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On-The-Air (01/09/2023)

Martin Creamer talks about developments in zinc, aluminium, inwardly-focused miners

1st September 2023

By: Martin Creamer

Creamer Media Editor


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Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Kamwendo: The Indian zinc mining company Vedanta wants to invest another $500-million in South Africa “as quickly as possible”.

Creamer: Yes, the chairperson was here during Brics Summit in Johannesburg and he had interviews with journalists. He said he is ready to invest more in South Africa, because he had promised a much bigger investment than was made several years ago. He says he is willing to go ahead with additional investment as fast as possible, not only in zinc mining, which Vedanta has done in the Northern Cape and done very well.

He is also prepared to put in a zinc smelter in the Northern Cape, which will mean an investment of another $500-million. What is holding him back is South Africa’s energy insecurity and rail insecurity. The Vedanta chairperson Anil Agarwal is saying that the moment the electricity and rail issues are resolved, he’ll invest that additional $500-million. The zinc smelter that Vedanta is planning to establish will be very important for the Northern Cape region. It will mean that another 2 000 people get employed there. Already, Vedanta is employing 3 000 people at its zinc mining operations in the Northern Cape.

The Vedanta chairperson likes investing in South Africa a great deal. He has got a lot of good things to say about South Africa and together with theSouth African government, Vedanta is building up a speical industrial hub in the Northern Cape. The India-based company envisages much more zinc beneficiation. It wants to add much more value to zinc in South Africa for export into the world. The company envisages local value addition in the forms of galvanising, going into chemicals with zinc, and going into pharmaceuticals with zinc. Vedanta is only holding back because of South Africa’s public sector at the moment not being able to supply enough electricity and being rail constrained. Vedanta’s expansion is dependent on more energy and more rail.

Kamwendo: The big Hillside Aluminium company in KwaZulu-Natal needs to go green to satisfy global markets.

Creamer: I think this is what we must realise far more intensely in South Africa, that if we continue to have excessive coal-fired power, we won't be able to export the products we produce with coal-fired power without facing price penalities. Now, we know that half of aluminium is really electricity and the world is saying to Hillside Aluminium, you must clean up your act by having less carbon intensity, and if you don't, we’re going to impose tariffs on your aluminium that we import. Also, if you continue to not clean up your act and continue to use coal-fired electricity so excessively, we’ll look elsewhere for our aluminium and you in South Africa will be last in the queue, which means South Africa will receive much lower prices for its products, because the Eskom electricity being used is so carbon intensive, which is adding to the global climate crisis. It is so important for South Africa to realise that if it does not have clean electricity, our exports are going to be hammered very severely. Hillside Aluminium is working now to try to speed up the bringing in of green renewable energy, but they have always had a very low electricity price, because they were set up when Eskom had such a lot of power and was prepared to sell it at a much lower price via long-term contracts. Hillside has always enjoyed lower electricity prices, which means it makes it much harder now to go into renewables and they are trying to work on a nuclear arrangement as well.

Kamwendo: Power shortages, softening prices, rand depreciation and persistent inflation are resulting in mining companies becoming more inwardly focused.

Creamer: We are going to find that a lot of the mining companies outside of gold, particularly the platinum group metal mining companies, that they will be looking intensively inward, because they are having to contend with such low platinum group metals prices. China is the biggest buyer of platinum group metals, but because of the problems with Russia going to war with Ukraine, Russia is battling to export its platinum group metals and is seemingly sending a lot of these metals to China at lower prices. This is bringing down the overall basket price of platinum group metals and hurting South Africa badly. On top of that, we have got inflation. We have got the power shortages and you find that the projections being done by some of the South African platinum group metals companies is that their mining businesses are facing heightened business risk. They have got to cut their costs and that is what they are having to focus on very intensively at the moment.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.

Edited by Creamer Media Reporter



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