South African Mining South Africa Sits at a Turning Point

Home , Aquarius Platinum, Coal in South Africa, Impala Platinum

South African Mining South Africa sits at a turning point. Many decisions concerning socio-economic policies, energy infrastructure and safety will determine its future.

TABLE OF CONTENTS A REPORT BY GBR FOR E&MJ

South Africa: Africa’s Superpower ...... 2 This report was researched and compiled by A Mining Nation Evolves ...... 4 Global Business Reports (www.gbreports.com) for South Africa is Open for Business ...... 8 Engineering & Mining Journal. Beyond Gold ...... 10 Editorial researched and written by Sharon Saylor ([email protected]), and Sarah Fraikue Industry addresses Complications ([email protected]). Created by MPRDA ...... 16 Cover photo: Impala Platinum’s shaft at Rustenburg Making Strides ...... 18 (with courtesy of Implats)

JUNE 2011 South African Mining South African Mining

vestment to meet the increasing demands sector to emerge, stating that mining of the mining industry through developing rights not used in an allotted timeframe South Africa: Africa’s Superpower infrastructure, including transport systems by mining companies to exploit minerals and energy projects. would revert back to the state. South Africa boasts Africa’s largest economy and strongest political As South Africa has become the Afri- Since its inception, a number of short- influence, but does South Africa have what it takes to prosper from the can continents springboard for majors, comings pertaining to ownership, procure- juniors and service providers, South Africa ment, employment equity, beneficiation, current commodity boom? will now offer improved access for BRIC human resource development, mine com- members to Africa, as well as enhanced munity development, housing and living investor confidence. “South Africa has the conditions have been identified and are be- financial muscle and, with its recent invita- ing relooked at. In the course of 2011 the decisions concerning the nationalization tion to join BRICS, the opportunities within entire act is to be reviewed in order to ad- of the mineral industry, security of ten- the industry are likely to improve,” said Dr. dress these shortcomings and will be ap- ure, underdeveloped transport and ener- Fred Sutherland, managing director Africa, proved by cabinet at the end of the year. gy infrastructure, skills shortages, safety Golder Associates. issues and affirmative action policies to Remodeling boost black ownership in the mining industry challenge South Africa’s ability to Sharing the Wealth In the wake of the global financial crisis, remain at the forefront of the international The Mineral and Petroleum Resources De- a tripartite group consisting of the gov- mining industry. South Africa needs a velopment Act (MPRDA) was enacted to ernment, the Chamber of Mines and la- collaborative effort from government, in- address the inequalities resultant from the bor unions worked together, through the dustry and labor to improve its competi- Apartheid regime which came to an end Mining Industry Growth Development and tive edge on the global mining arena and in 1994, and which prevented Historically Employment Task Team (MIGDETT), to min- enhance its image as a preferred invest- Disadvantaged South Africans (HDSAs) imize mining job losses and to find sustain- ment destination. from owning the means of production and able solutions for the mining industry. The from any meaningful participation in the interventions in the MIGDETT process also Mainstay of South Africa mainstream economy. The MPRDA was de- aim at creating an enabling environment signed to facilitate the participation of HD- for investment as well as reducing the From the discovery of alluvial diamonds SAs in the mining and minerals industry. cost of doing business in South Africa. An- in the late 1860s and the Witwatersrand Within the MPRDA, section 100(2)(a) glo American’s Executive Director Godfrey goldfields in 1886, the mining industry lies the mining charter, also known as Gomwe believes the task team is making has been and remains one of the country’s the Broad Based Socio Economic Em- positive strides. “MIGDETT is a process to most important economic drivers, contrib- powerment Charter for the South Afri- identify what a “globally competitive South uting 19% of GDP (8.8% directly), approxi- can Industry, which was designed by the Africa” could look like, there is recognition mately 1 million jobs (about 500,000 jobs government to effect sustainable growth that we missed the last commodity boom directly); 18% of gross investment (10% and transformation in the mining industry and there is a clear effort to try to take ad- directly); about 10% to 20% of direct cor- through specific targets. In an attempt to vantage of the next cycle,” Gomwe said. Aluminium smelter in Richards Bay. (Photo courtesy of BHP Billiton) porate tax receipts (R10.5 billion in 2009) disperse national wealth, South Africa has In essence, the task team was mandat- and accounting for 35% of the value of the set a target of 26% black ownership of its ed to identify bottlenecks and to come up More richly endowed than either Russia have been acknowledged by the Minister Johannesburg Stock Exchange (Chamber mines by 2014, but preliminary targets to with possible solutions intended to make or Australia, with an estimated $2.5 tril- and we, as industry, need to be more sup- of Mines, 2009-2010). But in the 2001 reach 15% in 2009 have disappointingly the industry competitive. The MIGDETT lion (the equivalent of R18 trillion) worth portive and work closer with the govern- to 2008 commodities boom, the world’s not been met. It also requires that mining process had already identified a number of metals and minerals in the ground at ment. If you look at the cultural change top 20 mining countries achieved an aver- companies substantially and materially in- of weak areas in the industry, including today’s prices, South Africa has by far the South Africa has navigated in the 15 years age mining GDP growth rate of 5% a year, crease the economic participation of HD- regulatory uncertainty and underdevel- most well endowed mineral wealth of any of democracy and if you think of the way while South Africa’s mining sector GDP SAs within the industry, from employment oped infrastructure, both of which led to country in the world (American Citibank in which the country has dealt with this, it shrank by 1% a year. to procurement. The new legislation paved the country’s downgrading in the Fraser Group, Metals and Mining Strategy, April is incredible. The country has great poten- South Africa is home to a population of the way for South Africa’s junior mining Institute report. A 13-pronged strategy to 2010). Containing 52 commodities in the tial and it has 100 years of mining culture. 50 million people, occupies a landmass of address these has been put in place. ground and home to the world’s largest re- People understand the industry and both 1.2 million sq km (equal to the combined President Zuma has called on South serves of platinum group metals (almost the union and government are support- landmass of Germany, Italy and France) Africa, with strong support from indus- 90%), manganese (80%), chrome (73%), ive.” and a coast line stretching almost 3,000 try, to embark on a bold New Economic vanadium (45%) and gold (41%), and a South Africa hosts the largest mineral km. It is now strategically aligned with its Growth Path to create 5 million jobs and major reserve holder of vermiculite, zirco- reserves, ranks as the fifth largest mining Asian counterparts, India and China as the reduce unemployment from 25% to 15% nium minerals, titanium minerals, coal and economy by GDP value, leads the world’s most recent addition to the BRICS partner- by 2020. The new growth plan aims to iron ore, South Africa’s mineral potential is platinum production and is the fourth larg- ship as of December 2010. Some argue enhance economic growth, employment second to none (Chamber of Mines, 2009- est gold producer, yet the country lags South Africa, whose economy is about creation and equality in South Africa and 2010). far behind in foreign direct investment one-quarter the size of India’s, is simply has identified both mining and mineral “South Africa has the largest resource and mineral production. A recent report too small to join the group of the world’s beneficiation as one of the key contribu- base as measured by financial value and (March 2011) by the Toronto-based Fras- top-four major emerging markets and fu- tors. is the fifth largest mining jurisdiction,” said er Institute ranked South Africa 67 out of ture economic powerhouses. But South If South Africa can address investor CEO of AngloGold Ashanti, Mark Cutifani. 79 mining jurisdictions around the world, African officials disagree, stating it is the concerns and, in some cases mispercep- “It has a legislative framework that is gen- just four places ahead of Zimbabwe. The country’s strategic importance both re- tions, its top financial institutions, corpo- erally clear and built on perceived best survey was launched to examine which gionally and globally that matters. As one rate footprint and knowledge of all of the practice. South Africa has a legal system jurisdictions provide the most favorable of China’s largest trading partners, reach- African continent position the ‘rainbow na- that works. There are issues within the business climates for the mining industry. ing two-way trade revenues of R119.7 Godfrey Gomwe, tion’ well to lead the continent into a cen- Department of Mineral Resources, which South Africa is at a critical turning point; billion, South Africa looks to China for in- Executive Director of Anglo American South Africa tury of economic prosperity. 2 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 3 South African Mining South African Mining

