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Africa Mining

Mechanisation still far off for South Africa’s platinum mines – by Clara Ferreira-Marques and Sherilee Lakmidas (Reuters India – March 14, 2013)

http://in.reuters.com/

LONDON/MARIKANA, South Africa, March 14 (Reuters) – Rising wage costs and strikes have revived the arguments in favour of automating South Africa’s loss-making platinum mines, but weak prices for the metal and tough conditions underground mean mechanisation remains a distant prospect.

The rest of the mining industry, from copper to coal, has been transformed in recent decades by automation, unmanned trucks and remotely controlled equipment.

That is in large part thanks to geology. In the cramped mines where platinum is found, the rock is still drilled, blasted and cleared by men. The platinum seams are damp, sweltering and claustrophobic places to work: men often drill in shafts so constricted that it is like mining under a table.

Mines are evacuated for hours a day so blasting can take place – a major inefficiency for operations with the thinnest of profit margins.

But mechanising platinum would be costly and the mining companies need to be convinced it is worth it. “They would need to believe that any investment in platinum mechanisation would significantly drive them down the cost curve,” said analyst Alison Turner at Panmure Gordon.

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Gold Fields chief Holland isn’t afraid to get out front – by Geoffrey York (Globe and Mail – March 12, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

JOHANNESBURG — When the wave of violent strikes erupted across the country, Nick Holland’s security advisers cautioned him to stay away from his gold mines. He went anyway – and soon found himself facing an army of 5 ,000 angry miners marching across the fields, waving machetes and sticks.

“I always like to be at the front,” says Mr. Holland, chief executive officer of Gold Fields Ltd., the world’s fourth-biggest gold producer. “But it gave me a really scary feeling in the pit of my stomach, that we were about to have something blow up.”

Gold Fields survived the wildcat strikes that left dozens dead at other mines in South Africa last year, but now Mr. Holland faces an even greater challenge: How to save his company from a national mining-industry crisis of rising costs, deteriorating production, high political risk, labour pressures and the threat of new taxes.

It’s a daunting moment for South Africa’s gold industry, the biggest in the world for nearly a century but now in steady decline. At a time when innovation is crucial, Mr. Holland has become a pioneer, orchestrating a bold move to divide Johannesburg-based Gold Fields by spinning off its older South African mines into a new company, leaving its most modern and international mines in the hands of Gold Fields itself.

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Anglo American SA silicosis liability could be largest yet – lawyers – by Natalie Greve (MiningWeekly.com – March 7, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – A silicosis class action application launched on Thursday against mining giant Anglo American South Africa (AASA) could result in the largest-ever silicosis liability of any gold mining company.

So asserted the legal collaboration that filed the application in the Johannesburg High Court and which comprised the Legal Resources Centre (LRC), Garratt Mbuyisa Neale attorneys (GMN), London-based lawyers Leigh Day and Legal Aid South Africa.

The application would be served on Thursday on AASA, a company believed to hold assets worth some $15-billion.

The legal team said in a statement that the application was opt-out and, therefore, provided a mechanism through which the interests of the wider class of silicosis sufferers ¬– including those who were unaware that they had the disease – were protected.

The class action application against AASA was a ‘natural progression’ from the President Steyn litigation against AASA, it claimed.

In 2004, 18 claims relating to miners employed at AASA’s President Steyn mine, in the Free State, were filed by the same legal team, alleging that AASA negligently controlled and advised its mines with regard to the prevention of dust exposure and silicosis.

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PDAC-Mining legend Friedland looks to burnish his image – by Euan Rocha and Rod Nickel (Reuters.com – March 6, 2013)

http://www.reuters.com/

TORONTO – (Reuters) – Leave it to the irreverent Robert Friedland to brighten the mood of a mining conference in the throes of a deep, collective depression.

The outspoken financier, known for his talent for picking winners in a risky business, made a rare public appearance on Monday to trumpet his latest venture, Ivanplats Ltd. It was a star turn by a man apparently unburdened by self-doubt or any lack of confidence in the industry’s resilience.

Friedland’s company, one of a handful of initial public offerings in the mining industry last year, owns South Africa’s Platreef, a project rich in platinum, palladium, gold, rhodium, nickel and copper.

Ivanplats owns the “largest mechanizable, ethical precious metal discovery in the world,” Friedland said at the Prospectors and Developers Association of Canada convention in Toronto, promising that the geological nature of the deposit would allow for more humane working conditions than those in rival South African mines.

“We’ve discovered something that is very good,” he said, “We’re quite confident that the nickel and copper values are double what we would need to recover, gold, platinum, rhodium and palladium at a negative cost.”

