• Pages
  • Editions
01 Cover
02 Welcome Letter / Sections
03 Index & Interview Directory
04 Section 1: Introduction
05 The Road to Recovery
06 ABSA Group Interview
07 PwC Interview
08 Regional Trends
09 Sustainability & ESG Gaining Momentum
10 SRK Consulting Interview
11 Nafasi Water & ZN Geo Services Interviews
12 Section 2: Production, Development and Exploration
13 Precious Metals
14 Gold Fields Interview
15 Harmony & Pan African Resources Interviews
16 Base and Energy Metals
17 Lepidico Interview
18 Trevali Mining Interview
19 Orion Minerals Interview
20 Vedanta Zinc International Interview
21 Kumba Iron Ore Interview
22 Diamonds
23 Lucara Diamond Interview
24 Debswana Interview
25 Section 3: South Africa
26 South Africa
27 Ministry of Mineral Resouces and Energy SA Interview
28 Minerals Council SA Interview
29 Seriti & Exxaro Resources Interviews
30 NSDV & ENSafrica Interviews
31 Insights on South African Mining Industry's Health
32 Section 4: Namibia
33 Namibia
34 Chamber of Mines Namibia Interview
35 RMB & Standard Bank Namibia Interviews
36 Walvis Bay Salt Holdings Interview
37 Insights on Namibia as a Mining Investment Destination
38 Section 5: Equipment and Services
39 The Journey to Modern Mining
40 Murray & Roberts Interview
41 Kal Tire Interview
42 Eazi Access Interview
43 METC Engineering Interview
44 Insights on Digital Mining Revolution in Africa
45 MEMSA Interview
46 Fabchem Mining Interview
47 Insights from Local Manufacturers
48 Energy
49 juwi Interview
50 Engie Impact & Vivo Energy Interviews
51 Howden Interview
52 Section 6: Sponsored Company Profiles
53 Trevali Company Profile
54 Murray & Roberts Company Profile
55 Concluding Remarks
56 Credits

Precious Metals

Gold and PGMs shining bright

While disruptions caused US$8.8 billion worth of losses in precious metals output globally in 2020, according to Forbes, the rebound was rapid and strong. Platinum group metals (PGMs)' prices fell steeply in March of 2020, before rebounding strongly with prices of platinum, palladium and iridium nearing record-highs.

PGMs

According to a PwC report covering 2020, total market capitalisation in the South African mining industry, which sits at the helm of global PGM production accounting for 96% of global PGM reserves, witnessed a 52% year-on-year increase, attributed primarily to the increase in market capitalisation of companies in the gold and platinum group metals (PGM) sectors, and total revenue increased by 4%, also driven by PGMs and gold but also iron ore. For the first time in 10 years, PGMs overtook coal as the number one revenue generator in South Africa, reaching R190 billion in 2020, which is more than the value of iron ore and gold sales combined. The PGM industry is also the largest mining employer in South Africa, according to the Minerals Council.

PGMs consist of six metals: platinum, palladium, rhodium, ruthenium, osmium and iridium, of which rhodium has the highest price. Even though supply deficits increased platinum prices over the course of 2020, its price has halved over the last decade. Meanwhile, the price of rhodium increased tenfold and the price of palladium eightfold. Sibanye-Stillwater, the world's largest primary producer of platinum and second-largest primary producer of palladium, therefore prioritised palladium production.

“We are excited to expand the mine capacity and infrastructure, taking it back to its glory days. In 2020, we produced 250,000 ounces of PGMs per annum, and with the expansion we are aiming for 280,000 ounces and ultimately 300,000 ounces of PGMs per annum.”

Francois Uys, CEO, Siyanda Bakgatla Platinum Mine

The majority of PGMs in South Africa can be found in the Bushveld Igneous Complex (BIC), where three horizons (the Merensky Reef, UG2 Chromitite and the Platreef) are mined. Platinum and palladium production from the BIC accounts for approximately 75% and 40% of annual global production, respectively. Anglo American, which produces 37% of the world's platinum, aims to almost double production in 2021 to 4.2 – 4.6 million oz/y from its three mines in the BIC. Tharisa is following suit with a plan to increase overall production to 160,000 oz/y in 2021, compared to 143,000 oz/y in 2020. "Operationally, the third quarter was one of the strongest in the company's history, with record mining and processing rates, supported by strong PGM and chrome pricing," highlighted Tharisa CEO Phoevos Pouroulis.

