You are currently viewing our desktop site, do you want to visit our Mobile web app instead?
 Registered users can save articles to their personal articles list. Login here or sign up here

Mark Cutifani’s vision to reboot SA mining

New technologies will postpone its date with the undertaker.

There was a sense at the Joburg Indaba on Thursday that mining’s long-predicted date with the undertaker may have been postponed.

Share and commodity prices are up, profits are rolling in and there were smiles all round.

Read: Mining output rises for first time in nine months

Even firebrand trade union leader Joseph Mathunjwa of the Association of Mineworkers and Construction Union (Amcu) got a warm reception from the crowd, despite warning that unless inequality is addressed, residents of nearby Sandton could expect more visits from those of Alexandra, as nearly happened earlier this year when service delivery protests spilled over from the township to surrounding areas.

Read: SA mine earnings at five-year high – PwC

“We need to address the greed of bosses,” says Mathunjwa. “Minerals are there to serve the nation, not the boss or the investors. What happened in Alexandra is only the tip of the iceberg.”

Mathunjwa’s appearance as a guest at the indaba is perhaps a sign of thawing relations with mine management.

It was a good PR move by event organisers, putting a human face on a man who many imagined breathes fire and shatters crystal with his booming voice.

Event moderator Bernard Swanepoel, former Harmony Gold CEO, introduced him as Reverend Mathunjwa, and it turns out he is indeed the son of a preacher, just as capable of quoting from the Gospel of St John as Karl Marx.

Vision

Anglo American CEO Mark Cutifani, Australian born but adopted son of SA, outlined a vision for rebooting the local mining sector.

First we need an enabling environment for investment, then we need to maximise the use of technologies to make mining more sustainable. And “we need to navigate a transition that is sensitive to our current financial and social complexities”.

Read: Mining tax provisions have not kept up with the industry

“We have effectively, for much of the past decade, been a cash-starved industry, one where investment levels have been declining, while the input costs of mining, such as energy and water, have soared, and where regulatory uncertainty has understandably caused reluctance among international investors to support major new mining projects,” he says.

Modern mining is the opportunity for SA to regain its competitive edge. The future of the industry will be fundamentally different if we are going to be genuinely sustainable, and SA has a leading role to play in the change that will take place globally.

Mining has gone high-tech

“Technology is opening up opportunities for the industry to be more productive. It’s no longer about bigger trucks, but about being smarter, more precise, moving less waste material and having less physical impact.”

Anglo is a fundamentally different business to what it was six years ago, producing more product today with only half the number of assets, and reducing real costs by more than 40%.

Amandelbult Platinum is working to combine rock cutting, new rock breaking technologies and hydrohoisting (pumping rock with water) to remove the need for a new shaft and replace it with a pipe.

It has already introduced driverless vehicles to improve productivity and uses drones for data collection and aerial monitoring. It has drastically cut the use of water in its mining operations and now plans to go water-neutral, eliminating the need for fresh water and slurry ponds.

Cutifani says new coarse particle flotation technologies increase mill throughput by 15% to 20% while using less energy and water.

These new technological visions open up vast potential for greenfields mining in SA, which still rates as among the most mineral-rich countries in the world.

Yet the country accounts for just 1% of global exploration, and just a fraction of this is going on greenfields projects.

For all the commiserations over declining mining investment in SA, Anglo is bucking the trend. In the past decade it has poured a total of R300 billion into projects like its Venetia Diamond Mine, the Mogalakwena platinum project and Kumba’s ongoing expansion of Sishen/Kolomela, says Cutifani.

Heart of the problem

Minerals Council SA CEO Roger Baxter cut to the heart of the mining investment problem, pointing out that it takes just two months to secure an exploration licence in Botswana, against about 300 days in SA.

“I am always getting asked by potential investors what’s the long-term electricity price in SA? We don’t know. They also want to know what’s the carbon tax, and then what are the continuing consequences [of mining in SA]?”

These are imponderables that can only be sorted out by getting Eskom into some kind of functional state where electricity prices can be predicted with reasonable certainty for a period of ten years or more, and de-bottlenecking regulatory issues that drive investors away.

Economist Thabi Leoka argues that government lacks a sense of urgency in its decision-making. “We need leaders who respond quickly,” she says. “People won’t invest in a country that’s not attractive.” It helps that she was recently appointed to the Presidential Economic Advisory Panel, where she can hopefully drive the message home.

Tantalising carrot

The Minerals Council estimates that SA could virtually double mining investment in the next four years if it can return to the top quartile of the most attractive mining investment destinations.

Nor is this a pipe dream. With greater regulatory certainty, faster decision-making and Eskom back on its feet, it is achievable.

There is one area where SA has made impressive strides – reducing mine fatalities.

Minerals Council president Mxolisi Mgojo points out that there were 35 mining deaths in 2019, down 87% since 1993. Now the target is to get this down to zero.

Climate and unrest

South32 COO Mike Fraser spoke of the impact climate change is having on mining with the global shift towards a low-carbon economy: “We are already seeing the impact on our coal market in terms of export prices out of SA,” he says.

“We face a number of other challenges in terms of community unrest, social pressure and the availability of power. If we don’t manage these they will detract from us delivering. Last year we saw an escalation of protests outside mines and an increase in illegal mining activity.

“We cannot continue to do business this way,” he adds. “Unrest will become more frequent unless we find a way forward; we need to remain committed to finding sustainable ways to address the concerns of communities.”

With a direct contribution to GDP of R350.8 billion and direct employment for 456 000 people, mining is a sector that should be helping grow the economy, not disposing of assets and downscaling operations, notes ENSafrica director Ntsiki Adonisi-Kgame.

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   6

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Why do we always expect the mines in a mining town to be the only providers of income and employment. Yes it is a huge industry and makes or breaks the town.

However if DMR / Eskom/Nersa relax their pedantic rules on renewables one could start building renewable projects in mines.

Some mines have waste material good for building

There are opportunities to have agriculture in the area

After the mine has left perhaps mine rehabilitation.

A simplistic view but every mining Town needs a second source of income and growth.

Stop the red tape and open minds and it will begin to happen

To support your idea of a Plan B for mining towns following mine closures – just look at Welkom, Virginia, Odendaalsrus, Stilfontein, Orkney and a few others to see how depressing it is without the said Plan B.

Besides removing red tape; Government should focus on what to do about illegal mining..? And how about enforcing the rules on rehabilitation and going after polluters who have gone ‘bankrupt’ taking their profits offshore..?

Militant, violent unions + communist policies = the end of mining.

Some mining operations find profitable opportunities in the reworking of old mine dumps. The tripartite alliance created a similar opportunity for some operators.

Government support for militant labour unions created a huge “wage overburden”, a dump of unproductivity, something that offers huge profit potential to those who can extract the benefit. This shift towards technology actually is a shift away from the tripartite alliance, a shift away from labour unions. In other words, due to the negative effects of the Mining Charter, the most profitable opportunities in mining in South Africa is the extraction of the profits that are locked up in the cost-structure of labour. The mines will fire tens of thousands of overpaid and militant workers and add millions to their bottom lines.

The ANC created this situation where only viable mining operations in SA is the mining of people and the extraction of their livelihoods.

Cutifani in a country with high unemployment, poverty, poor education and health with asset raping you come and bring the message of technology? Please focus on de Beers and rather ensure shareholders are getting what is due to them and not top up executive pay based on selective information of execution

Load All 6 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: