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BusinessDay www.businessday.co.za Friday 3 February 2023
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INVESTING IN AFRICAN MINING INDABA Sponsored content
Deposits: miners need to dig deeper
sinking •canShaft extend the
life span of a mine, writes Pedro van Gaalen
G
lobal demand for metals and minerals will experience a six-fold increase by 2050 as the world transitions towards a carbonfree economy, according to the International Energy Agency. As such, mines risk their long-term sustainability if they do not take decisive action today to access additional orebody reserves. “Due to the cost-efficiencies and shorter time to production, miners typically start with bulk surface mining operations,” says Digby Glover, CEO at United Mining Services (UMS) Group. In this regard, spiral ramps and declines are popular, but these options only get miners so far. When surface-level reserves run out, miners generally seek other orebodies close to the surface rather than invest in shaft sinking due to the associated costs and lengthy times to completion. “Miners will often choose to venture into remote areas as shafts are considered a grudge purchase. However, establishing
Digby Glover … complex factors. remote operations can prove costly and complex, and if the miner cannot find another reserve, the company risks going bust.” Glover asserts that sinking a shaft is becoming increasingly necessary and can often make financial sense by extending the life span of a mine by decades. For example, UMS is sinking two shafts at an open pit mine in Botswana. This underground mine expansion project will extend the mine’s operational life span from 2026 to 2040. “When miners realise they need to look deeper to access embedded orebody deposits, the decision to go underground often comes too late. The process should start as soon as possible as shaft sinking can take up to 10 years to progress from concept to ore extraction.”
Yet miners often shelve capital expenditure on mine expansion projects in response to boom and bust cycles in the mining sector. “These cycles usually play out over 10-year periods and typically result in a dearth of capital expenditure when commodity prices dip. While the sector recently experienced some reinvestment as the commodities supercycle gathered momentum, mines should always consider going underground independent of market sentiment,” says Glover. “While there are complex factors at play across various commodities, miners need to start implementing plans to access additional high-grade orebody deposits now to ensure their long-term sustainability.” Faced with this reality, shaft sinking is gathering momentum globally, with Glover pointing out many projects, including multiple in the notoriously conservative Australian mining sector, as examples. “We also see opportunities in Europe, North and South America and Africa,” he adds. In certain circumstances, the sector is seeing a shift in the technology used in vertical boring, with various machines developed that can bore down directly to the orebody in suitable ground. Anglo American is sinking
production and service shafts at its Woodsmith polyhalite project in the UK, using Herrenknecht’s Shaft Boring Roadheader technology to reach depths of about 1,600m. Applying technology to traditional shaft sinking methodologies also helps to significantly improve safety for mine workers. “The huge advances realised in terms of safety relate to how we sequence activities, and the ability to remove people from dangerous situations through remote operating capabilities, modern equipment and machine automation,” For example, in the past, equipment such as the cactus grab proved dangerous when operated by people. Now, miners use remotely-operated grabbers to scoop material, but no workers are allowed on the shaft floor during the mucking cycle, which improves safety and productivity. Similarly, miners can also operate mechanised drilling remotely, thereby minimising the need for workers in the shaft bottom during the drilling cycle. “These technological advancements have drastically improved safety and productivity on conventional shaft sinking projects over the past 10 years, which remain the leading considerations on all projects,” says Glover.
Focus on investment at indaba Stakeholders in the African mining industry will gather at the Cape Town International Convention Centre (CTICC) from February 6-9 2023 to facilitate greater investment in the continent across the mining value chain. Held under the theme of “Unlocking African Mining Investment: Stability, Security and Supply”, conference organisers plan to cover myriad topics affecting the industry in the year ahead. “The Mining Indaba is the only place where the community comes together to share perspectives and learnings that can spark change and, ultimately, drive investment,” says Simon Ford, Portfolio Director for Investing
in African Mining Indaba. While ESG remains an investment imperative and the social licence to operate continues to underpin the Mining Indaba values, Ford believes that the new chapter unfolding in pan-African and global economies necessitates important dialogue between influential industry stakeholders. “The theme for 2023 captures the geopolitical shifts and economic disruptions creating pressure points and opportunities within African mining as global economies seek security of supply, especially for their own energy transitions, as well as raw materials and precious metals to bolster their economic
power,” continues Ford. This year’s programme will delve into integral economic empowerment strategies, ways to support supply chain security for the energy transition and seizing opportunities to capitalise on the commodities supercycle. Numerous new initiatives and programmes will also debut this year. These include the Explorers Showcase, which will profile early-stage explorers to help stimulate conversations with investors, as well as the Junior MINE and the Official Government Leaders programmes. “We are also delighted to launch our new InfraTech @ Indaba content programme, which combines our previous
Companies act to secure long-term growth The numerous global supplyside constraints fuelling the current commodities super cycle will likely persist for years, creating significant opportunities for South African mining companies to benefit from higher prices. However, multiple areas require focused investment over the coming decade to support continued sector growth, including access to reliable energy, transport and water infrastructure. According to Arnold van Graan, Head: Markets Research at Nedbank CIB, miners have multiple avenues to fund these growth-supporting initiatives.
Arnold van Graan … energy mix. “The commodities boom that has run since 2017 has shored up balance sheets, and miners used this windfall to bring down debt and gearing levels and pay dividends to shareholders.”
However, the sector has recently witnessed a shift in this capital allocation framework, with cash flush mining companies, especially those in the PGM universe, investing to continue generating strong cash flows and sustain growth into the future. “We have subsequently seen an increase in capital expenditure on initiatives that add growth to portfolios.” According to Van Graan, these investments primarily focus on two areas. These include developing new projects and mergers and acquisitions (M&A). “We have already seen a rise
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Mining 2050 and Infrastructure & Supply Chain streams into one platform,” adds Tom Quinn, Head of Content at the Investing in Mining Indaba. This conference track will showcase leading suppliers and experts involved with technology convergence, critical supply chains and infrastructure in the mining sector. Delegates can also attend mainstay content streams, including the Ministerial Symposium, Intergovernmental Summit, Green Metals Day, Sustainable Development Day, the General Counsel Forum and the Innovation & Research Battlefield, a unique platform for academic institutions and start-ups to showcase their latest ideas.
in capital expenditure to replace existing reserves and M&A activity as mining companies look to secure longer-term growth opportunities.” Mining companies are also investing in embedded renewable energy generation capacity to help achieve their net-zero and ESG targets and decouple their reliance on Eskom for power. “Mine operators will continue spending substantial amounts to diversify their existing energy mix, with many considering green funding mechanisms to realise these ESG-linked outcomes,” concludes Van Graan.