South Africa is the world leading producer of
andalusite, here mined by Andalusite Resources
in the Limpopo province (picture)
South Africa remains one of the
worlds leading mining and mineral-processing countries
and one of the strongest economies in Africa even though it was
impacted by the financial crisis. The country is home to some
of the worlds greatest mining resources such as gold,
diamonds and platinum but also industrial minerals including
andalusite, chromite, graphite, wollastonite and zircon to just
name a few.
Over the last few years, South Africa has achieved an average
growth of 3.3%/year mainly thanks to its growing mining
industry which saw a tenfold increase in terms of minerals
sales from R30.9bn ($4.4bn.) in 1987 to R300bn ($42,8bn.) in
2008 according to the ministry of mines (see South Africa
at a glance). Meanwhile, the country has undergone
dramatic change particularly since the end of apartheid in
South Africa, which was the first
African country to ever host the FIFA world cup last summer,
would very much like to be in the company of the BRIC (Brazil,
Russia, India, China) nations in the future.
The government has launched the
Black Economic Empowerment (BEE) programme to redress the
inequalities of apartheid by giving previously disadvantaged
groups economic opportunities previously not available to
The South African rand (R), one of
the most actively traded emerging market currency in the world
even though having recently been quite volatile, has joined an
elite club of fifteen currencies, the continuous linked
settlement (CLS), where forex transactions are settled
Compared with other mineral rich
countries on the continent very often affected by political
instability and lack of infrastructure, South Africa
remains the safest destination for foreign investment in mining
and resources as Andalusite Resources Pty Ltd sales and
marketing manager Andreas Pabst pointed out to
It is therefore wooed by
fast-developing China and India, constantly in search of new
sources of raw material, in addition to Western investors,
while South African stocks keep rising, thanks to leading
mining companies such as Anglo American Plc.
As a consequence, the government,
which focuses on strengthening its valuable mining industry,
has been working on a reviewed mining charter which was
launched in September this year.
The mining industry has been
and remains a critical sector in our economy. Its
transformation is therefore vital for our national
socio-political objectives, South Africas Minister
of Natural Resources Susan Shabangu declared.
40% boost for andalusite
South Africa is the worlds largest producer of
andalusite, which is used as a raw material feedstock for
refractory products, with an estimated output of 245,000 tonnes
in 2008. The main other producer is France with 65,000 tonnes
estimated for 2007.
Despite a slowdown during the
financial crisis, the refractory market is picking up slowly
mainly thanks to China and India which have performed
relatively strong despite the recession. This comes as good
news for the andalusite industry as during the last two years,
the refractory market has seen a shortage in the material and a
few producers have therefore decided to extend their operations
in order to meet the increasing demand as a potential
alternative to Chinese bauxite for the refractory industry.
As a consequence, South
Africas andalusite production in South Africa is expected
to increase by more than 40%, from the present 245,000 tpa to
an estimated 350,000 tpa.
Two companies own andalusite mines
in South Africa, which reports a reserve base of about 51m.
tonnes of aluminosilicates ore (andalusite and sillimanite).
Damrec, a subsidiary of Imerys, produces almost 80% of the
andalusite in the country.
The other major South African
producer, Andalusite Resources Pty Ltd, is a relative newcomer
to the andalusite industry. It is the only alternative supplier
of the South African material outside Damrecs
subsidiaries Rhino Minerals Pty Ltd and Samrec Pty.
Andalusite Resources revealed to
IM that it was planning to double production
by 2012 at its Maroeloesfontein mine in the Limpopo
As a result, the company is now
working on boosting its present production of 50,000 tpa
andalusite (57% Al2O3) over the next
three years to 80,000 - 100,000 tpa at its mine located about
220km north-west of Johannesburg.
Andalusite Resources had to reduce
production in December last year and in January 2010 owing to
some technical problems while making installations and changes
in its crusher plant. But the company is now back to normal
levels. Our plans are still on track, Pabst
Direct competitor Damrec has also
planned to increase its output by 26% within the next few
years. The company has four andalusite mines in South Africa,
producing about 195,000 tpa: Annesley, Havercroft and
Thabazimbi in the Limpopo region (owned by Rhino), which is
located about 30km from Maroeloesfontein mine.
