Limpopo Business 2016-17 edition

OVERVIEW Mining The

OVERVIEW Mining The Waterberg region is attracting mining companies. SECTOR INSIGHT After several years of rising prices and increasing demand, the global commodities market experienced lower prices and shrinking demand in 2015. This had a lot to do with slower growth in China, but South African mining companies also had to deal with rising energy prices, labour upheavals and legislative uncertainty. There have consequently been some big changes to the mining landscape, and not just in South Africa. One of the most significant is the change of focus by Anglo American, one of the world’s biggest resource companies. It decided to focus sharply on diamonds, copper and platinum. This is not just in the company’s South African mines, but rather a global decision which will affect Anglo’s operations in North and South America, Australia and South Africa. In 2015 the Anglo group had 55 mines, employed 128 000 people and had revenue of -billion. The sale of Anglo’s iron-ore and coal assets has provided an opportunity for other mining companies that want to mine differently or acquire new assets. Sibanye Gold, going beyond the name it acquired when Goldfields was unbundled in 2013, bought platinum mines in Rustenburg Chinese companies have been very active in the Limpopo mining sector. • Sibanye Gold is buying platinum assets. • Hebei Iron and Steel and the IDC may build a steel mill in Limpopo. • A provincial mining roundtable was held to promote industrialisation. • A national Energy Metallurgical Base Project will anchor the planned Special Economic Zone at Musina. • Phalaborwa Copper will spend R9.3-billion on extending the life of the mine. • Anglo American is selling some assets, but investing more money in diamond mining in Limpopo. • Exxaro is investigating Underground Coal Gasification. from Anglo American Platinum (Amplats) in 2015 and has expressed interest buying coal assets, mostly to offset rising energy costs at its own mines. Anglo’s 16.8% share in the copper mine, smelter and refinery in Phalaborwa was dis- LIMPOPO BUSINESS 2016/17 50

OVERVIEW posed of in 2013 (Rio Tinto was the majority shareholder). The main shareholders in the purchasing holding company are Hebei Iron and Steel (of China) and South Africa’s Industrial Development Corporation, holding 35% and 20% respectively. The new shareholders have undertaken to spend R9.3-billion on the mine complex to extend the life of the mine which is South Africa’s only producer of refined copper. The mine produces about 80 000 tons of refined copper every year, and the refinery produces continuous cast rod for the domestic market and cathodes for the export market. Hebei and the IDC have jointly committed to spending a further -billion on building a new steel plant in South Africa. One of the sites being considered is Phalaborwa (the others are Witbank in Mpumalanga and Richards Bay). Other steel producers have been stressed by low prices and over-production on the global market, but the IDC believes that they can make steel cheaper and supply the African market. Mining activities at the Kumba iron-ore Thabazimbi mine ceased at the end of September 2015 and processing activities ceased on 31 March 2016. In contrast to these pull-backs, Anglo American has announced a further investment of -million to expand production at its diamond mine near the town of Musina. Venetia Mine is by far the most important part of De Beers’ South African operation, accounting for 3.1-million of the 5.4-million carats recovered by the company from its six operations. Limpopo’s mineral riches Limpopo has a very rich and varied mineral asset base. Platinum occurs on both limbs of the Bushveld Igneous Complex (BIC), and the Waterberg district is seen as the answer to South Africa’s coal needs for the next several decades. The provincial government reports that the mining sector constituted 26% of Limpopo’s gross domestic product in 2013. In 2015 a Mining Roundtable was held under the title “Limpopo’s Minerals for a Broad-Based Industrialisation Agenda” and attended by 250 delegates from the mining sector, universities, NGOs and government. A key focus area is to try to ensure that 20% of procurement in the mining sector goes to small businesses and co-operatives. Silicon Smelters (the largest charcoal producer in Africa) and Anglo Platinum’s smelting facility, one of three run by the company, are both located in Polokwane. Northam Platinum’s metallurgical complex at its Zondereinde mine processes Merensky and UG2 ores separately. 51 LIMPOPO BUSINESS 2016/17