Although faced with, and cognisant of, the challenges of opencast mining, almost all African governments are mindful of the investment opencast mining could generate, which, in turn, will increase these countries’ gross domestic product (GDP).
For this reason, opencast mining is not likely to be abandoned soon, says Venmyn Deloitte mineral project adviser Godknows Njowa, explaining that this type of mining is frowned upon in western and other developed countries, particularly owing to the environmental concerns and associated risks that have been raised by affected shareholders, nongovernmental organisations and selected financial institutions.
Opencast operations offer large economies of scale and have lower capital cost requirements than underground opera- tions. Openpits also allow for large- volume operations, but enable smaller operations to start mining with limited financial resources, even if the plan is to eventually mine underground. In the current economic climate, projects with early cash flows and limited capital requirements are preferable and openpits provide for this possibility.
However, Njowa points out that most small to medium-sized African companies that are operating mines have little access to capital markets to enable them to use state-of-the-art mining equipment. This makes mining more costly than it would have been if technology-advanced equipment had been necessary.
Njowa believes that the skills shortage in the industry also remains a challenge that needs to be addressed. “Skills retention in Africa is a big problem because of the signifi- cant brain drain being experienced, owing to the fact that many African engineers, artisans and other skilled labourers are attracted to other mining destinations as a result of better opportunities, an increase in quality of life and higher salaries.
Potential for Growth
Most high-grade opencast deposits are already known or currently in opera- tion, but Njowa notes that there is still significant potential for opencast mining in the development of lower-grade bulk material deposits. “However, this needs to be coupled with technological development in terms of beneficiating these low-grade deposits,” he says.
Njowa adds that the openpits being developed in South Africa require a large capital outlay – although the outlay remains smaller than those of underground operations. As a result, many of these projects will be delayed or postponed for some time, owing to the current capital market crisis.
He further believes that contract mining has become more common in most small to medium-sized operations in the last decade. “Mining companies do not have to provide capital upfront to buy equip- ment, as a result of this operating model,” he says.
Njowa says the biggest area of potential growth for the opencast mining industry in South Africa lies in coal mining, as there is strong interest in this sector, owing to its strategic importance to the country.
“Where most bulk commodities have been adversely affected by the global downturn in many commodity prices, coal may be one of the commodities which registers strong growth in the number of proposed opencast mines, although they might be short-lived operations in some cases,” he concludes.