Escolar Documentos
Profissional Documentos
Cultura Documentos
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This is the Mining Industry
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 3
Mining Matters for South Africa
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 4
Mining helps give us a cleaner future
Emissions from
one car sold in Emissions from 100 cars sold in 2015
1960s
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 5
Mining gives us energy for development
Platinum based fuel cell technology is unlocking Chamber 100kW FUJI fuel cell
the potential of the hydrogen economy • First base-load 100kW platinum
fuel cell installed in Africa
• In operation since 18/12/2014
• Uses natural gas (Egoli gas)
• Electro-chemical process,
no moving parts
• 25 year design life, minimal
servicing
• 50% energy efficient
• Further 30% energy to be
captured for heating building
• Levelised energy cost cheaper
than municipal supply
• Collaborative project, CoM, DTI,
Mitochondria, Fuji, Egoli Gas,
See www.platinumpowerfuelcell.co.za demonstration of platinum
beneficiation
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 6
Metals and minerals are the building blocks
for smart technologies
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 7
The world’s famous buildings would not
have been possible without mining
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 8
A wind turbine uses a significant amount
of metals and minerals
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 9
Cosmetics are made from minerals
• Talc
• Mica
• Kaolin
• Calcite
• Titanium dioxide
• Zinc oxide
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 10
A bright smile comes from mining…
• Silica
• Limestone
• Aluminum
• Phosphate
• Fluoride
• Titanium
• Mica
• Petroleum
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 11
Metals and minerals are necessary for
our well-being
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 12
What I am going to be talking about
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 13
What I am going to be talking about
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 14
Even though our market share of
global commodity production and reserves
has declined, potential is huge
60
50 Pt & Pd
% of World Production
40 Chromium
30
Iron Ore
20 Manganese
Coal
10 Diamonds
Gold
0
0 20 40 60 80 100
% of World Reserve Base
Source: SA Chamber of mines, SAIMM
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 15
We are reaching a precipice
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 16
Yet we hold some of the best mineral
resources in the world
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 17
Industry has use potential;
If growth constraint can be removed and the industry makes significant progress on 'modernisation'
and 'innovation
'
• Non-gold mining sector can grow at 3-5% • The gold mining sector can:
pa, resulting in more balanced country growth
rate (double size of non-gold mining by 2028). • slow down the rate of decline and bring to
account the country’s significant remaining
• If mining had grown at same pace as rest of gold reserves
economy between 1994 and 2013, country’s
growth rate would have been 4% (not 3.2%) • help sustain and create significant economic
linkages in the rest of the economy
• At a 5% growth rate, mining industry can
double in size in 15 years
• significantly increase exports and reduce
the savings-investment constraint.
• stabilise direct jobs and indirect jobs
• significantly contribute to investment,
transformation and development
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 18
More than half of NDP priorities can
be tackled by mining
8. Promoting health
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 19
Mining really matters to South Africa
Other , 8
Chrome, 2
Manganese, 6
Diamonds, 3
Iron ore, 20
Coal, 18
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 20
What I am going to be talking about
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 21
China’s economic slowdown has been
material for commodity prices
Chinese demand weakness structural GDP Growth rates per key region or country
15
• Investment driven commodity demand
growth from China at the end and shift is on
to more consumer driven growth 13
India
(rebalancing growth)
• Extent of oversupply of property 11
Emerging and
significantly slowing commodity demand developing Asia
growth 9 China
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 22
The global mining industry: under significant
financial pressure = adjustment
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 23
The commodity price outlook remains weak
(lower prices for longer - the 'new normal')
Zinc, HG 98%,
US$/ton
100.0
0.0
2005 2007 2009 2011 2013 2015 2017 2019 2021
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 24
SA mining industry has been hard hit
Global commodity prices have fallen Productivity has fallen for a decade
• Rand prices of key export commodities have • Platinum output per worker has declined 49%,
fallen (except gold) real labour costs/kg up 309% (1999-2014)
• Due to declining grade, aging mines,
Domestic cost pressures risen too quickly production disruptions (inappropriate s54s,
(for mining inputs) strikes, community disruptions, illegal mining)
• Electricity prices have trebled in 7 years. and inability to increase productive shifts per
annum
• Wages up >10% p.a. past 5 years.
