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Petra reports strong Q1 performance, despite strike, Tanzania export ban

Despite labour disruptions at LSE-listed Petra Diamonds’ Finsch, Koffiefontein and Kimberley Ekapa Mining (KEM) Joint Venture (JV) operations in late September, CEO Johan Dippenaar says the group achieved a strong start to the 2018 financial year.

Production for the quarter was down 4% year-on-year to 1.05-million carats, mainly as a result of the planned reduction in tailings production at Finsch and the KEM JV.

Run-of-mine (RoM) production, however increased by 17% year-on-year to 842 809 ct, despite the labour disruptions, which reduced RoM production by about 70 000 ct and tailings production by about 10 000 ct.

“The group is continuing its production build-up and it is encouraging to see the increasing contribution of RoM production,” commented Dippenaar.

The Finsch mine’s RoM production increased by 2% year-on-year to 467 795 ct, owing to improved RoM grades as a result of the continued ramp-up of the Block 5 sublevel cave, as well as owing to high-grade RoM surface stockpiles.

RoM production at Cullinan increased by 35% year-on-year to 250 001 ct, owing to the production ramp-up of the new processing plant. The XRL modules of the plant, which recover coarse material greater than 12 mm in size, were put into operation in September. Two diamonds larger than 200 ct have already been recovered.

At Koffiefontein, RoM production decreased by 19% year-on-year to 12 563 ct, as a result of the loss of about 3 000 ct of production during the labour disruption.

Petra on Monday reported that construction of the ore handling infrastructure at Koffiefontein would be completed in the quarter to end December 31, with RoM production to return to planned levels from the second half of the 2018 financial year.

The KEM JV’s attributable production also decreased by 29% year-on-year to 170 014 ct, with RoM treatment having increased as the modifications to the Central Treatment Plantwere completed.

Meanwhile, production at the Williamson mine increased by 66% year-on-year to 85 213 ct.

However, a ban on the export of Petra’s diamonds from Tanzania, which has now been lifted, negatively impacted on the group’s revenues for the first quarter. Revenues decreased by 17% year-on-year to $78.7-million.

The Tanzanian government on September 28 agreed to allow Petra to resume the export and sale of diamonds recovered at the Williamson mine. This followed the seizure, by government officials, of a parcel of diamonds earlier in September, owing to allegations that the company had under declared the value of the diamonds to be exported.

Petra on Monday said it was yet to realise sales from Williamson for the current financial year and that it continued to engage with the Tanzanian government regarding a solution for the 71 654-ct parcel of diamonds that remains blocked for export.

A 40 000-ct parcel of diamonds recovered at the mine has been shipped to Petra’s marketing office for sale in the second quarter of the 2018 financial year.

 

Source: Mining Weekly

NUM, Solidarity sign three-year wage agreement with Assmang

Trade unions the National Union of Mineworkers (NUM) and Solidarity have secured a three-year wage agreement with iron-oreand manganese miner Assmang at its operations in the Northern Cape.

Assmang, a joint venture between Assore and African Rainbow Minerals, operates the Khumani iron-ore mine, the Beeshoek iron-ore mine and the Black Rock manganese mines.
The agreement will see lowest-earning mineworkers across the operations receive an 8% increase in the first and second year and 7% in the third year.

The lowest paid employee currently earns R15 284.88 on a total package, which will increase to R16 507.67 on the 8% increase in the first year, the NUM said in a statement on Tuesday.

The agreement also outlined the payment of a one-off R10 000 tax-free cash allowance for the members, an increase in family responsibility leave to five days and maternity and medical-related travel assistance provisions.

Assmang will also pay an underground allowance of R600 a month for the first year, R650 for the second year and R700 for the third year.

 

Source: Mining Weekly

2 500 jobs at risk at lossmaking Impala Rustenburg

South Africa’s second-largest platinum mining company has initiated a process that may lead to 2 500 staff reductions at its lossmaking Impala Rustenburg operation, where financial sustainability has deteriorated significantly in recent years.

The Johannesburg Stock Exchange-listed Impala Platinum(Implats) said on Monday that it had issued a notice to relevant employee representative groups, government authorities and other stakeholders of its initiation of a Section 189 consultation process in terms of the Labour Relations Act, aimed specifically at ensuring the sustainability of the Impala operations, which currently employ some 31 000 people.

