Modern Mining: Featured News

Although Cyril Ramaphosa was not yet installed as South Africa’s President at the time of the recent Mining Indaba, the mere prospect of his taking over the top post was enough to lift the mood of delegates who – by and large – seemed optimistic about the outlook for mining in South Africa, notwithstanding the bitter disputes in recent months over the revision of the Mining Charter. Also reinforcing the positivity was the recent political changes in Zimbabwe, which could see a sharp revival in that country’s long-suffering mining industry.

Delegates to the Mining Indaba listen to a main stage presentation.

The opening address was given by Minerals Resources Minister Mosebenzi Zwane who noted that the prices for most metals had increased year on year in 2017, with zinc going up 40 % and copper and iron ore by about 20 %. “Globally, the recovery is expected to continue in the short to medium-term, supporting commodity prices and demand,” he said. “We can therefore confidently assert that the spring in mining is indeed blossoming into a summer.”

The Minister – who, as of this writing in mid-February, is not expected by most commentators to retain his post for too much longer – stayed away from contentious issues, preferring to focus instead on progress in geology and mapping, beneficiation and support for junior miners. His address was not particularly well received by delegates, with Jacques Barradas, partner and head of mining at Grant Thornton in Johannesburg, saying it “lacked substance” and Jonathan Veeran, partner and deputy head of Webber Wentzel’s mining sector group, describing it as “a missed opportunity to state that South Africa is open for business.”

A persistent theme of speakers was that South Africa and Africa needed to make themselves more attractive to investors. Norman Mbazima, Deputy Chairman of Anglo American SA, for example, pointed out that while South Africa was one of the world’s most endowed mining jurisdictions, the country had not been able to bring this endowment to account. As he noted, gross fixed investment in mining has been stagnant since 2009 and had declined by 5 % over the course of the last three years while net investment had declined by 57 % since 2008.

“We need to attract capital for South Africa’s mining industry, whether foreign or domestic, and we must accept that such capital needs to get a competitive return,” he said. He stressed that investors required a clear, concise and consistent regulatory environment to justify investing and added that, at present, “we have anything but a conducive regulatory environment.” He said the issues to be resolved were comprehensive and could only be resolved “by dialogue and engagement to arrive at a regulatory regime that works for everyone.”

Mbazima said he was hopeful that with the improvement in the political environment in South Africa “we can now find the ‘reset button’ and get back around the table.”

The regulatory environment apart, Mbazima also identified lack of infrastructure as an impediment to attracting investment into mining. He pointed out that a large portion of South Africa’s mining production consisted of bulk commodities such as iron ore, manganese and coal and said: “In the 15 years that I’ve been associated with this industry, I have not seen any significant expansion of the rail capacity for transporting these products to our ports. For the mining industry to grow, we need to urgently expand our rail and port networks.”

Rounding off his address, Mbazima said that South Africa desperately needed its economy to grow faster than the 0,7 % recorded in 2017. “The mining industry can be a significant contributor to this growth, but only if we make conditions right for investment,” he concluded.

In somewhat similar vein to Mbazima, Randgold Resources Chief Executive Mark Bristow told delegates that the mining industry’s unique ability to function as a primary driver of economic growth in Africa would be impaired or even destroyed unless mining companies and their host countries worked together to address the existential challenges it faced.

He said while the industry was at least to some extent dealing with the consequences of its recent excesses, the same could not be said of some of its host governments in Africa, who seemingly expected their revenue streams from mining to continue at supercycle strength and were re-writing the rules to make sure that they could harvest more from less.

“How will hard-pressed companies, still struggling to recover, cope with these demands?” he asked. “By high-grading more and investing less, and that is not good for anyone, let alone the future generations of our great continent.”

Bristow noted that when African countries started liberalising their economies in the mid-90s, they immediately attracted foreign investment, and their fledgling mining sectors began to grow to substantial proportions. This trend was now reversing, and despite its great mineral wealth, Africa last year attracted only 14 % of global exploration expenditure, versus 30 % to South America and 28 % to North America.

“As long as African countries offered mining codes and fiscal regimes that were reasonably investor-friendly, companies were prepared to take the risks of limited or non-existent infrastructures and skills bases, as well as political volatility. Start making unreasonable demands, however, and investors will vote with their feet,” he said.

While Mbazima and Bristow addressed the major issues facing mining, many CEOs focused on the projects their companies were pursuing, with one of the best presentations being given by Robert Friedland, Executive Chairman of Ivanhoe Mines. He gave a characteristically entertaining talk, stressing the importance of metals such as copper and platinum to the fast-emerging electric vehicle industry and talking up the company’s three Southern Africa projects – the Platreef in South Africa, and Kamoa/Kakula and Kipushi in the DRC.