The fourth mine, Krugerpost, owned
by Samrec, is located in the Mpumalanga region, near
Damrec confirmed to
IM that it has planned three other projects to
increase andalusite by 55,000 tpa within the next five years:
debottlenecking at Thambazimbi and Krugerpost and an extension
at Segorong, with Rhino having finally obtained the approval
from the South African government for the exploitation of its
andalusite Segorong project (IM 3 September 2009: New
andalusite mine in S. Africa).
Chromite: world leading producer
South Africa is the worlds biggest producer of chromite
but much of its capacity is exported and processed for the
production of ferrochrome, used in ferroalloys. According to
South Africas ministry of mines, chromite production
almost tripled in the country during the last 20 years from
3.8m. tonnes in 1987 to 9.6m. tonnes in 2008. The market total
value was estimated at R5.5bn. in 2008.
As demand is expected to grow
during the next few years, chromite producers keep developing
their operations such as Amcol International Corp. which is
focusing on establishing a mine to market chromite processing
hub in South Africa.
The project has been boosted by
Amcols acquisition of the remaining 47% interest in
Bonmerci Investments 103 Pty Ltd, which is part of a $50m.
investment that included the establishment of a chromite
processing facility based at Ruighoek, from which Amcol plans
to supply foundry sand to Asia, Europe and South America.
Bonmerci, which owns almost three
quarters of the shares in Batlhako Mining Ltd holder of
the Ruighoek Chrome Project was subject to a 53% equity
sale to global foundry supplier Amcol in February 2009.
London AIM-listed Chromex Mining
Plc is also continuing to expand its chromite operations. The
chrome-focused company owns two key mining assets located in
the Bushveld Complex in South Africa which between them have
total resources of 41m. tonnes chromite.
The Mecklenburg mine lies in the
east and the Stellite mine in the west. Both are owned and
operated by South African registered Chromex Mining Co, which
is 74% owned by Chromex and 26% owned by their BEE partner
The companys principal
operation, the Stellite mine, is currently ramping up
production. It will produce approximately 20,000 tpm run of
mine (ROM) in a first phase before increasing to 40,000 tpm ROM
once a dense media separation circuit (DMS) is installed at the
The company plans to take full
operational control of the Stellite opencast chrome mine and
processing plant in South Africa, moving away from the
contractor-based modelÊto process its chrome ore (IM
18 May 2010: Change of strategy at Chromex).
The company plans to produce
foundry and chemical grades. Stellite should reach full
capacity by Q1 2011 - producing approximately 500,000 tpa
Graphite back on stream
Like Mozambique, Tanzania and other southern African countries,
South Africa owns graphite resources which have not yet been
exploited. This is mainly owing to low prices and
political difficulties, commented Dominik G. Luh,
managing director of trading company Technografit GmbH to
But the country is on the way to
emerge as a new graphite producer as local Jonkel Group intends
to start production at the beginning of 2011, therefore
becoming the countrys sole miner since Germanys GK
Graphite exited the business some years ago.
Jonkel Mines has identified
all graphite economic deposits here in South Africa and is
working on them for future mining, Matimba Khoza,
president of the group, declared to IM, adding
that he was planning to start on a small scale with
about 100 tpa of purified graphite.
Jonkel will produce graphite
through its subsidiary Jonkelkoza Minerals and Resources (Pty)
Ltd (Jonkel Mine) created a year ago in order to exploit
existing and future natural graphite opportunities.
The company owns three graphite
deposits in the Limpopo province, including the Steamboat
deposit which has a grade of 8.8% of 2mm disseminated flake
graphite and estimated resources of 3.5m. tonnes according to
the companys last feasibility study.
The three major economic deposits
happened to be on community land, so Jonkel is on a
joint-venture agreement with the local community to exploit
them. The process of acquiring them started in 2009 and is not
yet finalised with the administration of Department of
The plan for Jonkel Mines is to
supply its sister company, Jonkel Carbons and Grafites (Pty)
Ltd also created in Q1 2009, which would then process and
manufacture Jonkel Mines graphite for domestic
consumption. The company cannot say yet when it will exactly
start production as it is still looking for a partnership to
develop the deposit.
