The development of green mining initia-tives and more environment-friendly projects will become an increasingly economically viable option for the mining industry, commentators indicate to Mining Weekly.
While, initially, it may be costly to initiate or implement environmental programmes to comply with South Africa’s environmental legislation, the long-term benefits a mining company could reap by going ‘green’ could be a more viable option for the industry, they suggest.
Environmental compliance and future cost considerations will become a mainstream business requirement and will impact on the mining industry because, to expand and grow, environmental issues need to be taken seriously or their access finance will be restricted, they add.
At the AngloGold Ashanti/Motjoli Resources Mining for Change workshop, in Johannesburg, Pan-African Capital CE Dr Iraj Abedian advocated the concept of mining and managing the environment as a joint production activity that could dovetail with other pursuits like the agriculture and light industry. (see also page 7 of this edition of Mining Weekly).
Emerging coal company Ecca Group CEO Dale Packham says that, as a mining company works towards greener mining, investors will become secure in the knowledge that, owing to South Africa’s stringent environmental procedures and directives around the environment, a company will be monitored and will operate in the right way.
Investment access is more readily available for environment-friendly projects. The concept of green finance and responsible investing has resulted in investors examining whether a company or mine is as sustainable as they should be.
Further, noncompliance with the environmental legislation, which is becoming increasing stringent over time, can also be costly over the long term to the mining industry and may result in the directors of the offending com- panies being held liable, companies shutting down, operation stoppages, delays or having licences revoked, huge legal bills, increased penalties, loss of investment and lawyers’ fees, all of which can be avoided.
During a project’s assessment process, mines are starting to consider the cost consequences of noncompliance with the environmental legislation, in addition to the direct costs incurred during the life-of-mine, says advisory firm Deloitte & Touche head of sustainability and climate change Duane Newman.
Further, high energy costs and pressures for sustainability are triggering environment-friendly mining and companies are realising that their operations could be more viable if they were more environment friendly.
The business case for the mining industry, known for its energy-intensive and expensive processes, was built on cheap electricity; however, owing to electricity price increases and the erratic supply South Africa faces, there is a drive to reduce the country’s dependence on coal and identify and examine alternative energy sources, says Newman.
“The rise of electricity prices is impacting on existing and future operations and many mining houses are examining the long-term cost curve of energy and challenges to the sustainability of the mine going forward,” he says.
This has resulted in some mining com- panies studying capital-intensive cogener- ation plant projects, which can be more cost effective in the long term, particularly if planned government policies come into play, such as increased tax breaks, incentives and carbon credit benefits.
However, renewable energy is still costly, compared with State-owned power utility Eskom’s coal-based supply. Solar energy currently costs about R2.20 KW/h, reducing 15% a year, while Eskom’s coal-based power is charged at R0.60 KW/h, increasing 25% a year.
It also seems the South African industry will only seriously consider renewable energy once coal-based electricity runs out or becomes too expensive, says coal mine and solar photovoltaic project developer Dr Michael Seeger.
Mines constitute the biggest industry in South Africa and have larger project budgets than smaller industries such as manufacturing, and, as they have the wherewithal, they will be forced to examine these solutions if they want to continue mining, he adds.
Packham agrees that new mines should start considering solutions to reduce electricity dependence on the national grid and generate their own electricity through alternative solutions that create a sustainable economy while mitigating the effect a mining oper- ation has on the environment.
“Electricity is the way forward and, if a mining operation has an independent power plant, particularly if it is a renewable solution, and has the ability to supply two mines, for example, it should not be too hard to find investments,” he says.
Renewable-energy generation can also be seen as another source of revenue for a mining company and becomes a commercial division for the company, harnessing wind, solar or biomass-produced energy.
Under Scrutiny
Newman says that, while environmental protection is increasingly being taken more seriously by mining companies, some issues still fall through the cracks, and mitigation requires the right team with the right skills asking the right questions and implementing the correct processes. Further, as all the skills and knowledge required cannot be sourced from a single organisation, specialists and partners should also be consulted.
Further, it is becoming difficult for mining companies to ignore or disregard regulations, as one is now seeing an integrated reporting journey in which the public and environ- mentalists demand one simpler, integrated report from organisations – combining the company’s financial results and historical information with reporting on its compliance with sustainability and environmental legislation. The more progressive companies are currently developing more transparent ways of reporting this information.
Centre for Environmental Rights executive director Melissa Fourie says a single system of environmental-impact assessment, incorporating integrated permitting to streamline and expedite the authorisation process, and implemented jointly by water and environment authorities, is required.
“The framework for this already exists in legislation promulgated in 2008 after many years of negotiation – all that is needed is for the Mineral Resources Minister to bring this legislation into effect. Instead, some mining companies are abusing the legislative delay to continue irresponsible behaviour with regard to environmental damage and unauthorised activities,” she says.
Increased funding and capacity within government are necessary to implement this streamlined, integrated authorisation process and improved and expanded com- pliance monitoring and enforcement.
However, she adds, such resources can be generated through a yearly fee payable by each permitted mining company and calculated according to their environmental risk profile and compliance history, as is practised globally.
“Greater scrutiny promotes better per-formance and more efficient, transparent and accountable reporting in the industry is required,” Fourie says.
