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South African
Mining
South Africa sits at a turning
point. Many decisions
concerning socio-economic
policies, energy infrastructure
and safety will determine its
future.
TABLE OF CONTENTS A REPORT BY GBR FOR E&MJ
South Africa: Africa’s Superpower ............... 2
This report was researched and compiled by
A Mining Nation Evolves ............................ 4 Global Business Reports (www.gbreports.com) for
Engineering & Mining Journal.
South Africa is Open for Business ................ 8
Editorial researched and written by Sharon Saylor
Beyond Gold ............................................ 10
(ssaylor@gbreports.com), and Sarah Fraikue
Industry addresses Complications (sfraikue@gbreports.com).
Created by MPRDA .................................. 16
Cover photo: Impala Platinum’s shaft at Rustenburg
Making Strides ........................................ 18 (with courtesy of Implats)
JUNE 2011
South African Mining South African Mining
South Africa: Africa’s Superpower
vestment to meet the increasing demands sector to emerge, stating that mining
of the mining industry through developing rights not used in an allotted timeframe
infrastructure, including transport systems by mining companies to exploit minerals
and energy projects. would revert back to the state.
South Africa boasts Africa’s largest economy and strongest political As South Africa has become the Afri- Since its inception, a number of short-
influence, but does South Africa have what it takes to prosper from the can continents springboard for majors,
juniors and service providers, South Africa
comings pertaining to ownership, procure-
ment, employment equity, beneficiation,
current commodity boom? will now offer improved access for BRIC human resource development, mine com-
members to Africa, as well as enhanced munity development, housing and living
investor confidence. “South Africa has the conditions have been identified and are be-
financial muscle and, with its recent invita- ing relooked at. In the course of 2011 the
decisions concerning the nationalization tion to join BRICS, the opportunities within entire act is to be reviewed in order to ad-
of the mineral industry, security of ten- the industry are likely to improve,” said Dr. dress these shortcomings and will be ap-
ure, underdeveloped transport and ener- Fred Sutherland, managing director Africa, proved by cabinet at the end of the year.
gy infrastructure, skills shortages, safety Golder Associates.
issues and affirmative action policies to
boost black ownership in the mining in-
Remodeling
dustry challenge South Africa’s ability to
Sharing the Wealth In the wake of the global financial crisis,
remain at the forefront of the international The Mineral and Petroleum Resources De- a tripartite group consisting of the gov-
mining industry. South Africa needs a velopment Act (MPRDA) was enacted to ernment, the Chamber of Mines and la-
collaborative effort from government, in- address the inequalities resultant from the bor unions worked together, through the
dustry and labor to improve its competi- Apartheid regime which came to an end Mining Industry Growth Development and
tive edge on the global mining arena and in 1994, and which prevented Historically Employment Task Team (MIGDETT), to min-
enhance its image as a preferred invest- Disadvantaged South Africans (HDSAs) imize mining job losses and to find sustain-
ment destination. from owning the means of production and able solutions for the mining industry. The
from any meaningful participation in the interventions in the MIGDETT process also
mainstream economy. The MPRDA was de- aim at creating an enabling environment
Mainstay of South Africa signed to facilitate the participation of HD- for investment as well as reducing the
From the discovery of alluvial diamonds SAs in the mining and minerals industry. cost of doing business in South Africa. An-
in the late 1860s and the Witwatersrand Within the MPRDA, section 100(2)(a) glo American’s Executive Director Godfrey
goldfields in 1886, the mining industry lies the mining charter, also known as Gomwe believes the task team is making
has been and remains one of the country’s the Broad Based Socio Economic Em- positive strides. “MIGDETT is a process to
most important economic drivers, contrib- powerment Charter for the South Afri- identify what a “globally competitive South
uting 19% of GDP (8.8% directly), approxi- can Industry, which was designed by the Africa” could look like, there is recognition
mately 1 million jobs (about 500,000 jobs government to effect sustainable growth that we missed the last commodity boom
directly); 18% of gross investment (10% and transformation in the mining industry and there is a clear effort to try to take ad-
directly); about 10% to 20% of direct cor- through specific targets. In an attempt to vantage of the next cycle,” Gomwe said.
Aluminium smelter in Richards Bay. (Photo courtesy of BHP Billiton) porate tax receipts (R10.5 billion in 2009) disperse national wealth, South Africa has In essence, the task team was mandat-
and accounting for 35% of the value of the set a target of 26% black ownership of its ed to identify bottlenecks and to come up
More richly endowed than either Russia have been acknowledged by the Minister Johannesburg Stock Exchange (Chamber mines by 2014, but preliminary targets to with possible solutions intended to make
or Australia, with an estimated $2.5 tril- and we, as industry, need to be more sup- of Mines, 2009-2010). But in the 2001 reach 15% in 2009 have disappointingly the industry competitive. The MIGDETT
lion (the equivalent of R18 trillion) worth portive and work closer with the govern- to 2008 commodities boom, the world’s not been met. It also requires that mining process had already identified a number
of metals and minerals in the ground at ment. If you look at the cultural change top 20 mining countries achieved an aver- companies substantially and materially in- of weak areas in the industry, including
today’s prices, South Africa has by far the South Africa has navigated in the 15 years age mining GDP growth rate of 5% a year, crease the economic participation of HD- regulatory uncertainty and underdevel-
most well endowed mineral wealth of any of democracy and if you think of the way while South Africa’s mining sector GDP SAs within the industry, from employment oped infrastructure, both of which led to
country in the world (American Citibank in which the country has dealt with this, it shrank by 1% a year. to procurement. The new legislation paved the country’s downgrading in the Fraser
Group, Metals and Mining Strategy, April is incredible. The country has great poten- South Africa is home to a population of the way for South Africa’s junior mining Institute report. A 13-pronged strategy to
2010). Containing 52 commodities in the tial and it has 100 years of mining culture. 50 million people, occupies a landmass of address these has been put in place.
