Water shortage threatens mining – by Lucky Biyase (Business Day – October 13, 2013)

http://www.bdlive.co.za/ [South Africa]

TROUBLED mining companies in the Rustenburg platinum belt are facing another crisis — drought.

This may add to problems besetting companies trapped in the middle of rivalry between the National Union of Mineworkers and the Association of Mineworkers and Construction Union.

The water affairs department and North West’s provincial government have both warned of a drought in the mineral-rich province.

South Africa supplies nearly 60% of the world’s platinum and rhodium and 30% of palladium. The department has warned mining companies, among them Glencore, Anglo American and Lonmin, to restrict water use.

Lonmin’s executive vice-president for process and sustainability, Natascha Viljoen, said: “We are working with the Madibeng local municipality to explore opportunities to re-use water. Our current external source of water is Rand Water and the Buffelspoort canal scheme, and the rest is internal.”

Amplats has suspended its use of potable water from Rand Water between 10pm and 6am until the situation stabilises.

Glencore spokesman Chris Tsatsawane says most of the water the miner uses comes from sources within its operations. “We only use a small amount of ‘make-up’ water which comes from Rand Water. We also have boreholes that we extract water from.”

Peter Major, a mining analyst at Cadiz, says a water shortage is a threat to future operations. At present, he says, mining companies “will manage” because they have been looking at ways of consuming less water for many years.

Beyond the immediate headache of a water shortage, the outlook for platinum remains positive, analysts said.

“There has been a lot of negativity on platinum with prices down and production costs rising,” said Vincent Maposa, an analyst at Frost and Sullivan. “The good thing is that the vehicle population in the world is likely to increase in the next 10 to 20 years. Another upside is that the mining industry is leading an initiative that looks at other uses of platinum.”

Tom Pugh, an analyst at London-based research company Capital Economics, expects platinum production to be cut back sharply over the next year, especially in high-cost mines in South Africa, due to the current low price.

“We also expect an increase in demand for platinum jewellery and from the autocatalyst sectors in both US and Europe due to stricter environmental regulations. As a result we expect the price of platinum to increase to about $1800/oz by the end of next year.”

This month the North West High Court will hear a case between the Royal Bafokeng Nation and villagers who lay claim to about 29 mineral-rich farms in the Rustenburg area.

If the case goes against the Royal Bafokeng Nation, it could have serious implications for Chief Molotlegi Leruo’s Royal Bafokeng Nation and mining companies, which will have to negotiate new terms with incoming landlords.

The communities have accused their chief of disposing of their mineral-rich land in favour of mining companies that do not take environmental depletion and sustainable livelihoods into consideration. The companies most affected are Glencore, Implats, Amplats, Lanxess, Aquarius and Royal Bafokeng.

For the original of this article, click here: http://www.bdlive.co.za/business/mining/2013/10/13/water-shortage-threatens-mining