Earlier this year, the Centre for Environ-mental Rights and the Open Democracy Advice Centre asked 30 of the largest mining companies to upload their environmental permits on their websites for ease of access by the public to see which rules apply to each mine; however, only two of those companies have agreed.
“The remainder cited the expense involved in uploading these permits, the ‘dangers’ of supplying too much information to the public or referred us back to the Department of Mineral Resources, which, on average, has provided documents in only 13% of applications under the Promotion of Access to Information Act,” she explains. “We do not accept these excuses and view this reluctance as a lack of commitment to transparent and accountable management. Permits should be public documents.”
Interrelated
Meanwhile, Nedbank Capital joint head of resource finance Peter van Kerckhoven says mining companies are realising the positive impact environment-friendly mining has in terms of creating good relations in the community as well as stability.
Van Kerckhoven says socioeconomic, environmental and sustainability elements are interrelated; however, environmental challenges and solutions continue to become more important in the lives of mining companies.
As mining companies are labour intensive and many are operating in rural communities, sound environmental practices and social upliftment initiatives are key to the sustainability of their own operations.
“Many of the submissions Nedbank Capital receive are built around creating sustainable projects in the communities in which the mine operates and creating socioeconomic developments in that community that will survive the existence of the life of the mine,” he says.
However, Ernst and Young’s report, ‘Business risks facing mining and metals from 2011 to 2012’, points out that maintaining a social licence to operate has become a more significant risk to companies, listing at number four in the 2011 to 2012 top ten business risks list.
There are a number of issues that can affect a company’s social licence to operate, including environmental performance, safety and land disputes.
“Difficulties can arise in relation to the environmental impacts of new and existing mining and metals operations. Issues such as the impact on biodiversity, water extraction, water pollution, air emissions, soil contami- nation and waste management are often a point of concern for local communities and regulators,” the report states.
Taking Control
Van Kerckhoven says mining companies are better suited to lead the way in developing sustainable projects than other industries, as they are more project orientated, have a larger budget to develop socioeconomic and environ-mental projects and have an on-the-ground capacity to manage and implement the project.
Anglo American Thermal Coal’s R28.1-million gypsum housing project, which was a joint winner in Nedbank Capital’s Green Mining Awards in the Environmental category, entails the use of gypsum waste products as building materials while the by-products from the gypsum baking pro- cess are potentially used in other applications, creating future business opportunities which are being explored.
The gypsum is recovered from dirty Anglo American and BHP Billiton mine water from coal mines in Mpumalanga and the project is part of the mining company’s aim to make its water reclamation plant a zero-waste and low-effluent facility.
BHP Billiton Aluminium South Africa’s Ongoye Forest project, the other joint winner in the Environmental category, involves restoring a 500 ha degraded and threatened forest and providing a sink for between 60 000 t and 125 000 t of carbon dioxide (CO2) over a 20- year period.
The project has the potential, through the use of indigenous tree species, to promote ecological restoration, as well as conservation of medicinal plants, Nedbank Capital explains.
First Quantum Minerals’ Kansanshi Mining’s conservation farming project, a runner-up in the socioeconomic category, is aimed at conserving and rejuvenating soil, while simultaneously improving food security. It involves minimal soil disturbance, crop rotation and using crop residues to increase the humus layer of the soil.
This project, started in 2010, has the potential to provide new sources of income for communities affected by mining activities, as well as to slow and possibly reverse deforestation.
Further, Ecca has bought into Australia-based environmental sustainability technology company Eestech’s technologies that significantly reduce the CO2 emissions into the atmosphere through the conversion of methane into CO2 as well as capturing CO2. Eestech’s technology specifically focuses on generating electricity from waste coal and biomass feedstock, says Packham.
The company has also invested in hybrid coal and gas turbine technology, which can significantly reduce fugitive gas emissions from underground coal mines and potentially save the coal-mining industry millions of dollars a year in reduced expenditure for waste coal.
The plant can use low-quality energy sources, high-sulphur and high-ash content coal, tailings, biomass or municipal waste as its fuel to generate power and turn waste into electricity. It can also potentially save on power and waste coal management costs, he says.
Meanwhile, a methane capture project has been implemented at Gold Field’s Beatrix mine, in Welkom. It has been registered by the United Nations Framework Convention on Climate Change as a Clean Development Mechanism project under the Kyoto Protocol, Mining Weekly reported in September.
The mine project captures methane gas at its source, which is then piped to the surface where it is either flared or used to generate electricity. It is expected that the carbon emissions at the operation will be reduced by 1.7-million tons of CO2 from 2011 to 2018.
Further, Coal of Africa Limited (CoAL), the South African National Parks and the Department of Environmental Affairs signed a memorandum of agreement, committing to the preservation of the Mapungubwe World Heritage site, near CoAL’s Vele colliery, in Limpopo.
The purpose of the agreement is to ensure the integrity of the historical site through biodiversity offset programmes, which include components of natural and cultural heritage conservation, tourism development and water resource management.
CoAL CEO John Wallington says that the company wants to set a standard in responsible mining, as future mining in the country is likely to increasingly venture into more sensitive areas.
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