Mining Indaba participants are moving from inaction to action

Greater regulatory certainty has unleashed the “animal spirits”.

An example of this move from inaction to action is the decision by diamond mining giant De Beers to restart exploration after a two year hiatus, caused by the unilateral imposition by the South African government of the third iteration of the Mining Charter in 2017, which wiped out more than R50 billion off the market capitalisation of South African mining companies.

The new Minister of Mineral Resources, Gwede Mantashe, has by contrast consulted widely and promulgated the new Mining Charter in December 2018 and has promised an open door policy to addressing the challenges facing the mining industry.

Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities,” the economist John Maynard Keynes wrote.

Mantashe told the 14th Annual Southern African Coal Conference that he aims to raise the contribution of mining to the South African economy to 10 per cent within five years from the current 7 per cent.

“For years people have been talking mining down, expecting something nice to replace mining. My view is however that we should talk mining up and my mission is to raise the share of mining to 10 per cent within five years from the current 7 per cent. If you are silent in the face of the negative narrative, then that narrative will predominate,” Mantashe said.

He pointed out that mining was the largest contributor to South Africa’s foreign exchange earnings with a 40 per cent share and within mining, the coal sector was the largest revenue generator outweighing the gold and platinum mining sectors. The South African coal industry mines 260 million tons annually of which some 73 million tons is exported and employs more than 86,000 miners who get R25 billion in salaries.

Two of the reasons why Mantashe is bullish on increasing the share of mining are the Springbok Flats coal field which has coals seam 10 meters thick and the deepsea drilling for oil and gas off the South African coast.

“I am going to an offshore drilling rig to see for myself what the prospects are. If the initial reports prove to be a reality then this could be a game changer for our country,” he added.

Garrett Soden, Africa Energy’s President and CEO, has said the Brulpadda-1AX exploration well is a world-class, basin-opening opportunity in one of the last under-explored regions offshore Africa. Block 11B/12B is located in the Outeniqua Basin approximately 175 kilometers off the southern coast of South Africa.

The area has a proven petroleum system from the nearby Sable and Oryx oil fields. The Brulpadda (“Bull Frog”) Prospect has gross prospective resources of more than 500 million barrels with an upside potential of some 1.5 billion barrels. The Brulpadda-1AX exploration well is being drilled in 1,432 meters of water by the Odfjell Drilling-owned Deepsea Stavanger semi-submersible rig to a total depth of 3,420 meters subsea.

The Minerals Council of South Africa, previously called the Chamber of Mines, surveyed its members towards the end of 2017 on what a more conducive regulatory environment would mean for fixed investment and job creation. The result was that the estimated capital spending in the mining sector (stretching over the next four years) amounted to more than R145 billion, but a more certain and conducive environment (covering at least another three years) would unlock an additional R122 billion or an 84 per cent increase.

Confidence in South Africa’s regulatory framework had all but vanished, so fixed investment in mining has been stagnant since 2009, while net investment has declined by 57 per cent since 2008 and it is has been outside investors such as India’s Vedanta that have invested in new projects such as Gamsberg.

The key benefit to exploring multi-commodity mineral deposits such as the Gamsberg is that these activities will feed the increasing industrial demand created by accelerating technological innovation in batteries. This demand is reflected in the ongoing upward trend in the so-called “battery minerals” prices of copper, cobalt, lithium, nickel and zinc.

This is anticipation of the electric vehicle (EV) revolution, which will have an impact on commodities form 2020 onwards, as that is when the mass market in EV will take off in China and the US, with Europe following in the subsequent years.

Commodities trading giant Glencore has for instance said that forecast EV-related metal demand will be significant from as early as 2020 – estimates are an additional 390,000 tons of copper; 85,000 tons of nickel and 24,000 tons of cobalt will be needed, yet major mines take at least a decade to move from project to producing mine.

Minerals Council South Africa Chief Executive Officer Roger Baxter said hope was in the air as there had been constructive engagement with government on a number of issues. He was addressing the media at the start of the 25th Investing in African Mining Indaba.

“Hope is in the air and the green shoots are reflected in the fact that we believe the mining industry outperformed the national economy in 2018 with our estimates showing 1.2 per cent growth compared with 0.7 per cent for the national economy,” he said.

He told The BRICS Post that South Africa currently has 1 per cent of global exploration spend, but it should be 5 per cent based on its resource base and he expected that to grow to 5 per cent within the next five to ten years.

Alex Grose, the managing director of Mining Indaba, told The BRICS Post that what stood out for him at this year’s event was the interest by investors in junior mining companies, which had previously been neglected by investors as they were seen as being too high risk.

One of the beneficiaries of this renewed interest was Orion Minerals, which is resurrecting the old Prieska mine zinc copper in the Northern Cape. Its share price has risen by more than 30 per cent in the past month.

Prieska was mined by AngloVaal for 20 years from 1971 to 1991 and produced some 1 million tonnes of zinc and 430,000 tonnes of copper from 46.8 million tonnes of sulphide ore milled. Below the worked-out area is a world-class orebody which is a top-30 global volcanogenic massive sulphide deposit with the probability of further reserves underlying this orebody. A 10-year, phase one project was outlined by the December 2018 scoping study and a bankable feasibility study is on track for completion in the second quarter, according to Orion.

