped government, rather than opposition, at a time when the need for

mines. investment is a key priority. ■

New Dra Financial Provisioning Regulations were

published in May 2019, but had not yet been finalised or

brought into e ect at the time of writing this article. The

mining industry has welcomed the dra regulations as being Warburton Attorneys is a Johannesburg based law
an improvement on previous versions of the regulations, firm that is 100% South African women owned. We
although some uncertainty remains as to whether these dra provide specialist advice on environmental, mining,
regulations will be promulgated before February 2020, or energy, occupational and mine health & safety
whether the holders of an existing mining right will have to legal issues.
comply with the controversial 2015 version of the Financial

Provision Regulations.

Some key developments have emanated from our courts, In particular we assist with:
particularly regarding the interests of local communities ■ Due diligence investigations;
a ected by mining activities. The Constitutional Court held, ■ Contractual advice;
in Maledu v Itereleng Bakgatla Mineral Resources (the Maledu ■ Safety, health and
judgment), that if the Interim Protection of Informal Land
Rights Act 31 of 1996 (IPILRA) applies, any deprivation of environmental legal auditing
informal rights to land must be done in terms of section 2 of and compliance assessments;
IPILRA. Therefore, no person may be deprived of any informal ■ Risk assessments;
right to land without their consent. Furthermore, a mining ■ Legal opinions; &
right holder must finalise the section 54 process under the ■ Litigation and arbitrations.

Mineral and Petroleum Resources Development Act 28 of 2002 Warburton Attorneys collaborates with IMBEWU
(MPRDA) before eviction proceedings may be instituted. In Sustainability Legal Specialists (Pty) Ltd, a
Baleni v Minister of Mineral Resources (the Baleni judgment)
sustainability legal consultancy –

the High Court also found that the MPRDA and IPILRA must 53 Dudley Road,

be read together and that the minister is obliged to obtain Corner Bolton Avenue,

the full and informed consent from holders of informal land Parkwood,

rights under IPILRA, prior to granting any mining right in terms Johannesburg,

of section 23 of the MPRDA. Mining applications in protected 2193

areas came to the fore again in Mining and Environmental Tel: +27 11 447 6848

Justice Community Network of South Africa v Minister of Fax: +27 11 447 6868

Environmental A airs (the Mabola judgment), where the High Email: [email protected]