lations at Gold Fields. “South Deep mine is a significant investment in the future of the A Mining Nation Evolves South African gold mining industry and will be around beyond most other SA mines,” said Although major gold discoveries may be a thing of the past, South Africa is Nick Holland, CEO of Gold Fields. According to the U.S. Geological Survey, still home to some of the greatest developing gold ore bodies in the world. 6,000 metric tons (mt) of gold reserves remain in South Africa. The main gold producing area, just outside of Johannesburg, the the Witwatersrand gold fields in 1886 as Witwatersrand Basin has already produced well as the Barberton Greenstone Belt in more than 41,000 mt of gold and still re- Mpumalanga and followed by the Kraaipan mains the greatest un-mined ore body in the Greenstone belt in Gauteng, South Africa’s world. world-class gold mining industry has flour- Inevitably, 125 years of gold mining ished. equates to declining grades, increased From the initial gold discovery, South Af- depths of mining (reaching more than 4,000 rica dominated the global gold industry for m), greater safety risks and lower profit 120 years and was only recently surpassed margins, which have led to a steady decline by China in 2007 as the leading gold pro- in gold production and South Africa’s top ducer. With 41% of global gold reserves, ranking slip to fourth. In 2010, South Africa South Africa is not surprisingly the birth- produced 191,833 kg of gold, a 6.4% de- place to some of the largest gold mining cline on the 2009 production of 204,922 kg companies in the world. (Chamber of Mines). DRDGold, Pamodzi Gold Three of the top 10 gold companies are Ltd., Simmer and Jack Mines Ltd., Great Ba- rooted in South Africa1, AngloGold Ashanti sin Gold Ltd., Pan African Resources and (4.5 million oz), Gold Fields (3.6 million oz) Gold One International also contributed to and Harmony (1.4 million oz). the 2010 gold production. South Africa’s Gold Fields is the oldest As reserves deplete and become harder mining house in the world. It was formed in to mine, AngloGold Ashanti, Goldfields and A significant investment, Gold Fields’ South Deep mine represents the future for South Africa’s gold mining sector. 1887 in Johannesburg and since then it has Harmony remain committed to South Africa, (Photo courtesy of Gold Fields) grown and morphed itself in many different but look to new frontiers in Africa and inter- forms. In January 1998, the old assets of nationally. Dominating South Africa’s gold, platinum, num, AngloGold Ashanti, Anglo Platinum, Gold Fields South Africa were merged with Without adding new ounces to their South chrome, coal and base metal production Goldfields, Sasol, Harmony and Kumba the gold assets of Gencor to form Gold African portfolio, AngloGold Ashanti-South were the traditional major mining houses Iron Ore, are still reflected in the resources Fields Ltd., a new company that maintained Africa’s number one gold producer and sig- Anglo American, De Beers, Gencor, Billi- sector of the JSE. The top 13 companies 125 years of history. “South Africa is the nificant contributor to the economy, is chal- ton, Gold Fields, JCI, Anglovaal and Rand by size constitute over 95% of the total core of Gold Fields. We have Kloof, Beat- lenged to maintain high production levels at Mines. The rise of a new democratic con- market capitalization of all listed mining rix and Driefontein and between these they the greatest mining depths in the world. “The stitution in 1994 resulted in significant re- companies. still have 20 million oz of good high quality South African operations will be flat as most structuring. reserves within reach of existing infrastruc- of the operations are mature. The South Af- “Prior to 1994 South Africa still had ture. Driefontein is the greatest gold mine rican gold industry has been declining over large mining houses, which have now Gold: Sunrise, Midday this planet has ever seen, this mine has al- the past 10 years, year-on-year we are see- evolved into more focused mining compa- or Sunset? ready mined 110 million oz and Kloof has ing declines in the range of 5%-10%.” nies. Mining houses held assets in coal, Gauteng, meaning “place of gold,” refers mined 75 million oz,” said Willie Jacobsz, The country’s lowest cost producer, An- gold, platinum, base metals and also oper- to the thriving gold province, which is home senior vice president, head of investor re- gloGold Ashanti is investing significantly to ated in the service industries. Another im- to Pretoria (the constitutional capital) and extend its operations, “We are looking to portant evolution was that in the old days, invest in new technologies to extend the life Johannesburg (the economic hub of South mining houses were required to finance 1. As measured by 2010 production of publicly traded of some of the existing operations from 20 Africa). Originating from the discovery of gold mining companies. themselves. Now if you want to go to the years to 30 or 50 years. We have put togeth- market and you want to raise money, you er a technology consortium that is looking have to be operating at best practice. This to develop the business over the long-term. has been a major transition for South Afri- The participants, amongst many, include GE can mining houses and it has been done and 3M. They believe it is one of the big- very successfully. The South African min- gest technology consortiums they have ever ing companies have adapted to this mar- been involved with and possibly the most ket orientated approach and we’ve evolved significant since the Manhattan project, with with them,” said Roger Dixon, chairman of 33 partners involved in the process,” said SRK, an independent international consul- CEO Mark Cutifani. tancy, established in 1974 in South Africa, Although some operations may platform with global operations in more than 40 out for Gold Fields’ South Deep mine, pros- countries. perity is on the horizon. “South Deep mine Although the constitution and favorable is the greatest developing gold ore body in legislations in the MPRDA have paved the the world, with 35 million oz of reserves, 90 way for juniors to enter the marketplace, million oz of resources and a current life of the dominance of the majors, including mine plan that extends to 2076. We have BHP Billiton, Anglo American, Impala Plati- Bheki Sibiya, Chief Executive of Chamber of Mines Mark Cutifani, CEO of AngloGold Ashanti been building the mine for the past two 4 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 5 South African Mining South African Mining years. It is already producing just below 300,000 oz/y annualized. This is one mine that has more reserves than most international companies, and between our four mines, Gold Fields will be mining gold in South Africa long after any other company. That is not sunset, that is sunrise,” said Willie Jacobsz of Gold Fields. Over the last decade South Africa has developed a junior gold sector. Great Ba- sin Gold is a Canadian junior with a primary listing on the TSX that saw a unique opportunity. “After the political environment changed and subsequently the mining charter opened the door for juniors to play, with Canadian dollars we could have cheap access to large amounts of ounces in South Africa and we obtained the Burn- Platinum miners operate jackleg drills in a low-profile reef formation. (Photo courtesy of Implats) stone project. It is challenging times with a new mine, but Burnstone is vastly different nity with the acquisition of Barberton and discards which enables us to be the low- from the other South African gold opera- has allowed the company to evolve over est cost platinum producer in the word. tions. It is shallow and not labor intensive the past five years from a struggling ex- We are a unique investment opportunity, as it is mechanized, so we do not have the plorer to gold producer and soon to be giving exposure to gold and platinum,” Dip- complexities associated with deep level platinum producer. penaar said. mining,” said Ferdi Dippenaar, president “We started out as an explorer, with Despite South Africa’s production de- and CEO. no money in the bank, very few resources clines, majors and juniors still contribute Barberton is one of the oldest working and we now own the Barberton mine, pro- significantly to the economy. “Gold mining, gold mines in the world, producing for 120 ducing 100,000 oz/y with the potential to in many ways, has been the mainstay of years and has an extended mine life to an grow to 150,000 oz in the next year. We the South African economy for years, but excess of 25 years. also have a long-term view of 100,000 oz it’s getting to a more mature phase where Jan Nelson’s appointment to CEO of of platinum at the Phoenix platinum project platinum and coal are now bigger. How- Pan African Resources brought opportu- to mine platinum from the chrome tailings ever, we are still an important part of the economy; 120,000 people are employed in the gold sector, another 120,000 are employed in the service sector support- ing the gold sector. For every person employed in the gold sector, it is estimated there are 10 other dependents in the country. This means the gold sector is support- ing around 2.5 million people and still remains South Africa’s third largest mining sector,” said Cutifani. Bheki Sibiya, recently appointed president of Chamber of Mines (the chamber acts as a conduit between its 50 members, who, in terms of value and volume, produce 80% of the output of the mining industry) said: “We have 130 years of mining history and with our mineral deposits we have another 150 to 200 years of mining in the country.” The cost of gold reached an all time high in April 2010 of more than $1,500/ oz, but the volatility and perhaps an over- valued rand are not providing the margins that the industry hoped. However, a century ago miners were crippled by the inability to extract the gold from the ore; then the introduction of cya- nide technology and deeper mining transformed a dead industry to the greatest gold fields in the world. Perhaps with newer technologies, changes in organizational structures and labor relations, South Africa’s treasure may be mined for decades to come.

6 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 7 South African Mining South African Mining years. It is already producing just below 300,000 oz/y annualized. This is one mine that has more reserves than most international companies, and between our four mines, Gold Fields will be mining gold in South Africa long after any other company. That is not sunset, that is sunrise,” said Willie Jacobsz of Gold Fields. Over the last decade South Africa has developed a junior gold sector. Great Ba- sin Gold is a Canadian junior with a primary listing on the TSX that saw a unique opportunity. “After the political environment changed and subsequently the mining charter opened the door for juniors to play, with Canadian dollars we could have cheap access to large amounts of ounces in South Africa and we obtained the Burn- Platinum miners operate jackleg drills in a low-profile reef formation. (Photo courtesy of Implats) stone project. It is challenging times with a new mine, but Burnstone is vastly different nity with the acquisition of Barberton and discards which enables us to be the low- from the other South African gold opera- has allowed the company to evolve over est cost platinum producer in the word. tions. It is shallow and not labor intensive the past five years from a struggling ex- We are a unique investment opportunity, as it is mechanized, so we do not have the plorer to gold producer and soon to be giving exposure to gold and platinum,” Dip- complexities associated with deep level platinum producer. penaar said. mining,” said Ferdi Dippenaar, president “We started out as an explorer, with Despite South Africa’s production de- and CEO. no money in the bank, very few resources clines, majors and juniors still contribute Barberton is one of the oldest working and we now own the Barberton mine, pro- significantly to the economy. “Gold mining, gold mines in the world, producing for 120 ducing 100,000 oz/y with the potential to in many ways, has been the mainstay of years and has an extended mine life to an grow to 150,000 oz in the next year. We the South African economy for years, but excess of 25 years. also have a long-term view of 100,000 oz it’s getting to a more mature phase where Jan Nelson’s appointment to CEO of of platinum at the Phoenix platinum project platinum and coal are now bigger. How- Pan African Resources brought opportu- to mine platinum from the chrome tailings ever, we are still an important part of the economy; 120,000 people are employed in the gold sector, another 120,000 are employed in the service sector support- ing the gold sector. For every person employed in the gold sector, it is estimated there are 10 other dependents in the country. This means the gold sector is support- ing around 2.5 million people and still remains South Africa’s third largest mining sector,” said Cutifani. Bheki Sibiya, recently appointed president of Chamber of Mines (the chamber acts as a conduit between its 50 members, who, in terms of value and volume, produce 80% of the output of the mining industry) said: “We have 130 years of mining history and with our mineral deposits we have another 150 to 200 years of mining in the country.” The cost of gold reached an all time high in April 2010 of more than $1,500/ oz, but the volatility and perhaps an over- valued rand are not providing the margins that the industry hoped. However, a century ago miners were crippled by the inability to extract the gold from the ore; then the introduction of cya- nide technology and deeper mining transformed a dead industry to the greatest gold fields in the world. Perhaps with newer technologies, changes in organizational structures and labor relations, South Africa’s treasure may be mined for decades to come.

6 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 7 South African Mining South African Mining