The company, headed by CEO Nico Muller, is experiencing severe financial pressures largely as a result of persistently low metal prices in rands and continued production cost increases.

At the same time, Impala Rustenburg is encountering declining labour productivity rates, with production falling from an historical base of some 1 000 000 oz of platinum a year to the 680 000 oz to 720 000 oz forecast for the current financial year ending June 30, 2018.

“Unfortunately, we’re now left with no further option in the prevailing operating environment but to consider further restructuring processes that may lead to a reduction in the number of employees,” Muller said in a release to Creamer Media’s Mining Weekly Online.

While 2 500 jobs could be affected in the near term, further optimisation processes may also be required in future to ensure the continued sustainability of the operation.

“It must be emphasised that no final decision has been taken as regards the proposed restructuring, and no final decision will be taken prior to full and proper consultation with affected employees, and their representatives, in compliance with the Labour Relations Act,” added Muller, who told Mining Weekly Online that important steps to effect greater strength of leadership within the Impala Rustenburg operation had already been taken.

Implats reported last week that it was in the first phase of the review of an intended restructuring of Rustenburg after its headline earnings per share plunged to a 137c a share loss in the 12 months to June 30.

Ongoing cost saving and optimisation initiatives had been implemented in an attempt to restore profitability and secure continued employment as far as possible.

A priority target of returning Impala to a cash neutral position by 2019 has now been set assuming the current low platinum price environment remains as is.

This incorporates an assessment of each shaft and production area and will result in a mining complex that is likely to be somewhat different to the large and intricate current operation and may lead to the disposal or suspensions or harvesting of marginal and lossmaking shafts.

Impala’s leadership has been strengthened and realigned to ensure that a fit for purpose team is in place to drive performance, to increase production volumes, and improve efficiencies and productivity.

On the cards is the rebuilding of the entire operating methodology and culture at Rustenburg, where delegation of authority and accountability to lower levels is anticipated.

Currently decision-making is seen as being excessively centralised, with the changes already undertaken giving rise to early signs of improvement.

 

Source: Mining Weekly

Numsa union demands 15% wage hike in coal sector

JOHANNESBURG – The National Union of Metalworkers of South Africa (Numsa) has demanded Glencore raise coal mining wages by 15%, Numsa said on Tuesday, almost triple the inflation rate of 4.6%.

Numsa also said it was pushing for an increase of 20% in all allowances. The union is scheduled to meet with the Chamber of Mines on Tuesday to discuss wages.

 

Source: Mining Weekly

Acacia enters into gold protection measures

LSE-listed Acacia Mining has bought put options covering 210 000 oz of gold at a strike price of $1 300/oz as it continues implementing ongoing cash outflow mitigation measures.

The group on Wednesday announced that the $3.2-million option provided a minimum price for the majority of the group’s expected doré production for the next six months above the budgeted gold price of $1 200/oz, along with full upside exposure should the gold price continue to trade above $1 300/oz.

The options will expire in equal instalments of 35 000 oz a month over the period.

This followed the reduction of operational activity at its Bulyanhulu mine, in Tanzania, earlier this week, owing to the pressures of unsustainable cash outflows at the mine owing to the ongoing concentrate ban, which was imposed on March 3.

At the time, Acacia had highlighted the negative impact of Tanzania’s gold and copper concentrate export ban, resulting in a concentrate inventory build-up of about $265-million and a negative cash flow of around $15-million a month.

Over the next three months, Acacia will focus on moving the mine to a reduced operational state, undertaking consultations with its stakeholders and ceasing underground activity, with the processing of underground ore to be halted within the next four weeks.

Despite several mitigating interventions, the loss of revenue, together with an outflow of $65-million in indirect taxes and costs from other changes to the operating environment, has led to a significant cash outflow of about $210-million in the 2017 year-to-date.

 

Source: Mining Weekly

Zambian copper production to grow by 7% this year, despite power challenges

JOHANNESBURG (miningweekly.com) – The Zambian government’s support for the mining industry and strong copper prices are expected to drive growth in the country’s copper production for this year, despite ongoing power shortages.