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Finland ranked as #1 for global mining investment—Fraser Institute Survey – by Dorothy Kosich (Mineweb.com – March 1, 2013)

http://www.mineweb.com/

742 mineral exploration and development companies surveyed by Vancouver’s Fraser Institute say Indonesia is the worst place to do business out of 96 global jurisdictions.

RENO (MINEWEB) – The mining and exploration companies who responded to 2012/2013 Fraser Institute’s Annual Survey of Mining Companies ranked Finland as the best place to do business, while Indonesia was deemed the worst place for mining and exploration companies.

Along with Finland, the top 10-ranked jurisdictions are Sweden, Alberta, New Brunswick, Wyoming, Ireland, Nevada, Yukon, and Norway. All were in the top 10 last year except for Utah and Norway.

The 10 least attractive jurisdictions for investment are (starting with the worst) Indonesia, Vietnam, DRC (Congo), Kyrgyzstan, Zimbabwe, Bolivia, Guatemala, Philippines, and Greece. All of these jurisdictions except DRC Congo, Greece and Zimbabwe were in the bottom 10 last year.

The jurisdiction deemed to have the best current mineral potential assuming current regulations and land use restrictions is Greenland, followed by Finland, Sweden, Nevada and Saskatchewan. The worst is Bolivia.

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SA must instil new confidence in global investors – Motsepe – by Martin Creamer (MiningWeekly.com – February 26, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – South Africa would benefit greatly if it succeeded in instilling new confidence in the global investment community, African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe said on Tuesday.

Answering questions after the JSE-listed ARM presented a 30% fall in headline earnings to R1.41-billion in the six months to December 31, Motsepe said the countries that had created the most jobs, lifted living standards highest, improved literacy most and provided the best health facilities were those that offered global investors the highest degree of confidence.

Elucidating in reply to Mining Weekly Online, Motsepe emphasised – also see accompanying video – the importance of corporates like ARM engaging in ongoing communication with the government.

In such discussions it was important for CEOs to be forthright in also raising the negative aspects of doing business in South Africa. Government, he said, had no choice but to partner with the private sector in order to benefit the people of South Africa.

Governments of developing countries needed jobs for their people and could only provide employment in partnership with the private sector. He said the attention that other developing countries were affording potential investors was impressive.

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Insight: Congo’s neglected state miner hankers for past glory – by Clara Ferreira-Marques and Jonny Hogg (Reuters Canada – February 22, 2013)

http://ca.reuters.com/

KAMBOVE, Democratic Republic of Congo (Reuters) – At the heart of the Democratic Republic of Congo’s southern mining belt, Kambove once churned out tonne upon tonne of copper for Gecamines, a sprawling conglomerate that used to make up 60 percent and more of the country’s exports.

Now, inside the rust-streaked corrugated iron walls of the Kambove copper plant, the conveyor belts run erratically and the corroded walkways have holes so large that visitors can see through to the workers milling below.

Today, like much of state-owned Gecamines, the processing operations are working at a fraction of their capacity, slowly crumbling in the searing African heat. Kambove, however, is part of an ambitious government plan to put state-owned Gecamines back on the map as a miner and producer and reverse decades of underinvestment, war and kleptocracy presided over by the late dictator Mobutu Sese Seko.

Under technocrat managers appointed in 2010 and a plan laid out last year, Gecamines would no longer just hold minority shares in mines across Congo’s south, but aim to triple its own production by 2015, thanks to investment in new machinery and a push into exploration. The group last month took its first minority stake in an asset outside Congo – cobalt refinery assets in Finland – a move it says will help raise and improve its bruised international profile.

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China’s interest in Africa picking up as its economy recovers – by Keith Campbell (MiningWeekly.com – February 22, 2013)

http://www.miningweekly.com/page/americas-home

The year 2011 saw a staggering increase in Chinese mining investments in Africa. Whereas these had totalled some $1.5-billion at the end of 2010, by the conclusion of 2011 the figure had rocketed to $15.6-billion. Africa has become the site of almost 75% of Chinese foreign mining investment. The China Mining Association (CMA) reported that, worldwide, Chinese companies invested in 284 mining companies during 2011. These figures exclude the oil and gas sector.

Economic upturn

China needs minerals and metals to feed its economy. From 1999 to 2009 the country’s real gross domestic product (GDP) grew at an annual average rate of 10.3%. The Asian giant has become the second largest economy in the world, and, according to The Conference Board’s “Global Economic Outlook 2013” (January 2013 Update), accounted for 16.4% of global economic output last year. (The US contribution was 18.2%; in rather sharp contrast, India was responsible for 6.3%, the whole of Latin America for 7.7%, Russia and Central Asia and South East Europe 5.9%, Africa 3.3% and the Middle East 3.7%. As for Europe – defined as the European Union plus Iceland, Norway and Switzerland – that contributed 20.3%, while the figure for the Euro area was 13.8%.)

