Ivanhoe Mines, a diversified miner with a 26-year history in the African mining sector, is aiming to enhance the sustainability goals of the group and its flagship Kamoa-Kakula copper complex in the Democratic Republic of Congo (DRC).

The company plans to utilize hydropower potential and abundant sunshine to decarbonize the mining industry, while also exploring various options to increase alternative power solutions. Ivanhoe has obtained approval for environmental and social impact assessment amendments for Kamoa-Kakula’s Phase 3, while it awaits the same for its Platreef project in South Africa. The latter is expecting to receive power from a 5 MVA solar power plant before year-end, and evaluating other power options.

The company has also completed a greenhouse gas alternatives analysis for Kamoa-Kakula and implemented GHG emissions programs to reduce emissions. Additionally, the company has established a biodiversity project nursery and an apiary as sanctuaries for pollinators, promoting natural habitation and plant diversity.

To meet local procurement obligations, Ivanhoe has implemented targeted enterprise and supplier development programs, which have supported seven informal enterprises and 41 formal enterprises. Additionally, eight opportunities have been exclusively earmarked for local community suppliers.

The company is also building the Kamoa Centre of Excellence to create a sustainable and community-focused higher learning environment.

The community development initiatives of Ivanhoe have provided communities with valuable infrastructure, as well as supported local businesses and established value chains in the areas around the mining complexes. These initiatives also include investments in sustainable agriculture and farming, early childhood education, and gender equality.

Africa is home to some 30% of the world’s mineral deposits; yet 70% of mined materials are exported to Europe or Asia to be further refined and turned into marketable products.

African countries hold some of the largest deposits of particular minerals on Earth, including Namibia, which is the second-largest producer of uranium in the world. The country is also home to massive deposits of tin and lithium – two materials needed to enable the green transition away from fossil fuels towards more sustainable energy sources.

Voices within Africa argue that those minerals should stay on the continent for greater beneficiation – or the process of improving the economic value of a mined raw substance. Proponents of beneficiation say Africans will benefit from greater income generation, employment opportunities, industrialisation, as well as regional integration.

It is an ambitious goal, but one that may be achieved over the coming decades as African governments coalesce to push for continent-wide development and reform. There is no doubt a long road to travel to get there, and part of that path includes building roads and developing infrastructure. Miners say political risk in some countries is another major hurdle.

While there is a greater impetus for cohesion with endeavours such as the intra-continental African Continental Free Trade Area that recognises the importance of infrastructure development to advance trade, there is still a monumental need for new policies to push development.

“Adequate domestic policies for the development of a beneficial value chain for improved prosperity, and job creation, to support the sustainable development of the continent have not been formulated,” reads a 2021 report from the African Natural Resources Centre.

Beyond policies, foreign direct investment (FDI) is also needed to see these goals realised. Historically, investors have been hesitant to invest in Africa due to its perceived risk.

“Africa gets a pretty bad reputation in terms of being an investment destination,” says Anthony Viljoen, the South African CEO of Andrada Mining, which operates exploration projects across Africa, including in Namibia. “The recent history has been quite volatile, and there are countries where political risk is a life or death situation.”

Over the past decade though, policymakers and government officials on the continent have worked to flip the script on risk. A UN Conference on Trade and Development report found that between 2006 and 2011, Africa boasted the highest rate of return on FDI inflows at 11.4%. In Asia, the rate was 9.1%, and 8.9% in Latin America and the Caribbean. The global figure for that time frame stood at 7.1%.

From policymakers and businesspeople on the continent, the message to investors is a resounding: “Africa is open for business.”

The link between investment and beneficiation

Intrinsically linked to the investment question is the question of beneficiation.

Greater beneficiation can only be achieved through higher investment that will enable the development of road and transport networks, a steadier electricity supply, and water infrastructure – in some cases, this requires desalination plants. Raw minerals can’t undergo beneficiation if they cannot be moved to a processing plant, and they can’t be processed without steady electricity and water.

Then there is the argument that because many minerals are manufactured into goods that support a certain process – such as lithium-ion batteries – they should be manufactured closer to where they will be used, and that is almost always outside Africa, which lacks manufacturing capacity. As supply chains have been thrown into disarray by the Covid-19 pandemic and global geopolitical events, manufacturers increasingly want parts to be made near their end destination.

“Being an African myself, there is a lot more benefit that can be gained from having beneficiation in-country,” Viljoen says. “Investors need to see to what level beneficiation is practically possible, and it should be pushed to the level that host governments can realistically provide.”

However, the question of value addition to African countries’ economies through expanded continent-level value chains remains central for African governments, despite arguments against it.

Government officials across Africa look at these challenges with a determined optimism that they can be surmounted.