findings of these audits and the alization. We had a national general coun- South Africa is Open for Business major legislations and processes sel of the ruling African National Congress that will be put in place as we move where this issue was tabled. It was decided forward? that, given that it has never gone through Interview with Susan Shabangu, Minister of Mineral Resources the process of policy development, for the When I joined the industry there was a first time the youth league would table the lot of noise about corruption and malad- item for discussion. It was decided further Can you outline the Minis- Currently South Africa is a ministration. I then put a moratorium on that an independent research study be new prospecting licenses and ordered the try’s key initiatives intended to resourcebased economy. What done to see if it is a viable option for South department to conduct an audit. During Africa, and the policy will be debated and help the mining industry navi- potential do you see for value the audits, one of the key findings was discussed in 2012. But at this juncture, na- gate through some of the chal- added mineral operations in that the current system we had was not tionalization is not a government policy. lenges that have arisen since South Africa? adequate to deal with the challenges faced It is an issue that has been tabled at the the end of Apartheid? South Africa has been a country by the industry. level of the political party. I am confident For instance, we have seen double Let’s look at the history and evo- that has been exporting its com- to say that the policies we are implement- modities for many years with no value granting; two companies have been given lution of the industry. During the era ing currently are the correct policies and added. We have put together a docu- the same prospecting right, which has cre- leading up to 2004 we succeeded in as government. ment that deals with a beneficiation ated problems in determining who owns We will continue to make sure that the profiling mining in South Africa during strategy. We have taken it to govern- the land. We also saw our systems were interest of the economy of South Africa is an extremely difficult time. With the ment and to cabinet with the intention very weak as there was a lack of use taken care of. If we say we want to create end of Apartheid, came the need to of adopting it as new government of technology, which resulted in a lot of jobs and attract investment, we are mind- rewrite the laws of the country and to policy. It is a consensus document paperwork. By moving to an electronic ful as government and as a country what create the Mineral and Petroleum Re- reached by all parties in government, system we have identified other issues, is needed to grow the economy of this source Development Act (MPRDA) to labor and industry. We have set clear and we have discovered people who have country and hence the issue of attracting replace the Minerals Act (1991). targets and one of the targets is to been granted licenses without a paper trail investment and hence vis-à-vis nationaliza- In 2009 the industry was faced create 40,000 jobs this year through and in those cases we have engaged with tion cannot be ignored. These are issues with the financial crisis and subse- the mining sector. them to revisit their application, which in we can debate, but we have to bear in quently this led to the development of There has been a misperception in some cases rights have been revoked. We mind that attracting more investment into have also identified a lack of environmen- Mining Industry Growth, Development, the industry; the belief that a mining South African economy is very critical. Employment Task Team (MIGDETT) to look not been achieved and how to advance the company would be compelled to benefici- tal management plans, which is a condition for the granting of a license. at how best we can grow the industry, cause of transformation. For instance, ate. This is not our policy. Our policy is Despite some of the issues we the 2004 mining charter stated all mining that when there are other companies in the As a result of the audits findings and how can jobs be saved and created and have talked about, South Africa has to link this with the new growth path which companies must be transformed and em- value chain that want to beneficiate, mining the challenges in terms of the act, which by far the greatest mineral wealth, aims to create 5 million jobs in the next 10 powered and it was expected that every companies must not say they are locked are currently being reviewed, we issued years. MIGDETT also aims to take forward mining house achieve an interim target of into long-term agreements with other com- a moratorium for six months as we could a constitutional democracy, a sta- the objectives outlined in the MPRDA. In 15% black ownership by 2009 and a final panies that export their products. not continue allowing applications coming ble political environment and some 2009, the mining sector saved 20,000 target of 26% black ownership by 2014. We need commodities available for lo- in when we had challenges around pros- of the top financial institutions in jobs which could have been lost in the fi- Reaching only 9% in 2009, the target was cal production and local manufacturing. I pecting licenses. It is a process that has the world and really has the oppor- not achieved. If we look at transformation, am satisfied to say we have seen a lot of identified the gaps and we unveiled the nancial crisis. tunity to be at the forefront of the This year we will be reviewing the act the issue of human resources as per char- companies that are interested to come to electronic system in April 2011 to allow transparency. global arena. As a final question, as a whole and we will look at the type ter targets saw companies employing more South Africa to build steel plants and refin- The system allows people to apply on- what would be your message to the of legislation needed for the industry to white women. In South Africa our constitu- eries. Our policy of beneficiation is going to work. The mining sector has responded line and also view their existing prospect- move forward. This is an act that was tion pertaining to the issue of women in readers of E&MJ about the Depart- the industry is not based on color and the positively. ing and mining rights. All the companies done during the transition of the industry, ment of Mineral Resources and the mining industry has manipulated the clause The president has called for sustain- who have been granted rights are on our promulgated in 2004 with many stakehold- future of the South African mining and has used white women to achieve their able jobs and to create a living wage as system. What exists in the department can ers participating. This was done during a industry? targets. We need to make sure that more well as decent fringe benefits and this cre- be found by everyone rather than relying difficult time. It was a new democracy and black people are involved in the industry in ates an opportunity for more professional on officials. We need to make sure our cur- South Africa is a mining destination. there was no trust amongst industry, gov- the technical and professional areas. We and technical people to come into the sec- rent commodity opportunities are applied Mining is not a sunset industry, but a ernment and labor. need to look at mining companies applying tor. The participation of many companies for in a way that takes our economy for- sunrise industry. Our legislative frame- Now we have reached a point of matu- scholarships to young black people and in skills development is commendable. We ward and that makes our economy grow work is conducive to investment. We are rity and we have identified many gaps in to women. We have also discovered the are not yet there. We still need to create consistently by creating certainty in the democratic and a country that recognizes the act. We believe the mining industry is issues of sustainable development were the jobs and grow the industry, but we are industry. human rights, offers stable financial insti- the backbone of South Africa, so now we very weak and not occurring in a coher- on the right track. Beneficiation will cre- I am confident that moving forward we tutions and continuously responds to the have to determine how best we grow this ent way. The legislation and the charter ate new industries and create the needed will be able to deliver a transparent ser- challenges of the world. Right now, we are sector. are fairly new, and we have had to revise jobs in South Africa, which will drive the vice that meets the needs of the industry reviewing the mining act. This is a recogni- the charter and act to see why they could economy forward. as a whole. tion that the world is dynamic and changes, South Africa has set a target of not achieve their targets. One of the key hence our legislation and our laws need to 26% black ownership of its mines problems was the lack of mechanisms for Since your tenure, the Minis- One of the most influential fac- respond to the changes of the world. by 2014 and current reports indi- annual evaluation of target performance. I try has been commended on the tors impeding international invest- There are a lot of opportunities; we cate we are not on track to meet am now satisfied with the current mecha- streamlining of the mineral pro- ment is the issue of nationalization. have 60 different minerals in our soils. nisms we have put in place. To ensure that Anyone who has an interest in South Af- this requirement. Do you think this cesses to remove regulatory un- Can you comment on the ministry’s on an annual basis targets are met, we are rica should know that we are transforming is a possible transformation? checking to ascertain we can assist and certainties and bring transparency position? the industry and we are opening up to the Through MIGDETT we are examining is- identify any challenges in the implementa- and stability to the mining sector. First of all, I must highlight that in South world and trying to be as transparent as sues of transformation to identify what has tion of the program. Can you outline some of the key Africa, government policy is not for nation- possible. We are open for business. 8 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 9 South African Mining South African Mining

South Africa’s major coal producers mors that South African majors are disin- of the substance of the business. Anglo include BHP Billiton Energy Coal South Af- vesting in the nation. But according to BHP American announced an aggressive growth Beyond Gold rica, Anglo American Coal, Xstrata, Exxaro Billiton and Anglo American, South Africa plan of $4.8 billion in the next three years Resources Ltd., and Total Coal, a division will remain at their heart center. “There in South Africa alone. “Our growth will be From the heritage and mining culture of gold, South Africa should be well of Total SA. Exxaro, is South Africa’s larg- are many rumors we are looking to exit around platinum, iron ore and coal, and will positioned to develop other minerals. est black-owned mining company formed South Africa. There can be nothing further be largely organic in South Africa. We have by the merger of the Eyesizwe and Kum- from the truth. In the last two years, we one of the strongest project pipelines in ba’s coal division. Sasol, headquartered in have invested more money in the energy the industry within the current commodi- South Africa is the world’s largest coal-to- coal business than we have ever done in ties we are operating in. By 2015, we will Although gold discoveries of massive and has grown into an advanced 24-hour chemicals producer. the past; we invested US$1 million in Klip- grow by at least 50% volume. This growth scale are probably a thing of the past and operation with a potential design capacity Traditionally Mpumalanga’s Witbank spruit, expanding the production from 4.8 will come from four projects globally a decline in production of the mature gold of 91 million tons per annum. coalfields accounting for 40% of South Af- to 8 million mt, in addition, jointly with Ang- which are currently under implementation mining sector is to be anticipated, from Eskom, South Africa’s parastatal util- rica’s coal production has been known for lo, we built a 16 mt processing plant to ca- and the Kolomela iron ore growth project the heritage and mining culture of gold, ity company, has helped pave the way for its richness in coal reserves and well-de- ter for another 8 mt and we are just about in South Africa, currently in development South Africa should be well positioned to South Africa’s coal industry to flourish. veloped infrastructure. Dr Tony Harwood, to commission another massive project and which will be commissioned in 2012 develop other minerals. The non-gold sec- “For much of the two decades prior to chairman of Universal Coal Plc, an emerg- called Douglas Middelburg Optimization. and will add 9 mt to our production profile. tor has the potential to counterbalance re- 2008…the mining industry showed good ing near-term thermal coal production and We combined the two mines to create a We will remain a very important player in duced production levels of gold, so far this growth and a lot of this growth was based development company comments, “We large 35 km long open-pit mine. This proj- South Africa; we are here to create jobs is not the case. “Mining is in our blood, but on Eskom’s ability to provide stable power have over 300 million tones of thermal ect cost US$175 million and has a life of and to be relevant in the context of South unless we address our issues we will find and the fact that Eskom was the largest coal in three projects, located in the Wit- mine until 2034,” said Xolani Mkhwanazi, Africa,” said Godfrey Gomwe, executive ourselves at the back end of the queue of buyer of coal in South Africa, which meant bank area, which is a very well established chairman of BHP Billiton SA Ltd. director of Anglo American. the mining boom. From 2001 to 2008 our a robust export industry was built as Es- coal mining area in South Africa. All three Anglo American holds a balanced port- For BHP Billiton, its aspirations for competitor countries, the top 20 mining kom provided stable cash flow for coal projects are exploitable by open-pit, in the folio both in terms of geographical spread growth and willingness to invest further countries, GDP grew by 5% per year at the supply,” emphasizes Brian Dames, chief early years of the mine life, with low strip and of product spread. With leading posi- in South Africa will not be reflected. Mkh- Dr. Tony Harwood, Chairman of Universal Coal same time South Africa’s GDP shrank by executive, Eskom. According to Eskom, ratios. They are also close to infrastruc- tions in platinum and diamonds and holding wanazi is frustrated from the lack of in- 1% per year,” said Dr. Con Fauconnier, re- 77% of the country’s electricity demands ture road and rail. We are focusing on low- a strong position in iron ore (single largest vestment in infrastructure over the past tired CEO of Exxaro Resouces Ltd. year. Approximately 25% of South Africa’s are supplied by coal and this will remain cost operations, and want to bring these mine in South Africa and the fourth largest decades, which will constrain the industry coal production is exported, mainly through relatively unchanged in the next decade three projects to become mines in the producer in the world), and leading posi- for years to come. “The challenge we have as two new major coal fired power sta- next three years.” Mpumalanga will remain tion for copper. About 40% of Anglo’s net as a company in South Africa is we are the Richards Bay Coal terminal (RBCT), the Coal tions, Medupi and Kusile are scheduled to an important coal mining destination, but operating assets are in South Africa and constrained in terms of growth. We would South Africa is the fifth largest coal produc- single largest export coal terminal in the come online as well as the relative lack of the Waterberg region in the Limpopo prov- South Africa represents a significant por- like to grow, but we can’t. We are in three ing country in the world, producing about world. RBCT opened in 1976 with an origi- suitable alternatives to coal as an energy ince will most likely become the next coal tion of their group portfolio both in terms business’ in South Africa; energy coal, 224 million tones of marketable coal per nal capacity of 12 million tones per annum source. frontier, however, not without significant of their employee numbers and in terms manganese and aluminum. We cannot capital expenditure. Development in the Waterberg region becomes much more complicated, with sparse access to water, limited rail infrastructure compounded by long distances to the port, making this area rich in coal reserves a more expensive endeavor. Eskom’s steel program suggests a future shortage of coal, implying the need for development of new coal mines and increasing global demand means more pressure on Eskom to pay market leading prices for coal. Dr. Harwood has already seen interest from foreign and domestic coal consumers, “ There is a huge interest from China, India, and Korea, as well as Europe. A number of groups have approached us looking for offtake agreements, and are looking to invest in Universal Coal in order to secure long term supplies of our high quality coal.” Estimates of South Africa’s coal reserves are 53 billion tones and at current production rate there should be almost 200 years of coal supply left.