Friedland did not tell delegates anything they had not heard before but he is a compelling speaker and there seems to be a consensus in mining circles that the three projects are indeed top class, particularly Kamoa/Kakula, which now ranks as one of the biggest – and richest – copper finds in history and certainly the biggest in Africa. He also gave an update on the Platreef project near Mokopane, noting that it would have the biggest vertical shaft on the African continent (with a hoisting capacity of 6 Mt/a) and could potentially emerge as the world’s biggest platinum mine in its third (12 Mt/a) phase of development. He added that the project represented 21 years of hard work, dedication and faith in the future of South Africa.

Although there were plenty of majors exhibiting and delivering presentations at the Indaba, this year’s event also saw a refocusing on the junior mining sector in a conscious attempt by the organisers to return the show to its roots. A highlight was the new Junior Mining Showcase, a dedicated area on the exhibition floor designed to give emerging and small companies a platform to promote their projects. Modern Mining found this an attractive feature of the show although it must be said that many of the companies participating in the Showcase seemed to have packed up their stands early to judge from the number of empty booths on the last full day of the Indaba.

Making its appearance again this year after debuting at the 2017 event was the ‘Investment Battlefield’ aimed at giving juniors the opportunity to pitch their projects to a panel of judges representing the investment community. Among the finalists out of the 22 companies who participated were Deep-South Resources, which holds the Haib copper pro­ject in Namibia; Thor Explorations, which has the advanced Segilola gold project in Nigeria; Opal Mining, an emerging South African miner with a focus on vanadium; Algold, which is exploring for gold in Mauritania; Kibaran Resources, which is developing the Epanko graphite deposit in Tanzania; M2Cobalt, a cobalt explorer with licences in Uganda; and Bannerman Resources, which owns the Etango uranium project in Namibia.

In the event, the winner was Thor Explorations, listed on the TSX-V. The company was represented by its CEO, Segun Lawson, who made a strong case for the Segilola project, located approximately 120 km from Lagos. Segilola will comprise an open-pit mine served by a new 500 000 t/a processing plant, which consists of a conventional crushing circuit, single stage grinding, CIL, elution, electrowinning and smelting to produce gold doré. The mine will produce an average of 81 000 oz/a in years 1 to 3 and 47 000 oz/a in years 4 to 7. Pre-production capex is estimated at US$71,4 million. Lawson said that he believed that mining at Segilola would start by the end of this year with first gold production being achieved 15 months after that.

As mentioned, there are strong hopes for a resurgence of mining in Zimbabwe and it was noticeable that there was a strong Zimbabwean delegation – led by the new Minister of Mines and Mining Development, Winston Chitando – in Cape Town to reinforce the message that the new administration welcomes investment in the country’s mining sector.

Chitando, who has had a long career in Zimbabwean mining (notably with platinum producer Mimosa and Hwange Colliery) and who has served as the President of the country’s Chamber of Mines, addressed the ‘Mining in Zimbabwe Dialogue’, one of the events held alongside the Mining Indaba. He made the point that the country was under explored and that its mineral endowment was under exploited. He also emphasised that the new administration had eased the onerous ‘indigenisation’ requirements introduced when Robert Mugabe was in power. His message was that ‘Zimbabwe is open for business’ and he left his audience in little doubt that new investors in the country’s mining sector would be welcomed with open arms.

Although the Mining Indaba is not normally associated with new equipment launches, JSE-listed Master Drilling – as has now become customary for it – used the event as a platform to introduce new technology, its focus this year being its new ‘disruptive’ Mobile Tunnel Boring (MTB) solution. The company believes the MTB will make it possible for some marginal projects to pass feasibility hurdles due to the cost- and time-saving it can deliver.

According to the company, the MTB can bore out an excavation of 4,5 m and/or 5,5 m in diameter at a rate that far exceeds conventional tunnel excavation methods. The system, which is able to tunnel in hard rock with compressive strengths of over 300 MPa, has been developed in partnership with Italy’s Seli Technologies and will be deployed through a newly established and dedicated division, Master Tunnelling.

Finally, and summing up, the Mining Indaba was, as always, well organised with an impressive array of presentations, round-table discussions, workshops and the like all running concurrently over the four days of the event. Although the final attendance figures have yet to be released, Modern Mining’s impression was that the number of delegates was somewhat down. The ‘quality’ of delegates, however, has apparently improved with – according to the organisers – a 26 % increase in mining company attendance, a 23 % increase in the number of delegates classified as investors and more African government representation than at previous events. The event has its challenges – among other things, competition from the 121 Mining Investment conference which runs in Cape Town at the same time – but it certainly did enough this year to retain its status as Africa’s leading mining convention.

Report by Arthur Tassell, photos courtesy of 2018 Investing in African Mining Indaba (Dave Hann Photography).

Contact Modern Mining

Title: Editor
Name: Arthur Tassell
Email: mining@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Bennie Venter
Email: benniev@crown.co.za
Phone: +27 11 622-4770
Fax: +27 11 615-6108

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