Wringing out value
Any Johannesburg resident who waxes sentimental about the disappearance of the old gold-mine dumps that are one of the city’s unique features needs to visit Krugersdorp and Randfontein to appreciate how ugly and toxic the dumps really are.
Those flat-topped dumps contain lowgrade gold that could not be extracted using the techniques available 100 years ago. They also contain sulphur and harmful heavy metals. On the western Witwatersrand they contain substantial uranium.
Companies like DRDGold, Mintails and Sibanye Gold are making money for their stakeholders by demolishing these dumps to extract the residual gold and can simultaneously claim credit for addressing the water pollution and harmful dust that they cause.
DRDGold has for many years invested in pipelines and processing facilities to treat dumps on the central and East Rand. On the West Rand, a succession of companies including Harmony Gold Mining, Gold Fields, Rand Uranium and now Sibanye Gold, which took over some of the Gold Fields mines three years ago, have spent about R800m over several years on defining the value and most economical methods of treating the dumps. But studies have been complicated by the weakness in gold and uranium prices in recent years.
Grant Stuart, Sibanye Gold’s vice-president for projects, says previous planners did not have the scale, grades and infrastructure that Sibanye is able to bring to this project, which makes it economically viable.
Sibanye’s Kloof, Driefontein and Cooke mines have 715 Mt of tailings material, containing about 6.5m oz of gold and 99m lb of uranium. There is more material in neighbouring mines’ dumps, which offer longerterm options.
Sibanye’s West Rand Tailings Retreatment Project is a strategy to take an initial 1.4 Mt/month of material for 18 years from the dumps on Sibanye properties to produce 100,000 oz of gold and 2.2m lb of uranium a year.
The sand will be blasted with hoses and carried in a slurry through pipelines to a central processing plant where the gold, uranium and sulphur will be extracted. The residue will be sent to a new tailings deposition site which will meet modern regulatory requirements.
The process is water intensive but most of the water will be recycled. Sibanye has a water treatment plant at Cooke mine which can produce 15-17 Ml of potable water a day at relatively low cost.
The plan will be implemented in phases to reduce capital and risk. It will cost about R9.6bn over three years to build the infrastructure, including about R1bn for a uranium treatment plant, and the new deposition site. It can be built onto existing infrastructure on the Sibanye properties.
If work started next year, first production would be in 2020. Expected capex and operating costs over the life of the project are US$476/oz for the gold, $34/lb for uranium and $62/t for sulphuric acid. Spot gold is about $1,350/oz, uranium is $25-$30/lb and sulphuric acid is about R1,200-R1,300/t (mostly for transport).
Nuclear power stations seeking security of supply will sign long-term uranium contracts at prices above spot prices.
Sibanye does not plan to fund the full capital cost. Stuart says it is in discussions with third parties which would fund the uranium and sulphuric acid portions of the circuit. But without those partnerships, Sibanye can go ahead with the gold extraction, using its existing processing facilities. This option would cost about R4.6bn initially and once the gold is extracted, the uranium and sulphur-containing material could be deposited on an existing tailings dam for later processing.
Stuart says there are social and environmental benefits to this project. It would create about 500 sustainable jobs and would move tailings which currently sit on permeable dolomite, creating various environmental hazards, to a single, well-managed facility on solid rock.
The process of getting community and regulatory approval for a new deposition facility in the area has been under way for at least six years, though it had to start afresh last year after Sibanye chose an alternative site in response to community concerns. Stuart says the proposed regional tailings storage facility will take 1.3bn t of material and the regulators have indicated they do not intend to license any other new tailings facilities in the area.
He is confident the permits will be secured by the end of this year.
Mariette Liefferink, CEO of the Federation for a Sustainable Environment, which has been actively seeking a solution to the dumps for a long time, says she has facilitated several meetings between Sibanye and local farmers on the issue of a new site.
About eight or 10 landowners in the immediate vicinity of the planned new facility have expressed opposition, mainly because of the loss of arable land, potential water and air pollution and aesthetics. Sibanye Gold CEO Neal Froneman engaged with them directly. Liefferink says about 800 signatures were collected against the proposed location, but most of the signatories did not follow up with their concerns. Discussions are under way with the affected farmers about acceptable offsets.
Market speculation is that DRDGold and Sibanye Gold have held discussions about a merger or some other form of co-operation, based on the infrastructure and processing expertise that DRDGold has built up over the years. But Stuart says the distance between DRDGold’s infrastructure and the West Rand dumps is too great to offer any synergies.
Stuart says the company is talking to Gold Fields about processing the dumps at South32, its neighbour. As far as Harmony and AngloGold Ashanti are concerned, “eventually there will be a time for those discussions, but not now”.