• Stores and materials up >10% pa (steel up A significant portions of the PGM sector is
12% pa past 5 years) loss-making at current prices
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 25
The SA mining sector cost competitiveness
Estimate % of sector
loss-making (May 2015)
Cash costs ($)
Gold 31%
Diamonds 10%
PGM 45%
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 26
SA mining : key financials (sector is the
only loss-making sector of the economy)
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 27
Challenges in SA mining sector
Instability in
Viability labour market Policy,
Mineral prices in
challenges and excessive regulatory
rand terms have
facing gold, wage demand uncertainty
stagnated or
platinum, coal pressures linked despite efforts to
declined
sectors to social wage address this
issues
Binding
infrastructure Declining
Inappropriate
constraints productivity,
application of
(electricity rapidly
regulatory tools
shortages since escalating costs
2007)
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 28
What I am going to be talking about
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 29
Mining has a set of characteristics
that include:
• High risk industry, with long lead times from exploration through to mine development and
ultimately through to closure
• Very capital intensive. Large portion of capital is spent in development of the mine
• Exposed to cyclical commodity markets
• Generally a 'price-taker' and cannot pass on cost increases to the final consumer
• Geographically captured
• Requires access to cost competitive and efficient infrastructure
In order to encourage investment into mining, policies need to recognise the characteristics of
mining and help reduce the risks of investment in long term projects
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 30
Given long life cycle, mining needs
predictable, stable and competitive policy
and regulatory environment
Mining asset lifecycle
+
Cash flow over life cycle
-
Price cycle
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 31
Examples of significant capital spend
to bring new deep platinum resources
to account
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 32
What I am going to be talking about
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 33
Creating a successful mining sector
Stable and constructive labour relations environment and better social license to operate
Solutions to improve productivity (next generation mining) and reduce cost pressures
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 34
More effective problem solving partnership
between government, business and labour
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 35
Regulatory and legislative environment that
is stable, predictable and competitive
Environmental licensing
• New “One Environmental system” in place. Real progress made. Resolve
challenges related to financial provision and treatment of mine residue as waste
Carbon tax
• Require significant offsets for carbon intensive trade exposed sectors
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 36
Stable and constructive labour relations
environment and social licence to operate
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 37
Access to available, efficient and cost
effective infrastructure (electricity, rail)
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 39
Solutions to improve productivity
and reduce cost pressures (2)
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 40
Modernisation possible future
scenarios (20 yrs)
High local content Where
Where we want
we are
Modernised: Continuous, Mechanised
Mining with equipment to be
Stay as is: Conventional Mining
Zero Harm: Remove people from high-risk areas
• Health and safety performance plateaus SA’s Wealth: >50% increase in PGM tonne-years; >20% for gold
• Rapidly depleting mineral wealth tonne-years
• Lower production and higher costs Growth: >10% in GDP growth gained (losses prevented)
• Rapidly declining jobs Employment: >10% increase in PGM job-years; >5% for
• 55% portable skilled labour in mining gold job-years
• GDP growth opportunity lost Exports: >10% in exports gained (losses prevented)
• Lack of Foreign Direct Investment Govt revenue: >5% in revenue gained (losses prevented)
Skills: 90% portable skilled labour in mining
Investment: Higher investment potential in optimal production at
lower costs
Low mechanisation High mechanisation
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 41
Vision for a competitive, vibrant and
transformed South African mining industry
Mining in South Africa: the challenges and the opportunities 2 September 2016 PAGE 42
MINING IN SOUTH AFRICA:
THE CHALLENGES AND
THE OPPORTUNITIES
Roger Baxter, Chief Executive | 1 September 2016
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