The world was, of course, hit by the Great Recession of 2008/2009, and the downturn is by no means over. And China was also affected. Economic growth for 2012 was 7.8%, the Chinese Academy of Sciences (CAS) has reported. But the second semester of the year saw faster than expected growth. The Chinese government’s growth target for the year was 7.5%. Nevertheless, this was the country’s slowest growth rate since 1999 – the rate for 2011 was 9.3% and for 2010, 10.4%.

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Negative sentiment on South Africa ‘significantly overblown’ – Cutifani – by Martin Creamer (MiningWeekly.com – February 20, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – The negative sentiment on South African had been “significantly overblown” at a time when the right things were being done, outgoing AngloGold Ashanti CEO Mark Cutifani said on Wednesday.

After delivering his last set of AngloGold Ashanti results for 2012 – the company’s second-highest ever yearly earnings of $924-million despite the negative impact of last year’s strikes, Cutifani said that AngloGold Ashanti’s share price should be trading at around $60 a share on the New York Stock Exchange based on earnings and cash-flow growth since 2008 rather than the current $27 a share.

The company was introducing the new ounces at half the price of the industry, which, he was confident, would eventually stand it in good stead. But in the meantime, its share price was being discounted as a result of negative sentiment towards South Africa, as was also the case with South Africa’s other gold majors.

“The great frustration is the share price,” said Cutifani, who takes up the position of CEO of Anglo American on April 3. He said he remained “immensely confident” about the future of South Africa and praised Minerals Minister Susan Shabangu for bringing the two conflicting mine unions together to sign an accord.

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Zambia: Safety Gaps Threaten Copper Miners – by Human Rights Watch (February 20, 2013)

http://www.hrw.org/home

Government, Chinese State-Owned Subsidiaries Make Uneven Progress

(Johannesburg) – Workers in the copper mining sector in Zambia remain vulnerable to abuse. New Human Rights Watch research found that the government of President Michael Sata, who promised to prioritize labor rights when he took office in September 2011, has made some improvements in supporting the oversight of the mines, but there remains inadequate enforcement of national labor laws designed to protect workers’ rights.

Human Rights Watch published a report in November 2011 documenting labor rights abuses at four Zambian subsidiaries of China Non-Ferrous Metal Mining Corporation (CNMC), a state-owned enterprise under the authority of China’s highest executive body, the State Council. In follow-up research in October 2012, Human Rights Watch found that CNMC’s subsidiaries made some notable improvements on reducing work hours and respecting freedom of association, but that miners continued to face poor health and safety conditions and threats by managers if they tried to assert their rights. The Zambian government has not adequately intervened to address these problems, Human Rights Watch found.

“President Sata ran on a populist campaign to protect workers, so the lack of meaningful progress in the mining sector is disappointing,” said Daniel Bekele, Africa director at Human Rights Watch. “Although CNMC’s subsidiaries have addressed some of the labor rights abuses documented by Human Rights Watch in 2011, the miners still face significant health and safety risks.”

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Is now the time to reinvest in mining majors – by Lawrence Williams (Mineweb.com – February 20,2013)

http://www.mineweb.com/

The almost universal change in the top management of major diversified and gold miners should indicate that a more cautious approach will see greater profits and dividends ahead.

LONDON (MINEWEB) – Over the years the world’s biggest mining companies have proved to be spectacular investments, but have very much underperformed over the past 4-5 years as corporate dealmaking, largely entered into when the companies’ boards took on CEOs who would embrace big merger deals and huge capital projects when the mining sector seemed to be headed onwards and upwards.

The first real halt to the upwards progression came with the Great Financial Crisis of 2007/8 which decimated the values of many mining sector companies. While the megaminers, because of their diverse holdings, and continuing strength in the bulk mining sectors like iron ore and coal, may not have suffered as much as most, they have since been caught in a position which does not exactly please their major shareholders and, as a result, we have seen an unprecedented series of major asset write downs and a virtually complete change in top management right across the sector.

In the diversified miners we have seen, or are seeing, new CEOs for BHP, Vale, Rio Tinto, Anglo American and Xstrata – in short the world’s top 5 mining companies by market capitalisation.

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Canadian miners wading into Africa – by Jessica McDiarmid (Toronto Star – February 19, 2013)

The Toronto Star has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.

Africa is home to the latest mineral rush, with potential for great riches–and catastrophe.

When rebels in Mali launched a surprise push south toward the capital, Bamako, last month, the Canadian mining industry took notice.It’s got nearly $500 million in assets there.