Only one of Jonkel Carbons
two premises, Diggers Rest and Nine Pence, is operational, Nine
Pence needing renovations. The plant buys raw material from
other graphite producers such as Germanys SGL Carbons and
Chinas Qingdao Hensen Graphite Co. Ltd.
Africa is pointed out by many in
the graphite industry as the place to look if the sector ever
needs new sources of raw material in the next decade - which
has some credence owing to the increase demand for lithium-ion
However, it is likely that this new
production from South Africa will not have a dramatic impact on
world graphite production (1.13m. tonnes) and the country will
certainly not yet compete with the world top graphite producers
such as China (800,000 tpa), India (140,000 tpa), Brazil
(77,000 tpa), North Korea (30,000 tpa) or Canada (27,000
But it will make South Africa the
third graphite producer of the African continent, after
Zimbabwe and Madagascar, Madagascar being a major player with
about 5,000 tpa (down from 15,000 tpa two years ago). But
the chances for a new producer to supply the local market
are not quite positive, as you need a minimum output of 3,000
tpa to run a mine economically, Luh underlined.
In spite of that, this new supply
could yet show good growth opportunities as there is a need for
graphite in South Africa, the black raw material being mainly
imported from China. In 2008, domestic consumption was
estimated to be over 3,000 tonnes and this amount is expected
to increase in the future, owing to African developing
countries needs for the steel industry and energy
markets. The advantage South Africa has compared to the rest of
the continent is that there is good infrastructure to exploit
raw materials, such as well established rail, road and sea
Africa is embarking on the
industrial revolution and graphite will find its use in the
steel industry and lubricants in the mining sector,
commented Khoza, pointing out that the sole country owns over
Opportunities for graphite in
Africa could also come from renewable energies as the continent
has electricity issues and solar panels are a quick
solution. Graphite as a source of carbon also became an
additive in the chemical industry.
On an international scale,
increased demand for graphite in the metallurgy industry in
addition to electric cars (lithium-ion batteries) is expected
within the next decade (IM March 2010, p. 29: Graphite set
to move up a gear).
Wollastonite from 2011
After years of heavily concentrated global supply, South Africa
is now following Spain to quietly emerge as a major producer of
wollastonite in an industry dominated until now by only a
handful of players: China, India, the USA, Mexico, and Finland
(IM November 2009: Wollastonites pins and
South Africas Namaqua
Wollastonite (Pty) Ltd has revealed to IM that
it expects to start producing 9,000 tonnes wollastonite from
2011 at its Magata wollastonite project located about 14km
north east of Garies, Namaqualand, in the Northern Cape
province of South Africa.
This new operation will bring the
company back to its past as it used to be South Africas
only producer as a then subsidiary of Western Investment Co.
Pty. Ltd, before exiting the business in 1999.
Namaqua will then increase
production as the market allows by commissioning
plants with a similar size of the pilot plant, targeting 17,367
tonnes by 2012 and 23,316 tonnes by April 2014. The tailings
from the sorting and the production plants will be sold into
the construction industry.
Although the resource is
considerably larger, a drilling programme conducted
in the 1980s delineated a 3.2m. tonne resource with an average
grade of 52%.
The company intends to only supply
the domestic market at the moment. We are small and will
initially focus on the local market to ensure a stable business
before venturing abroad, Mari-Alet Van Der Merwe,
Namaquas chief executive officer, explained to
As a consequence, the effect
globally will be minimal, initially to a certain extent
replacing the import of wollastonite, she added,
cautioning that exporting in the future would not be
Although an annual production of
23,000 tonnes would propel Namaqua into the circle of the world
leading producers, it is therefore likely that it will not
immediately allow the company to compete on the international
market with world leading producers such as USAs NYCO
Minerals Inc., Wolkem India Ltd or Finlands Nordkalk.
