SA mines on an upward curve

THREATS: DROUGHT AND FLASH FLOODS

The sector is transitioning to shallower, mechanised mining .

Despite a healthy two-year climb, the mining index has yet to recover to 2007 levels and has consistently underperformed since 2012.

Climate change is a major theme in this year’s PwC SA Mine report and it’s not just environmental pressure groups that are pushing for cleaner mining.

Drought and flash floods have been identified as major threats. Barrick Gold estimates it has a 5% chance of losing billions in production value every year across its operations because of droughts.

The Council for Scientific and Industrial Research’s studies show change in the global climate is affecting the way local mines need to plan and build their water management and other infrastructure.

“These studies suggest climate change will make the eastern regions of South Africa significantly wetter, and the western regions drier.

“In the eastern areas of the country, this means mines will experience increased rainfall, which could overwhelm current water management infrastructure,” says PwC.

Several mining groups are already adapting to these risks. Gold Fields spent $32 million on water management practices in 2018, including pollution prevention, recycling and conservation initiatives.

About 66% of their total water use was recycled or reused.

Adding to mining risks are the introduction of carbon tax and the withdrawal of bank funding for carbon-intense projects such as new coal mines.

Insurance premiums are increasing due to investor concerns over climate change, adding to an already heavy cost burden.

The Carbon Tax Act became effective on June 1, 2019 and levies a carbon tax rate of R120 a ton of carbon dioxide equivalent. This is expected to result in a 5-10% reduction in emissions over time.

Engagement with local communities will also feature powerfully in the award and retention of mining licences going forward.

Mining groups such as Anglo American are going green, using precision mining technologies to save on energy and water, while simultaneously reducing capital intensity. In 2018 Anglo implemented 440 energy and business improvement efficiencies.

Climate change features heavily in planning