Anglo American CEO Mark Cutifani.
Photo by: Creamer Media's Donna Slater
JOHANNESBURG (miningweekly.com) – The green hydrogen footprint being developed by Anglo American could be extended to provide low-cost and efficient energy to local communities.
Anglo, which is advancing towards using green hydrogen to replace diesel in the huge haul truck it is building at Anglo American Platinum’s Mogalakwena mine in Limpopo, has presented a well-received strategy of spreading its hydrogen footprint in support of local people.
Using the water in unused mine shafts as batteries is being earmarked to help with the generation of diesel-replacing green hydrogen over the long term. Such water batteries, which operate on a similar principle to Eskom’s large pumped storage schemes, come within a hair’s breadth of being as efficient as lithium-ion batteries.
Embracing these opportunities forms part of Anglo’s much larger and further-reaching partnership with global renewable energy company EDF Renewables to generate 3 GW to 5 GW of green electricity.
Know-how to bring about these value-enhancing possibilities has been developed against the background of Anglo opting to spend close to 10% of its gross revenue on technology, innovation and research and development in recent years, compared with only 2% in 2013.
This comes atop mining expenditure’s major positive economic knock-on effects, highlighted by every R1-million spent on mining production adding R1.3-million to South Africa’s gross domestic product, and providing the government with R330 000 in revenue.
The capital intensive nature of mining, which requires support for a wide range of local goods and services, renders feasible the target of creating five jobs outside of the mine gate for every one job created inside of it.
Moreover, the green hydrogen technologies emerging open the way for South Africa to become a springboard of new technology into Africa, and work is being done at the highest level to bring about local industrialisation and local procurement.
Community job creation could also be enhanced by the provision of energy, water and road infrastructure to facilitate agricultural production, improve crop yield and streamline the transport of product to market, which generally saps up close to a third of the revenue generated.
These are among the very many points highlighted by Anglo American CEO Mark Cutifani during an interview with Mining Weekly on the eighth floor of Anglo’s impressive new ‘green’ corporate offices at 144 Oxford Street, Rosebank, Johannesburg.
Cutifani, who will be handing the Anglo baton to CEO-designate Duncan Wanblad at the end of June, elaborated on the wide range of subjects that were raised at last week's South Africa Investment Conference, where Anglo announced that it would be investing R100-billion in South Africa over the next five years.
As revealed during the interview, Anglo is poised to spend even more than the R100-billion, owing to the R100-billion not including the upcoming capital outlay that the EDF Renewables partnership will engender.
The partnership with EDF will centre on the development of a network of on-site and off-site solar and wind farms to provide around-the-clock renewable energy to Anglo's operations. In itself, it will stimulate the development of new economic sectors, local production and supply chain activity.
Much of Anglo’s innovation step-up has been made possible by spending something like $1.5-billion a year since 2013, compared with $300-million to $400-million prior to Cutifani taking office.
Mining Weekly: Has this investment helped to advance energy transition?
Cutifani: Absolutely. It’s the key. The renewables, the new battery concept, using the deep-water unused shafts. It will help us with the trucks to get rid of diesel over the long term. It touches on all of those points.
Mining Weekly: What are the benefits of the regional renewable energy ecosystem approach in your partnership with EDF Renewables?
Cutifani: Very simply put, if you ask how South Africa can build an energy system that gets best efficiency out of renewables, the idea is let's build windmills where there’s lots of wind – East Coast and West Coast. Let's put solar panels where there's lots of sun – Northern Cape. Let's use facilities we might have, or infrastructure we've got in the mines, to help with other solutions. In our mines that are flooded, we can use the water as a battery, i.e., you generate sun energy all day, and maybe 50% of that goes to running the plants of the mines, the physical assets, and you've got excess capacity that you use then to pump water out of the mine into a dam. Then at night, you let the water from the dam run back into the mine, and you've got a hydropower system. A mine used as a battery is only 2% less efficient than a lithium-ion battery. It's unbelievably efficient, and we've already got the water in the mine. We don't know what to do with it. So, we’re turning a benign resource that is probably considered a nuisance into an active energy resource for the country that is environmentally friendly. You do no worse than what we're currently doing, and if anything, it will pay for rehabilitation. It’s a real positive. We then looked at that and said, okay, but where you would put that energy generation is not necessarily the right position, because you still have to get the power from A to B. If you don't have distribution networks, then that might not be the best place, so you might be better off putting your windmills at the second-best site, where you've got the power lines, to be able to transfer the energy to other places. That's what I mean by integrating what we've got with what we could have, in making that system work. Then what we’ll do is we’ll add 3% to the energy grid of South Africa, and the actual capacity that we will provide is somewhere between three and five gigawatts. That's big, and the old rule of thumb is about a billion rand a gigawatt. As long as you've got powerlines, Eskom can use that energy where they get it from or somewhere else on the grid. We give Eskom a solution. What we're asking for in terms of our footprint, we want credit for the windmills and everything that we build on the grid, but then we'll take energy from the local sources, depending on where it comes from, get some credit for the capital we've put into the system, lower operating costs, and get more reliable energy supply. What I'm happy to do with the energy from the mine water underground, which is moved up and down each night, is to use it to generate hydrogen, and besides using it to replace diesel in the truck, also extend our hydrogen footprint to the local communities, who get low cost and efficient energy. That's what we're talking about, and by the way, South Africa reduces its overall footprint by 3%, in terms of the global climate change commitments, and maybe we can actually use some of that $8.5-billion in helping to build this network, but we've got big investment funds that will fund it.
