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Macroeconomic factors, green metals demand and ESG impacting on mining investment

Amplats CEO designate Craig Miller

Amplats CEO designate Craig Miller

6th October 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Macroeconomic factors, demand for green metals and environmental, social and governance (ESG) endeavours are all factors that are influencing investment in mining, speakers outlined during the second day of the Joburg Indaba, which was held this week.

Anglo American Platinum (Amplats) CEO designate Craig Miller said the company had benefitted from the changing macroeconomic environment, with the just energy transition (JET) and need for reduced emissions resulting in increasing demand for platinum group metals (PGMs).

However, he emphasised that mining was cyclical and there was a need to be vigilant, as prices could fluctuate.

From an investment perspective, he averred that the PGMs opportunity lay in the role these metals would play in the green hydrogen space, with momentum in this regard gathering pace on a global level.

Moreover, this transition would impact on industrialisation, and with PGMs being a good industrial metal, the opportunity in this space was considerable, Miller highlighted.

Harmony Gold Mining Company FD Boipelo Lekubo said the global macroeconomic environment had provided both opportunities and challenges.

She expanded that challenges included supply chain disruptions and logistical and energy issues; however, the company was able to mitigate these and meet its stated objectives, as well as its production and cost guidance, through its approach of “managing what it can control”.  

Moreover, this was underpinned by a strong gold price, which the company expects to remain resilient going forward, given continuing geopolitical issues.

Lekubo also indicated that Harmony had a consistent hedging programme in place to manage downcycles.

Industrial Development Corporation of South Africa (IDC) Mining and Metals Strategic Business Unit head Thabiso Sekano said the entity had a research department that provided updates on macroeconomic and other local trends.

He emphasised that as a financier, the IDC needed to understand what clients were going through, to be responsive to their challenges and to the overall market.

Sekano added that the IDC was able to analyse commodity prices and better understand clients who were unable to pay at certain points, owing to the cyclical nature of mining.

ESG

Miller said ESG was the cornerstone of all the decisions taken by Amplats.

He emphasised that Amplats’ support for green hydrogen would be “fruitless” if its production processes were not decarbonised and were negatively affecting the environment.

In this vein, Miller highlighted Amplats’ parent company Anglo American’s partnership with EDF Renewables to jointly form Envusa Energy to develop a regional renewable energy ecosystem in South Africa.

As part of the agreement, Envusa Energy is launching a mature pipeline of more than 600 MW of wind and solar projects in South Africa, with Envusa Energy to supply Anglo American with a blend of renewable energy generated on its sites and renewable energy transmitted via the national grid.

Miller said Amplats would be a recipient of this, with about 30% of the energy it required, to assist in decarbonising and meeting goals that stakeholders require to invest in the company.

He added that Amplats’ ESG initiatives were linked to customer perception, with automotive manufacturers BMW and Ford, for example, supporting it, and therefore influencing demand for the company’s PGMs.

Lekubo said Harmony aimed to “mine with purpose and to leave a lasting legacy”.

She said ESG had always been entrenched in the mining industry, as it formed part of companies’ social licence to operate.

Lekubo emphasised that safety was a key element for the company, with this being an area it continued to focus on, and a key metric that investors looked at.

Sekano mentioned the importance of resilience in ESG.

He also informed that the IDC has a responsible funding principle, whereby it considered various factors around ESG, such as jobs, transformation, carbon footprint, JET plans, et cetera. This was then developed into a score, which impacted the interest rates charged by the IDC, he explained. 

GREEN METALS

Sekano said that while the IDC was commodity-neutral when it came to providing funding to companies, it was aware of the growing demand for the critical minerals needed for the energy transition.

Therefore, it had devised a strategy to advance its aspirations in terms of this, which included exploring funding projects in the rest of Africa.

As part of this funding on the continent, Sekano informed that the IDC considered how to redirect these to South Africa to start downstream industries in the country – “looking at the bigger picture of investment”.

Miller emphasised the considerable opportunity presented by green metals, and reiterated the importance of investment in market development to support this.

This includes examples such as Anglo American implementing a hydrogen-powered mine haul truck at its Mogalakwena PGMs mine in South Africa.

He also, once again, highlighted the need to mine responsibly.

Another theme that was emphasised throughout the event was the need to bolster exploration investment, with the country at a significant lack in this regard.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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