ground and home to the world’s largest re- People understand the industry and both 1.2 million sq km (equal to the combined President Zuma has called on South
serves of platinum group metals (almost the union and government are support- landmass of Germany, Italy and France) Africa, with strong support from indus-
90%), manganese (80%), chrome (73%), ive.” and a coast line stretching almost 3,000 try, to embark on a bold New Economic
vanadium (45%) and gold (41%), and a South Africa hosts the largest mineral km. It is now strategically aligned with its Growth Path to create 5 million jobs and
major reserve holder of vermiculite, zirco- reserves, ranks as the fifth largest mining Asian counterparts, India and China as the reduce unemployment from 25% to 15%
nium minerals, titanium minerals, coal and economy by GDP value, leads the world’s most recent addition to the BRICS partner- by 2020. The new growth plan aims to
iron ore, South Africa’s mineral potential is platinum production and is the fourth larg- ship as of December 2010. Some argue enhance economic growth, employment
second to none (Chamber of Mines, 2009- est gold producer, yet the country lags South Africa, whose economy is about creation and equality in South Africa and
2010). far behind in foreign direct investment one-quarter the size of India’s, is simply has identified both mining and mineral
“South Africa has the largest resource and mineral production. A recent report too small to join the group of the world’s beneficiation as one of the key contribu-
base as measured by financial value and (March 2011) by the Toronto-based Fras- top-four major emerging markets and fu- tors.
is the fifth largest mining jurisdiction,” said er Institute ranked South Africa 67 out of ture economic powerhouses. But South If South Africa can address investor
CEO of AngloGold Ashanti, Mark Cutifani. 79 mining jurisdictions around the world, African officials disagree, stating it is the concerns and, in some cases mispercep-
“It has a legislative framework that is gen- just four places ahead of Zimbabwe. The country’s strategic importance both re- tions, its top financial institutions, corpo-
erally clear and built on perceived best survey was launched to examine which gionally and globally that matters. As one rate footprint and knowledge of all of the
practice. South Africa has a legal system jurisdictions provide the most favorable of China’s largest trading partners, reach- African continent position the ‘rainbow na-
that works. There are issues within the business climates for the mining industry. ing two-way trade revenues of R119.7 Godfrey Gomwe, tion’ well to lead the continent into a cen-
Department of Mineral Resources, which South Africa is at a critical turning point; billion, South Africa looks to China for in- Executive Director of Anglo American South Africa tury of economic prosperity.
2 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 3
South African Mining South African Mining
South Africa: Africa’s Superpower
vestment to meet the increasing demands sector to emerge, stating that mining
of the mining industry through developing rights not used in an allotted timeframe
infrastructure, including transport systems by mining companies to exploit minerals
and energy projects. would revert back to the state.
South Africa boasts Africa’s largest economy and strongest political As South Africa has become the Afri- Since its inception, a number of short-
influence, but does South Africa have what it takes to prosper from the can continents springboard for majors,
juniors and service providers, South Africa
comings pertaining to ownership, procure-
ment, employment equity, beneficiation,
current commodity boom? will now offer improved access for BRIC human resource development, mine com-
members to Africa, as well as enhanced munity development, housing and living
investor confidence. “South Africa has the conditions have been identified and are be-
financial muscle and, with its recent invita- ing relooked at. In the course of 2011 the
decisions concerning the nationalization tion to join BRICS, the opportunities within entire act is to be reviewed in order to ad-
of the mineral industry, security of ten- the industry are likely to improve,” said Dr. dress these shortcomings and will be ap-
ure, underdeveloped transport and ener- Fred Sutherland, managing director Africa, proved by cabinet at the end of the year.
gy infrastructure, skills shortages, safety Golder Associates.
issues and affirmative action policies to
boost black ownership in the mining in-
Remodeling
dustry challenge South Africa’s ability to
Sharing the Wealth In the wake of the global financial crisis,
remain at the forefront of the international The Mineral and Petroleum Resources De- a tripartite group consisting of the gov-
mining industry. South Africa needs a velopment Act (MPRDA) was enacted to ernment, the Chamber of Mines and la-
collaborative effort from government, in- address the inequalities resultant from the bor unions worked together, through the
dustry and labor to improve its competi- Apartheid regime which came to an end Mining Industry Growth Development and
tive edge on the global mining arena and in 1994, and which prevented Historically Employment Task Team (MIGDETT), to min-
enhance its image as a preferred invest- Disadvantaged South Africans (HDSAs) imize mining job losses and to find sustain-
ment destination. from owning the means of production and able solutions for the mining industry. The
from any meaningful participation in the interventions in the MIGDETT process also
mainstream economy. The MPRDA was de- aim at creating an enabling environment
Mainstay of South Africa signed to facilitate the participation of HD- for investment as well as reducing the
From the discovery of alluvial diamonds SAs in the mining and minerals industry. cost of doing business in South Africa. An-
in the late 1860s and the Witwatersrand Within the MPRDA, section 100(2)(a) glo American’s Executive Director Godfrey
goldfields in 1886, the mining industry lies the mining charter, also known as Gomwe believes the task team is making
has been and remains one of the country’s the Broad Based Socio Economic Em- positive strides. “MIGDETT is a process to
most important economic drivers, contrib- powerment Charter for the South Afri- identify what a “globally competitive South
uting 19% of GDP (8.8% directly), approxi- can Industry, which was designed by the Africa” could look like, there is recognition
mately 1 million jobs (about 500,000 jobs government to effect sustainable growth that we missed the last commodity boom
directly); 18% of gross investment (10% and transformation in the mining industry and there is a clear effort to try to take ad-
directly); about 10% to 20% of direct cor- through specific targets. In an attempt to vantage of the next cycle,” Gomwe said.
