JOHANNESBURG (miningweekly.com) – The South African mining industry returned to profitability this year, despite a challenging operating environment owing to regulatory uncertainty, energy constraints, labour disputes, illegal mining activities and a skills shortage, PwC’s eleventh ‘SA Mine’ edition, published on Thursday, shows.
PwC Africa energy utilities and resources leader Andries Rossouw said during a briefing on Thursday that the industry’s good performance during the year was in spite of the speed of technological advancement, climate change, sustainable operations and the changing of consumer behaviour defining some of the industry’s key risks.
While these should be “top of mind” for mining companies, he added that operating performance, investor sentiment and the global attractiveness of the industry continued to erode, with investors questioning whether the industry can create sustainable value for its stakeholders.
Because of this, Rossouw urged miners to “find a balance between stakeholder needs and long-term sustainable operations in their capital allocation decisions”.
He said that, in order to restore faith in a challenged industry, mining leaders would need to show that they were at the forefront of creating sustainable value for all stakeholders.
“By aligning financial and sustainable strategies to prioritise green-, customer- and community-focused strategies, further enabled by technology, [the industry] will help build a long-term vision of growth, access, equality, innovation and trust.”
PwC’s report, meanwhile, highlights that, in 2019, South African miners’ total market capitalisation increased to R884-billion, well above the R482-billion market capitalisation of the prior year.
This was mainly owing to the increase in market capitalisation of companies within the platinum-group metals (PGMs) and gold sectors…Full Story
By Loni Prinsloo and Paul Burkhardt | Bloomberg
Sasol Ltd. is planning to sell its South African coal-mining business, according to people familiar with the matter.
The company will begin a formal sales process in the coming weeks, said the people, who asked not to be identified as the information isn’t public yet. The mining business had turnover of 20 billion rand ($1.4 billion) in the 2018 financial year, according to the company’s financial report, mostly from internal sales to Sasol’s other operations.
The company is the world’s biggest manufacturer of fuel from coal, an energy-intensive process. Sasol’s coal mines produce about 40 million tons of coal a year, almost entirely for use in its own operations, according to its website.
The company would plan to sign a coal-purchase agreement with whoever buys the asset, said one of the people.
Sasol announced a long-term review process in November 2017 that would involve disposing of some assets at prices that ensure value for the company, it said in an emailed response to questions, while declining to comment directly on a possible mine sale…Full Story
Optimum Coal Mine in Middelburg, Mpumalanga went up in flames after a fire set the mine’s conveyor belts alight on Sunday.
The Middleburg Observer reports that while it is unclear what caused the fire, it is believed that it may be sabotage.
Initial reports suggest that the fire started next to the conveyor belts and then spread onto the mine grounds.
The former Gupta-linked mine, which supplied coal to Eskom, had gone under business rescue in February 2018.
Gupta-owned Tegeta bought Optimum from Glencore in 2016 for R2.15bn in a deal shrouded in mystery, Fin24 previously reported.
Business rescue practitioner, Louis Klopper told News24 on Monday he did not want to speculate on the circumstances surrounding the incident.
“One of the overhead transmission cables fell down into the dry grass and set it alight, simple as that…Full Story
By Lisa Steyn
The reduction in exports is not due to operational issues at the terminal but reflects weaker global demand, CEO Alan Waller says.
Three-million fewer tonnes of coal were exported from the Richard’s Bay Coal Terminal (RBCT) in 2018 as global demand for South African product weakened in response to high prices.
In a briefing on the annual performance for 2018 on Thursday, RBCT reported coal exports of 73.47-million tonnes for 2018 —4% less than the 76.47-million tonnes exported in 2017 and falling short of a previously-stated target of 77-million tonnes. On average the terminal received 26 trains a day in 2018 compared with 27 a day in 2017.
The reduction in exports is not because of any operational issues at the terminal but, rather, is a reflection of weaker global demand, said CEO Alan Waller. “Whatever has been railed has been shipped. [The reason for lower exports] is global demand; it’s market dynamics,” he said.
Xavier Prévost, senior coal analyst at XMP Consulting, said the weaker demand was because South African coal index prices had been marginally higher than those of other coal producing countries such as Colombia and Australia in 2018.
The Richard’s Bay terminal, which is owned by 14 major coal-mining companies, is one of the largest such facilities in the world and has an export capacity of 91-million tonnes. Coal exports are a significant foreign-currency earner for SA.
Nearly 82% of the coal leaving RBCT was delivered to Asia in 2018, with India being the largest market. Africa received 8% of the export coal and Europe procured 10.1%.
While the global demand is out of its control, RCBT has been hard at work to increase efficiencies. In December, the terminal achieved an export record of 8.12-million tonnes, in spite of a derailment of 51 wagons on the Transnet coal line on December 21…Read More
As Nersa prepares for public hearings on Eskom’s 45% Multi-Year tariff increase request (on top of an already approved 12% increase), Energy Expert Ted Blom has called on Eskom to scrap its application as the still captured and corrupt utility should not be granted any increases until a full forensic audit has been completed.
As we now enter 2019, Eskom is rudderless,” says Blom. “The Eskom board has proved to be dysfunctional and required Ministerial intervention on several occasions. Although appointed 12 months ago, they have been unable to carve out a credible turnaround plan, despite the use of expensive outside consultants.” Blom further pointed out the skills shortage which has lead to the President intervening by appointing “8 wise men” to steer the Board in the right direction by a deadline set for 31 January 2019.
“The many futile interventions point to an unsalvageable and bankrupt Eskom,” says Blom, “In fact, the pillaging is still continuing, this time by another ‘third force’ which has replaced the Zupta gang.”
The extent of the pillaging has already been confirmed by the Public Protector, the Parliamentary Investigation report, the Dentons report, and in Eskom’s annual report where it references corruption over 30 times. Questions remain as to why no-one has been prosecuted and no monetary recovery has occurred.
Throwing coal on the fire is an acknowledgement of serious design flaws at Medupi and Kusile, resulting in an estimated 10% or more performance incapacity – according to Minister Gordhan’s latest revelations. Yet Eskom kept this quiet since the first commission began in 2012.
Where are the auditors and Eskom Governance structures in all this mess?
In addition, Eskom has also acknowledged coal procurements lapses of late. According to Blom, rampant coal procurement fraud has been ongoing since 2006, and Eskom has ignored or blessed this ongoing fraud annually.
Although Eskom has acknowledged a bloated headcount (estimates are by 35 000 including ghost workers), Nersa continues to ignore the gross inefficiencies and has, since 2008, granted tariff increases of some 500% above the corresponding inflation rate. “This has just fueled and financed the rampant corruption,” claims Blom.
Still to be uncovered is the actual loss been forced onto Eskom as a result of Government’s corrupt renewable schemes. “Last year, it sucked around R34bn from Eskom revenue and is destined to increase to R50bn for this year “ states Blom. Another 14 GW of REIPP is in the pipeline on top of the currently approved 6GW – Blom suggests this will “kill off” Eskom within months as lenders can see the writing on the wall.
Blom intends representing electricity users at each of the 10 provincial public hearing venues from 14 January to 4 February 2019. “Against these dire circumstances, it is NOT appropriate for Eskom to proceed with their ‘business as usual’ tariff increase applications,” Blom stated…Read More