BMI Research on Monday pointed out that, according to data published by the Zambian central bank, Zambia’s copper production reached 362 000 t by June 30, down slightly from the 367 000 t produced in the first half of 2016.

“No details have been given by the Zambian authorities on this decline, but it is likely that Zambia’s ongoing power supply problems have been the key constraint on copper mining activities,” BMI said.

“We are positive on Zambian copper and maintain our forecast of 7% growth this year as Zambian President Edgar Lungu remains supportive of the sector, and rising copperprices incentivise domestic miners to ramp up production during the second half of the year.”

Ongoing power shortages resulting from the country’s dependence on hydropower and rising water tariffs are the key risks facing the Zambian mining sector moving forward.

In August, two of the country’s biggest copper producers, Glencore and First Quantum Minerals, were forced to reduce power at key operations, owing to tariff disputes with electricity provider Copperbelt Energy Corporation.

However, improving rainfall and rising dam levels in the country will ease some of power shortages experienced in recent quarters.

Another key driver of strong Zambian copper production this year will be the positive trajectory of prices in 2017 relative to last year.

Since touching lows of $4 500/t in June last year, copper prices have risen over 57% to $6 810/t in August owing to strong demand from China.

“While it is possible that prices may unwind from current levels towards the end of the year, we think the gradual uptrend over the last 12 months will bode well for mining activity in Zambia.

 

Source: Mining Weekly

Kumba Iron Ore, union reach wage deal

JOHANNESBURG – South Africa’s Kumba Iron Ore, a unit of Anglo American, and a major union have signed a three year wage deal giving workers an increase of much as a 10% a year, the National Union of Mineworkers (NUM) said on Friday.

NUM, which is the majority union at all of Kumba’s operations, said workers would get an annual pay rise ranging between 7% to 10%.

The parties also agreed a once off payment of R25 065 ($1 905) for all employees covered by the agreement.

NUM in May tabled wage hike demands of 12.5% to 16% with Kumba.

The pay deal is good news for the troubled mining sector in South Africa. Investors have been rattled in recent months by labour unrest, policy uncertainty and depressed commodity prices.

Coal producers and unions agreed in June to retain a collective bargaining framework for wage talks in 2017, defusing friction after NUM threatened to go on strike if mining firms negotiated on a company-by-company basis.

Source: Mining Weekly

Platinum, palladium, rhodium on 3-way price parity path – Northam

The platinum group metals (PGM) market may be heading for three-way price parity, Northam Platinum CEO Paul Dunne pointed out when the company presented a 60% rise in operating profit to R614-million in the 12 months to June 30, reflecting the benefits of the company’s growth strategy, mechanisation at the Booysendal mine and improved palladium and chrome prices.

A higher PGM basket price and higher chrome revenue translated into a 44%-greater year-on-year group cash profit of R5 314 per equivalent refined platinum ounce, on a sales revenue of R6.9-billion. (Also watch attached Creamer Media video).

Dunne remains confident that, over time, PGM demand will grow and supply will shrink, resulting in a more positive price environment for PGM metals.

The company’s mechanised Booysendal – which has an operating margin of 17% – produced well above its nameplate capacity at just under 200 000 oz, with progress at the Booysendal South project adding promise.

Despite labour unrest at the Zondereinde mine, output of 280 172 oz was within a hair’s breadth of last year’s 282 765 oz, at an operating margin of 3.6%.

“The company represents the best risk-adjusted return in the platinum sector,” Dunne told Creamer Media’s MiningWeekly Online at an investor and media briefing where he
emphasised the importance of cost control to maintain the company’s competitive position “in this very difficult market”.

Group costs of R19 736/oz of platinum were 4.6% higher, while perating cash flow increased by 17% to R981.5-million and the cash balance at year-end was R1.8-billion, CFO Ayanda Khumalo reported.

While the platinum price struggles below the $1 000/oz mark, the higher palladium price has provided some support for the basket price as price movements suggest a move towards three-way parity with rhodium.

“However, we must say that overall price performance remains lacklustre and continues to be a source of great concern to our sector,” cautioned Dunne, who described the negative sentiment towards platinum and PGMs in general and the emphasis on the emergence of battery electric vehicles as being overdone.

“Today’s internal combustion engines are clean, efficient and economic to run. In our view, the adoption of battery technology will remain constrained owing to the inherent fundamental chemistry of the battery itself,” he commented.