Aluminium smelter in Richards Bay. (Photo courtesy of BHP Billiton) porate tax receipts (R10.5 billion in 2009) disperse national wealth, South Africa has In essence, the task team was mandat-
and accounting for 35% of the value of the set a target of 26% black ownership of its ed to identify bottlenecks and to come up
More richly endowed than either Russia have been acknowledged by the Minister Johannesburg Stock Exchange (Chamber mines by 2014, but preliminary targets to with possible solutions intended to make
or Australia, with an estimated $2.5 tril- and we, as industry, need to be more sup- of Mines, 2009-2010). But in the 2001 reach 15% in 2009 have disappointingly the industry competitive. The MIGDETT
lion (the equivalent of R18 trillion) worth portive and work closer with the govern- to 2008 commodities boom, the world’s not been met. It also requires that mining process had already identified a number
of metals and minerals in the ground at ment. If you look at the cultural change top 20 mining countries achieved an aver- companies substantially and materially in- of weak areas in the industry, including
today’s prices, South Africa has by far the South Africa has navigated in the 15 years age mining GDP growth rate of 5% a year, crease the economic participation of HD- regulatory uncertainty and underdevel-
most well endowed mineral wealth of any of democracy and if you think of the way while South Africa’s mining sector GDP SAs within the industry, from employment oped infrastructure, both of which led to
country in the world (American Citibank in which the country has dealt with this, it shrank by 1% a year. to procurement. The new legislation paved the country’s downgrading in the Fraser
Group, Metals and Mining Strategy, April is incredible. The country has great poten- South Africa is home to a population of the way for South Africa’s junior mining Institute report. A 13-pronged strategy to
2010). Containing 52 commodities in the tial and it has 100 years of mining culture. 50 million people, occupies a landmass of address these has been put in place.
ground and home to the world’s largest re- People understand the industry and both 1.2 million sq km (equal to the combined President Zuma has called on South
serves of platinum group metals (almost the union and government are support- landmass of Germany, Italy and France) Africa, with strong support from indus-
90%), manganese (80%), chrome (73%), ive.” and a coast line stretching almost 3,000 try, to embark on a bold New Economic
vanadium (45%) and gold (41%), and a South Africa hosts the largest mineral km. It is now strategically aligned with its Growth Path to create 5 million jobs and
major reserve holder of vermiculite, zirco- reserves, ranks as the fifth largest mining Asian counterparts, India and China as the reduce unemployment from 25% to 15%
nium minerals, titanium minerals, coal and economy by GDP value, leads the world’s most recent addition to the BRICS partner- by 2020. The new growth plan aims to
iron ore, South Africa’s mineral potential is platinum production and is the fourth larg- ship as of December 2010. Some argue enhance economic growth, employment
second to none (Chamber of Mines, 2009- est gold producer, yet the country lags South Africa, whose economy is about creation and equality in South Africa and
2010). far behind in foreign direct investment one-quarter the size of India’s, is simply has identified both mining and mineral
“South Africa has the largest resource and mineral production. A recent report too small to join the group of the world’s beneficiation as one of the key contribu-
base as measured by financial value and (March 2011) by the Toronto-based Fras- top-four major emerging markets and fu- tors.
is the fifth largest mining jurisdiction,” said er Institute ranked South Africa 67 out of ture economic powerhouses. But South If South Africa can address investor
CEO of AngloGold Ashanti, Mark Cutifani. 79 mining jurisdictions around the world, African officials disagree, stating it is the concerns and, in some cases mispercep-
“It has a legislative framework that is gen- just four places ahead of Zimbabwe. The country’s strategic importance both re- tions, its top financial institutions, corpo-
erally clear and built on perceived best survey was launched to examine which gionally and globally that matters. As one rate footprint and knowledge of all of the
practice. South Africa has a legal system jurisdictions provide the most favorable of China’s largest trading partners, reach- African continent position the ‘rainbow na-
that works. There are issues within the business climates for the mining industry. ing two-way trade revenues of R119.7 Godfrey Gomwe, tion’ well to lead the continent into a cen-
Department of Mineral Resources, which South Africa is at a critical turning point; billion, South Africa looks to China for in- Executive Director of Anglo American South Africa tury of economic prosperity.
2 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 3
South African Mining South African Mining
A Mining Nation Evolves
lations at Gold Fields. “South Deep mine is
a significant investment in the future of the
South African gold mining industry and will be
around beyond most other SA mines,” said
Although major gold discoveries may be a thing of the past, South Africa is Nick Holland, CEO of Gold Fields.
still home to some of the greatest developing gold ore bodies in the world. According to the U.S. Geological Survey,
6,000 metric tons (mt) of gold reserves re-
main in South Africa. The main gold produc-
ing area, just outside of Johannesburg, the
the Witwatersrand gold fields in 1886 as Witwatersrand Basin has already produced
well as the Barberton Greenstone Belt in more than 41,000 mt of gold and still re-
Mpumalanga and followed by the Kraaipan mains the greatest un-mined ore body in the
Greenstone belt in Gauteng, South Africa’s world.
world-class gold mining industry has flour- Inevitably, 125 years of gold mining
ished. equates to declining grades, increased
From the initial gold discovery, South Af- depths of mining (reaching more than 4,000
rica dominated the global gold industry for m), greater safety risks and lower profit
120 years and was only recently surpassed margins, which have led to a steady decline
by China in 2007 as the leading gold pro- in gold production and South Africa’s top
ducer. With 41% of global gold reserves, ranking slip to fourth. In 2010, South Africa
South Africa is not surprisingly the birth- produced 191,833 kg of gold, a 6.4% de-
place to some of the largest gold mining cline on the 2009 production of 204,922 kg
companies in the world. (Chamber of Mines). DRDGold, Pamodzi Gold
Three of the top 10 gold companies are Ltd., Simmer and Jack Mines Ltd., Great Ba-
rooted in South Africa1, AngloGold Ashanti sin Gold Ltd., Pan African Resources and
(4.5 million oz), Gold Fields (3.6 million oz) Gold One International also contributed to
and Harmony (1.4 million oz). the 2010 gold production.
South Africa’s Gold Fields is the oldest As reserves deplete and become harder
mining house in the world. It was formed in to mine, AngloGold Ashanti, Goldfields and
A significant investment, Gold Fields’ South Deep mine represents the future for South Africa’s gold mining sector. 1887 in Johannesburg and since then it has Harmony remain committed to South Africa,
(Photo courtesy of Gold Fields) grown and morphed itself in many different but look to new frontiers in Africa and inter-
forms. In January 1998, the old assets of nationally.
