Developing a framework for managing compressed air in the Platinum Group Metal Mining Industry in South Africa HJ Groenewald orcid.org 0000-0001-8610-043X Mini-dissertation accepted in partial fulfilment of the requirements for the degree Master of Business Administration at the North-West University Supervisor: Mr JC Coetzee Graduation: May 2020 Student number: 12301507 ABSTRACT South Africa is home to the Bushveld Igneous Complex, the largest known platinum group metal (PGM) resource in the world, which makes South Africa the top global PGM- producing country. Unfortunately, the sustainability of the PGM mining industry in South Africa is under threat as a result of rapidly escalating costs, such as electricity and labour, in combination with a low platinum price. PGM mining is an electricity intensive endeavour. The PGM mining industry in South Africa depends on Eskom, the parastatal electricity utility, for most of its electricity supply. This dependence is problematic because Eskom’s electricity tariffs have increased annually for more than a decade at a rate significantly higher than inflation. This trend of above-inflation electricity price increases is likely to continue in future due to Eskom’s ongoing financial problems. The PGM mining industry is therefore forced to implement measures to reduce electricity consumption. The biggest electricity consumer on deep-level PGM mines is the generation of compressed air. Compressed air is used for various purposes in PGM mines and its availability is critical to prevent interruptions in the production process. Managing compressed air is important to ensure that the costs of generating compressed air and maintaining compressed air infrastructure are minimised. The primary objective of this study was developing a framework for managing compressed air in the PGM mining sector. Two secondary objectives were also established, namely: i) developing a strategic guideline for improving and maintaining energy efficiency on compressors, and ii) developing a strategic guideline for monitoring and preventing the occurrence of events that result in increased compressor maintenance costs. In order to achieve the objectives of the study, qualitative research was conducted through semi-structured interviews with nine experienced senior managers who manage compressed air in the PGM mining industry. The results of the qualitative research were presented in the form of six themes that were identified in the data through computer- assisted qualitative data analysis. The qualitative results were supported by quantitative ii results showing that a 15% saving in compressed air generation costs could be achieved by applying measures to improve energy efficiency on compressed air networks. A framework for managing compressed air in the PGM mining sector was developed based on the quantitative and qualitative results. The framework consists of focus areas, priorities and action steps for managing compressed air in the PGM mining sector in terms of improving/maintaining energy efficiency and the monitoring/prevention of events that result in increased maintenance costs. KEYWORDS: Energy management, maintenance management, platinum group metal (PGM) mining, compressed air. iii ACKNOWLEDGEMENTS I wish to thank the Almighty God for the strength and grace to complete this dissertation and my MBA study. I dedicate this mini-dissertation to my beautiful wife, Sorita. Thank you for always believing in me. I also wish to acknowledge the following persons and institutions: My study leader, Johan Coetzee, thank you for your guidance and encouragement. My MBA study group, Po10C, thank you for the camaraderie, friendship and everything that I learned from you. SP van der Merwe for assistance with ATLAS.ti. The lecturers and support personnel of the North-West University Business School who made my MBA study such a wonderful learning experience. My two sons, Hancke and Juan. I am very proud of you. Marike van Rensburg for proofreading this document. iv TABLE OF CONTENTS ABSTRACT II ACKNOWLEDGEMENTS ............................................................................................. IV LIST OF TABLES ......................................................................................................... XI LIST OF FIGURES ....................................................................................................... XII LIST OF ABBREVIATIONS ....................................................................................... XIV LIST OF UNITS ........................................................................................................... XV CHAPTER 1 ‒ NATURE AND SCOPE OF THE STUDY ............................................... 1 1.1 Introduction ...................................................................................................... 1 1.2 Problem Statement .......................................................................................... 3 1.3 Objectives of this Study .................................................................................. 7 1.3.1 Primary objective ................................................................................... 7 1.3.2 Secondary objectives ............................................................................ 7 1.4 Limitations of the Study .................................................................................. 8 1.4.1 Coverage limitations .............................................................................. 8 1.4.2 Generalisability limitations ..................................................................... 8 1.5 Definitions of Key Concepts ........................................................................... 8 1.6 Research Methodology ................................................................................... 9 1.6.1 Research method .................................................................................. 9 1.6.2 Research design ................................................................................. 11 1.6.3 Population ........................................................................................... 12 1.6.4 Data collection/fieldwork ...................................................................... 12 1.6.5 Data coding and analysis .................................................................... 12 v 1.6.6 Ethical considerations ......................................................................... 13 1.6.7 Significance of the study ..................................................................... 13 1.7 Outline of the Dissertation ............................................................................ 13 1.8 Conclusion ..................................................................................................... 14 1.9 Chapter Summary .......................................................................................... 15 CHAPTER 2 ‒ LITERATURE STUDY ......................................................................... 16 2.1 Introduction .................................................................................................... 16 2.2 Overview of the PGM Industry ...................................................................... 16 2.2.1 History of PGM mining in South Africa ................................................ 16 2.2.2 Platinum group metals and uses ......................................................... 18 2.2.3 Major role players ................................................................................ 20 2.2.4 Production figures ............................................................................... 25 2.2.5 State of the industry ............................................................................ 26 2.3 Compressors and Compressed Air Networks ............................................. 32 2.3.1 Basic compressor operating principles ................................................ 32 2.3.2 Centrifugal compressors ..................................................................... 35 2.3.3 Compressed air networks .................................................................... 39 2.4 Uses of Compressed Air in PGM Mining Operations .................................. 41 2.4.1 Drilling ................................................................................................. 42 2.4.2 Loaders ............................................................................................... 43 2.4.3 Pneumatic cylinders ............................................................................ 43 2.4.4 Refuge bays ........................................................................................ 45 2.5 Electricity Savings Measures on Compressed Air Networks..................... 46 2.5.1 Supply-side measures ......................................................................... 47 2.5.2 Demand-side measures ...................................................................... 49 2.6 Compressor Maintenance ............................................................................. 54 2.7 Previous Compressed Air Studies ............................................................... 56 2.8 Conclusion ..................................................................................................... 59 2.9 Chapter Summary .......................................................................................... 59 vi CHAPTER 3 ‒ EMPIRICAL STUDY ...........................................................................