Fight or Flight Growth constraints, including underdeveloped road and energy infrastructure, as well as security of tenure and threats of nationalization, contribute to the lack of new FDI into South Africa and a web of ru- 10 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 11 South African Mining South African Mining

“We have had senior level discussions Peter Labrum, the managing director with government and at the moment are for SRK South Africa, believes “the poten- aggressively seeking partners for new joint tial for increased investment in South Af- ventures. As of the nature of our growth, rica will be dependent on how the country we are open to different scenarios. There reacts to the deficiencies in infrastructure is still considerable potential for the dis- and power supply and most importantly covery of significant deposits in areas of how it addresses the supply of qualified the country that have yet to be fully ex- technical people.” From South Africa, SRK ploited,” said Wayne Venter, executive of has established offices in Zimbabwe, DRC, operations at Norilsk Nickel. and Ghana and have additionally a joint Norilsk Nickel is the world’s leading venture in Angola. producer of nickel and palladium. Although its main mining and metal production units Platinum are located in Russia, its foreign assets The metal, hovering around $1,800/ are now located not only in South Africa, oz in the first quarter of 2011, plunged but also in Botswana, Australia and Fin- 66% during the economic crisis, but has land. Its South African mine, Nkomati, will rebounded from autocatalysis, as well as be ramping up to 20,000 mt/y. Nkomati, increased platinum jewelry demand. South a 50:50 joint venture with African Rainbow Africa’s Bushveld Igneous Complex (BIC) Minerals, is an important strategic asset is the largest known PGM (platinum, pal- for Norilsk Nickel. ladium, rhodium, osmium, ruthenium and iridium, occur together in nature alongside Infrastructure Development nickel and copper) reserve and South Afri- ca is the world’s leading platinum producer Nkomati Mine of Norilsk Nickel Transnet, South Africa’s state-owned logistics group responsible for South Africa’s (4.5 million oz) and produced 8 million oz of PGMs in 2009 (Chamber of Mines). grow our aluminum business because of rails and ports, and Eskom, South Africa’s power utility, have committed to signifi- Together Anglo Platinum, the world’s lack of power. In fact we have had to close leading primary producer of platinum half of the potline of one of the smelters cant expenditure in the upcoming years to improve the country’s infrastructure. group metals (PGMs), accounts for about in Richards Bay and this business will not 2 Transnet will spend over R110 billion on 40% of the world’s newly mined platinum expand until the power situation changes. (2.57 million oz), Implats (1.74 million oz) We have recently expanded our coal busi- its investment programme over the next five years. This is in addition to the R73 bil- and Lonmin (694,000 oz) contribute to the ness, but we are now constrained by the bulk of the nation’s production, with other Transnet freight rail, which is the same for lion already spent over the past five years on expanding capacity and improving infra- contribution from Royal Bafokeng Hold- our manganese business,” said Mkhwa- ings, Northam Platinum and Eastplats. nazi. “My objective is to find ways to work structure in port, rail and pipeline assets. Transnet has been investing heavily in Within the BIC, the main PGM producing with government and to partner with them reefs are the Merensky Reef and the Upper to ease these infrastructure constraints. new and improved infrastructure, but is still far from meeting the annual capacity Group 2 (UG2) Reef, which occur around We are talking with Eskom and Transnet the eastern and western limbs. Demand to expand the manganese line. However, of 91 million tones at Richards Bay Coal Terminal. In 2010, South African coal ex- fundamentals appear healthy, but supply BHP is going to spend US$80 billion over will continue to be constrained and this ports rose to 63 million tones, as a result the next five years in organic growth, (ex- has led to price tension. With this forecast, of increased demand from China and India. penditure that is equivalent to the sum South African producers large and small Transnet is also looking to raise the rail total of the three largest banks in South are ramping up operations to increase and port capacity on the iron-ore line from Africa) and not a lot of it will come to South their output. Sishen to Saldanha to 60-million tones a Africa, because there is no project we can Implats group, known for its flagship year and to increase manganese exports invest big sums of money into because mine, Impala Platinum, has been through to 4,2-million tones through Port Eliza- of infrastructure. It is not that we are not an aggressive growth strategy over the beth. wanting to, it is simply that we are unable past decade. “When Implats saw an in- Eskom has embarked on an aggres- to invest further in South Africa.” crease in market demand, we recognized sive new build programme, with additional Although South Africa hosts 80% of the our limited resource base (from only one power stations and major power lines be- world’s manganese reserves in the Kala- geographical area) and effectively over ing built on a massive scale to meet ris- hari basin, the current market share is only the years we purchased Marula Platinum, ing electricity demand in South Africa. Es- 15% as compared to China who holds a Mimosa Platinum (50:50 joint venture with kom’s capacity expansion budget is R385 market share of 35% with only 5% of the Aquarius Platinum), Zimplats (in Zimba- billion up to 2013 and is expected to grow world’s known manganese reserves. Due bwe), Two Rivers (an entrée with African to more than a trillion rand by 2026. Es- to logistical constraints, including trans- Rainbow Minerals) and Afplats. We spent portation of manganese to the ports the kom is expected to double its capacity to the last decade increasing our exposure to development potential is hindered. 80,000MW by 2026. Brian Dames, chief resources in the ground, and in 1998 we Despite rumors that Norilsk Nickel is executive of Eskom explains that “since created the Impala Refining Service,” said disinvesting in South Africa, it is constant- April 2008 we have had no interruptions David Brown, CEO of Implats group, the ly looking for new opportunities there, due to a shortage of capacity and no cus- second largest platinum producer world- although its operations are also located tomer has been asked not to expand. The wide. in a rural area, which means challenged issue, however, is to determine the appro- infrastructure and difficulty in maintaining priate timelines for new mining projects to skilled staff. come online.” 2. Based on 2010 production levels 12 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 13 South African Mining South African Mining

2010 estimates 100,000 oz of platinum it back to the tipping point, where we could assets and has urged many other majors gress (ANC) has appointed a team of inde- was essentially lost in South Africa. This was weather further downturns in the market to do the same. Xolani Mkwanazi, chair- pendent researchers and mining experts attributed to strike action and safety issues and at the same time be ready to take ad- man of BHP comments on the companies to investigate the appropriateness of na- amongst the world’s leading producers. Both vantage of any market improvements,” said strategy, “We had a lot of reserves and we tionalizing the South African mines. Implats and Anglo Platinum saw decreases Phillip Barton, CEO, De Beers Consolidated did an analysis of what we can meaningfully “The approach by the ANC to appoint in platinum production, but Anglo Platinum Mines (DBCM). “We brought our cost base develop within the given time. The reserves independent researchers is lauded as this has plans to produce 2.6 million oz this year down and aligned production down to meet we were unlikely to develop we decided we will not only increase the credibility of the to make up for lost production and Implats is reduced demand. However, we retained would give them to the transformed compa- findings, but will also ensure a wider sup- working hard to restore its annual production enough skills in the company that should nies. What we have divested are the mines port of those findings once the investigation to 1 million oz at Impala Platinum, according the upturn come as we saw in the 30s, we we cannot develop in the near future or the has been completed,” said Bheki Sibiya, to David Brown. “On average, we should be would be well positioned to take advantage reserves that are too small. Our strategy chief executive for the Chamber of Mines. developing 120-130 km per year at our flag- of it. This meant a major restructure of the is to go for big, low cost, upstream and Earlier this year the industry witnessed the ship mine to ensure face availability and to business and we had to sadly retrench a expandable resources.” launch of the state’s first mining company, catch up for the lack of development that number of people to get the company to the African Exploration Mining and Finance was done in the past. During the mid and that point. With a recovery late in 2009 and Reason Eventually Prevails Corp. (AEMFC). “This company cannot be late-1990s, the cash generative potential a strong recovery in 2010, we could then given an unfair competitive advantage to of the business was muted as compared to reap the benefits, with further restructuring There is no greater deterrent to foreign private sector companies, as this would today. At Impala we had an investment mis- and we implemented more of what we had investment, than the threat of national- send the wrong message to investors and match between old infrastructure and new learned, especially around how to get our ization. Established operations may take potential investors,” said Sibiya. infrastructure. We are currently sinking three cost base down and operate smarter. We comfort in the resolute position by key The industry anxiously awaits final de- shafts; 20 shaft (deliver 2011), 16 shaft (de- carried this into the 2010 business plan governmental ministers including Minister cisions on the topic which are more than liver 2013), 17 shaft (deliver 2016). There and we saw fantastic results, some of the Shabangu, President Zuma and senior 1 year away. “I am confident the develop- was a hiatus in terms of vertical shaft devel- best results ever. De Beers has disposed of leaders within the African National Con- ments in the regulatory frameworks are opment, but once we have 20 and 16 shaft some of its assets that do not fit its operat- gress (ANC) who highlight the devastating positive and by July 2012 the issue of na- moving up to production we will restore up ing model going forward and instead have effects of a nationalized mining industry. tionalization will be finalized…we believe to the 1 million mark.” refocused efforts on key assets, having Nevertheless, undoubtedly this creates we will make sound decisions. We have While production losses can be attrib- recently approved the feasibility study for a major stumbling block for the requisite taken steps back, but soon we will take utable to operational performances, the Venetia, its flagship mine, to take the mine long-term mining investments needed the steps forward. The mining industry is platinum industry is also constrained by en- underground. This study may lead to a huge to grow the economy. The ANC’s youth a competitive advantage for this country ergy and water availability. “South Africa has investment of nearly 10 billion rand and will leader, Julius Malema, representative of and can underpin a lot of development in huge infrastructure challenges. This year we expand life of the mine beyond 2040. an important constituency in South Africa, South Africa. Reason eventually prevails,” have an energy shortfall of 6 terawatt hours Minister Shabangu has complimented has succeeded in getting the issue on the said Xolani Mkhwanazi, president for the and 9 terawatt hours next year. In our plati- BHP Billiton on the divestment of their coal party’s agenda. The African National Con- Chamber of Mines. num business we require 1,000 MW for our growth pipeline, so it will be important for South Africa to grow its energy base for new projects. Equally there needs to be a contribution from industry to improve energy efficiency in their operations and create power saving projects,” said Godfrey Gomwe, executive director of Anglo American. The industry has been plagued with increased depths in mining, increased safety issues and flooding which have curtailed what should have been higher production levels. South Africa sits on the resource base and many of the unique properties of PGMs make them indispensable to modern technology and industry. Surely this is an opportunity that cannot be missed.