Dominating South Africa’s gold, platinum, num, AngloGold Ashanti, Anglo Platinum, Gold Fields South Africa were merged with Without adding new ounces to their South
chrome, coal and base metal production Goldfields, Sasol, Harmony and Kumba the gold assets of Gencor to form Gold African portfolio, AngloGold Ashanti-South
were the traditional major mining houses Iron Ore, are still reflected in the resources Fields Ltd., a new company that maintained Africa’s number one gold producer and sig-
Anglo American, De Beers, Gencor, Billi- sector of the JSE. The top 13 companies 125 years of history. “South Africa is the nificant contributor to the economy, is chal-
ton, Gold Fields, JCI, Anglovaal and Rand by size constitute over 95% of the total core of Gold Fields. We have Kloof, Beat- lenged to maintain high production levels at
Mines. The rise of a new democratic con- market capitalization of all listed mining rix and Driefontein and between these they the greatest mining depths in the world. “The
stitution in 1994 resulted in significant re- companies. still have 20 million oz of good high quality South African operations will be flat as most
structuring. reserves within reach of existing infrastruc- of the operations are mature. The South Af-
“Prior to 1994 South Africa still had ture. Driefontein is the greatest gold mine rican gold industry has been declining over
large mining houses, which have now Gold: Sunrise, Midday this planet has ever seen, this mine has al- the past 10 years, year-on-year we are see-
evolved into more focused mining compa- or Sunset? ready mined 110 million oz and Kloof has ing declines in the range of 5%-10%.”
nies. Mining houses held assets in coal, mined 75 million oz,” said Willie Jacobsz, The country’s lowest cost producer, An-
Gauteng, meaning “place of gold,” refers
gold, platinum, base metals and also oper- senior vice president, head of investor re- gloGold Ashanti is investing significantly to
to the thriving gold province, which is home
ated in the service industries. Another im- extend its operations, “We are looking to
to Pretoria (the constitutional capital) and
portant evolution was that in the old days, invest in new technologies to extend the life
Johannesburg (the economic hub of South 1. As measured by 2010 production of publicly traded
mining houses were required to finance of some of the existing operations from 20
Africa). Originating from the discovery of gold mining companies.
themselves. Now if you want to go to the years to 30 or 50 years. We have put togeth-
market and you want to raise money, you er a technology consortium that is looking
have to be operating at best practice. This to develop the business over the long-term.
has been a major transition for South Afri- The participants, amongst many, include GE
can mining houses and it has been done and 3M. They believe it is one of the big-
very successfully. The South African min- gest technology consortiums they have ever
ing companies have adapted to this mar- been involved with and possibly the most
ket orientated approach and we’ve evolved significant since the Manhattan project, with
with them,” said Roger Dixon, chairman of 33 partners involved in the process,” said
SRK, an independent international consul- CEO Mark Cutifani.
tancy, established in 1974 in South Africa, Although some operations may platform
with global operations in more than 40 out for Gold Fields’ South Deep mine, pros-
countries. perity is on the horizon. “South Deep mine
Although the constitution and favorable is the greatest developing gold ore body in
legislations in the MPRDA have paved the the world, with 35 million oz of reserves, 90
way for juniors to enter the marketplace, million oz of resources and a current life of
the dominance of the majors, including mine plan that extends to 2076. We have
BHP Billiton, Anglo American, Impala Plati- Bheki Sibiya, Chief Executive of Chamber of Mines Mark Cutifani, CEO of AngloGold Ashanti been building the mine for the past two
4 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 5
South African Mining South African Mining
A Mining Nation Evolves
lations at Gold Fields. “South Deep mine is
a significant investment in the future of the
South African gold mining industry and will be
around beyond most other SA mines,” said
Although major gold discoveries may be a thing of the past, South Africa is Nick Holland, CEO of Gold Fields.
still home to some of the greatest developing gold ore bodies in the world. According to the U.S. Geological Survey,
6,000 metric tons (mt) of gold reserves re-
main in South Africa. The main gold produc-
ing area, just outside of Johannesburg, the
the Witwatersrand gold fields in 1886 as Witwatersrand Basin has already produced
well as the Barberton Greenstone Belt in more than 41,000 mt of gold and still re-
Mpumalanga and followed by the Kraaipan mains the greatest un-mined ore body in the
Greenstone belt in Gauteng, South Africa’s world.
world-class gold mining industry has flour- Inevitably, 125 years of gold mining
ished. equates to declining grades, increased
From the initial gold discovery, South Af- depths of mining (reaching more than 4,000
rica dominated the global gold industry for m), greater safety risks and lower profit
120 years and was only recently surpassed margins, which have led to a steady decline
by China in 2007 as the leading gold pro- in gold production and South Africa’s top
ducer. With 41% of global gold reserves, ranking slip to fourth. In 2010, South Africa
South Africa is not surprisingly the birth- produced 191,833 kg of gold, a 6.4% de-
place to some of the largest gold mining cline on the 2009 production of 204,922 kg
companies in the world. (Chamber of Mines). DRDGold, Pamodzi Gold
Three of the top 10 gold companies are Ltd., Simmer and Jack Mines Ltd., Great Ba-
rooted in South Africa1, AngloGold Ashanti sin Gold Ltd., Pan African Resources and
(4.5 million oz), Gold Fields (3.6 million oz) Gold One International also contributed to
and Harmony (1.4 million oz). the 2010 gold production.
South Africa’s Gold Fields is the oldest As reserves deplete and become harder
mining house in the world. It was formed in to mine, AngloGold Ashanti, Goldfields and
A significant investment, Gold Fields’ South Deep mine represents the future for South Africa’s gold mining sector. 1887 in Johannesburg and since then it has Harmony remain committed to South Africa,
(Photo courtesy of Gold Fields) grown and morphed itself in many different but look to new frontiers in Africa and inter-
forms. In January 1998, the old assets of nationally.
