Northern Cape Business 2017-18 edition

OVERVIEW Rare earth

OVERVIEW Rare earth elements Rare earth elements (REE) are a very modern mineral, in that large parts of the modern economy rely on them. Super-conductors, X-ray machines, nuclear batteries and PET-scan detectors are just some of the technologies that rely on rare earth elements such as promethium, thulium and holmium. China controls 95% of the world’s supply of REEs and the search is on for alternative sources. Two sites in western South Africa have attracted investor’s attention: Zandkopsdrift (Northern Cape) and, very close by but in the adjoining province of the Western Cape, Steenkampskraal. Manganese and iron ore The overwhelming majority of the world’s manganese comes from the Postmasburg and Kalahari regions of the Northern Cape. The province is responsible for 25% of the world’s exports of the mineral. Assmang has two manganese mines in the province: Nchwaning and Gloria. The Northern Cape produces more than 84% of South Africa’s iron ore. The province has two major iron belts, from Postmasburg to Hotazel, and running through Sishen and Kathu. Sishen is the most important iron-ore mine in South Africa, where operations include extraction and four beneficiation plants. The availability of natural resources, labour and infrastructure (including the Sishen-Saldanha railway line), make Sishen the ideal location. Kumba Iron Ore has the huge Sishen facility at Kathu and Kolomela. Assmang, a joint venture comprising African Rainbow Minerals and Assore, mines at Khumani. The reality of low prices for iron ore have been felt very keenly in the Northern Cape. After a tough period because of reduced global demand (particularly for platinum and iron ore), mining as a whole started to recover in 2016, with the iron-ore price recovering strongly late in the year. Kumba is building plants to increase production again. After initially saying that it wanted to get rid of everything outside its core assets (copper, platinum group metals and diamonds), Anglo American has backtracked somewhat in the light of the recovery of iron ore and other mineral prices. (Anglo does not have diamond assets in the Northern Cape.) Assuming that it will go ahead with disposals, the sale of Anglo’s 69.7% shareholding in Kumba Iron Ore will have the biggest impact. Diamonds De Beers sold its underground operations at Kimberley to Petra (in 2007 but the final details were only sorted out in mid-2010) and it sold South Africa’s secondbiggest diamond mine, Finsch mine, 165km west of Kimberley, to the same company for R4.25- billion in early 2011. This is part of a broader programme by De Beers in which several of its mines have been sold to Petra (Koffiefontein and Cullinan mines in other provinces and a Tanzanian operation are examples). The company’s Namaqualand mines have been closed and are for sale. Petra Diamonds’ purchases mean the company now has five South African mines, two of which are in the Northern Cape. Another active purchaser of mines is Rockwell Diamonds, which is listed on the TSX and JSE. The company’s assets in the Northern Cape lie between Prieska and Douglas, southwest of Kimberley: Wouterspan, Nieuwejaarskraal, Remhoogte and Saxendrift. Away from the underground kimberlite pipes and fissures, river and coastal deposits are also present in the Northern Cape. Diamonds have been recovered along the Orange, Buffels, Spoeg, Horees, Groen, Doom and Swart rivers in the province, while coastal deposits have been found from the mouth of the Orange River to Lamberts Bay. Diamond mining company West Coast Resources (WCR) completed its production plant at Mitchells Bay at the end of 2016 and started mining in 2016. Trans Hex, with a 40% shareholding in WCR, will manage the mine and market the diamonds produced NORTHERN CAPE BUSINESS 2017/18 54

OVERVIEW from it. The national Department of Trade and Industry (dti) owns 20% of WCR. By 2020 the project intends employing 686 jobs. By May 2016 there were 166 permanent employees and 24 parttimers working at Mitchells Bay. Copper The Northern Cape is responsible for around 18% of South Africa’s total copper production, with the two most prominent mines located in Nababeep and Aggeneys. The Carolusberg Mining Complex has copper reserves of 37.5- million tons, while the Nigramoep deposit has 15-million tons. Galileo’s initial tests at its Concordia Copper project near Okiep suggest that prospects are good what it calls “large-scale copper targets”. Tungsten has also been found in the area. In 2016 Horomela Investments received prospecting rights for is property near Aggeneys. The only 100% black-owned and black-managed base metals mining company in South Africa, Horomela will be mining for lead, silver, copper and zinc. Lead and zinc Aggeneys, in the Namaqualand district of the Northern Cape, is responsible for approximately 93% of South Africa’s lead production, and 12% of all world lead exports. Zinc is less abundant, but the province is still responsible for about 43% of South Africa’s overall zinc production. The Black Mountain mine run by Vedanta can produce 30 000 tons of concentrate annually, 7 000 tons of copper, 50 tons of silver and 40 000 tons of lead. Almost a third of the mine’s concentrate output is exported through Saldanha on the West Coast. The Indian company is investing a further R9.4-billion on a nearby project at Gamsberg. Located on the road between Springbok and Pofadder, the mine is already having a significant impact on employment for nearby communities. In the first phase, 4Mtpa of ore will be mined, producing 250 000tpa of zinc concentrate. The site is a diversity “hotspot” (one of seven in South Africa) so a lot of work has to be done. Vedanta is working with International Union for the Conservation of Nature (IUCN) and a biodiversity offset agreement has been signed. South African government officials, including the Deputy Minister of Mineral Resources, have visited Vedanta’s Indian headquarters and there are hopes of partnership in fields such as copper smelting, zinc beneficiation and captive power generation. Local engineers are expected to travel to India for training as part of the Vedanta global leadership programme. ONLINE RESOURCES Chamber of Mines: www.chamberofmines.org.za Geological Society of South Africa: www.gssa.org.za Mining Qualifications Authority: www.mqa.org.za Mintek: www.mintek.co.za National Department of Mineral Resources: www.dmr.gov.za Northern Cape Department of Economic Development and Tourism: www.economic.ncape.gov.za Southern African Institute of Mining and Metallurgy: www.saimm.co.za South African Mining Development Association: www.samda.co.za 55 NORTHERN CAPE BUSINESS 2017/18