Shedding Weight The mining sector was one of the hardest hit during the recession. Mining companies were constrained and forced to tighten their reigns, restructure their organization, their balance sheets and in some cases, dispose of uneconomic assets. De Beers, the world’s leading diamond company, with more than a century of mining history, is now benefiting from the strong price recovery and demand in China and India, but the situation was not the same several years ago. “De Beers took the necessary measures to get DBCM in good shape to weather the storm and bring 14 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 15 South African Mining South African Mining

ing license the condition is that you give African Rainbow Minerals, created in international companies,” said Bongani Mt- up some of the equity to HDSA and the 2004, is also a diversified mining and min- shisi, CEO of BSC Resources. Industry Addresses MPRDA Issues imposition of BEE on prospecting should erals company, with world-class long-life, Industry has embraced the transforma- be obsolete.” low-cost assets forged through mutually tion and has recognized that to operate Although the MPRDA has liberalized the industry and created racial diversity Despite its demise, the MPRDA has liber- beneficial partnerships with major play- successfully in South Africa you need a alized the industry, increasing competition ers in the platinum, iron ore, manganese, BEE partner that can actively add value. the government needs to quickly address its shortcomings. amongst juniors and multinationals and, copper, chrome and coal. African Rainbow Richard’s Bay Minerals is the largest pro- since its inauguration, there have been a Minerals have successfully established ducer of titanium minerals, high purity pig plethora of listings of mining companies. themselves as a black owned and oper- iron, rutile and zircon and was formed tions. We focused too much on ownership The act also succeeded in creating racial ated company both in South Africa and from a joint venture Rio Tinto and BHP Bil- instead of training and educating people,” diversity, in an industry that previously was around the continent. liton and brought on board a BEE Partner, said Dr. Con Fauconnier. nonexistent. BSC Resources has the same aspira- Blue Horizon, in 2009. “The transition that “This is a learning process; many be- The mining sector was the first sec- tions and has already demonstrated strong the nation is making through their trans- lieve we could have done it better and it tor to broach transformation, and is now management. It has successfully estab- formation so that the leaders of tomorrow could have been broader, and benefited the largest contributor by value to black lished South African coal operations, part- reflect the diversity of South Africa today, more people than it did,” said Mkhwanazi. economic empowerment in the economy nered with mining giant Vale and developed both in terms of racial and gender diver- Unfortunately the overhaul of the legisla- (in terms of the value of BEE transactions the capability to move into Africa. “We are sity, is very exciting,” said Managing Direc- tion was too late save Kumba Iron Ore from completed). looking to be more active not just in South tor Elaine Dorward-King. having its mining license swept from under The formation of Exxaro, whose entry Africa but around Africa. We want to de- To tackle the issues Leon has made a the company’s feet and awarded to an em- into the market was through the merger of velop skills among South Africans and go recommendation to government to look at powerment company, Imperial Crown Trad- the Eyesizwe and Kumba’s coal resources, out into the rest of the continent and add best practices in other jurisdictions such ing (ICT). ArcelorMittal SA (South Africa’s is now one of South Africa’s largest diversi- value there. Our involvement in a project in as Ghana. “I have suggested to govern- largest steel producer) failed to convert its fied mining companies, listed on the JSE Namibia is proof of that. We acquired the ment to seriously consider creating an old-order rights to neworder rights under with a world-class commodity portfolio in project and it is now listed. It was not an independent regulator for the mining in- the MPRDA, which meant their prospect- coal, mineral sands, base metals and in- empowerment deal and we look to do the dustry. This model has been successful in ing right was given back to the state and dustrial minerals, and exposure to iron ore same in neighboring countries. We want Ghana, and it has had a positive impact on awarded to ICT after Kumba had applied through a 20% interest in Sishen Iron Ore to continue to be explorers across the their regulatory regime, and they continu- Women in mining: Female electrician (Laticia) and maintenance operator (Madirang) at Voorspoed Mine. for the mining right to give it full ownership Co. (SIOC). As the second-largest South continent and to remain first movers. We ally rank higher on the Fraser Institute Re- (Photo courtesy of De Beers Consolidated Mines) of Sishen (South Africa’s largest iron ore African coal producer, with capacity of 45 are a niche player; most BEE companies port. The commission employs technically deposit). million mt/y and the third-largest global are passive shareholders, holding a 26% competent people to deal with regulatory The government’s lawmaking showpiece, 2014. Disappointingly, the first tranche of This decision caused chaos in the in- producer of mineral sands, this is truly stake. We try to own our projects outright obstacles and inform and make recom- the Mineral and Petroleum Resources De- 15% has not been met and the industry dustry and raised concern about the DMR’s a successful transformation to a black until we bring in a partner. We have a very mendations to the Ministry. This is some- velopment Act (MPRDA) came into being transformed by a mere 9%. It also requires systems. The minister said there was a owned and operated mining company. strong institutional backing from local and thing we seriously need to consider.” in 2004 with what appeared to be fun- mining companies substantially and mate- problem in particular with section 9(1)b, damentally sound legislations to address rially increase the economic participation which governed the applications proce- the inequalities and transform the mining of HDSAs within the industry, from employ- dures and led to double grants. A proposal industry, but in the past seven years has ment to procurement. to have ICT purchased by ArcelorMittal, an revealed many ambiguities. These have As Frank Gregory, managing direc- R800 million empowerment deal was then been identified and an entire overhaul of tor for The Mineral Corporation points submitted and should be finalized later this the act is currently underway, but not without “The mineral resource is a national year. out creating uncertainty and an unclear heritage, and it needs to be shared with Section 11 of the MPRDA, which relates to the transferability of rights, is supposed regulatory environment. people who have lived in the country for to safeguard against the almost immediate Webber Wentzel’s Peter Leon, one of thousands of years. The concept of BEE sale of recently granted mineral rights for the top legal advisers in the continent, not- (for sustainable development of communi- a premium; the so-called flipping of mined at the time of development there was ties) is absolutely right. I think we’re going ing assets. This area is currently up for re- “too much subjective discretion and lack to see that it will spread rather than con- view. A similar situation of double granting of time periods for decisions that would tract. At the current time, approximately arose with Rio Tinto’s Palabora mine, and make the act very difficult to implement.” 400,000 people in this country earn more Lonmin was ordered by the department to Webber Wentzel, established in the 1860s, than a $1000 a month; only 0.1% of the stop selling nickel, copper, chrome and has the largest mining practice group in the population can be considered wealthy.” any minerals other than the platinum group country. Leon was proven right over the However, to date the intended transfor- metals, as another company had now been years, as lengthy time lags for granting of mation has not achieved its objective and granted those prospecting rights. The min- licenses and permits prevailed, instances many companies approached the transfor- erals occur naturally together and it does of double granting of permits arose and mation as a compliance issue rather than not make economic sense to mine them subjective discretion of governmental staff a genuine transformation. separately. Issues of double granting cre- to approve or enforce Black Economic “The idea was to try to bring in as many ating insecurity of tenure have been now Empowerment (BEE) involvement weighed HDSA’s into the mainstream business, but acknowledged and addressed. heavily on the industry. what we have are people that are becom- “Prospecting is even more risky than The (MPRDA) requires that mining coming rich overnight, and 95% of HDSA’s mining,” said Leon. “There has been incon- panies transform their ownership struc- are not getting any benefit. As part of the sistent application for BEE requirements tures or facilitate BEE, with 15% Histori- industry team to negotiate the empower- for prospecting companies. Under the act cally Disadvantaged South African (HDSA) ment legislation, what was in my mind was as it stands, the DMR can impose BEE ownership of equity in their companies or a system that would benefit a broad spec- on a prospecting company, but does not the equivalent attributable units of produc- trum of people. The DMR has recognized have to do so; the application on this rule tion to HDSA owners by 2009 and 26% by that there are shortcomings in the legisla- is inconsistent. I believe, if you get a min- 16 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 17 South African Mining South African Mining