Namaquas wollastonite indeed
has a high aspect ratio, but also an iron (Fe) content higher
than 0.4% which with current metallurgical processes cannot be
readily removed. As a result, it precludes the South African
wollastonite to be sold into certain markets just like
Spains new wollastonite producer Compania Mineral
Namaquas wollastonite will
therefore be used for its structural and friction properties in
friction, construction and plastic related products where a Fe
content less than 0.4 % is not required instead of traditional
wollastonite markets. The largest portion of the business will
be to sell off-spec wollastonite into markets that previously
used asbestos as opportunities of replacement for
asbestos are endless.
South Africa is the worlds second largest supplier of
zircon after Australia with an output of 350,000 tpa in 2009
(31% of world production). Main producers are Exxaro Resources
Plcs KZN and Namakwa Sands subsidiaries in addition to
Richards Bay Minerals (RBM), a 50:50 joint venture between Rio
Tinto and BHP Billiton Plc established in 1976 which dredge
mines ilmenite, rutile, and zircon.
Over the last three years, South
African output has remained relatively stable, fluctuating with
the times rather than undergoing any significant expansions or
This could change, however, with
Exxaros significant decision at the beginning of 2010 to
close its KZN Sands operations over the next five years. The
company cancelled all plans to develop the 5m. tpa Fairbreeze
minsands mine which would have seen a new source of zircon
coming onto the market next year.
Fairbreeze was set to replace
Exxaros 9m. tpa Hillendale mine which is coming to the
end of its life where the company produces titanium dioxide
(TiO2) feedstock and zircon. Instead the company has
vowed to look for new high grade minsands deposits.
However, the Rio Tinto/BHP
joint-venture which will be opening its tailings plant next
year should result in some increased production from Q1 2011.
Output from this mine equates to 8% of global production.
Rio Tinto has invested $158m. in a
tailings treatment plant at its RBM operation in the
Kwazulu-Natal province to boost zircon production. The
expansion, which was approved in 2008, will improve mineral
recovery and extend the operations zircon mining life by
five years. The mine has 30 years worth of tailings,
which can be processed to produce about 60,000 tonnes
50% boost in kaolin
Africa is not a major kaolin player as the continent produces
only 500,000 tpa of the worlds 30.6m. tpa kaolin
production. According to the US Geological Survey (USGS), the
main African kaolin producer is Egypt (300,000 tpa) followed by
Nigeria (100,000 tpa) and South Africa.
But the country, which produced
about 40,000 tonnes kaolin in 2008, could see its domestic
output increase by 50% to 60,000 tpa as Seeland Development
Trust expects to start producing 20,000 tpa kaolin at its
Langeklip deposit in the Western Cape province from November
The deposit, a high quality kaolin
and halloysite assemblage acquired in 2006 by Seeland, is
located near St Helena Bay about 160km from Cape Town, in the
south-west of the country.
Seelands chairman Johan Lewin
said to IM that the company is at present
looking for a partner to exploit the deposit which shows very
good potential for many markets other than coating clay.
The kaolin is not suitable
for paper coating but shows very good potential for high
quality porcelain and tableware. Brightness values are high
based on low iron and very low titania, independent
consultant Ian Wilson explained to IM.
The mix of halloysite and
kaolin gives good strengths for ceramic bodies. The low trace
element levels indicate good potential for pharmaceutical and
perhaps food (animal and human). It is considered that this
type of clay will be suitable for paint and other uses,
Lewin plans to supply the domestic
market in addition to potentially exporting its kaolin to China
and South Korea. Exploration work is still continuing.
New mining law
South Africa launched its reviewed mining charter in September
to facilitate the sustainable transformation and development of
its mining industry, with emphasis on a target of 26% black
ownership of the countrys mining assets by 2014.
Minister of Mineral Resources Susan
Shabangu said her department had concluded an assessment of the
progress of the industrys transformation against the
mining charter objectives as adopted in 2002.
The observations are that
growth in the mining industry has left much to be desired and
transformation within the sector has been disappointingly
slow, she said.
The amended code was released after
an extensive period of consultation with miners. The government
said it would improve transparency and help redress stark
racial imbalances in the sector.
