Ticking boxes won’t revive the mining industry
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- Created: Wednesday, 13 March 2024 09:46
- Written by I. Robinson
The mining industry, which has been the engine of growth of the South African economy for about 150 years, has stalled. Commodity prices have plunged and production costs risen as the infrastructure within which the mines operate has deteriorated. Production is restricted by erratic power supplies and exports are throttled by Transnet’s lack of capacity and problems at the ports. Mining companies have to spend vast sums both to protect their assets and for personal security. There are few new projects and exploration has dwindled to nearly zero. Beneficiation has moved backwards as more chrome and manganese ore is being exported and less is smelted domestically to produce alloys.
In late February Anglo American Platinum (Amplats) announced that it had initiated a Section 189A process that would result in the retrenchment of 3 700 employees. This followed Arcelor Mittal’s (Amsa’s) threat to close facilities at its Newcastle and Vanderbijlpark steel plants which would involve the loss of 3 500 jobs. Amsa blamed their problems largely on factors beyond their control, citing Transnet’s inability to provide an efficient rail transport service and the erratic supply and high cost of electricity.
Amsa also reported that steel demand had collapsed under the weight of a sluggish economy and a failing state, with the country’s apparent steel consumption declining by 20% over the last seven years to an annual level of about 4 million tons. As demand for steel is a key indicator of industrialization this shows that South Africa has deindustrialized over the last decade.
However, President Ramaphosa struck an upbeat note at the Mining Indaba in Cape Town when he announced that 39% of the South African mining industry is now owned by blacks and the audience responded with rapturous applause. Did that mean that ownership of the industry has now been expanded to a much larger number of blacks or simply that a few wealthy individuals have gained a larger share of the industry? If expansion in black ownership does not equate to an increase in benefits and prosperity for the wider black community then calculating ownership figures according to race is a mere box-ticking exercise.
It also raises the question of foreign ownership. Perhaps the architects of this ownership-by-race analysis could also inform the South African public of the percentage of our mining industry controlled by foreign companies. It would be interesting to know what proportion of the South African mining industry belongs to the Chinese through their ownership of chrome ore and alloy producer Samancor. Or the Russian oligarchs through their involvement in the production of manganese ore and alloys? Or the British through Anglo American? Are these figures available?
Furthermore, foreign owned companies like Samancor and Acerinox, the Spanish company that owns Columbus Stainless Steel, which are not listed on the Johannesburg Stock Exchange (JSE) deny South African citizens of all races any possibility of ownership of projects in their own country.
Evidently not prepared to face up to the really important problems facing the mining industry, MP Sylvia Lucas flippantly remarked during the State of the Nation (SONA) debate in Parliament that load-shedding was not ‘the end of the world’. Perhaps not, but certainly the cause of billions of rands in damage to the national economy.
Also during this debate, the Minister of Mines, Gwede Mantashe proudly asserted the government’s control of the mining industry, saying that ANC cadre deployment would continue and the ANC will continue to deploy ‘capable’ cadres because the party has brought about racial transformation. This may be so but he also needs to ask himself why the South African mining industry over which he presides was rated in May last year for the second time by the prestigious Fraser Institute in Vancouver, Canada, as one of the world’s ten worst destinations for mining investment.
I. Robinson
Journal Comment
The SAIMM Journal is an accredited international publication which enjoys respect and recognition worldwide. There are very few international journals focussed on mining and metallurgy, and therefore the SAIMM Journal makes a very important contribution in these fields.
There is currently a flurry of bad news emanating from the mining industry. The electricity shortages, logistical problems, and low commodity prices have resulted in the proverbial perfect storm, and this is testing the resilience of our industry. As an encouragement to the readers affected, this is not the first time the industry had to survive exceptionally difficult periods. With ingenuity and a bit of luck, we always seem to pull through. For example, the gold price was artificially low in the 1960s owing to the London Gold Pool’s actions to defend the dollar price of $35 an ounce. Many of the marginal gold mining operations in South Africa had to close. The strong mining units survived, however, and they did exceptionally well in the 1970s during the gold boom that followed. Commodity prices will always be subjected to cyclic volatility, and we need to build our mining houses on solid rock to weather the occasional storm.
Welcome to another edition of papers for the Student Edition. Most of the papers published in this Student Edition are based on the annual Student Colloquium of 2022. The Colloquium, organised by the Southern African Institute of Mining and Metallurgy (SAIMM) since 2002, aims to identify the best final-year mining and metallurgical engineering students’ presentations. The papers presented at the Colloquium are based on the students’ final year projects. Our mining engineering students at Wits University, the School of Mining Engineering (Wits Mining) have a final-year course called Project Report, usually based on projects carried out by students on a mine during the vacation work session between the third and fourth year of study. It is a good opportunity for the students to showcase what they have learned during their summer vacation work. Wits Mining selects the top three presentations to take part in the Colloquium, similar to the other schools/departments in the country. The best performers amongst the participants were chosen by the panel of judges in the Colloquium and the winners were asked to prepare a paper to be published in the Journal of the SAIMM (JSAIMM). As with any paper submitted to the JSAIMM, the students’ papers are also subject to the Journal’s peer reviewing process.
In the last two centuries there have been significant changes in the way energy is generated. In countries that lack other natural resources such as hydropower, energy has traditionally been derived from solid, liquid, or gaseous fossil fuels. A mix of factors, including geological resources and technological advances, as well as political and economic pressures, has led to the selection of energy sources in each country. Over time, energy selection has been influenced by the availability of resources, the cost of production, and more recently by environmental impact.
The African Copperbelt, which stretches some 500 km in length, roughly following the northwest–southeast border between the Democratic Republic of Congo (DRC) and Zambia, contains more than 10% of the world’s known copper deposits, and hosts the highest concentration of industrial activity in sub-Saharan Africa outside of South Africa.
This edition of the Journal contains five general papers on a variety of topics. Three of the papers deal with rock engineering issues, one deals with spontaneous combustion, and another with soiling of solar reflectors or heliostats. The three rock engineering papers each cover very different challenges faced by the mining industry.
This edition of the Journal is the first of a series of planned themed editions. The South African mining industry faces several engineering challenges and it is hoped that these themes will stimulate research and groundbreaking papers. The first of these challenges is to develop local pillar strength equations and pillar design methodologies for hard rock mines. The shallow chrome, platinum, and manganese mines in South Africa typically use mechanized bord-and-pillar mining layouts. The older operations are gradually increasing in depth and this adversely affects the extraction ratios. The available design methodologies and pillar strength formulae dictate an increase in pillar size and a decrease in extraction ratio with depth. As these mining operations are vital to the South African economy, it is critical to maximize the extraction ratios and to ensure that the orebodies are optimally exploited. For outsiders, it is therefore somewhat surprising to learn that the layout designs are still mostly based on the Hedley and Grant pillar strength formula, which was originally developed for Canadian uranium mines in the early 1970s. Since then, very little research has been conducted to develop reef-type specific pillar strength formulae for the hard rock mines in South Africa. Considering the importance of this aspect, it is remarkable that a dedicated research programme to address this issue was not established a long time ago.