Social and Labor Plan you can mine and make this compatible with good environmental performance. It As part of the MPRDA, the social labor Making Strides is fascinating to see some of the natural plan was created to legislate how mining forest that has been revegetated and in The Chamber of Mines has locked horns with government and agreed on activities are going to be conducted in a terms of biodiversity, structure and func- manner that leads to sustainable develop- tion it is very hard to distinguish this from a common vision: to create a meaningfully transformed, competitive and ment. The mining industry faces significant a forest that has never been disturbed.” growing mining industry. pressure, both nationally and globally, to In 2010 Anglo American spent 111 mil- increase productivity and reduce costs, lion dollars globally on corporate social ini- and, at the same time, improve mining tiatives and roughly 80% was allocated to safety and contribute significantly to the South Africa, including the largest HIV pro- funder’s Abel Malinga, head of mining and communities in which it operates. gramme of any corporate anywhere in the beneficiation, reports the increased focus Norilsk Nickel’s Wayne Venter discusses world. Anglo American’s Zimele flagship of funding allocation to beneficiation proj- how important local partnerships can be in program is currently implemented globally, ects. “We have been exporting raw material achieving these objectives, “From a skilled with companies such as DeBeers, Hitachi workforce point of view, in the South Afri- to the rest of the world and then importing Guys Landsman, CEO of Detnet and President of South- and Barloworld copying the model. God- can context you have the requirement to those value added product at ten times the ern African Institute of Mining and Metallurgy frey Gomwe, chairman of Zimele explains: price. We would want to have a situation recruit from the local communities. It is a “Zimele is our enterprise development ini- huge challenge to supply our operations where we export a beneficiated project. We tainable mining. Richards Bay Minerals has tiative; to create jobs and bring enterprise are looking at beneficiation consciously, with the necessary skilled employees. developed an internationally recognized to areas with little or no economic activity. instead of exporting the jobs we want to Training is becoming more and more im- We do this at several levels, we look at our environmental programme to restore the create jobs, to tackle the unemployment in portant. Since it is a new mine, we do not supply chain, and we try to make this ben- biodiversity in the mined sand dunes. South Africa. Beneficiation makes business have an adequate training system in place efit a broader community. We look in and Elaine Dorward-King, managing director, sense.” yet, but are actively working on this and around the vicinity of the mines and help Richards Bay Minerals proudly explains: In addition to beneficiation, the growth we are fortunate to have African Rainbow to develop enterprise and create jobs over Hydraulic re-mining with a Fraser Alexander Track Gun. (Photo courtesy of Fraser Alexander) path highlights a review of the MPRDA Minerals as a partner. They have a lot of “We create a lake in the dunes and pro- and above those created from the mining (which is already under way), as well as experience in Corporate Social Responsi- gressively mine the sands taking out the operations. We also offer training to run With the end of Apartheid came the strug- transformation in the sector and the Mining lowering logistics and skills costs. bility and know how to appropriately invest heavy sand particles, spitting back out a business and, out of that, they learn to gle for engagement between government, Charter review. “Through MIGDETT we have money into the business to add value.” 95% of the sand, hence we only remove create a business plan and we fund them industry and labor. Over the years the locked horns with government and agreed Transparency South African companies are spear- about 5% of the total volume of the dune. through their plan. They have to pay taxes collaboration between these parties has on a common vision for the industry: we heading initiatives for the global mining As we mine, we continually recondure the and the regular contributions in order to The new South African Mineral Regulation strengthened. “When the world went into want to achieve a meaningfully transformed community, demonstrating leadership in dune. This process of progressive recla- develop the economy. We also finance ex- Administration (Samrad) online system financial chaos in September 2008, two and growing mining industry. The relation- profitable, safe and environmentally sus- mation has been able to demonstrate that ploration, we fund up to the bankable fea- was launched in April 2010 by the Depart- countries took the time to understand what ship between industry and government impact that would have on the country; has never been better,” said Sibiya. The ment of Mineral Resources to tackle the South Africa and Zambia. South Africa had prognosis is promising, and MIGDETT has issues of double granting, corruption and previously negotiated with the industry’s already achieved success by getting the lack of transparency, enabling investors to input, an earnings based royalty system. mining sector back onto government’s list apply for prospecting rights, mining per- However in 2008 at the economic down- of priorities. mits and mining rights from anywhere in turn they held back the implementation of Gys Landman, president of the Southern the world. This system is an improvement this system, on the basis of not wanting to African Institute of mining and metallurgy, from the previous single layered NMPS to negatively impact the industry. There is not the professional institute that provides news a 264 multi-layer system which includes any other country I have seen that tries to and views about technological develop- consideration for environmentally sensitive work as constructively as our country does ments in the mining and metallurgical sec- areas. Prior to the release of Samrad, the with its mining industry,” said Cutifani. tor, believes South Africa’s mining industry government issued a six-month memora- Further strengthening this partnership is making positive strides. “We came out torium on prospecting rights, while the De- was the “The Mining Industry Growth De- of a difficult time and we are getting some partment of Mineral Resources undertook velopment and Employment Task Team” stability. The good news is at least there is a comprehensive audit. Results revealed (MIGDETT), established in December 2008 a lot of good momentum and recognition that despite the 26,000 applications and to manage the impact of the global econom- that we must work collaboratively togeth- huge number of prospecting rights that ic crisis on the mining sector and to reduce er and the mining industry is expected to were issued since the inception of the the number of retrenchments, and to help grow at an average of 4% a year.” As per MPRDA, the exploration activity was not re- position the South African mining industry MIGDETT’s intent, the government’s New flective. The audit also revealed 122 cases to take better advantage of the next com- Economic Growth Plan aims to enhance of double granting and the disengagement modity cycle. This led to the development economic growth, employment creation of the various departments to work cohe- of a tripartite—government, industry and and equity in South Africa and has identified sively for licensing requirements. labor—Strategy for the Sustainable Growth both mining and mineral beneficiation as In the wake of the Kumba Iron Ore and and Meaningful Transformation of the South one of the key contributors. The strategy of ArcelorMittal debacle over prospecting African Mining Sector. The MIGDETT task the New Economic Growth Plan is to reduce rights as well as Lonmin’s halted opera- team recognized the importance of com- unemployment from 25% to 15% by 2020 tions, the Samrad was developed prior to petitiveness and transformation and con- and has targeted the mining industry to cre- the completion of the revised MPRDA and ducted detailed research into the factors ate 140,000 more direct mining jobs by beneficiation strategy that is set to be constraining them. Two work streams were 2020 and 200,000 by 2030. The growth approved by Cabinet late 2011 or early established; the first would concentrate on path highlighted value added as a key com- 2012 to address immediately investment the competitiveness and growth of the min- ponent to job creation. The International concerns about mineral rights and secu- ing sector and the second would focus on Development Corp. (IDC), the state owned rity of tenure. 18 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 19 South African Mining South African Mining sibility stage. Within the portfolio we have require rehabilitation and Fraser Alexander 15,494 employed in the business that we has been involved in the managing of tail- created and these are jobs outside of our ings dams throughout its history, but the normal core activity. We have invested company is now seeing the need to also 453 million rand into this program.” look at other environmental elements such water retreatment, waste water manage- Environmental Impact ment and environmental rehabilitation. He further comments, “Fraser Alexander is From over a century of mining, the coun- very strong on environmental solutions. try is faced with a legacy of environmental We work in partnership with some of our unfriendly mining which has plagued the in- clients on R&D projects. Specifically we dustry with acid mine draining in Gauteng. focus on the water component of the tail- In 2002 for the first time, the Western Ba- ing dam. Rehabilitating tailing facilities and sin overflowed with acid water into Robin- planning for mine closure prior to the end son Lake, but since then the situation has of the life of the mine is also a big area, and worsened significantly in recent months one where we can offer a lot of innovation. and government is considering impos- In deposition, our team has been active in ing a mining industry levy to finance the developing products where we deliver the clean up. Coffey Mining’s Chris Fredericks tailings material in a much more cost ef- notes: “The industry has been long estab- fective way than to the tailings dam.” lished, which means that many licenses Leon Furstenburg says, “The main busi- were granted years ago and therefore the ness thrust is new mining and new licens- environmental considerations were not ing. For foreign investors it is extremely a key concern. The newcomers are go- difficult to navigate through the environ- ing through the processes and adhering mental legislations.” to the environmental legislations, which means that the future development of the industry is now being developed on a solid Skill Development Atlas Copco Drilling Solutions through its Southern Af- footing, sound environmental manage- The social labor plan is the mandate for rica distributor, Barloworld Equipment, supplies large surface blasthole production rigs to open pit mines ment and company compliance to those companies to contribute to skill develop- throughout Southern Africa. (The Atlas Copco Pit Viper requirements, which is good practice. For ment. South Africa’s skill shortage is crip- 271 is shown here. Photo courtesy of Atlas Copco) companies to provide the level of compli- pling the industry, but this is not unique ance now needed, there is a lot of reme- to the southern most country in the con- ticated labor legislation in this country, dial work that needs to be done to make tinent; this is a global problem. South perhaps almost too sophisticated for the the project attractive. For the intelligent in- Africans are recognized worldwide for nature of our workforce as it makes it very vestor he has to consider those. This is a their skills, especially when it comes to difficult to retrench employees when times huge factor in the economic evaluation of deep level mining, but as Bill McKechnie, are difficult. We have a ratchet effect; the project and is very often pushed out to general manager South Africa, Snowden, huge demands for wages increases and the tail end of the project. This is the way a leading mining consultancy headquar- this pushes up the entire cost structure in of the modern world; we do not want to tered in Australia, points out: “Acquiring the country.” see acid mine drainage and tailings dam- skilled and knowledgeable people is a ma- South Africa’s wage demands continue age failings, those are things that should jor challenge in South Africa. There has to grow. The National Union of Metalwork- not happen if the correct environmental been a large exodus of trained profes- ers of SA demands for a 20% increase plans are in place and the adequate clo- sionals out of the country over the past and the National Union of Mine Workers sure plans are made.” twenty years and this reduces the size is currently demanding 14%, while the offi- Leon Furstenburg, managing director of the pool of expertise and results in an cial economic position of the government, for Knight Piésold Consulting remarks, ageing workforce.” as outlined in the new growth path, calls “South Africa has strong environmental Mr. Vaughn Duke, chief executive officer for wage restraint. “In the next years, the legislation and environmental protection of Sound Mining, recognizes the shortage cost of labor will be an issue. 6 years ago and mine closure legislations are at inter- as an opportunity and has a team of older salaries were 40% less than what they national standards, but the enforcement of experienced engineers providing consult- were in the US. Today they are, in a lot it is dubious and decisions are not always ing services to the industry. “We started of cases, equal or more expensive. Our made on a reasonable basis.” The launch Sound Mining to address a clear gap in labor force needs to understand interna- of the Department of Mineral Resources’s the market in terms of mining engineer- tional trends and not just focus on national new online system is intended to address ing skills.” The South African government trends. For example, the world is offering these issues. However, Lambert van der hopes to create 30,000 more engineers 2% increases and we are asking for 10%,” Nest, chief executive officer from Fraser in the country by 2014 and plans to under- says Jaco van der Merwe, general man- Alexander, sees the industry moving for- take major changes in university funding ager Atlas Copco. ward: “South Africa has some of the best formulae in order to achieve this target. The mining industry, has been sum- environmental legislations in the world and But South Africa is faced with a dichoto- moned by President Zuma to create em- we are seeing the application of those my; extraordinarily high levels of unemployment opportunities and part of this moving on the right direction.” Fraser Al- ployment, low levels of engineering skills, strategy is through indirect employment exander is a proudly South African com- coupled with demanding labor legislations. created through value-added. Terry Gillhan pany with a history of 100 years (in 2012). As Dr. Con Fauconnier, retired president the general manager of Bell Equipment South Africa has an abundance of tailings for the Chamber of Mines of South Africa, sales South Africa reinforces the govern- dumps and many old mining sites, which says: “We have some extremely sophis- ment’s position on the need for beneficia- Piezcocone (CPT) Probing at Palaborwa Mining Company (Photo courtesy of Knight Piésold) 20 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 21 South African Mining South African Mining sibility stage. Within the portfolio we have require rehabilitation and Fraser Alexander 15,494 employed in the business that we has been involved in the managing of tail- created and these are jobs outside of our ings dams throughout its history, but the normal core activity. We have invested company is now seeing the need to also 453 million rand into this program.” look at other environmental elements such water retreatment, waste water manage- Environmental Impact ment and environmental rehabilitation. He further comments, “Fraser Alexander is From over a century of mining, the coun- very strong on environmental solutions. try is faced with a legacy of environmental We work in partnership with some of our unfriendly mining which has plagued the in- clients on R&D projects. Specifically we dustry with acid mine draining in Gauteng. focus on the water component of the tail- In 2002 for the first time, the Western Ba- ing dam. Rehabilitating tailing facilities and sin overflowed with acid water into Robin- planning for mine closure prior to the end son Lake, but since then the situation has of the life of the mine is also a big area, and worsened significantly in recent months one where we can offer a lot of innovation. and government is considering impos- In deposition, our team has been active in ing a mining industry levy to finance the developing products where we deliver the clean up. Coffey Mining’s Chris Fredericks tailings material in a much more cost ef- notes: “The industry has been long estab- fective way than to the tailings dam.” lished, which means that many licenses Leon Furstenburg says, “The main busi- were granted years ago and therefore the ness thrust is new mining and new licens- environmental considerations were not ing. For foreign investors it is extremely a key concern. The newcomers are go- difficult to navigate through the environ- ing through the processes and adhering mental legislations.” to the environmental legislations, which means that the future development of the industry is now being developed on a solid Skill Development Atlas Copco Drilling Solutions through its Southern Af- footing, sound environmental manage- The social labor plan is the mandate for rica distributor, Barloworld Equipment, supplies large surface blasthole production rigs to open pit mines ment and company compliance to those companies to contribute to skill develop- throughout Southern Africa. (The Atlas Copco Pit Viper requirements, which is good practice. For ment. South Africa’s skill shortage is crip- 271 is shown here. Photo courtesy of Atlas Copco) companies to provide the level of compli- pling the industry, but this is not unique ance now needed, there is a lot of reme- to the southern most country in the con- ticated labor legislation in this country, dial work that needs to be done to make tinent; this is a global problem. South perhaps almost too sophisticated for the the project attractive. For the intelligent in- Africans are recognized worldwide for nature of our workforce as it makes it very vestor he has to consider those. This is a their skills, especially when it comes to difficult to retrench employees when times huge factor in the economic evaluation of deep level mining, but as Bill McKechnie, are difficult. We have a ratchet effect; the project and is very often pushed out to general manager South Africa, Snowden, huge demands for wages increases and the tail end of the project. This is the way a leading mining consultancy headquar- this pushes up the entire cost structure in of the modern world; we do not want to tered in Australia, points out: “Acquiring the country.” see acid mine drainage and tailings dam- skilled and knowledgeable people is a ma- South Africa’s wage demands continue age failings, those are things that should jor challenge in South Africa. There has to grow. The National Union of Metalwork- not happen if the correct environmental been a large exodus of trained profes- ers of SA demands for a 20% increase plans are in place and the adequate clo- sionals out of the country over the past and the National Union of Mine Workers sure plans are made.” twenty years and this reduces the size is currently demanding 14%, while the offi- Leon Furstenburg, managing director of the pool of expertise and results in an cial economic position of the government, for Knight Piésold Consulting remarks, ageing workforce.” as outlined in the new growth path, calls “South Africa has strong environmental Mr. Vaughn Duke, chief executive officer for wage restraint. “In the next years, the legislation and environmental protection of Sound Mining, recognizes the shortage cost of labor will be an issue. 6 years ago and mine closure legislations are at inter- as an opportunity and has a team of older salaries were 40% less than what they national standards, but the enforcement of experienced engineers providing consult- were in the US. Today they are, in a lot it is dubious and decisions are not always ing services to the industry. “We started of cases, equal or more expensive. Our made on a reasonable basis.” The launch Sound Mining to address a clear gap in labor force needs to understand interna- of the Department of Mineral Resources’s the market in terms of mining engineer- tional trends and not just focus on national new online system is intended to address ing skills.” The South African government trends. For example, the world is offering these issues. However, Lambert van der hopes to create 30,000 more engineers 2% increases and we are asking for 10%,” Nest, chief executive officer from Fraser in the country by 2014 and plans to under- says Jaco van der Merwe, general man- Alexander, sees the industry moving for- take major changes in university funding ager Atlas Copco. ward: “South Africa has some of the best formulae in order to achieve this target. The mining industry, has been sum- environmental legislations in the world and But South Africa is faced with a dichoto- moned by President Zuma to create em- we are seeing the application of those my; extraordinarily high levels of unemployment opportunities and part of this moving on the right direction.” Fraser Al- ployment, low levels of engineering skills, strategy is through indirect employment exander is a proudly South African com- coupled with demanding labor legislations. created through value-added. Terry Gillhan pany with a history of 100 years (in 2012). As Dr. Con Fauconnier, retired president the general manager of Bell Equipment South Africa has an abundance of tailings for the Chamber of Mines of South Africa, sales South Africa reinforces the govern- dumps and many old mining sites, which says: “We have some extremely sophis- ment’s position on the need for beneficia- Piezcocone (CPT) Probing at Palaborwa Mining Company (Photo courtesy of Knight Piésold) 20 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 21 South African Mining South African Mining