Capital expenditure (capex) is estimated at R1.3-billion in this financial year, comprising R109-million on sustaining capex and R1.2-billion expansionary capex as Northam grows production down the cost curve, both organically and through acquisition.

Acquisitions include the Tumela block’s mineral resourcesfrom Anglo American Platinum for R1-billion; the acquisition of Eland Platinum mine from Glencore Operations South Africa for R175- million; and subsequent to year-end, the PGM recycling assets in Pennsylvania, US, from A-1 Specialised Services for $10.7-million.

At operational level, the company’s record three-million fatality-free shifts at Booysendal reflect the benefits of the mechanised mining method, with a graphic flashed on to a large screen showing the huge magnitude of safety difference between the conventional Zondereinde and the mechanised Booysendal.

Milled tonnage for the combined operations increased by 6.3% to 4.4-million tonnes, largely on the back of growth at the mechanised Booysendal.

The production of chrome in concentrate increased by 8% to 581 000 t on higher upper group two (UG2) tonnage milled at Booysendal and chrome has become “a very important segment for Northam”. Total revenue per platinum ounce has increased 11% owing to higher chrome and palladium pricing.

The higher production failed to translate into a similar increase in sales volumes, but this will end with the commissioning by year-end of the new furnace at the Zondereinde smelter, where a new drying plant and furnace have to date absorbed capex of R671.6-million.

Capex in the current financial year is expected to reach the R1.3-billion mark, with R109-million of it sustaining and the rest expansionary.

The operational outlook for Northam is healthy. It has a stable production base at Zondereinde and a growing production profile from Booysendal, which is on a particularly strong position on the cost curve.

It is envisaged that Zondereinde will benefit from the Tumelaacquisition over the next three years, raising its production profile to 350 000 oz.

Booysendal South is expected to boost the total Booysendal production profile to 500 000 oz, with the Eland operation contributing 150 000 oz on a five-year ramp-up.

As the company still has a large capital expansion programme ahead of it, project execution will be key to meet the its rising market expectations.

 

Source: Mining Weekly

PRICE INCREASE NOTICE

Dear Valued Customers,

Please click on the following link for the latest price increase notice :

Price Increase 1st September 2017

Kind Regards,

Ropa Mhlanga

Operations Director – Southern African Region

Technology set to unleash mining innovation – Anglo’s O’Neill

In the next ten years, technology is set to unleash a wave of mining innovation, with the sweet spot centred on changing the thinking around ore bodies and processing plants rather than much-spoken-about automation.

“Our focus has changed from hunting technologies to hunting value,” Anglo American technical director Tony O’Neill told Creamer Media’s Mining Weekly Online in an exclusive interview.

Three-dimensional metal printing, non explosive breakage of rock and microwave preconditioning of rock, as well as medical imaging equipment, are finding rapid application in mineral mining and processing.

The word in the industry is that mining companies that embrace the new era will be successful and the ones that do not will ultimately not survive. Anticipated are mines with footprints that can more readily coexist alongside a community in much the same way as farming.

The good news is that pathways are already starting to develop that change the current mining and processing paradigm.

Technologies are being reconfigured to make mining and processing far more precise, which offers massive potential reward.

Currently, much larger volumes of waste are brought to surface, compared with the scenario more than a century ago. This is because, outside of safety improvements, old methods are still being used today. For instance, in 1900, to obtain 40 kg of copper, 2 t of material had to be mined using 3 m3 of water and 10 kWh of energy, compared with currently having to mine 16 times more material, using 16 times more energy and drawing on double the volume of water.

“It’s risen at such a rate that it’s becoming unsustainable,” O’Neill commented to Mining Weekly Online.

While mining was, in the past, content to be a research and development laggard, other industries were not – and they shot ahead on the technological front, proving up technology that is now available off the shelf for mining to implement.

A successful pilot plant is already pointing the way for the more widespread introduction of coarse-particle recovery, which brings considerably larger-sized particles to surface and slashes water use.

Moreover, with the maturing of robotics technology, research is also being conducted into the introduction of swarm robotic mining, involving the use of small robots that will bring ultra-precision to a hugely wasteful industry.

