Mining Mirror February 2018 | Page 22

Indaba preview
of doing business . Along with the regulatory uncertainties surrounding the Mining Charter and issues related to the issuing of permits by the DMR , this is certainly reducing the attractiveness of mining investment in South Africa . The process of licensing in the exploration and the development of mines continues to be an issue in many parts of Africa . Globally , there currently seems to be a dearth of the very large and exciting deposits that attract investors to the sector .
Andrew van Zyl
Partner and principal consultant – SRK Consulting ( SA )
SRK Consulting ( SA )
How should mine managers and operational managers prepare for the future , and what are the major changes they should start introducing ?
On an operational level , the challenges facing mine managers will remain people-focused — whether this relates to people on the mine or people around the mine . This impacts significantly on the social licence to mine , and needs to be carefully managed to enable an efficient operation and a sustainable enterprise . The development of technology itself will not be the direct concern of mine management ; rather , they will be managing the human and social impacts of these changes .
Which aspects of mining should we prioritise when we talk about modernisation ? What are the challenges and the opportunities in what we refer to as ‘ modernisation ’?
The priorities will vary by country and depend on the type of mining and the maturity of the industry . In South Africa , we have several mature , deep-level mines that are increasingly difficult to mine safely , productively , and profitably . Technology has the potential to extend the life of these operations . While it might appear to lead to job losses , the reality is that the industry is likely to employ more people if it can modernise through the selective introduction of appropriate technology , than continuing on its current path .
With the Mining Indaba coming up in February , what are the major issues in the mining industry that you would like to be discussed , even if it is on other platforms ? ( In South Africa , Africa , and globally , respectively .)
Industry events like the Mining Indaba need to be addressing the variety of emerging risks to mining companies in Africa ; these range from water shortages , population growth , famine , agricultural production , and climate change , to the power of social media affecting your reputation among stakeholders and the public . These issues are growing in importance and can unexpectedly affect — and even threaten — a mine ’ s social licence to operate . These are challenges that cannot readily be resolved by individual players and will require increasing cooperation between all stakeholders .
There seems to be a dearth of new exploration projects in South Africa specifically . Do you feel this is the case in the rest of Africa as well ? Do you think it is a global concern ? If it is , what are the reasons for it ?
Due to South Africa ’ s isolated past during the apartheid years , the country benefited from high levels of exploration spending within the country , when mining profits were reinvested locally as the avenues for investing globally were restricted . It is therefore unlikely that any major finds will still be uncovered , although there is some potential for certain assets to be developed as and when the necessary infrastructure is put in place to exploit them . Given how well we know the geology , combined with the general uncertainties that surround mining ventures , South Africa is not high on the list of prospective countries . From the point of view of a global mining company , they would not prioritise exploration spending here .
The rest of Africa is a rather different story , but it does need to be examined in terms of whether the potential project would be constrained by a lack of infrastructure or not . Bulk commodities like iron ore , for example , require substantial infrastructure to be viable . At current commodity prices , such expenditure would be difficult to justify , and this has a dampening effect on exploration in these minerals . It is more likely that exploration into precious metals like gold will continue in Africa , and also into copper , cobalt , nickel , lithium , and graphite — these are commodities where there are either established producing regions or where juniors are able to raise funds on the back of renewed investor interest .
In the absence of substantial price increases , the greenfield development of bulk commodity mines elsewhere in Africa is likely to be focused on places where there is existing infrastructure or where deposits can be found closer to the coastlines of African countries .
In your opinion , which constraints are preventing investments in global , African , and South African mining projects ?
The global focus has been on cost containment and improving cash flow to manage debt ratios and generally to reduce leverage . The recent downturn has left investors sceptical of promised returns and reluctant to invest in risky projects , particularly greenfield projects . Locations perceived as risky have also suffered , as capital has pursued brownfield opportunities in less risky settings . Some rebound is likely though , as there are limits to how long this strategy can maintain supply , and this is positive for African mining . South Africa may not benefit , however , as the uncertainty around the regulations and the extensive exploration that has already been carried out limit the potential upside .
[ 20 ] MINING MIRROR FEBRUARY 2018