The region's producers expect a strong 2021 for PGMs, amid vaccine rollouts, tightening regulations on emissions and rising consumption. Even though the future of PGMs is threatened by the replacement of internal combustion engines (which rely on PGM-laden catalytic converters) with battery electric vehicles that do not rely on the metals, long-term demand will remain strong as hydrogen-powered platinum fuel cells attract attention. This transformation alone could generate US$35 billion by 2025, according to the Minerals Council. The demand for PGMs is also driven by jewellery.

Gold: the safe-haven asset soars

Gold remains one of the most coveted metals and is held as a global store of value. Gold prices reached US$2,067 per ounce in August 2020 as a result of the unprecedented global stimulus packages, record low interest rates and rising uncertainty. Gold production in South Africa decreased in 2020 by 13.7% to 90.8 mt/y, according to the Minerals Council. Production has been declining over the last decades from its peak of 1,000 mt in 1970, which is a testament to the weak structure of South Africa's gold production underpinned by ageing mines, declining grades and load-shedding. However, record-high prices allowed total sales to increase by 2% in 2020, reaching R78.2 billion.

Harmony, one of the few remaining South African gold producers squeezing profits from ageing assets and the largest gold producer in South Africa by volume, saw its production fall by 15% in 2020. "Over the past three years, we have added 300,000 higher grade gold ounces to our portfolio through acquisitions while further diversifying our portfolio," highlighted CEO Peter Steenkamp. "We are focusing on integrating our new assets into our portfolio and believe these have given us great opportunities to extend the life of mine."

Gold Fields' South Deep saw its net cash flow more than double in 2020 compared to 2019, and the mine's production increased by 2% to 227,000 oz/y from 222,000 oz/y in 2019. "It is estimated that South Deep lost approximately 32,000 oz due to Covid related stoppages and impacts in 2020," explained Martin Preece, executive vice president in South Africa for Gold Fields. "Gold production for 2021 is guided at 280,000 oz. Looking beyond 2021, we are optimistic that a further 20% – 30% can be added to production levels over the next four years."

Meanwhile, mid-tier Pan African Resources (PAR) produces the majority of its gold from tailings retreatment, in addition to underground operations at the Barberton and Evander mines, where annual production is at 100,000 and 85,000 oz/y, respectively. "In Barberton approximately 80% of production is from underground mining and 20% is from surface tailings retreatment. Meanwhile, at Evander, approximately 55,000 oz come from tailings retreatment," elaborated Cobus Loots, CEO of PAR.

“Over the past three years, we have added 300,000 higher grade gold ounces to our portfolio through acquisitions while further diversifying our portfolio. We are focusing on integrating our new assets into our portfolio and believe these have given us great opportunities to extend the life of mine.”

Peter Steenkamp, CEO, Harmony

South African gold producer DRDGOLD is a specialist in gold recovery from retreatment of surface tailings at its Far West and Ergo assets. Harmony also produces approximately 100,000 oz/y from mine waste solutions. The process allows for a reduced operational environmental impact as waste is reprocessed. Heap leaching has been a key advancement in the ability to treat tailings, especially for low-grade ores.

There are a significant number of old tailings dams in the region that present opportunities for companies to reclaim using new technology. Nick Tatalias, managing director of the mid-tier engineering firm METC Engineering, that designs and builds metallurgical plants for mines, explained that tailings retreatment can become quite expensive and that project scale and ownership pose challenges. “In South Africa many tailings-dams have been around for a very long period of time and have undergone many previous attempts at re-processing. Each project must be carefully examined. Where possible it is often an advantage if geographical tailings areas can be consolidated and retreatment plants built jointly,” elaborated Tatalias.

Namibia's gold production is dominated by two players: B2Gold and QKR Namibia. B2Gold's Otjikoto mine, located between the towns of Otjiwarongo and Otavi, produced 168,041 oz in 2020, and is expected to produce between 190,0000 – 200,000 oz in 2021. The Vancouver-based mid-tier producer is developing the Wolfshag underground project at Otjikoto, which should commence operations in January 2022.

QKR Namibia's open-pit Navachab gold mine experienced some setbacks due to cash constraints. Production at Navachab has been falling for the last two years, however, it is expected to bounce back given the development of satellite high-grade ore bodies. To mine the remaining estimated 4.4 million ounces of gold the mine requires approximately N$400 million investment, according to the Namibian National Planning Commission (NPC).

Images courtesy of Harmony and FLSmidth

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Interviews: Gold Fields