Opportunities abound in Namibia

“In terms of Agenda 2063, African leaders have realised that as Africa, we have natural resources, but they are all being exported to other countries,” says Nangula Uaandja, CEO and chairperson of the Namibia Investment Promotion & Development Board (NIPDB).

“There are significant opportunities for refineries in Africa, because if we can refine even a small percentage of the minerals that are mined on the continent, then there is definitely significant advantages for people who take up the first-mover advantages in that space.”

From exploration to extraction and refining, Uaandja says there are many opportunities for companies. Namibia is also investing in vocational training in recognition that skilled labour is essential to develop the country’s nascent manufacturing sector. By 2050, according to the UN, Africa is projected to have the largest working age population in the world, with birth rates falling in other regions globally.

“Namibia is the best destination in Africa to invest in,” Andrada’s Viljoen says. “It is not perfect, but it is as close as you can get.”

Viljoen adds that within Namibia, and especially within the NIPDB, there is a recognition that the country’s officials and economic development board must work with miners and other investors to find policies, incentives and tax regimes that are suitable for all parties.

“There is a pragmatic, rational way of thinking,” Viljoen says.

Many industrial facilities, mines and power stations rely too much on dust suppression and extraction systems, when the real answer is to improve the flow of material through well designed chutes.

This is the considered opinion of Weba Chute Systems technical director Alwin Nienaber, based on decades of experience in this field. His view is that 50% to 80% of the dust problem around conveyors and transfer points can be resolved by applying the right chute system design and positioning equipment correctly.

“Many of the dust suppression and dust extraction systems that are applied in these applications are expected to do more than they are capable of,” says Nienaber. “A preferable approach is to get the chute design right first, and then apply these other systems to deal with the residual dust load.”

He explains that the advantages of doing this extend well beyond the health and safety benefits. He has seen more than a few situations where the dust created by a poorly designed chute can prevent personnel from moving or working in that area. This often prevents the checking or maintenance of critical equipment during operating hours, requiring more downtime to wait – literally – for the dust to settle.

“In examples like this, excessive dust can reduce an operation’s efficiency, so there is an opportunity to improve overall productivity by fixing the dust problem,” he says. “Other equipment in these areas also gets heavily coated with dust, and needs regular cleaning to ensure optimal performance. Cleaning becomes yet another avoidable cost.”

To address excessive dust creation, a good chute design is based on understanding the physics of material flow – and avoiding uncontrolled velocity and impact. A lack of control over the way material flows will degrade the material and create higher levels of aeration – which is what leads to dust dispersal.

“Our philosophy at Weba Chute Systems is to ensure that material flows more easily and remains consolidated as a homogenous stream,” he explains. “We base our designs on the ‘supertube’ effect, which also allows the controlled transfer of material onto the conveyor belt. Not only does this reduce dust, but it also cuts down on the wear rate of the belt itself.”

South African based vibrating screen and feeder original equipment manufacturer (OEM) Kwatani reports that orders for its equipment have surged in recent months to record levels, with orders coming not only from South Africa and the southern African region but also overseas markets.

“The current level of business is the best we’ve ever seen since the company was founded nearly 50 years ago and every month now is turning out to be a record month,” says Jan Schoepflin, General Manager Sales & Service at Kwatani. “The growth is quite astonishing – in fact, 50 to 60 %, year on year.”

He adds that Kwatani is currently producing around 60 machines a month. “To keep pace with demand, we’ve rented an additional 3 000 m² of factory space to complement the 17 000 m² we already have,” he says. “Being part of Sandvik Rock Processing Solutions, which in turn is a business area within the Sandvik Group, we’ve also been able to outsource some production to other Sandvik factories overseas, including Sandvik’s Indian factory.”

One of Kwatani’s current orders – won in the face of intense opposition – involves the supply of over 70 screens and associated equipment to a large copper mining operation in Central Asia. This is the largest order in Kwatani’s history and probably the largest single screen order ever to be won by a screen manufacturer based in Africa. “We’re expecting another large order from this region shortly – it won’t be quite as big but will still be very substantial,” says Schoepflin.

Kwatani is also busy with two big contracts in southern Africa, one for a major platinum mine in South Africa and the other for a zinc project in the DRC. Both projects are in the construction phase.

According to Schoepflin, the surge in sales reflects not only more buoyant conditions within the global mining industry but also Kwatani’s membership of the Sandvik Group.

“We became part of Sandvik at the end of 2021 and this has opened many doors to us,” he says. “We’ve always been big in Africa and were, in fact, already ranked as the biggest screen manufacturer on the continent prior to being acquired by Sandvik but were less strong in certain other parts of the world. Being part of Sandvik has given us improved access to many markets, particularly in South America where Sandvik is the dominant supplier of mining equipment.”

