On-The-Air (03/09/2021)

3rd September 2021 By: Martin Creamer - Creamer Media Editor

On-The-Air (03/09/2021)

Every Friday, SAfm’s radio anchor John Gericke speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Gericke: Yet another mining company this week announced the paying over of a huge sum of tax to the fiscus.

Creamer: Impala Platinum this week reported that it will give the tax man six times more money than it did last year. I am sure the fiscus was anticipating more money, but not six times more money. To the South African government alone goes R13-billion, that is R10-billion in taxes and R3-billion in royalties.

We also look at the riches, because Impala Platinum also operates in Zimbabwe and the total to governments is R19,1-billion. If you look at what has gone to government, community and employees it is R44-billion. All over the place, the mines are just bursting with cash, thank goodness, at this time of Covid. We saw a couple of weeks ago, Sibanye-Stillwater for the half-year giving R10-billion to the fiscus.

We saw Harmony Gold this week give over R1-billion. It is marvellous the taxes that are flowing in, because at this point in time, South Africa needs every tax rand that it can lay its hands on.

Gericke: Gold mining company Harmony this week boosted the amount of solar power it is planning to generate.

Creamer: It is amazing how seriously the mining companies the world over are taking climate change. All of them are going for decarbonisation in a massive way. When they do that, they talk of a deadline in 2050, but you can see that they are going to beat that deadline, because they are already moving very fast.

One of the things that they want to get energy from is the sun and the other is the wind. A lot of them are already getting water energy, hydropower, depending on where they operate from. Harmony Gold, which we expected to go for 30 MW in the Free State, said this week they would be going for much more than that. They have been talking about 30 MW which they were hoping to get from an independent power producer, which means they don’t have to outlay a cent in capital but just agree to buy a certain amount of electricity and this would be 30 MW regularly and pay for that.

But now they are talking about a further 73 MW and this time around they might build that for themselves. If these mining companies do that, over a number of years, once they have paid off their capital amounts on the renewable energy, they are going to drop their energy costs dramatically. At the moment the energy cost imposed by Eskom is very high. The Eskom electricity tariff has gone up 500% in the last 10 years. Lowering the cost of electricity and ensuring power security is what is making the mines so exciting about renewable energy.

They want to generate their own energy, because not only is it the right thing to do to beat climate change and to be clean and green, but it also saves them a lot of money, and on top of the money saving is the certainty that generating your own electricity gives you. Energy uncertainty is always bad because you never know when you may have to close things down because of Eskom not delivering. So, all the way round, this is tremendous news that we are getting more and more renewable energy, generated by the mining sectors themselves.

Gericke: New gold mining projects worth nearly R8-billion were announced this week.

Creamer: This is a fantastic announcement that we have got new precious metals mining projects going ahead all the time. Impala Platinum is going ahead with R9-billion worth and they have got three others under study. This week, it was also very interesting to see Harmony Gold going ahead with R8-billion worth and, of course, happy to have bought the gold mines that previously belonged to AngloGold Ashanti.

For a long time AngloGold Ashanti had the Zaaiplaats extension on its project pipeline books and this week Harmony Gold announced that is not the only project they will go ahead with. The board has approved a capital expenditure of R4.5-billion on the Zaaiplaats  gold project, because that has a great return. Funnily enough, as they go deeper the gold gets better. So, going deeper could be cheaper. It also seems like the margins are going to be big.

Why it could be cheaper is because they have already got the Moab infrastructure there, they just have to put out new declines. They will also go ahead with a second multi-billion-rand project at Mine Waste Solutions and that is even better profit-wise. They call it a no-brainer investment, because they want to convert what is already on surface as tailings into gold. All they need is a larger tailings facility. They are also planning to go ahead with that  project, plus another project at Hidden Valley, in Papua New Guinea. That will give them an additional 550 000 ounces of gold a year.

You can see with Harmony Gold their profit margins are just going up dramatically. It’s an exciting gold company with a lot of expansion planned.

Gericke: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.