Dominating South Africa’s gold, platinum, num, AngloGold Ashanti, Anglo Platinum, Gold Fields South Africa were merged with Without adding new ounces to their South
chrome, coal and base metal production Goldfields, Sasol, Harmony and Kumba the gold assets of Gencor to form Gold African portfolio, AngloGold Ashanti-South
were the traditional major mining houses Iron Ore, are still reflected in the resources Fields Ltd., a new company that maintained Africa’s number one gold producer and sig-
Anglo American, De Beers, Gencor, Billi- sector of the JSE. The top 13 companies 125 years of history. “South Africa is the nificant contributor to the economy, is chal-
ton, Gold Fields, JCI, Anglovaal and Rand by size constitute over 95% of the total core of Gold Fields. We have Kloof, Beat- lenged to maintain high production levels at
Mines. The rise of a new democratic con- market capitalization of all listed mining rix and Driefontein and between these they the greatest mining depths in the world. “The
stitution in 1994 resulted in significant re- companies. still have 20 million oz of good high quality South African operations will be flat as most
structuring. reserves within reach of existing infrastruc- of the operations are mature. The South Af-
“Prior to 1994 South Africa still had ture. Driefontein is the greatest gold mine rican gold industry has been declining over
large mining houses, which have now Gold: Sunrise, Midday this planet has ever seen, this mine has al- the past 10 years, year-on-year we are see-
evolved into more focused mining compa- or Sunset? ready mined 110 million oz and Kloof has ing declines in the range of 5%-10%.”
nies. Mining houses held assets in coal, mined 75 million oz,” said Willie Jacobsz, The country’s lowest cost producer, An-
Gauteng, meaning “place of gold,” refers
gold, platinum, base metals and also oper- senior vice president, head of investor re- gloGold Ashanti is investing significantly to
to the thriving gold province, which is home
ated in the service industries. Another im- extend its operations, “We are looking to
to Pretoria (the constitutional capital) and
portant evolution was that in the old days, invest in new technologies to extend the life
Johannesburg (the economic hub of South 1. As measured by 2010 production of publicly traded
mining houses were required to finance of some of the existing operations from 20
Africa). Originating from the discovery of gold mining companies.
themselves. Now if you want to go to the years to 30 or 50 years. We have put togeth-
market and you want to raise money, you er a technology consortium that is looking
have to be operating at best practice. This to develop the business over the long-term.
has been a major transition for South Afri- The participants, amongst many, include GE
can mining houses and it has been done and 3M. They believe it is one of the big-
very successfully. The South African min- gest technology consortiums they have ever
ing companies have adapted to this mar- been involved with and possibly the most
ket orientated approach and we’ve evolved significant since the Manhattan project, with
with them,” said Roger Dixon, chairman of 33 partners involved in the process,” said
SRK, an independent international consul- CEO Mark Cutifani.
tancy, established in 1974 in South Africa, Although some operations may platform
with global operations in more than 40 out for Gold Fields’ South Deep mine, pros-
countries. perity is on the horizon. “South Deep mine
Although the constitution and favorable is the greatest developing gold ore body in
legislations in the MPRDA have paved the the world, with 35 million oz of reserves, 90
way for juniors to enter the marketplace, million oz of resources and a current life of
the dominance of the majors, including mine plan that extends to 2076. We have
BHP Billiton, Anglo American, Impala Plati- Bheki Sibiya, Chief Executive of Chamber of Mines Mark Cutifani, CEO of AngloGold Ashanti been building the mine for the past two
4 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 5
South African Mining South African Mining
years. It is already producing just below
300,000 oz/y annualized. This is one mine
that has more reserves than most interna-
tional companies, and between our four
mines, Gold Fields will be mining gold in
South Africa long after any other company.
That is not sunset, that is sunrise,” said
Willie Jacobsz of Gold Fields.
Over the last decade South Africa has
developed a junior gold sector. Great Ba-
sin Gold is a Canadian junior with a primary
listing on the TSX that saw a unique op-
portunity. “After the political environment
changed and subsequently the mining
charter opened the door for juniors to
play, with Canadian dollars we could have
cheap access to large amounts of ounces
in South Africa and we obtained the Burn- Platinum miners operate jackleg drills in a low-profile reef formation. (Photo courtesy of Implats)
stone project. It is challenging times with a
new mine, but Burnstone is vastly different nity with the acquisition of Barberton and discards which enables us to be the low-
from the other South African gold opera- has allowed the company to evolve over est cost platinum producer in the word.
tions. It is shallow and not labor intensive the past five years from a struggling ex- We are a unique investment opportunity,
as it is mechanized, so we do not have the plorer to gold producer and soon to be giving exposure to gold and platinum,” Dip-
complexities associated with deep level platinum producer. penaar said.
mining,” said Ferdi Dippenaar, president “We started out as an explorer, with Despite South Africa’s production de-
and CEO. no money in the bank, very few resources clines, majors and juniors still contribute
Barberton is one of the oldest working and we now own the Barberton mine, pro- significantly to the economy. “Gold mining,
gold mines in the world, producing for 120 ducing 100,000 oz/y with the potential to in many ways, has been the mainstay of
years and has an extended mine life to an grow to 150,000 oz in the next year. We the South African economy for years, but
excess of 25 years. also have a long-term view of 100,000 oz it’s getting to a more mature phase where
Jan Nelson’s appointment to CEO of of platinum at the Phoenix platinum project platinum and coal are now bigger. How-
Pan African Resources brought opportu- to mine platinum from the chrome tailings ever, we are still an important part of the
economy; 120,000 people are employed
in the gold sector, another 120,000 are
employed in the service sector support-
ing the gold sector. For every person em-
ployed in the gold sector, it is estimated
there are 10 other dependents in the coun-
try. This means the gold sector is support-
ing around 2.5 million people and still re-
mains South Africa’s third largest mining
sector,” said Cutifani.
Bheki Sibiya, recently appointed presi-
dent of Chamber of Mines (the chamber
acts as a conduit between its 50 mem-
bers, who, in terms of value and volume,
produce 80% of the output of the mining
industry) said: “We have 130 years of min-
ing history and with our mineral deposits
we have another 150 to 200 years of min-
ing in the country.”
The cost of gold reached an all time
high in April 2010 of more than $1,500/
oz, but the volatility and perhaps an over-
valued rand are not providing the margins
that the industry hoped.
However, a century ago miners were
crippled by the inability to extract the gold
from the ore; then the introduction of cya-
nide technology and deeper mining trans-
formed a dead industry to the greatest
gold fields in the world.
Perhaps with newer technologies,
changes in organizational structures and
labor relations, South Africa’s treasure
may be mined for decades to come.
6 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 7
South African Mining South African Mining
years. It is already producing just below
300,000 oz/y annualized. This is one mine
that has more reserves than most interna-
tional companies, and between our four
mines, Gold Fields will be mining gold in
South Africa long after any other company.