Schoepflin also points to the quality of Kwatani’s products as another reason for the skyrocketing demand for its equipment. “We produce bullet-proof products that work reliably and efficiently and that have been proven in Africa’s mining areas, which are probably the toughest in the world in terms of the demands placed on machines,” he says. “Equipment that works well in Africa will perform anywhere.”

He adds that the fact that Kwatani’s equipment is manufactured locally is another major plus for the company. “Our manufacturing costs here in South Africa are low by global standards and our exports also benefit from the fact that South Africa’s currency, the rand, is very weak. The result is that our machines are very competitively priced.”

Kwatani forms part of Sandvik’s crushing and screening division within Sandvik Rock Processing Solutions. This now includes not only Kwatani and Sandvik’s own screening business but also the recently acquired mining related business of Schenck Process Group, making Sandvik the world’s biggest supplier by far of vibrating screens and related equipment.

The above-inflation electricity tariff increases granted to Eskom, and the negative consequences for the economy and employment, has raised alarm bells in the mining industry.

The Minerals Council South Africa notes this increase with dismay, says Henk Langenhoven, chief economist at Minerals Council.

“The latest 18.65% and 12.74% tariff increases mean the mining industry’s electricity costs will increase by R13.5 billion, or 33.7%, to R53.5 billion by the end of 2024.

“Over the 4 years between 2021 and 2024 electricity tariffs would have increased by 46%. Since 2008, the price of electricity for the mining industry has increased eightfold while consumer prices, as measured using the consumer price index (CPI), have only doubled,” says Langenhoven.

Electricity will make up about 12.5% of South African mining costs by the end of 2024 from about 9% at present.

“These increases the National Energy Regulator of South Africa (Nersa) granted Eskom fundamentally shift the intermediary cost structures in mining. Due to the different electricity consumption densities of various mining commodities, the impact is not the same across the sector, but this is deeply concerning,” says Langenhoven.

The higher cost of electricity means the share of energy in intermediary inputs will increase from 24% to 38% in gold mining, from 22% to 37% in iron ore mining, and from 13% to 19% in the platinum group metals sector.

Langenhoven says the increasing difficulties Eskom has in keeping the economy supplied with electricity coupled with the tariff increases adds to the negative economic sentiment in South Africa.

“This at a time when unemployment is at a record high, and the country desperately needs urgent fundamental structural and regulatory reforms to stimulate the economy.”

The government’s reforms in the electricity arena announced in 2022 have probably been the most fundamental of all.

The Minerals Council welcomed the removal of the cap on the size of private sector electricity generation projects. “This must be emulated in other state-controlled areas of the economy like water and transport logistics where meaningful private sector participation and partnerships should be encouraged and facilitated,” Langenhoven adds.

The mining sector will feel the deepening electricity crisis at processing, smelting and refining plants, while mines need absolute energy certainty when sending employees underground to ensure they can safely return to the surface.

Smelters require sufficient time to ramp down as sudden loss of power will result in catastrophic damages.

With the current levels (Stage 3 and 4, before the recent Stage 6 announcement) of loadshedding, smelters were already experiencing uncharacteristic trips as they were not designed to operate under these conditions.

“The cost to the economy of ‘unserved energy’ or loadshedding is about R87 per kWh while the cost of diesel generation is about R7.50 per kWh, according to the CSIR. It makes sense, therefore, to allow diesel purchases due to the damaging opportunity cost of loadshedding, “ says Langenhoven.

He says the consequences of the latest tariff increase must be seen in the wider mining sector context. Average input costs were running at above 15% at the end of 2022. These new tariffs could add 4 percentage points to costs, materially squeezing profit margins.

The Minerals Council estimates mining production declined by 6% during 2022.

“The adverse operating environment of unreliable and expensive electricity, and a crisis in transport logistics for bulk mineral exports erode the mining sector’s global competitiveness and may very well culminate in job losses in mining,” says Langenhoven.

Over the medium to longer term, these uncertainties bode ill for starting new mines and extending the lives of older, marginal assets. For mining companies building mines that have lives of decades, the ability to accurately estimate long-term electricity prices and supply as well as confidence in securing reliable and cost-efficient transport and export channels are critical factors in deciding whether to start new projects.

The private sector in South Africa has a total pipeline of 9 GW (gigawatts) of energy projects in solar, wind and gas, and in battery storage. By expediting these projects and reducing industry’s reliance on Eskom, the power utility will secure the time and space it needs to undertake critical maintenance and refurbishment of its power plants. The mining industry alone accounts for about 7.5 GW of these projects at a cost of more than R150 billion.

The Minerals Council estimates 3 GW of the 9 GW of private sector electricity generation will be completed by the end of 2024.

The mining sector consumes about 14% of Eskom’s electricity. Adding smelters and refineries, the mineral sector consumes about 30% of Eskom’s output. Eskom will remain a source of baseload electricity supply for the mining industry because solar and wind energy are intermittent.