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Joburg Indaba: Taking mining from the past into the future

Mining has been the backbone of the South African economy for the past 150 years, and the mining industry is inseparable from its political history. At the Joburg Indaba held 3 to 5 October 2017, at the Inanda Club in Johannesburg, the over-arching theme was one of letting go of past injustices, creating stable regulatory environments that address present needs and embracing an innovative, technology-driven mine of the future.

The top concerns discussed at this year’s Joburg Indaba centered around regulatory uncertainty and a lack of confidence from investors who have fled South Africa to seek more investor-friendly pastures in other countries. Greater uncertainty about South Africa’s political and economic landscape has led to greater risk and a greater cost of capital.

Enticing investment through shared value

Speaking at the Joburg Indaba, Mmusi Maimane, leader of the Democratic Alliance, warned against Radical Economic Transformation becoming another type of elite capture. He recommended that South Africa take the following steps to realize the full economic potential of the country’s wealth of mineral resources:

  • Spread concentrated wealth, and become more inclusive
  • Create conditions to enable new entrants to more evenly distribute wealth
  • Become globally competitive
  • Rewrite an investor-friendly Mining Charter
  • Have simple and clear legislation to provide regulatory certainty and long-term empowerment
  • Lower tax, include incentives to promote juniors, include informal miners for employment growth and beneficiation.

“A hostile labor regime, volatile regulatory practices and government policy that has done all it can to send investors elsewhere, and it becomes clear why our mining industry has fallen so far short of its potential,” says Maimane.

Mining contributes 45% of global economic activity. Creating shared value requires a fundamental mind shift, one where mining assets belong to people, not the government. And while companies invest, management are stewards of the investment, tasked with ensuring the sustainability of businesses and communities alike.

Mining is a long-term game, thus confidence in government is paramount for creating conditions conducive to profitable mining.

The mine of the future

Neil Jacobson, Senior Partner at FutureWorld presented on the mine of the not-too-distant future.  Internationally, there are many ‘digital mines’ initiatives that incorporate interconnectedness across the value cycle, better generation and use of data, real-time enterprise optimisation, predictive and prescriptive analytics.

Though mines are typically late adopters of technology, the “Connected Mine” that utilizes the advantages of the Internet of Things (IoT), is expected to be a $9.9 billion industry by 2020. In South Africa, mechanization is positioned as modernization, because it leads to better buy-in from workers who feel displaced by machinery. The goal of using technology in mining is to make it easier and safer for people at the coal face. By using IoT for maintenance, for example, people have the opportunity to be upskilled and take on better jobs in the future.

Big Data and machine learning is expected to be the primary mining game changer in the next ten years, which means IT spend in mining is set to multiply massively. Autonomous vehicles, for example, are both safer and more efficient than manually operated machinery.

Jacobsen also stated that renewable energy is reshaping mining. Fossil fuels are limited resources, and many countries are embracing renewable energy over coal. Solar power has become considerably cheaper in recent years and the ability to store energy with batteries has also evolved. Thus, the minerals of the future are Lithium, graphite and cobalt, all used in the production of batteries. It is also estimated that 35% of all gold mined goes into electronics. Though the amount of gold in a single device is minimal – there is only 30mg of gold in an iPhone – there are 7.4 billion mobile phones in the world.