As international forces landed in the West African nation to fend off the Islamist advance, Vancouver-based Nevsun Resources was hit with allegations that forced labour built its Bisha mine in Eritrea, a pariah state on the other side of the continent.

Just last week, Canadian gold giant Barrick Gold attributed $3.8 billion (U.S.) of its massive writedown to its struggling Zambian copper operation, in part due to the southern African country’s government doubling royalties. Kinross Gold took a $3.2 billion (U.S.) writedown, mostly due to its Tasiast mine in Mauritania.

The Canadian government has made no secret of its support for miners investing in the continent — 54 countries, each vastly different from the next — in what some have called the latest ‘scramble for Africa.’ But recent events — conflict, human rights complaints, regulatory changes — highlight that while the continent holds staggering mineral wealth, it can come at a price.

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Resource nationalism threatens Africa’s mining boom – by Oladiran Bello (New Age – February 1, 2013)

http://www.saiia.org.za/

On the eve of the 2013 Mining Indaba, resource nationalism remains a serious investment risk which threatens both foreign investors and resource-producing states alike. With growing attention devoted to the subject, it appears that assertive resource-exporting countries in Africa risk alienating international capital. In newly resource-rich states and older producers alike, some proposals ostensibly aimed at maximising society’s benefits from resource extraction have spooked investors. Much discussion at the Indaba this week will touch on the disparate experiences often termed resource nationalism, but it is worth reflecting on what the term really means.

At one level, it seems to be a misnomer used to describe just about any assertive stance taken by governments on extractive sector governance. At another level, it has been used to denote grassroots level activism, extending in some respect to the labour unrest which the rhetoric around the nationalisation of mines in South Africa may have exacerbated.

Actions regarded as resource nationalism have thus varied widely, from tax hikes, through demand for greater state equity and indigenous participation, to renegotiation of stability clauses in mining contracts. Also, so-called beneficiation strategies – pursued by South Africa, Brazil, Indonesia, Vietnam and others – involve demands for value-added processing before exporting.

The term has generally described initiatives by host governments to secure greater financial, regulatory, and sometimes operational control over extractive activities. Recently, Zambia and Mali have pushed for 25 to 35 percent state participation in mining projects.

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OPENING ADDRESS AT THE MINING INDABA 2013 bY Ms. SUSAN SHABANGU, MP, MINISTER OF MINERAL RESOURCES OF SOUTH AFRICA: CAPE TOWN INTERNATIONAL CONVENTION CENTRE.

4th FEBRUARY 2013

Programme Director, Mr Jonathan Moore, Honourable Ministers here present, Members of the Diplomatic Corps, Leaders of the mining industry, The investment community, International friends visiting our shores,Delegates and distinguished Guests:

I am pleased to be here, once again, to welcome you to this august gathering. It has come to epitomise an annual pilgrimage of the mining industry on the southern tip of the continent of Africa. It is crucial to the wellbeing and progress not only of our own country, but of the global mining community that we serve in various ways.

I am convinced that all of you, including our distinguished visitors, will continue to be treated to our particular version of African hospitality. This is characterised and driven in the main by the spirit of ubuntu currently on display throughout the country as we host the premier soccer tournament of our continent.

Last year following our gathering here, the country was engulfed by dark clouds, which seemed to be billowing all around us. There was serious unrest in some mines, and the blot of Marikana on the landscape which is uncharacteristic of a democratic dispensation. President Zuma established the Independent Commission of Inquiry on Marikana, headed by retired Judge Ian Farlam. The proceedings of the inquiry are well advanced and expected to conclude in the near future.

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Mining royalties regime to come under spotlight – Zuma – by Martin Creamer (MiningWeekly.com – February 14, 2013)

http://www.miningweekly.com/page/americas-home

JOHANNESBURG (miningweekly.com) – South Africa’s current mining royalties regime would come under the spotlight as part of a tax study the Finance Minister would commission, President Jacob Zuma said in his yearly State of the Nation address to a joint sitting of Parliament on Thursday evening.

Zuma also revealed that he had held top-level talks with Anglo American chairperson Sir John Parker on the plans of Anglo American Platinum to restructure and retrench 14 000 employees.

Construction of the Majuba coal railway line, the President said, would begin soon in order to switch the transportation of coal from road to rail in Mpumalanga to protect that province’s roads, and additional rail capacity to improve the transportation of iron-ore had opened up South Africa’s West Coast.

On the imminent tax study, he said that Pravin Gordhan would be commissioning the review of South Africa’s current tax policies to make sure that the country had an appropriate revenue base to support public spending. “Part of this study will evaluate the current mining royalties regime, with regard to its ability to suitably serve our people,” Zuma added.

He revealed that his meeting with Parker had taken place in Pretoria two weeks ago.

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