Mining Weekly: And you can go ahead with this now?
Cutifani: The strategy is well supported but what we have to do is the detail. We’re probably at concept, and EDF will now help us with scoping, prefeasibility and feasibility. The joint venture would operate the assets, and we would look at who's best positioned. If it's an asset that sits inside the platinum fence, then maybe the platinum guys should operate and interface with Eskom and the joint venture oversee that, or if it's a greenfield site, maybe EDF have got the best skills to run that new greenfield project, but it's very flexible.
Mining Weekly: Just looking at those disused mines, what percentage of the 3 000 megawatts or 5 000 megawatts could come out of those mines?
Cutifani: It's not a new energy source from the mines. All you're doing is taking the solar energy, putting it into the water, and storing it in the water. The unused mines would be part of the 3 GW to 5 GW. Let's call it five gigawatts. It'd be 10% to 20% of that, that might be subject to the storage. It wouldn't be bigger than that.
Mining Weekly: Anglo reported during its last sustainability report that the livelihoods of many thousands of people living around the communities can be uplifted. How would this be done?
Cutifani: What we're saying there is that as industries automate to maintain efficiencies, they will ultimately not be in a position to offer as many jobs. For a community to want to support the mining development, there have to be other jobs that are created to replace the lost jobs – plus, plus. We’re saying we can be the catalyst to create five jobs off site for every one job on site. These jobs can be created by supply to the mine, and the other functions that come with that, because you don't supply to one mine, but to multiple mines. The jobs can be created from the industries that arise as a consequence of the mine. They arise when infrastructure is put in place. Let's say with energy, water, and roads, you can facilitate more agricultural production, where they've got more water, and Mogalakwena’s a good example. If you can improve crop yields enough, then the farm can become a more commercial exercise. Then they need to get product to market. In many cases, it costs up to 30% of the revenue they get from selling the crops just to get it to market. Can you establish transport links that give them more effective route to market? Health facilities, local health facilities, our job on Covid, getting people vaccines, giving them access to PPE, food packs, all those sorts of things help communities. In terms of businesses, are there new things that we can do in those communities? Developing really practical things – that’s ultimately how we did well in that five jobs off site for every one job on site. If we're not doing that, then why would a community support a mine if all we do is make noise, dig holes and create a lot of dust in the process? Despite me being able to see the beauty of a big hole in the ground, and the engineering excellence involved, there aren't many people who share that view.
Mining Weekly: Anglo informed the South Africa Investment Conference that it would be spending R100-billion in South Africa over the next five years. What are the main areas of expenditure?
Cutifani: The R100-billion includes all of our mine development for the next five years. It's all forward-looking. A lot of it is sustainability capital, new projects, Mogalakwena expansion, Venetia expansion and the energy transition. The dense media separation – DMS – technology work at Kumba Iron Ore, and the work on improving efficiencies. If we invest in Transnet, for example, that would be included in there. We've also got the trucks and hydrogen which comes with the Mogalakwena strategy, the declines. Those new investments are all part of that R100-billion.
Mining Weekly: The concept of the shared value that mines generate is grabbing headlines these days. The R47.5-billion worth of value that Anglo has just shared locally, where did that go?
Cutifani: It’s what we spent on things like earthmoving, pipework, different materials, local services, cleaning, looking after ground, security, and what we procure from local contractors. Important projects are always those you can do with labour and are supportive of the local communities. At Kumba Iron Ore, if we buy a certain brand of drill bit, they've made a commitment to sharpen and make the drill bits in the local community. There's about 10 or 15 jobs, and those sorts of things. Anglo is always looking to do procurement deals that bring the work close to the community, which is where the community gets the benefit. At Kumba, the former CEO Themba Mkwanazi was effectively the head of the Chamber of Commerce, where we were bringing all the enterprises that we work with into a local chamber and looking at how they can help them extend their businesses, talk to each other, connect, so one is supporting the other in the work they do. We get a much better feel for what's important in terms of promoting and supporting local businesses. We help them and give them advice on how they might get other businesses in the local area. That's been a fantastic initiative. We need to replicate those sort of models with the community around Venetia. But that's the logic and those numbers, I can't break down in detail, but they are the sorts of projects that we're spending money on, and we’re trying to do more of that.
Mining Weekly: Regarding government policy, you told the South Africa Investment Conference that you would recommend integrating government policies with business and working together. How do you envisage this being done?
