The mining industry is in an exceptional position to make a bold pivot to a sustainable future, and environmental, social and governance goals represent the most significant opportunity for the mining industry to create long-term value, trust and sustainable growth, says assurance and advisory multinational PwC South Africa energy strategy and infrastructure director James Mackay.
“The mining industry has rebounded from the impact of Covid-19 and is in an excellent financial position. Operationally, it has never been in a stronger financial position and the conversations now should centre on how to repurpose and rebalance mining.
“National and global narratives say that the industry must change, and partners are key to this. However, there are concerns that the world and the industry are not dealing with the pace of change, as a disruption becomes exponential once past a tipping point in terms of policy and global shifts in markets,” he says.
There are significant opportunities for mines into the future. There can be no transition to a low-carbon future without mining the minerals required by battery and energy technologies, which are the essential building blocks of a low-carbon economy, says industry organisation Minerals Council South Africa environment, social and health senior executive Nikisi Lesufi.
“Therefore, South Africa must propagate exploration strategies and advance fast-tracked processes to ensure we will be mining these minerals in the future. There are also other metals that are essential to a low-carbon future that are present in South Africa.”
South Africa should focus its efforts on meeting the needs of its niche mining operations, including deep-level conventional mining and low-profile mechanised operations. There are only a handful of such operations in the world and local mines will typically not find suitable equipment from original-equipment manufacturers (OEMs) to meet their decarbonisation requirements, says precious and battery metals producer Sibanye-Stillwater energy and decarbonisation manager and industry association Energy Intensive Users Group chairperson Jevon Martin.
This will allow the sharing of information, resources and risks, and provide economies of scale. This open innovation can provide a competitive advantage to all South African mining companies and help the industry to remain sustainable, he says.
“This is particularly true in terms of mobility solutions, such as battery electric vehicles and hydrogen technologies, as well as underground mining vehicles, which is where mines struggle to find technologies that meet our needs,” says Martin.
The Minerals Council is calling for the regulatory framework to be changed to recognise the principles of a differentiated, but common, approach to licensing and approval processes, says Lesufi.
“Mines and mining houses operate in various jurisdictions with different nationally determined contributions. A common but differentiated approach is important, with the common part being a ubiquitous commitment to progress to low-carbon objectives,” he says.
This differentiation is similarly required within the mining sector, as not all companies and operations are at similar maturity and capacity levels or pace of development. Some mines are progressing much faster, while other operations will need to be assisted to progress towards national and industry- agreed low-carbon goals, highlights Lesufi.
“We are not all facing similar challenges,” agrees gold producer Gold Fields South Africa executive VP Martin Preece, responding to a question from Mackay about the financing required to effect an energy transition and how to distribute the financial burden equitably.
“[Gold Fields] is progressing well with net-zero goals and has built its first 50 MW project, which makes good economic and financial sense for us. [Financing considerations] are not what is holding us back.
“The main challenge is to get further deregulation so that we can go beyond the 100 MW cap and, to support a just transition and linked to deregulation, to be able to put electricity back into the grid and/or transfer power to users so that projects are not ringfenced or is landed only to single operations,” he says.
More deregulation is needed to allow a just transition and for companies to play a potentially bigger role than only looking after their own needs, says Preece.
“I remain optimistic about the economics of current renewable-energy technologies and I think we will get [to our net-zero goals] before [the target date of] 2050,” he notes.
“I am confident that the industry will transition, but it is taking longer than we expected, owing to the plethora of red tape. We aim to place pressure on all industry stakeholders to recognise that we are on a burning platform in terms of energy security and delays are not cost-effective for companies, the industry and the country,” notes Lesufi.
Just Economy Transition
Meanwhile, a just transition requires that communities dependent on mining and carbon-intensive power generation not be left behind, emphasises coal and heavy minerals producer Exxaro Resources climate change and sustainability strategist Abel Sakhau.
“Our publicly announced net-zero commitments include commitments to drive our emissions down and build business resilience while we are growing. In South Africa, issues of economic development and the vulnerability of mining-linked communities are issues that cannot be ignored,” he says.
The critical path the company identified towards its net-zero goals includes the necessity to create partnerships with stakeholder communities and government to ensure that these communities also become carbon neutral and are not left behind during the energy transition, he adds.
“The industry cannot move towards net zero if communities are left out and, with all these aspirational commitments made by the industry and ourselves, we must recognise that this must happen in such a way as to bring communities along.”
This requires a change not only in the skill sets of the miners themselves, but also of the communities in which mines operate, confirms Lesufi.
“When talking about a transition to a new economic basis in post-mining communities, there are assets that can be leveraged, including water, land and knowledge about the community. We need the know-how and insights to convert these assets to provide post-mining economic activities,” he highlights.
The Minerals Council is conducting proof-of-concept studies that are focused on how to enable a faster transition to low-carbon economies and how to transition workers and communities and use the assets available to move to a post-mining economy, says Lesufi.
“There is a responsibility in a just transition, from the viewpoint of coal-fired power stations that may be shut and of mines that may be forced to close without offtake from power stations, to ensure that communities affected by such closures can also migrate to new forms of energy generation and economic activities,” concurs Martin.
“We have a responsibility to develop a joint plan to solve these challenges in the coal and power sectors, and this requires significant collaboration, open discussions and cooperation to solve,” he says.
However, despite the electricity supply challenges, there is a hesitancy to deploy private projects, owing to life-of-mine and stranded-asset risks. Enabling investments in private projects requires deeper structural reforms, including the unbundling of Eskom and the establishment of an independent transmission, system and market operator that leads to energy trading, says Martin.
Conversely, despite the regulatory barriers and arduous process to implement a renewable- energy project in South Africa, the overriding need means that companies are pushing through these barriers, despite taking time and making only slow progress, he highlights.
“Introducing the ability to trade will ameliorate many of the risks that renewable-energy projects may become stranded assets if the operation they support is closed and without the ability to later sell to potentially a range of smaller companies in the area, many projects will not be pursued,” he says.
“Private organisations are more agile than State organisations and are prepared to put money into research and development. This is why we need to create an enabling environment to unlock the potential that the energy transition presents,” Preece adds.
South Africa needs to collectively decide to pursue decarbonisation and then find solutions. A just energy transition can be achieved, but to work together needs trust, with government unblocking regulations, technology providers delivering appropriate solutions and implementing organisations developing the projects, with all partners and parts of the processes being transparent and open, he says.
“We need partnerships that put South Africa first. This will allow us to have the difficult conversations of what future we want for our country, which then allows us to ensure no one is left behind,” says Sakhau.
“We have to recognise that the just transition is not about competition, but that it needs business, communities, unions, investors and regulators to be partners. This is not a race. South Africa must adopt a carbon-neutral position and then partner, collaborate and plan how to deliver this project that presents opportunities for all companies and stakeholders in the country,” he says.
Source: Mining Weekly