That is not sunset, that is sunrise,” said
Willie Jacobsz of Gold Fields.
Over the last decade South Africa has
developed a junior gold sector. Great Ba-
sin Gold is a Canadian junior with a primary
listing on the TSX that saw a unique op-
portunity. “After the political environment
changed and subsequently the mining
charter opened the door for juniors to
play, with Canadian dollars we could have
cheap access to large amounts of ounces
in South Africa and we obtained the Burn- Platinum miners operate jackleg drills in a low-profile reef formation. (Photo courtesy of Implats)
stone project. It is challenging times with a
new mine, but Burnstone is vastly different nity with the acquisition of Barberton and discards which enables us to be the low-
from the other South African gold opera- has allowed the company to evolve over est cost platinum producer in the word.
tions. It is shallow and not labor intensive the past five years from a struggling ex- We are a unique investment opportunity,
as it is mechanized, so we do not have the plorer to gold producer and soon to be giving exposure to gold and platinum,” Dip-
complexities associated with deep level platinum producer. penaar said.
mining,” said Ferdi Dippenaar, president “We started out as an explorer, with Despite South Africa’s production de-
and CEO. no money in the bank, very few resources clines, majors and juniors still contribute
Barberton is one of the oldest working and we now own the Barberton mine, pro- significantly to the economy. “Gold mining,
gold mines in the world, producing for 120 ducing 100,000 oz/y with the potential to in many ways, has been the mainstay of
years and has an extended mine life to an grow to 150,000 oz in the next year. We the South African economy for years, but
excess of 25 years. also have a long-term view of 100,000 oz it’s getting to a more mature phase where
Jan Nelson’s appointment to CEO of of platinum at the Phoenix platinum project platinum and coal are now bigger. How-
Pan African Resources brought opportu- to mine platinum from the chrome tailings ever, we are still an important part of the
economy; 120,000 people are employed
in the gold sector, another 120,000 are
employed in the service sector support-
ing the gold sector. For every person em-
ployed in the gold sector, it is estimated
there are 10 other dependents in the coun-
try. This means the gold sector is support-
ing around 2.5 million people and still re-
mains South Africa’s third largest mining
sector,” said Cutifani.
Bheki Sibiya, recently appointed presi-
dent of Chamber of Mines (the chamber
acts as a conduit between its 50 mem-
bers, who, in terms of value and volume,
produce 80% of the output of the mining
industry) said: “We have 130 years of min-
ing history and with our mineral deposits
we have another 150 to 200 years of min-
ing in the country.”
The cost of gold reached an all time
high in April 2010 of more than $1,500/
oz, but the volatility and perhaps an over-
valued rand are not providing the margins
that the industry hoped.
However, a century ago miners were
crippled by the inability to extract the gold
from the ore; then the introduction of cya-
nide technology and deeper mining trans-
formed a dead industry to the greatest
gold fields in the world.
Perhaps with newer technologies,
changes in organizational structures and
labor relations, South Africa’s treasure
may be mined for decades to come.
6 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 7
South African Mining South African Mining
South Africa is Open for Business findings of these audits and the alization. We had a national general coun-
major legislations and processes sel of the ruling African National Congress
that will be put in place as we move where this issue was tabled. It was decided
Interview with Susan Shabangu, Minister of Mineral Resources forward?
that, given that it has never gone through
the process of policy development, for the
When I joined the industry there was a first time the youth league would table the
lot of noise about corruption and malad- item for discussion. It was decided further
ministration. I then put a moratorium on that an independent research study be
Can you outline the Minis- Currently South Africa is a
new prospecting licenses and ordered the done to see if it is a viable option for South
try’s key initiatives intended to resourcebased economy. What department to conduct an audit. During Africa, and the policy will be debated and
help the mining industry navi- potential do you see for value the audits, one of the key findings was discussed in 2012. But at this juncture, na-
gate through some of the chal- added mineral operations in that the current system we had was not tionalization is not a government policy.
lenges that have arisen since South Africa? adequate to deal with the challenges faced It is an issue that has been tabled at the
the end of Apartheid? South Africa has been a country by the industry. level of the political party. I am confident
that has been exporting its com- For instance, we have seen double to say that the policies we are implement-
Let’s look at the history and evo- granting; two companies have been given
modities for many years with no value ing currently are the correct policies and
lution of the industry. During the era the same prospecting right, which has cre-
added. We have put together a docu- as government.
leading up to 2004 we succeeded in ated problems in determining who owns
ment that deals with a beneficiation We will continue to make sure that the
profiling mining in South Africa during the land. We also saw our systems were
strategy. We have taken it to govern- interest of the economy of South Africa is
an extremely difficult time. With the very weak as there was a lack of use
ment and to cabinet with the intention taken care of. If we say we want to create
end of Apartheid, came the need to of adopting it as new government of technology, which resulted in a lot of jobs and attract investment, we are mind-
rewrite the laws of the country and to policy. It is a consensus document paperwork. By moving to an electronic ful as government and as a country what
create the Mineral and Petroleum Re- reached by all parties in government, system we have identified other issues, is needed to grow the economy of this
source Development Act (MPRDA) to labor and industry. We have set clear and we have discovered people who have country and hence the issue of attracting
replace the Minerals Act (1991). targets and one of the targets is to been granted licenses without a paper trail investment and hence vis-à-vis nationaliza-
In 2009 the industry was faced create 40,000 jobs this year through and in those cases we have engaged with tion cannot be ignored. These are issues
with the financial crisis and subse- the mining sector. them to revisit their application, which in we can debate, but we have to bear in
quently this led to the development of There has been a misperception in some cases rights have been revoked. We mind that attracting more investment into
Mining Industry Growth, Development, the industry; the belief that a mining have also identified a lack of environmen-
South African economy is very critical.
Employment Task Team (MIGDETT) to look not been achieved and how to advance the company would be compelled to benefici- tal management plans, which is a condi-
at how best we can grow the industry, cause of transformation. For instance, ate. This is not our policy. Our policy is tion for the granting of a license.
