Sustainability & ESG
The green mining revolution
Rivalled perhaps only by oil, the mining industry's environmental impact is considerable and is a cause for concern. Even though the sector has a net positive impact on the development of Southern African nations, it also carries with it direct and indirect negative externalities, such as the lack of diversification in mining-led economies, as well as a negative environmental impact due to its energy-intensive processes, massive diesel-powered equipment, tailings dams with their associated hazards, in addition to explosives and chemical stews to extract the desired metals that introduce toxic elements, noise and disruption into the surrounding environment.
Since climate change is one of the most pressing challenges of our age, the mining industry is more than ever under the spotlight and is investing in redefining itself as an active player in minimizing the global carbon footprint. As investor and social pressure is mounting, ESG is the new buzzword for the industry globally. According to a PwC report on global mining practices published in 2021, companies with higher ESG ratings had an average total shareholder return of 34% over the past three years – which is 10% higher than the general market index.
The pandemic presented an opportunity to re-evaluate current practices and reset ESG plans and timelines. According to a mining industry survey in 2021 conducted by the international law firm White & Case, 45% of key industry decision-makers see ESG goals as the most significant risk in the industry, followed by Covid (13.6%). In addition, 79% identified ESG issues as pivotal to investors' decision-making.
Currently, the industry is witnessing billion-dollar investments in ESG and in developing technologies to initiate the journey towards carbon neutrality. BHP, Rio Tinto and Anglo American have all set targets to become carbon neutral between 2040 and 2050. In South Africa, Anglo American Platinum (Amplats) has two pilot projects underway to introduce remotely operated platinum-based hydrogen fuel cell-powered equipment underground. Sibanye Gold has commissioned a methane-fired electricity generating plant at its Beatrix gold mine, making it the first to use natural methane for power generation in South Africa.
“South Africa is currently taking the lead in decarbonization, although there is also significant progress being made in Zambia and Ghana. We have also recently seen opportunities for decarbonization and off-grid electrification arising in the DRC, Mozambique, Ethiopia and Namibia.”
Rob Hounsome, Africa Regional Manager, SLR Consulting
In the transition to green mining, solar energy is at the helm. "Power consumption in mines is exceptionally high and now solar solutions can meet expectations of power generation implemented through hybrid systems," confirmed Hadyr Koumakpai, general manager of JA Solar in Africa, a Chinese-owned manufacturer and distributor of solar cell and module products.
In addition to lowering carbon footprints, mining companies are also investing in fostering a positive social impact through local beneficiation, recruitment and investments in the infrastructure of surrounding communities. For example, the Siyanda Bakgatla platinum mine, a subsidiary of the Siyanda Resources group of companies, is giving the Bakgatla-Ba-Kgafela community 27% ownership of the mine according to Hope Tyira, the mine's executive head of sustainable development. "We also gave 7.3% ownership to our employees, who then benefit through dividends. As shareholders, the community and our employees are aligned with our values and mission and put in the effort to contribute to the project's success," he explained.
There is no doubt that the significance of ESG and sustainability has risen substantially amid the increased focus on global warming and climate change. By adhering to ethical mining practices environmentally and socially, and integrating them into their initiatives, mining companies can ensure operational continuity and keener interest from investors. ESG represents one of the mining industry's most significant opportunities for long term value creation.
"South Africa is currently taking the lead in decarbonization, although there is also significant progress being made in Zambia and Ghana. We have also recently seen opportunities for decarbonization and off-grid electrification arising in the DRC, Mozambique, Ethiopia and Namibia," expanded Rob Hounsome, Africa regional manager of SLR Consulting, an environmental and engineering advisory specialist.
A future for green hydrogen in African Mining?
Interest in hydrogen as a vector for clean energy is on the rise globally as companies are looking to drive long-term strategic value by incorporating low-carbon technologies. "We are optimistic regarding hydrogen's future contribution and expect billions to be invested in hydrogen," confirmed Andries Rossouw, Africa energy, utilities and resources leader at the PwC office in South Africa.
Eric Vemer, CEO of Howden Africa Holdings, an air and gas handling equipment supplier, explained: "The cost of producing green hydrogen is reducing rapidly and in the next few years will be at the point of inflexion where it is competitive relative to other fuel sources, particularly when the cost of carbon is included in the equation."
South Africa envisions a hydrogen valley, stretching for 835 km from Anglo American's Mogalakwena mine, where they are already looking to generate hydrogen from a 300 MW solar plant to use hydrogen fuel cells for their truck fleet, along the industrial and commercial corridor to Johannesburg and the coast at Durban. This could create a domestic hydrogen economy worth up to US$10 billion annually and presents an export potential of US$100 billion a year, according to French energy multination ENGIE, which is working on the feasibility study of the hydrogen valley with South Africa's Department of Science and Innovation, South African National Energy Development Institute, Anglo American and Bambili Energy.
“The feasibility study assessing the potential demand and production possibilities for green hydrogen should be completed by August 2021. It will have identified interesting pilot projects, which will then be further explored to kick-start hydrogen applications in the region and contribute to the hydrogen valley development," elaborated Vincenzo Giordano, director of sustainability solutions for ENGIE Impact. "We hope to have completely developed the hydrogen valley project by 2030."
“Hydrogen will not be relied on anytime soon. This is because of its associated supply challenges that resemble those of other fuels such as diesel. The first challenge is making it at a lower cost. The second is transport issues to the off-grid mines.”
Bruce Anderson, CEO, 247Solar
The regional PGMs industry will be central to this transformation since PGMs play a critical role in Polymer Electrolyte Membrane (PEM) electrolysis used to produce hydrogen at a large scale and in fuel cells.
However, there are some issues that arise concerning this clean fuel considering its transport and storage. Bruce Anderson, CEO of 247Solar, a US-based solar solutions supplier, is not as optimistic regarding the near future of hydrogen in mining: "Hydrogen will not be relied on anytime soon. This is because of its associated supply challenges that resemble those of other fuels such as diesel. The first challenge is making it at a lower cost. The second is transport issues to the off-grid mines."
On the other hand, Rossouw of PwC explained that it could be transported in the form of ammonia and other derivatives, then converted at the mine. However, it is unlikely for mines to start producing hydrogen on a large scale on-site soon. Hydrogen-powered vehicles will be the first widespread application of the fuel. According to a Deloitte report in 2020, hydrogen fuel cells in the mining industry are at the 'prototype' stage.
These challenges do not, however, negate its benefits, which are often misrepresented and underestimated, according to Ian Fraser, managing director of RTS Africa Engineering, hydrogen electrolyzers supplier in the region and a member of the Africa Hydrogen Partnership (AHP). "Hydrogen fuel cells are an ideal technology to power road vehicles, especially large commercial vehicles and mining fleets. When used in a fuel cell, you only get electrical energy and water. Therefore, green hydrogen could drastically reduce carbon emissions," explained Fraser.
Once the cost and logistics-related challenges are addressed, hydrogen could dominate the world's transportation and energy industries. Market research and strategy consultant Global Market Insights suggests that the hydrogen generation market alone could be worth U$160 billion by 2026, and Southern Africa has world-class renewable potential that can be leveraged to supply clean energy in the form of green hydrogen to the world—simultaneously, diversifying the region's economies.
Image courtesy of TOMRA