The value of South African mining production broke through R1 trillion mark a year ago and is poised to approach R1.2 trillion when the Minerals Council South Africa reports its latest figure soon.
The council’s Facts and Figures 2022 report also noted the sector employed 458 954 people, up from 452 866 in 2020, at a time when other industries were retrenching.
Given this positive economic contribution by the mining sector, the view emanating from last month’s Mining Indaba was one of a still-positive sentiment to invest in Africa. However, that investor sentiment could prove brittle in the case of South Africa, unless the pace of change improves over the next six to eight months. Government cannot simply continue to talk and take no action.
Change the sentiment: Sustainability in focus
Fortunately, there is much that local mining companies themselves can do to burnish investor sentiment.
One would be a relook at the vexed issue of rehabilitation of old mines in the context of the communities left behind when a mine shuts.
Large investors are increasingly focusing on ESG (environment, social and governance), and need to be convinced that care for local communities extends beyond the bare minimum laid down by legislation.
Mines not wanting to see their companies being under-priced, must apply their minds now to the search for means to assist local communities, which historically have become utterly reliant for their survival on the income generated over decades by the mine.
This community impact is ultimately the legacy of a mining company, and stakeholders will increasingly shun those mining companies not seen as meeting international standards.
Rehabilitation is not simply about post-mining safety, but sustainable job opportunities among the local community that for years provided it labour and support. Mines must ensure their social and labour plans have a sustainable impact.
Historically, there has been a legacy of thousands of poorly-closed, abandoned and owner-less mines in South Africa, often compounded by the insolvency of owners along with hundreds of thousands of jobs shed.
No investor wishes to be tainted with the environmental damage associated with mining, such as acid rain drainage and socio-economic degeneration of surrounding communities.
This legacy means modern miners need to at least be initiating discussions on the financial provisions that need to be made towards rehabilitation.
Investors on the JSE are increasingly international, and the issues of mine closure and rehabilitation come in the context of it not being solely a South African problem, but a global one. Investors are seeking out mining companies that demonstrate the necessary conscience to respond proactively.
Enter AI
Safety and optimisation of productivity through artificial intelligence (AI) were themes that came through strongly from the investment community at the recent Mining Indaba. A regular stream of new AI technology is entering the mining space. The trend is gaining momentum as mining entities are increasingly digitising and transforming operations to optimise, bolster safety, and attract investors.
Miners that fall behind will equally find it difficult to attract investors or new capital investment.
This stems from the nature of AI, with its capability to automate and interpret data from sensors and drones without need for human intervention.
This, when combined with predictive analytics, will reduce the potential for human error and mining accidents, along with various productivity benefits.
We’ve already seen a decrease in fatalities both in South Africa and globally. Nonetheless, as a strategic issue for mining this needs to remain top of agenda for all mining companies.
Decisions that some few years ago used to require human intervention can now be done faster and more effectively by the use of AI – such as optimising hauling routes to ensure that the materials flow optimally from the mine pit to the conveyor belt, primary and secondary crusher and on to the stockpiles.
Drones are widely used to plot out the area and AI in real time analyses the data to plot the optimal distances. Of course, in each instance, these cost efficiencies have to be weighed against the cost of on-mine implementation.
Optimisation debottlenecks the mine processing plant to further help prevent failures and improve performance by leveraging big data using machine learning techniques, developing insights and transforming them into actionable recommendations for the client onsite.
The benefits are increased productivity and production levels, improved equipment failure prediction, waste reduction and making mines safer.
Over the coming year, we expect investors will want to see these trends gain rapid traction in the South African mining industry.
Thinus de Vries is audit partner at Mazars in South Africa