As a result of the audits findings and
Despite some of the issues we
how can jobs be saved and created and the 2004 mining charter stated all mining that when there are other companies in the
companies must be transformed and em- value chain that want to beneficiate, mining the challenges in terms of the act, which have talked about, South Africa has
to link this with the new growth path which
aims to create 5 million jobs in the next 10 powered and it was expected that every companies must not say they are locked are currently being reviewed, we issued by far the greatest mineral wealth,
years. MIGDETT also aims to take forward mining house achieve an interim target of into long-term agreements with other com- a moratorium for six months as we could a constitutional democracy, a sta-
the objectives outlined in the MPRDA. In 15% black ownership by 2009 and a final panies that export their products. not continue allowing applications coming ble political environment and some
2009, the mining sector saved 20,000 target of 26% black ownership by 2014. We need commodities available for lo- in when we had challenges around pros- of the top financial institutions in
Reaching only 9% in 2009, the target was cal production and local manufacturing. I pecting licenses. It is a process that has
jobs which could have been lost in the fi- the world and really has the oppor-
nancial crisis. not achieved. If we look at transformation, am satisfied to say we have seen a lot of identified the gaps and we unveiled the
the issue of human resources as per char- companies that are interested to come to electronic system in April 2011 to allow tunity to be at the forefront of the
This year we will be reviewing the act global arena. As a final question,
ter targets saw companies employing more South Africa to build steel plants and refin- transparency.
as a whole and we will look at the type
white women. In South Africa our constitu- eries. Our policy of beneficiation is going The system allows people to apply on- what would be your message to the
of legislation needed for the industry to
move forward. This is an act that was tion pertaining to the issue of women in to work. The mining sector has responded line and also view their existing prospect- readers of E&MJ about the Depart-
the industry is not based on color and the positively. ing and mining rights. All the companies ment of Mineral Resources and the
done during the transition of the industry,
mining industry has manipulated the clause The president has called for sustain- who have been granted rights are on our future of the South African mining
promulgated in 2004 with many stakehold-
and has used white women to achieve their able jobs and to create a living wage as system. What exists in the department can
ers participating. This was done during a industry?
targets. We need to make sure that more well as decent fringe benefits and this cre- be found by everyone rather than relying
difficult time. It was a new democracy and South Africa is a mining destination.
black people are involved in the industry in ates an opportunity for more professional on officials. We need to make sure our cur-
there was no trust amongst industry, gov- Mining is not a sunset industry, but a
the technical and professional areas. We and technical people to come into the sec- rent commodity opportunities are applied
ernment and labor. for in a way that takes our economy for- sunrise industry. Our legislative frame-
need to look at mining companies applying tor. The participation of many companies
Now we have reached a point of matu- in skills development is commendable. We ward and that makes our economy grow work is conducive to investment. We are
scholarships to young black people and
rity and we have identified many gaps in to women. We have also discovered the are not yet there. We still need to create consistently by creating certainty in the democratic and a country that recognizes
the act. We believe the mining industry is issues of sustainable development were the jobs and grow the industry, but we are industry. human rights, offers stable financial insti-
the backbone of South Africa, so now we very weak and not occurring in a coher- on the right track. Beneficiation will cre- I am confident that moving forward we tutions and continuously responds to the
have to determine how best we grow this ent way. The legislation and the charter ate new industries and create the needed will be able to deliver a transparent ser- challenges of the world. Right now, we are
sector. are fairly new, and we have had to revise jobs in South Africa, which will drive the vice that meets the needs of the industry reviewing the mining act. This is a recogni-
the charter and act to see why they could economy forward. as a whole. tion that the world is dynamic and changes,
South Africa has set a target of not achieve their targets. One of the key hence our legislation and our laws need to
26% black ownership of its mines problems was the lack of mechanisms for Since your tenure, the Minis- One of the most influential fac- respond to the changes of the world.
by 2014 and current reports indi- annual evaluation of target performance. I try has been commended on the tors impeding international invest- There are a lot of opportunities; we
cate we are not on track to meet am now satisfied with the current mecha- have 60 different minerals in our soils.
streamlining of the mineral pro- ment is the issue of nationalization.
nisms we have put in place. To ensure that Anyone who has an interest in South Af-
this requirement. Do you think this cesses to remove regulatory un- Can you comment on the ministry’s
on an annual basis targets are met, we are rica should know that we are transforming
is a possible transformation? checking to ascertain we can assist and certainties and bring transparency position? the industry and we are opening up to the
Through MIGDETT we are examining is- identify any challenges in the implementa- and stability to the mining sector. First of all, I must highlight that in South world and trying to be as transparent as
sues of transformation to identify what has tion of the program. Can you outline some of the key Africa, government policy is not for nation- possible. We are open for business.
8 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 9
South African Mining South African Mining
South Africa is Open for Business findings of these audits and the alization. We had a national general coun-
major legislations and processes sel of the ruling African National Congress
that will be put in place as we move where this issue was tabled. It was decided
Interview with Susan Shabangu, Minister of Mineral Resources forward?
that, given that it has never gone through
the process of policy development, for the
When I joined the industry there was a first time the youth league would table the
lot of noise about corruption and malad- item for discussion. It was decided further
ministration. I then put a moratorium on that an independent research study be
Can you outline the Minis- Currently South Africa is a
new prospecting licenses and ordered the done to see if it is a viable option for South
try’s key initiatives intended to resourcebased economy. What department to conduct an audit. During Africa, and the policy will be debated and
help the mining industry navi- potential do you see for value the audits, one of the key findings was discussed in 2012. But at this juncture, na-
gate through some of the chal- added mineral operations in that the current system we had was not tionalization is not a government policy.
lenges that have arisen since South Africa? adequate to deal with the challenges faced It is an issue that has been tabled at the
the end of Apartheid? South Africa has been a country by the industry. level of the political party. I am confident
that has been exporting its com- For instance, we have seen double to say that the policies we are implement-
Let’s look at the history and evo- granting; two companies have been given
modities for many years with no value ing currently are the correct policies and
lution of the industry. During the era the same prospecting right, which has cre-
added. We have put together a docu- as government.
