Local miners leverage existing infrastructure to extend operations

30th June 2017 By: Nadine James - Creamer Media Writer

Local miners leverage existing infrastructure  to extend operations

REDUCE REUSE RETREAT Mines are attempting to reduce costs by using existing infrastructure to mine new blocks, while supplementing revenue by retreating tailings

As a result of financial constraints, South African gold miners are looking to exploit their existing infrastructure to mine licensed blocks adjacent to existing operations, says mining engineering consultancy Ukwazi Mining.

Ukwazi underground engineer Hans Dippenaar notes that, in this way, miners will be able to increase production and revenue without amassing large capital expenditure costs, highlighting that the consultancy is working on such a project for gold miner Harmony Gold.

The project, which started in January last year, comprises two phases. The first phase, a feasibility study on optimising the life-of-mine (LoM), was completed in April. The second phase focuses on a mine design to determine the best method of accessing new blocks below the current operation using the current infrastructure, including the existing mine shafts. Dippenaar says this last phase is expected to be completed by July or August this year.

“Ukwazi, as both the mine design engineer and project manager, is developing the best possible design in terms of run-of-mine scheduling to ensure the most effective production over the extended LoM,” Dippenaar says.

Ukwazi business development manager Spencer Eckstein adds that, once the mine design has been “optimised”, Ukwazi might, depending on Harmony’s requirements, remain as an adviser during the execution phase.

Eckstein and Dippenaar have noted a slight uptick in gold-related projects globally in the last year, although Dippenaar points out that the majority of gold projects in South Africa have either been extension projects or tailings retreatment projects.

Eckstein adds that, with the commodities downturn, some gold mines looked to supplement their revenue by retreating their tailings. He notes that this is not a long-term solution, as “even large tailings dumps have a limited life”.

“There aren’t a lot of new projects,” adds Dippenaar, noting that this is partially owing to most of the easily accessible, shallow gold ore having already been mined.

He adds that, with the mines’ new focus on using existing infrastructure to save on costs, the only way for new projects to come on stream is for a gold discovery to be of a significant grade and/or size.

Regardless, he comments that the improved gold price – currently above $1 200/oz – is likely the cause of the gold sector’s increased activity, although he warns that, in South Africa, gold is priced in rands and, as such, the rand:dollar exchange rate has an effect on the value and feasibility of a project.

In terms of potential investment, South African projects require something of a perfect storm, Eckstein elaborates, referring to the rand:dollar exchange rate, the gold price and the size and/or grade of the deposit.

Since all these factors are rarely aligned, South African gold miners have had to improve in terms of managing uncertainty, he adds. “Companies have had to move away from relying on certain factors – a high gold price, a stable rand, good labour relations – being in their favour. They have had to adapt and find new ways of generating optimal production to produce the best returns for shareholders.”

Eckstein notes that, in their attempts to satisfy shareholders and maintain operations, gold miners have focused on “optimising existing operations, implementing cost-saving measures and improving labour productivity, where possible”.

He says the overarching uncertainty caused by macro- and microeconomic factors has been only marginally diminished by the slight arrest in the decline of the South African mining industry.

Dippenaar and Eckstein agree that the industry has “bottomed out”, but add that a proper recovery has yet to take place. “For now, it is apparent that the decline has slowed,” says Dippenaar.

Eckstein points out that the effects of South Africa’s decline are evident considering the uptick in worldwide gold production, citing the country sliding down the rankings from being the largest gold producer in the world 15 years ago, to it now being ranked seventh – according to a 2016 US Geological Survey report.

He warns that factors that affect mineral investment, such as labour unrest, sociopolitical issues and challenges in terms of credible, clean governance, are affecting South Africa, and the industry’s recovery largely depends on the country’s ability to manage these factors. The new Mining Charter published this month is also likely to have a chilling effect on the industry, with industry players needing to acclimatise, Eckstein adds.

Dippenaar notes that it has been, and remains, a difficult time for the mining industry, but notes that Ukwazi has “done well” to retain work and clients. He believes that the company is well positioned to capitalise on the next commodities boom.

Eckstein comments that Ukwazi is looking to expand into East and West Africa, where there have been significant gold discoveries – particularly in Kenya, which hosts a 1.3-million-ounce gold deposit grading 12 g/t. The company is also investigating opportunities in South America and Australia.

He highlights that Ukwazi has also expanded its services to include on-site services, which include technical support in relation to mine planning and the management of contractors.

Dippenaar concludes that Ukwazi remains, from a Southern African perspective, the largest mining engineering and planning consultancy, and describes its technical capabilities in terms of designing and planning opencast – including tailings projects – and underground operations as “unassailable”.