Frank Gregory, managing director of Safety Drives Technology that the initial cost implications hinder the the Mineral Corporation, notices: “Ex- mining industry’s affinity for change, “The South African mines are the some of the tensive amounts of corporate memory sector is of the mentality that if something deepest and most dangerous in the world. were lost and intellectual property data works, why should we change and the dispersed as it hemorrhaged out of the Frans Baleni, the general secretary for the South African mining industry is still very mining companies when they were being National Union of Mineworkers, the largest labor intensive and non-mechanized.” stripped.” Three of four of the founders recognized collectively bargaining agency Geobrugg has developed a mechanized of the Mineral Corporation came from JCI representing mine workers in South Africa method to install rock fall barriers for min- and one from Anglovaal and, together, they with 320 000 members, expressed his ing operations and is currently working in saw two opportunities. “From the loss of dissatisfaction. “We are not pleased with collaboration with AngloGold Ashanti and intellectual property, there was the ability the reported death of 128 in 2010.” He the technology consortium to improve to share our mining industry experiences believes the industry will not achieve safety methodology for deep level mining. The with the new emerging companies. Fur- improvements under present conditions. big challenge in safety is to remove people ther, we have an extensive global network “Remuneration is founded on a low-based from the unsupported ground and away and we saw the opportunity to alert the salary and large bonus structure, making it from the blasting. financial institutions around the world that easy for employees to compromise safety. In addition to improved safety, as Rod Frans Baleni, Dr. Con Fauconnier, retired president of the Chamber of The second problem is the absence of we were in business. The restructured min- General Secretary of National Union of Mine Workers Humphris, Managing Director of Omnia Mines of South Africa ing companies generally no longer had the peer review mechanisms.” Group (parent company of BME Mining) in-house financial muscle to fund deals and Although some of South Africa’s mining highlights the increase in productivity and versified practice amongst their global option to create employment as well as the they would seek assistance from financial conglomerates have moved towards higher efficiency are enormous, “In terms of erations. Peter Labrum, Managing Director contribution of Bell Equipment, a local institutions, not only in South Africa, but technology, mechanization and innovation, electronic detonators, we have brought to of SRK Consulting South Africa comments South African equipment provider to job marching to the Toronto Stock Exchange which leads to longer-term improvements market a user-friendly electronic detonator creation. “We are South African, we em- or London Stock Exchange looking for on increased competition, “Prior to 1994 in safety and productivity, the country, how- that is currently undergoing regulatory ap- ploy 2500 people, but the knock on effect equity financing arrangements,” continues South Africa was isolated and it was not ever, is not on the same footing as others proval. This product is extremely advanta- creates an additional 30,000 employment Mr. Gregory. a place where people wanted to do busi- such as Australia. This may in part be at- geous for the mining industry and can save opportunities. There is no local content The trend is to outsource all or part of ness. Today there is more competition, tributable to the government’s investment a mine up to 30% off their dragline time. in imported products and very little value the engineering functions, which means certainly with service providers as global in research and development. In 2009 He further adds, “Electronic detonators of- added. The manufacturing sector in this that mining houses no longer have to companies move into Africa.” the South African government contributed fer very good vibration and fragmentation country needs to flourish and companies carry the overhead of permanent engi- As companies evolve to adapt to R578-million to South African companies to control. The mines are encouraged to con- need to buy local and support local. The neering staff when they are not engaged changes, the challenge the industry and fund mining R&D, compared to Australia’s sider costs holistically rather than in silos iron ore that ArcelorMittal mine in this in projects or during times of financial related industries face now is how to ad- commitment of A$4,3-billion during the in order to optimize total expenditure. The country actually ends up as a Bell truck; havoc. Outsourcing is even more apparent vance technically and improve safety with- same period. Geobrugg’s manager of Afri- readiness of the industry to adopt the tech- this is a real value add. This is what the amongst some of the new Black Economic out compromising employment. can operations, Bart Schoevaerts, believes nology is improving steadily.” country needs to do more of.” As Terry Empowerment Juniors, which in some also states, local South African manufac- cases lack expertise and know-how. Atlas turers understand the operating condi- Copco has witnessed many changes. tions unique to the African continent, “the “With the new mining charter, the face conditions in Africa are harsh, amnient of our customers is changing. We see temperatures and rainfalls are high, we a lot of movement away from the large have a good understanding of Africa and mining houses to new junior miners that we know what it takes to make equipment will be black owned. If we want to be reliable and durable for these conditions.” competitive, we need to adapt to that. The disadvantage however for South Afri- Our company is very progressive when can manufacturers is the strong and often it comes to transformation. Because we fluctuating local currency which makes im- have a very strong local representation, porting companies very competitive. with local management we are positioned well to deal with new customers in the future,” says Jaco van der Merwe, general Support Services Adapt manager Construction & Mining Technique to Meet the Industry’s Southern Africa. Demands On the other hand, well established South African consultancies, such as Early industrial development flourished on Knight Piésold, celebrating 90 years of ex- the back of the diamond and gold mining istence in 2011, have found that because industry. The sector fostered the establish- of their long history they have already es- ment of some of the leading engineering, tablished a very diversified practice. “We construction, financial, water and energy are the most diverse of the Knight Piésold services. More recently, not only did the practices worldwide, which is a legacy phasing out of the concept of the “big six from the country’s history of working in mining houses” create the junior mining isolation, which meant we needed to di- industry, but it enabled the service indus- versify rather than specialize,” says Leon try to grow their business and participate Furstenburg, Managing Director, Knight in projects which were previously in the Piésold Consulting. hands of the mine owners themselves. The Headquartered in South Africa, with 37 industry has been unbundled engendering years of experience in the country, SRK’s new possibilities for those with skills. South African division is also the most di- 22 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 23 South African Mining South African Mining