Phase one would exploit the deep sulphide ore body of 28.7 million tonnes, which has a grade of 3.8 per cent zinc and 1.2 per cent copper. This will produce a concentrate that will be trucked to a railhead 40 kilometres away which can access either the Coega deep water port or the Saldanha deep water port. There would be an estimated AUD130 million annual free cash flow after-tax at steady-state with a payback period of less than three years from first production.

The upside potential is what has Orion says has it really excited as the company secured a large consolidated land package measuring 1,790 square kilometres in 2015. No major exploration activity on this land has taken place for past 30 years, but the application of modern exploration techniques presents a significant opportunity. In order to exploit this, Orion has a collaborative exploration agreement is in place with the Independence Group as the area is geologically similar to the Fraser Range in Western Australia.

There are several nickel sulphide deposits that seem to be attractive, but exploration on these targets have been put on hold as management is focused on getting Prieska into production within the next three years. Core samples from exploratory drilling that I saw on a mine site visit showed nickel content as high as 4 per cent, but far more drilling has to be undertaken to verify the extent and grade of the resource.

Helmo Preuss in Cape Town and Prieska, South Africa for the BRICS Post

The BRICS Post

Dear friends of this aggregator

  • Yes, I intentionally removed Newsbud from the aggregator on Mar 22.
  • Newsbud did not block the aggregator, although their editor blocked me on twitter after a comment I made to her
  • As far as I know, the only site that blocks this aggregator is Global Research. I have no idea why!!
  • Please stop recommending Newsbud and Global Research to be added to the aggregator.

Support this site

News Sources

Source Items
WWI Hidden History 50
Grayzone Project 60
Pass Blue 134
Dilyana Gaytandzhieva 14
John Pilger 415
The Real News 367
Scrutinised Minds 29
Need To Know News 2149
FEE 3982
Marine Le Pen 288
Francois Asselineau 25
Opassande 53
HAX on 5July 220
Henrik Alexandersson 734
Mohamed Omar 298
Professors Blog 10
Arg Blatte Talar 40
Angry Foreigner 17
Fritte Fritzson 12
Teologiska rummet 32
Filosofiska rummet 91
Vetenskapsradion Historia 139
Snedtänkt (Kalle Lind) 199
Les Crises 2367
Richard Falk 142
Ian Sinclair 92
SpinWatch 56
Counter Currents 7784
Kafila 407
Gail Malone 34
Transnational Foundation 221
Rick Falkvinge 94
The Duran 8527
Vanessa Beeley 93
Nina Kouprianova 9
MintPress 5315
Paul Craig Roberts 1448
News Junkie Post 58
Nomi Prins 27
Kurt Nimmo 191
Strategic Culture 4235
Sir Ken Robinson 20
Stephan Kinsella 79
Liberty Blitzkrieg 831
Sami Bedouin 62
Consortium News 2359
21 Century Wire 3259
Burning Blogger 318
Stephen Gowans 76
David D. Friedman 148
Anarchist Standard 16
The BRICS Post 1496
Tom Dispatch 465
Levant Report 18
The Saker 3876
The Barnes Review 502
John Friend 411
Psyche Truth 146
Jonathan Cook 135
New Eastern Outlook 3537
School Sucks Project 1757
Giza Death Star 1739
Andrew Gavin Marshall 15
Red Ice Radio 589
GMWatch 2049
Robert Faurisson 150
Espionage History Archive 34
Jay's Analysis 854
Le 4ème singe 88
Jacob Cohen 203
Agora Vox 13404
Cercle Des Volontaires 427
Panamza 1930
Fairewinds 109
Project Censored 808
Spy Culture 448
Conspiracy Archive 70
Crystal Clark 11
Timothy Kelly 528
PINAC 1482
The Conscious Resistance 705
Independent Science News 70
The Anti Media 6162
Positive News 820
Brandon Martinez 30
Steven Chovanec 61
Lionel 276
The Mind renewed 434
Natural Society 2563
Yanis Varoufakis 901
Tragedy & Hope 122
Dr. Tim Ball 97
Web of Debt 136
Porkins Policy Review 386
Conspiracy Watch 174
Eva Bartlett 579
Libyan War Truth 307
DeadLine Live 1909
Kevin Ryan 62
Aaron Franz 209
Traces of Reality 166
Revelations Radio News 121
Dr. Bruce Levine 136
Peter B Collins 1457
Faux Capitalism 205
Dissident Voice 10078
Climate Audit 222
Donna Laframboise 397
Judith Curry 1095
Geneva Business Insider 40
Media Monarchy 2179
Syria Report 76
Human Rights Investigation 90
Intifada (Voice of Palestine) 1685
Down With Tyranny 10984
Laura Wells Solutions 39
Video Rebel's Blog 420
Revisionist Review 485
Aletho News 19108
ضد العولمة 27
Penny for your thoughts 2850
Northerntruthseeker 2220
كساريات 37
Color Revolutions and Geopolitics 27
Stop Nato 4690 Blog 2867 Original Content 6530
Corbett Report 2205
Stop Imperialism 491
Land Destroyer 1148
Webster Tarpley Website 1040

Compiled Feeds

Public Lists

Title Visibility
Funny Public