leading up to 2004 we succeeded in ated problems in determining who owns
ment that deals with a beneficiation We will continue to make sure that the
profiling mining in South Africa during the land. We also saw our systems were
strategy. We have taken it to govern- interest of the economy of South Africa is
an extremely difficult time. With the very weak as there was a lack of use
ment and to cabinet with the intention taken care of. If we say we want to create
end of Apartheid, came the need to of adopting it as new government of technology, which resulted in a lot of jobs and attract investment, we are mind-
rewrite the laws of the country and to policy. It is a consensus document paperwork. By moving to an electronic ful as government and as a country what
create the Mineral and Petroleum Re- reached by all parties in government, system we have identified other issues, is needed to grow the economy of this
source Development Act (MPRDA) to labor and industry. We have set clear and we have discovered people who have country and hence the issue of attracting
replace the Minerals Act (1991). targets and one of the targets is to been granted licenses without a paper trail investment and hence vis-à-vis nationaliza-
In 2009 the industry was faced create 40,000 jobs this year through and in those cases we have engaged with tion cannot be ignored. These are issues
with the financial crisis and subse- the mining sector. them to revisit their application, which in we can debate, but we have to bear in
quently this led to the development of There has been a misperception in some cases rights have been revoked. We mind that attracting more investment into
Mining Industry Growth, Development, the industry; the belief that a mining have also identified a lack of environmen-
South African economy is very critical.
Employment Task Team (MIGDETT) to look not been achieved and how to advance the company would be compelled to benefici- tal management plans, which is a condi-
at how best we can grow the industry, cause of transformation. For instance, ate. This is not our policy. Our policy is tion for the granting of a license.
As a result of the audits findings and
Despite some of the issues we
how can jobs be saved and created and the 2004 mining charter stated all mining that when there are other companies in the
companies must be transformed and em- value chain that want to beneficiate, mining the challenges in terms of the act, which have talked about, South Africa has
to link this with the new growth path which
aims to create 5 million jobs in the next 10 powered and it was expected that every companies must not say they are locked are currently being reviewed, we issued by far the greatest mineral wealth,
years. MIGDETT also aims to take forward mining house achieve an interim target of into long-term agreements with other com- a moratorium for six months as we could a constitutional democracy, a sta-
the objectives outlined in the MPRDA. In 15% black ownership by 2009 and a final panies that export their products. not continue allowing applications coming ble political environment and some
2009, the mining sector saved 20,000 target of 26% black ownership by 2014. We need commodities available for lo- in when we had challenges around pros- of the top financial institutions in
Reaching only 9% in 2009, the target was cal production and local manufacturing. I pecting licenses. It is a process that has
jobs which could have been lost in the fi- the world and really has the oppor-
nancial crisis. not achieved. If we look at transformation, am satisfied to say we have seen a lot of identified the gaps and we unveiled the
the issue of human resources as per char- companies that are interested to come to electronic system in April 2011 to allow tunity to be at the forefront of the
This year we will be reviewing the act global arena. As a final question,
ter targets saw companies employing more South Africa to build steel plants and refin- transparency.
as a whole and we will look at the type
white women. In South Africa our constitu- eries. Our policy of beneficiation is going The system allows people to apply on- what would be your message to the
of legislation needed for the industry to
move forward. This is an act that was tion pertaining to the issue of women in to work. The mining sector has responded line and also view their existing prospect- readers of E&MJ about the Depart-
the industry is not based on color and the positively. ing and mining rights. All the companies ment of Mineral Resources and the
done during the transition of the industry,
mining industry has manipulated the clause The president has called for sustain- who have been granted rights are on our future of the South African mining
promulgated in 2004 with many stakehold-
and has used white women to achieve their able jobs and to create a living wage as system. What exists in the department can
ers participating. This was done during a industry?
targets. We need to make sure that more well as decent fringe benefits and this cre- be found by everyone rather than relying
difficult time. It was a new democracy and South Africa is a mining destination.
black people are involved in the industry in ates an opportunity for more professional on officials. We need to make sure our cur-
there was no trust amongst industry, gov- Mining is not a sunset industry, but a
the technical and professional areas. We and technical people to come into the sec- rent commodity opportunities are applied
ernment and labor. for in a way that takes our economy for- sunrise industry. Our legislative frame-
need to look at mining companies applying tor. The participation of many companies
Now we have reached a point of matu- in skills development is commendable. We ward and that makes our economy grow work is conducive to investment. We are
scholarships to young black people and
rity and we have identified many gaps in to women. We have also discovered the are not yet there. We still need to create consistently by creating certainty in the democratic and a country that recognizes
the act. We believe the mining industry is issues of sustainable development were the jobs and grow the industry, but we are industry. human rights, offers stable financial insti-
the backbone of South Africa, so now we very weak and not occurring in a coher- on the right track. Beneficiation will cre- I am confident that moving forward we tutions and continuously responds to the
have to determine how best we grow this ent way. The legislation and the charter ate new industries and create the needed will be able to deliver a transparent ser- challenges of the world. Right now, we are
sector. are fairly new, and we have had to revise jobs in South Africa, which will drive the vice that meets the needs of the industry reviewing the mining act. This is a recogni-
the charter and act to see why they could economy forward. as a whole. tion that the world is dynamic and changes,
South Africa has set a target of not achieve their targets. One of the key hence our legislation and our laws need to
26% black ownership of its mines problems was the lack of mechanisms for Since your tenure, the Minis- One of the most influential fac- respond to the changes of the world.
by 2014 and current reports indi- annual evaluation of target performance. I try has been commended on the tors impeding international invest- There are a lot of opportunities; we
cate we are not on track to meet am now satisfied with the current mecha- have 60 different minerals in our soils.
streamlining of the mineral pro- ment is the issue of nationalization.
nisms we have put in place. To ensure that Anyone who has an interest in South Af-
this requirement. Do you think this cesses to remove regulatory un- Can you comment on the ministry’s
on an annual basis targets are met, we are rica should know that we are transforming
is a possible transformation? checking to ascertain we can assist and certainties and bring transparency position? the industry and we are opening up to the
Through MIGDETT we are examining is- identify any challenges in the implementa- and stability to the mining sector. First of all, I must highlight that in South world and trying to be as transparent as
sues of transformation to identify what has tion of the program. Can you outline some of the key Africa, government policy is not for nation- possible. We are open for business.
8 E&MJ • JUNE 2011 www.e-mj.com www.e-mj.com JUNE 2011 • E&MJ 9
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