As more precise mining methods gather momentum, those 40 kg of copper used to illustrate mining’s deteriorating position may one day be mined without any waste at all.

Coarse-particle recovery and advanced fragmentation (using smart blasting technologies) are good examples of putting existing technologies into new configurations to deliver value right now.

None of the technologies used is unproven, but what Anglo has managed to do is configure them in a way that adds immense value, with minimal additional capital investment.

While technology will have to be honed specifically for mining at some stage, a surfeit of technologies is ready for instant application.

“It’s more about a mindset change than having to make massive investments,” Anglo American technology development head Donovan Waller added to MiningWeekly Online.

Much of the improvement is being driven by data science and the modern world’s ability to analyse increasing volumes of data to a very high degree.

Virtually all the technologies needed have come of age; one of the biggest being the stabilisation of information technology, in which other industries have tended to advance much faster than the mining industry. These other industries include consumer electronics, manufacturing, automotive engineering and the pharmaceutical sector.

COARSE-PARTICLE RECOVERY

The coarse-particle recovery process captures coarse particles that are not recoverable using conventional flotation.

By needing to grind to only 500 micron instead of 170 micron, capacity is increased. Less energy is required in the crushing and grinding and water is more easily extracted from the larger particles and then recycled, significantly reducing the need for fresh water. The extraction of interstitial water results in a dry product, which can be dry-stacked, ultimately eliminating the need for tailings dams.

In copper, coarse-particle flotation has the potential to change the cost curve of the industry by allowing for 30% to 40% more throughput at a recovery loss of 2% to 3%, a 20% energy saving and 30% to 40% less water.

This is already a significant achievement for Anglo American in copper, and the company is hopeful of migrating it to other commodities, including platinum in South Africa, where test work is still at an early stage.

If, for example, platinum ore can be pre-sorted in advance and be presented at a grade of 10 g/t instead of 4 g/t, output can be increased by two-and-a-half times from the exact same capital invested.

SWARM ROBOTIC MINING

Swarm robotic mining descales mining to make it much more precise, mimicking the actions of a swarm of locusts devouring a field or an army of ants working independently to execute tasks.

The technology envisages highly selective mining of ore types linked to real-time algorithms across a broad spectrum that includes constraints in energy, prices and associated issues.

As many people as possible are taken out of harm’s way in a remotely controlled environment.

Small operational teams will communicate with each other, without the need for a big-brother view from the surface that controls each of those small operational elements independently in self-learning operations.

WATERLESS MINES

Currently, the industry spends a lot of time adding water to its processes and even more time trying to get the water out afterwards.

A pathway has been developed to end up with a waterless mine through the adoption of a closed loop, using only a fixed amount of water that is then recycled time and again. Anglo already recycles or re-uses more than 60% of its water requirements.

Ultimately, the aim is to arrive at potentially chemical means that allow for the liberation of particles without having to add water to them, to arrive at a waterless process.

SUN, WIND, GRAVITY AND SMALL, GREEN NUCLEAR

In terms of energy, the focus is on using renewables for energy self-sufficiency.

The solutions will be a combination of sun and wind. As the sun does not shine at night and the wind does not always blow, other energy forms, including gravity, will take advantage of the mining sector having depth as one of those solutions.

Ultimately, nuclear may be incorporated should it become “greener”, smaller and more modular, as is expected.

MODULAR CONCEPT

Instead of spending billions to build one big plant, small modular plants will be built and scaled up quickly, with the lifespan of the modules being influenced by the next step up in technology.

Mines will move away from using the same technology for long periods of time and outlaying large capital expenditure on plants that last for 50 years and more.

Smaller, modular, cheaper units will allow for technology upgrades every five years, providing scalability as well as the opportunity to ramp up on new technology that has arisen.

Although mining is not an industry that has been used to technological change, there is no reason why it should not, from now on, accelerate advancing technology quickly, as other industries do.

“Our Future Smart Mining program is about far more than technologies alone. It is end-to-end innovation, in its broadest sense, addressing all aspects of sustainability for the business – safety, health, the environment, the needs of our communities and host governments, and the reliable delivery of our products to customers. Those that innovate and are agile will thrive in this industry. That is mining’s new future.” O’Neill concluded.

 

Source: Mining Weekly