Both DetNet and BME are seeing an existing plant and will place the company from beginning to end. We are working on and effluents and more Going North increased uptake of electronic detona- in a position to grow into the market as it a fully integrated model and we have been efficient chemical pro- More and more internationalization and op- tors by mining companies. Gys Landman, expands. looking at the whole organization strategi- cessing.” portunistic development across the conti- chief executive officer of DetNet, a leading AngloGold Ashanti is a leading light in cally; the operation model and its impacts South African suppli- nent prompts geographical diversification. supplier of electronic initiating systems safety improvements, and with mines at on safety and production. This is a major ers and multinationals formed a strong partnership with Dyno No- depths of 4000 meters with seismic activ- step change and no other mining company are driving forward high- For many companies, South Africa will re- bel and AECI. ity, this is not an easy feat. “We defined has taken it on,” he continues. er levels of automation main their core revenue source, but for oth- The purpose of DetNet was to design, a different way of working together to im- South Africa has also seen heavy in- and innovation. MMD, a ers their focus will shift towards the more develop, industrialize and assist with the prove safety and to look at the root causes vestments in “people metrics” (for exam- world leader in Mineral underdeveloped parts of the continent and manufacturing of electronic detonators of the accidents. Based on this we made ple heart rate performance) to understand Sizer technology, the South Africa will be the springboard for op- mainly through those two channels to technical changes to the way we operate. the physical implications of what employ- original inventors of the erations across Africa. “The World Bank is market. He sees the opportunities for this We have seen a 70% improvement over ees are enduring whilst underground and Mineral Sizer, have re- expecting growth of 7% across the conti- technology particular relevant to the South the past three years and we believe we improve safety and productivity of the cently developed ‘Green nent. South Africa is the means to execute African environment “As a result of ore will see another 70% over the next three operations. In addition, significant prog- Mining Solutions’. this and a lot of the work will be channeled bodies becoming more difficult to access years. Within a space of five years we will ress has been made on research into an “These eliminate the through South Africa instead of through and a general lowering of grades, there will be comparable to any developed coun- underground tracking system, which is a use of large truck fleets. Europe,” said Rory Kirk, the managing di- be a migration to new technology within try. Today our American operations are real-time locating system that monitors These include the fully rector of Hatch Africa. the mining industry. As such, The role that amongst the top quartile performers in the underground position of personnel. Moab Khotsong metallurgy plant South Africa. mobile sizing station in Mr. Kirk is starting to see a revival in electronic initiation systems play in min- safety across the continent and AngloGold (Photo by Annalien Swanepoel, courtesy of AngloGold Ashanti) combination with large spend across the mining sector and sees ing operations will continuously expand,” Ashanti globally is just behind the North Further Technological rope shovels and over- opportunities for the company to diversify he believes. To deal with the complexities Americans on average. South Africa is our to Metso which provides cutting edge re- land conveyer belts,” explains Martin Vor- further into southern Africa. Other consult- of a shortage in skilled workers, the blast biggest challenge. Three or four years ago Advancement search on preservation of energy and the ster, managing director. ing and engineering companies, such as is controlled through electronic media and we had injury rates double that of North Mining companies are adopting energy ef- Metso mining and construction division “Our GTMET team have some very ex- MDM Engineering, currently with five ma- designed in such a way that it is intuitive America. If we continue making the prog- ficient machinery and are increasing their works closely with them to improve the citing technology, we can run extremely jor projects in various stages of execution for miners to use and as a result the knowl- ress we have seen, we will be amongst the investments in new energy technologies. utilization of energy,” remarks Dave Moon, low volumes of minerals through their and three of which are in South Africa, in- edge is easily maintained. best in the world and there is no reason AngloGold Ashanti, in three years, has re- the VP of Southern Africa for Metso. trial plant process, which means mining cluding the flagship Kalagadi manganese As a result in growth in electronic deto- why we shouldn’t be,” says Mr. Cutifani. duced their energy consumption by more Peet Reyneke, acting president for companies do not have to make huge bulk Umtu Project, treating 3 million tpa of nators, the requisite need for nitrates has AngloGold Ashanti’s consortium is look- than 15% through the application of differ- Outotec Sub Saharan Africa, has also samples for no profit. Trial can actually be magnesium ore, all for export, see more created an opportunity for Omnia group ing at automation and technologies that will ent innovations. seen a shift in the business. run on core samples. This technology has opportunities outside the country. Dave to invest in a second nitric acid plant to remove people from areas of most risk. Schneider Electric’s Wilhelm Swart “This has pushed us to develop appro- the ability to save exploration projects Todd, technology manager said, “Alot of meet the demand in the market. Their “We are exploring new mining methods, says: “In South Africa we have soaring es- priate new technology so we see appli- hundreds of millions of rands.” says Julian our key client base are the juniors, which second plant, scheduled to come online in new mining machines and new transport calation of electricity demand; our energy cations arising for energy-optimized sin- Upshall, Business Development Manager are exploring much more over Africa than 2012, will be about 40% larger than the systems to basically redesign the process costs are increasing 4 fold over a 3-year tering and smelting, reduced emissions for Africa. in South Africa right now.” The company phase and with this shortage, our demand outstrips our supply until 2016-2017. Mining is very energy intensive, and we believe that you can save 20-40 percent of energy in the modern day mining environment through a holistic programme of fixes. We leverage the saving in safety, energy efficiency and productivity. We did a large project for Anglo Platinum (3rd largest energy user in the country); they did not know where 65% of their power was being used, so we did a measure- ment project where we put metering all over their sites and collected the data at their different hubs. We deployed meters to see where the key usage was and now they are busy analyzing the data to look for areas of improvement.” We are seeing a global drive for more efficient mining methodology, but South Africa’s producers, manufacturers and service companies have been forced to adapt in order to avoid the repeated energy crisis which took place in 2008 and resulted in halted mining operations as a electricity demand outstripped supply. “Clients are always looking for more efficient ways of extracting the minerals from the ore bodies; therefore we are constantly striving to develop different processes and different equipment to increase the efficiency. We have an energy and environment technologies segment

24 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 25 South African Mining South African Mining

He cautions however that companies the market. We continue strengthening our looking to diversify must adapt to the service capability to the market,” said Ute cultural translation, “We have reasonable Bormann, the newly appointed managing timeframes and constraints that work in director for SEW Eurodrive. SEW Eurodrive South Africa, but are not necessarily appli- is a leading supplier of industrial gears to cable in other African countries. We need the mining industry. They launched the X to make sure that the cultures talk to each series, a product that is well suited for the other without creating necessary conflict,” African market. he continues. For Stewart group, acquisitional growth George Bennett the executive director helps position the company for continen- for MDM engineering recently formed a tal expansion. Stewart Group is an inter- strategic partnership with GR Engineering, national independent minerals assay and a geo-engineering company involved with inspection company and they have just EPC projects in Australia to take advan- installed a new geochemical lab in Johan- tage of the huge opportunities presented nesburg as part of their strategy to service across the continent. “The attractiveness the business and grow in Southern Africa. Daphne Mashile-Nkosi, of the strategic alliance for MDM was to They also recently acquired GTMET (from Martin Smith, CEO of MDM Engineering Chairperson of Kalagadi Manganese expand within Africa. There are over 150 Canada) “There are good opportunities for Sound Mining collecting data for geological modeling at Mrima Hill, Kenya listed Australian companies with 400 proj- this business in South Africa and we ex- expects to have 20% of their revenue gen- Major manufacturers such as Cummins ects across the continent and we can use pect to see this as the year progresses. in many cases, political instability. “From “Strategically South Africa is the leading erated from their South African operations South Africa, with more than 90 years of this partnership to leverage access to The acquisition presents Stewart Group an SEW South Africa point of view, we see light in terms of the African continent and and 80% in Africa as time progresses but established operations in South Africa has these projects. It has already borne fruit and GTMET with an excellent platform to Africa as a target. It is difficult from an in- what we do here and how well we do it, will still utilizing South Africa to branch out fur- also seen the shift in the companies geo- as we have qualified for two tenders and expand our global reach, providing cus- vestment and technical expertise point of be used as the template that other devel- ther into Sub-Saharan Africa. Martin Smith, graphical strategy to a stronger focus in the partnership was only made several tomers with a seamless, integrated ser- view to move into all African countries. We oping countries will follow,” emphasis Cof- CEO of MDM, notes “Our strategy is up in Africa, “For Cummins, Africa is the next months ago (December 2010).”MDM is vice at a time when demand for services is have over 48000 parts that make up over fey Mining’s Chris Fredericks. “If you look Africa, we have done work there, and we major growth area, and we are now in the a engineering and project management high. It enables Stewart Group to provide 4 million combinations, which means the at the infrastructure developed in South are moving back there. We are picking up process of structuring the entire African house with an exclusive focus on mining. our customers across the globe with an stock holding is very high. This is required Africa, the education systems and the reg- where we left off several years ago. There strategy. Africa is the next big thing. We Vaughn Duke from Sound Mining sees integrated service at every phase of the to deliver the flexibility needed by our cus- ulatory bodies that monitor our sphere of are a lot of engineering and EPC players have an integrated approach and we offer the most opportunities for expansion on exploration,” says Julian Upshall, Business tomers, but it makes it challenging to set work are of a quality and standard that is in South Africa....but South Africa is lag- the full suite of services across the whole the continent and believes new internation- Development Manager for Africa. up assembly plants across the continent.” acceptable internationally. South Africa is ging the rest of the world in exploration continent,” says Phillip Rhodes, director al players will be looking for local partners Geographical diversification is of course South Africa has laid the necessary a fantastic example of how you should set because of governmental issues. It should for the newly created Mining Centre of Ex- to mitigate risk and understand how to not without its challenges; lack of infra- groundwork and created a service delivery up the systems to support the industry,” be growing at a far faster rate.” cellence at Cummins. navigate within the continents dynamics, structure, different working cultures, and model for replication across the continent. adds Mr. Fredericks. “Most of the activity is going to be on this continent. There will be a lot of business with the Chinese and with the Indians and a big challenge for them will be to understand how to operate and work with the people in Africa.” The old method of flying in and flying out is less accepted. Mining companies are demanding more and both services and suppliers are recognizing the importance of founded business and in some cases manufacturing operations on the continent, with South Africa being the most logical destination. “We keep ahead through local manufacturing, which is a significant advantage for us. The mining industry in Africa traditionally has been supported from South Africa. Logistically it makes sense to have established practices. We have agents in several African countries, to provide the first line contact with the client, and in more complex projects they work closely with South Africa. We work through distributors and we currently have installations across the continent, in countries such as Nigeria, Mali, Zambia, Zimbabwe, Malawi and the DRC,” says Vorster from MMD mineral sizing. SEW Eurodrive is also making significant investments both into South Africa and across the continent. “We are investing 20 million into a service plant in Johannesburg and we see this as the key differentiator in 26 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 27 South African Mining South African Mining