Court set aside the decisions of then environmental a airs and

mineral resources ministers who had granted approval under,

inter alia section 48 of the Protected Areas Act 57 of 2003

(NEMPA), to Atha-Africa for the establishment of a coal mine in

the Mabola Protected Environment. It was held that in making




We’ve seen numerous prospecting By Lili Nupen (Director), and Mining Charter III requirements would The views expressed are the authors’ own and do not necessarily reflect SA Mining’s editorial policy.
rights being granted with an empowerment apply should a mining right be applied for.
condition that requires BEE participation, Nicole Limberis-Ritchie
sometimes even up to 51%. The question So where does the imposition of 51%
is, where does this come from and is it (Senior Associate) and empowerment of prospecting rights come
reasonable, or even lawful given that Minister from?
Gwede Mantashe has specifically announced Emlyn Pillay (Candidate Attorney)
that the Mining Charter III does not apply to Section 100(2)(a) of the MPRDA empowers
prospecting rights? had the Reviewed Mining Charter 2017 the minister to develop a Mining Charter to
interdicted, where it was superseded and set targets for historically disadvantaged
Mining Charter III was published on replaced by Mining Charter III. South Africans to enter and participate in the
27 September 2018 and amended on mining industry.
19 December 2018. Although it aims to Unlike the dra published for comment,
empower previously disadvantaged South which expressly excluded prospecting rights, Section 17(4) of the MPRDA empowers
Africans and to increase certainty in the Mining Charter III is completely silent on its the minister to grant a prospecting right to a
mining industry, to encourage both local and application to prospecting rights. This begs holder conditionally, upon compliance with
foreign investment, it appears to fail in many the question as to why. empowerment conditions as provided for in
respects, including creating certainty around section 2(d) of the MPRDA, which speaks to
empowerment requirements for prospecting. Perhaps the current empowerment the substantial and meaningful expansion of
requirements are extensive in that they opportunities for historically disadvantaged
The Reviewed Mining Charter 2017, require a 30% BEE shareholding at holder persons. However, when imposing any such
published on 15 June 2017, also referred level, distributed as follows: 20% ownership conditions, the minister must have regard to
to as the “Zwane Charter”, distinguished by BEE entrepreneurs, 5% by ESOPs and the type of mineral concerned and the extent
between empowerment requirements 5% by community trusts. To include such a of the proposed prospecting project.
for mining and prospecting rights. In burdensome requirement seems irrational
terms thereof, a holder of a mining right and unworkable. Perhaps, on a proper Accordingly, it is evident that there
was required to have a minimum of 30% interpretation of the Mineral and Petroleum are circumstances where a holder of a
shareholding held by black persons, Resources and Development Act, 28 of prospecting right may lawfully be called
including a corresponding percentage of 2002, as amended (MPRDA), the lack of any upon to comply with certain empowerment
voting rights, while the empowerment mention of prospecting rights in Mining targets as the decision maker may deem
shareholding requirement for a prospecting Charter III leaves the door open for decision suitable having regard to the type of mineral
right was 50% plus 1, which was to include makers to apply empowerment requirements concerned and the extent of the proposed
voting rights. with some element of discretion, because prospecting project. However, we submit
once exploration reveals a resource, the that to include empowerment conditions
The former minister of Mineral Resources exploitation would be economically viable (i.e. 51%) into prospecting rights that are
Mosebenzi Zwane’s rationale for this appears more stringent than those set out in Mining
to have been to ensure the entry of black Charter III (i.e. 30%) would be irrational at
persons into the industry at a lower cost. best.
The Minerals Council expressed concern of
the substantially larger target for prospecting Including conditions such as the 51%
rights, as prospecting does not always result has indeed led to widespread confusion
in mining operations occurring and may in the mining industry and, in e ect, the
therefore be short lived and render minimum implementation of the Reviewed Mining
short- or medium-term returns. Charter 2017 which has been repealed and
replaced. Our view is that the minister may
Indeed prospecting o en requires lawfully impose empowerment conditions
substantial financial outlays with no he deems fit, on prospecting rights, however,
foreseeable cash flow for years to come, such conditions must be imposed lawfully
if at all. Accordingly, the Minerals Council and rationally within the current legal and
approached the High Court and successfully policy framework and should not go beyond
what is envisaged in Mining Charter III. ■

Nupen Staude de Vries Inc. is a boutique law firm specialising in Our dedicated team combines in-depth
Mining, Environmental and Construction Law. We aim to provide highly knowledge and experience with an
specialised and relevant legal service to the sectors within which
we operate, which includes both our legal and technical knowledge efficient, solution-oriented approach. We
and expertise as well as access to constructive and well-established are constantly reviewing the latest legal
relationships with the relevant regulators.
We specialise in: developments in the specialised markets in
■ Mining Law ■ Environmental Law ■ Construction Law ■ Dispute Resolution which we operate to be able to advise on and

18 Hurlingham Rd, Illovo, Johannesburg, 2196 ■ Tel: +27 10 880 3285 implement new solutions to the challenges
■ Email: [email protected] / [email protected] ■ faced by our clients.



of toughening mining regulations in Southern Africa

By Ogi Williams – Associate Director, In On Africa

With the ever-fluctuating yet© Simphiwe Nkwali @ Sunday Times REGULATIONS ARE WELL-MEANING, BUT companies that are tied to the mining sector,
steadily increasing demand © ISTOCK – Maciek67FINANCIALLY MISGUIDED … including foreign banks, insurers and law
for raw materials to fuel the One of the most well-known pieces of firms. Such entities would now need to o er
digital age, Southern African legislation in Southern Africa is South a stake/ownership in their business to the
governments have looked Africa’s Mining Charter III. The latest version Tanzanian government. Additionally, any
to structure policies and legislation around of the document developed in September and all mining companies (e.g. contractors,
a number of key themes. Among these is 2018 sees a very in-depth and granular sub-contractors, etc.) will need to utilise a
the main aspect of resource beneficiation outline of the new requirements for mining 100%-owned Tanzanian bank to conduct
for local communities. In more extreme companies. Included among them are points their transactions. The impacts on the sector
cases this has gravitated strongly towards regarding a minimum 30% black ownership will be widespread given the number of
resource nationalism driven by far-le for new mining rights applicants, vague re- international financial services operators
political parties such as South Africa’s empowerment obligations, and the power based in the country, including Barclays,
Economic Freedom Fighters (EFF) and vested in the mining minister to review Citi Bank, Standard Chartered and First
Tanzania’s ruling Chama Cha Mapinduzi and revise obligations from time to time. National Bank from South Africa. A final new
(CCM). This drive by socialist parties has Though the charter is thorough in terms of regulatory limitation to mention is the export
looked to recover power over Africa’s mining how local communities are to benefit from ban on raw and unprocessed minerals which
industry in favour of local governments. procurement initiatives, investor confidence have not undergone a level of processing
With so much focus on the enforcement of has been brought to an all-time low with domestically.
new legislation, an unintended and o en foreign and domestic capital for new projects
overlooked by-product of more stringent drying up. With limited incentive to start … AND INADVERTENTLY STIMULATE
regulations has been the growth of the up new projects, mining companies will AND DRIVE ILLEGAL MINING
informal and artisanal mining side of the likely undertake a “wait and see” approach With so much attention going towards
industry, which itself has a considerable level on the outcome of the current court battle regulating big corporates, far less is
of impact on local beneficiation and revenue. between the Minerals Council and the directed towards addressing inadvertent
Though with noteworthy aims based on Department of Mineral Resources before issues created within the artisanal, and in
social development prerogatives, the mining committing additional capital to new mine many instances illegal, side of the industry
industry across Southern Africa requires a developments. o the back of tighter regulations. In a
more conducive regulatory environment number of cases the stringent regulatory
for investors to commit capital towards its The picture is similar in other markets environment is in fact pushing those
development. across the region. In Tanzania three new unable to find employment in large mining
key regulations promulgated in early 2018 operations towards illegal mining activities.
R7-billion have looked to limit foreign influence In the Democratic Republic of the Congo >
and ownership within financial service
Illegal mining worth