Cutifani: In energy, you've got Mineral Resources and Energy Minister Gwede Mantashe on policy. On assets, infrastructure and Eskom, you’ve got Public Enterprises Minister Pravin Gordhan. On localisation, you've got Trade, Industry and Competition Minister Ebrahim Patel. On the environment and emissions from the energy stations, you've got Forestry, Fisheries and the Environment Minister Barbara Creecy, and on finance and fiscal policy, Finance Minister Enoch Godongwana. Making sure that work is integrated and, from a business perspective, give these Ministers the feedback on what the integration looks like from our perspective, I think is an important contribution we can make. I think that's what Pravin is trying to do, Gwede’s trying to do it. Sometimes they may not talk to one another as well as they could, and I don't mean that as a specific statement, but just as a generic statement, and I think we have a responsibility to be clear about where we see the gaps, and give them a practical demonstration of that, and suggestions on how they could close the gaps, because the people that I know in the Ministries are all committed to trying to improve things, but I think we, as business, have got to be really clear in our feedback on how they can improve, and what that improvement might look like. On energy, water, industrial policy, and more generally, localisation through Ebrahim, we can be clear, and we have to be clear about what we're looking for, so that they can apply what works and what doesn't work. We're not quite there yet. I'll give you a good example. When President Cyril Ramaphosa did the strategy for former President Jacob Zuma in the Planning Commission, I thought the strategy was a great piece of work. But, in my view, the strategy then didn't get to be plans for each of the Ministerial departments, because the Minister of a department should have been building a policy framework and doing the work around implementing the strategy – and I don't think that ever happened. What I think we have is a strategy but not a plan, and they called it the National Development Plan. It wasn't a plan, it was a strategy. The plan comes when you've got people's names to projects that actually deliver outcomes, and they're time-bound, you know exactly what the scope is, and the cost. It's costed and it’s delivered. That's a plan, and we never got to the plan. My conversation about integration of those pieces is code for turning that strategy into a plan and have Ministers accountable for what has to be delivered in their areas, and then help them understand how to put a plan together and how to execute.
Mining Weekly: When you say help them, who should help them?
Cutifani: Me, others. I've said that I'm happy to put my finger in the pie and help wherever I can. Again, I'm not going to go and say you should do this. If somebody wants support, then I'm happy to provide help and to work with them as best I can. But I also understand that we've got to be careful of personal arrogance, where we tell people what they should do, and how they should do it. They tend not to take that view or perspective. You're better off asking how can we help and then help them on the pieces they see as important, which is what we did with the Eskom CEO, Andre De Ruyter. We might have had some different perspectives when we got into the detail of the conversation that we could put up for consideration, but again, remember we're not accountable, they’re the accountable individuals, so we can give ideas and suggestions, and provide answers to the questions they are asking us, but in the end, it's up to them to decide whether they are going to take them up and execute them. One thing I know is you cannot be arrogant and try and tell an operator, or the person accountable for the work, what they have to do, but you can give them ideas, suggestions and you can even construct a possibility. But if they say no to that, but they’ll take this, then you need to ask how you can help them make that work.
Mining Weekly: Can you give us some insight into the benefits that you can derive from this Hydrogen Corridor Project?
Cutifani: The most obvious one is if we've got a plant next to Mogalakwena, generating hydrogen to replace the diesel, if we can generate more hydrogen, or more energy from the hydrogen from the solar plant, and feed into the local community, that solves the headache for Eskom, and provides a local community with lower, more effective energy for them. Those footprints change, and we can help them with the communities. We don't have a land problem, we have a development problem, we’ve got lots of land, and even if you distribute – not redistribute – we can cover everybody, but you can't do anything with the land. You got to have infrastructure, water, energy, transportation, those sorts of things to make the land payable to support people. Being part of that solution, I think is really important. Development ultimately becomes an answer to the expropriation-type stuff, you don't want to go there, it destroyed Zimbabwe, but the issues are real. So how do you do that. It's a bit like handing land back over to the locals on this basis we get to carry out our activities, on a planned basis. We'll agree the plan each year and together, we will be partners with the land being what we share in common. From all accounts that's worked extremely well.
Mining Weekly: You mentioned during the South Africa Investment Conference that Anglo is also helping school children. How are you doing that?
Cutifani: Our schools programme involves effectively adopting schools in the regions where we operate and to try to get them to top quartile performance. There are some great case studies on what we've done with local schools. We train, we go through how to run a business, how to maintain physical assets, keep the buildings in good shape, cut the grass, and do all those sorts of things. We're giving schools human resource support, performance review assistance, succession planning guidance, how teachers can be held accountable for delivery, and how to run the schools as a business. The best statistic I saw was a school going from an 18% pass rate to an 80% pass rate. The numbers are fantastic. Helping kids to put themselves in position where they can bid for jobs. The ultimate test is whether we have helped the local communities to achieve what they want to achieve, and helping kids at school is one way and helping them to bid for jobs they might not otherwise get exposure to.
Cutifani highlighted that Anglo would be continuing to increase its footprint downstream in the fields of recycling of platinum group metals and the circular economy.
“There are certain areas that we can play in on the recycle side that could be very profitable, particularly in a world that's looking for transition metals,” he said.