per annum


We’re proud of our rich past and together we
are ready to take the mining industry where
we’ve always been headed: FORWARD.


The stringent regulatory environment is
pushing those unable to find employment

towards illegal mining activities.
(DRC) the problem is so severe that in “
mid-2019 the Congolese government was – Williams “
forced to send in the army to tackle illegal
mining at a Glencore cobalt operation in
the Lualaba Province. Following many

years of failed negotiations, alternative
employment programmes and the rare

policy intervention, the government has

been unable to resolve the issue and has

looked to appease investor sentiment with

a tough-stance approach. Safety has been a

concern as well, with two deadly incidents

at illegal mining operations in June and

October 2019, however more emphasis has

been placed on criminalising such activities

in deterring participation. Despite some

existing regulations around the sourcing of

conflict minerals, illegal mining continues to

also fuel conflict across the country.

The issue is similar in South Africa, though

not as severe as in the case of the DRC. The
© ISTOCK – Africanway
© ISTOCK – demerzel21regulatory environment in the country has

squeezed the private sector and pushed

many towards illegal mining. By one estimate

of the Minerals Council illegal mining is

worth some R7-billion annually, which has

a considerable economic impact on the and curbing demand. Though a viable way
forward, the route is laden with under-
formalised side of the industry. While having income-generating avenue as a result of resourced police and government capacity to
this influence over the industry economically, limited working opportunities for low- tackle the gravity of the challenge.
skilled labourers in the formal sector, given
“it also has a much broader impact in that weak investor confidence in the regulatory TO BE TRULY BENEFICIAL, THE
environment. Attempts at regulating the INDUSTRY NEEDS A MORE RELAXED
it gives rise to criminal syndicates. Their space have similarly failed, with the main REGULATORY ENVIRONMENT
networks are quite sophisticated, which solution route under debate being one of Though it is imperative that governments
allows them to even export the minerals focusing on supply and demand dynamics,
to global buyers. As with the DRC, many
illegal miners are pushed towards this

Governments need to find a middle ground across Africa structure legislation to the
benefit of their countries, it is equally

when structuring legislation to ensure that important to bear in mind the impacts
that tough regulatory environments may

mining companies are able to provide working create. Regulators are currently too weary
and sceptical of big business with excessive

opportunities and manage the growth of the control and power being placed in the
hands of governments, leaving the private

informal sector. sector with little room to move but halt
– Williams investment flow and look for more viable
opportunities. In cases where there are few
options but to stay, mining companies have
focused on buckling down, cutting costs

and weathering the storm until the tide

turns. The unintended consequence of this

however is rising desperation from poor

communities looking for work opportunities

at mining operations, which in turn drives

illegal mining activities at abandoned

mining sites. Even though regulations are

meant to benefit local communities they

should not overlook the impacts that a

weak investment environment will have

on formal employment. Going forward,

governments need to find a middle ground

when structuring legislation in order to

ensure that mining companies are able to

provide working opportunities and manage

the growth of the informal sector by drawing

labour towards the formalised (and safer)

side of the industry. n


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