One of the main concerns is that
the review of the mining code gives the ministry new powers to
withdraw mining licences from companies judged to be
non-compliant and some analysts believe that it could dampen
foreign investment as the ministry can amend the charter as and
when the need arises.
This new mining code could also see
South Africa adopting a policy of nationalising mining
operations in 2012, according to a senior source from South
Africas ruling party the African National Congress (ANC)
despite repeated assurances from President Jacob Zuma and the
ANC thatÊit is not government policy.
The nationalisation of mines would
be a source of concern for investors and miners in
Africas biggest economy, which is recovering from the
global downturn, a power crunch and high electricity
However, it is not likely to happen
according to most South African miners. I do not believe
this will or can happen. It would destroy the country and
convert it to a Zimbabwe. There are simply too many
normal people in the country to allow this to happen,
explained to IM Andreas Pabst from Andalusite
If wide-scale nationalisation
was to happen it would devastate the economy, because it would
lead to an investment exodus, he added.
Matimba Khoza from Jonkel Group
confirmed to IM that big companies may
pull out if that was to happen. Investors will
simply identify countries with friendlier mining laws and
invest there. South Africa will suffer because the quality of
life will deteriorate while the country is embedded with $2.5
trillion worth of mineral resources, he said.
Chinese investors have been showing a growing interest in South
Africas minerals resources during the last twelve years.
On 25 August, president Jacob Zuma ended a three-day visit to
China which resulted in signing trade agreements relating to
minerals, environment and transportation. South
Africas relationship with China holds much
promises, commented Jennifer Cook, director of the Africa
Programme at the Center for Strategic and International Studies
Even though the Asian growing
economy is at present focusing on precious metals such as gold
or platinum, sources from the industry have reported that China
also started to look at other minerals, such as chromite, to
meet its increasing domestic demand. New joint-ventures are
therefore expected within the next few years.
This is seen with a keen interest
by the South African government as China could help fund
projects which had been put on hold and develop infrastructure
in order to get mining contracts. As an example, the two
countries signed a memorandum of understanding at the beginning
of September for a $30bn. high-speed rail link between
Johannesburg and Durban.
Chinese investors are at
present taking their time to study the assets in South Africa.
But they are looking long term, a source explained.
Although South Africa has good opportunities from a resources
point of view, the country still has to fix a few issues if it
wants its mineral industry to continue growing steadily.
Inefficient government departments, power supply and costs are
often pointed out.
PricewaterhouseCoopers (PwC) mining
director Hein Boegman noted that South Africa
luckily had some of the worlds best iron ore,
copper, and other resources and that it would be able to supply
China with quality resources going forward. However, there are
concerns about the countrys capability to stay
competitive mainly owing to growing costs.
South Africas mining
industry is very labour intensive and it has to constantly deal
with wage concerns, Boegman said. As an example, Exxaro
had to halt production in September this year as a result of an
18-day strike by workers who wanted their wages to be
increased. The halt has since then been resumed when the
company offered employees an 8.5% rise, up from its previous
offer of 8%.
Power supply also remains a source
of concern. [It] is not reliable enough for larger
projects and it has not yet been made fully clear how this
problem will be tackled and by when, Pabst explained to
IM adding that the neglect of such
important infrastructure does not reflect well on the
performance of the government and its priorities for industry
Our mines are super-deep and
about 50% of fixed costs goes just into cooling these mines.
This means that Eskoms electricity tariff hikes will put
further pressure on the countrys operating costs,
Nevertheless, Boegman noted that
mining and operating costs would most probably play a
significant role in commodity prices going forward.
Another point is the black economic
empowerment component of 26% equity shareholding. Pabst
believes that it needs to be priced into any investment
decisions, as most companies that want to invest will find
themselves in the position where they will not be paid any or
at least much below value for those shares.
South Africas mining industry seems to have a bright
future ahead thanks to its massive mineral resources. The
country is the centre of attention of investors, particularly
Asian ones, and many mineral expansions are planned for the
next few years.
As underlined by the ministry of
mines, there are still more than 300 years of profitable mining
left in South Africa alone and although mining opportunities in
other African countries sometimes seem more promising, the
country still appears as a free-risk investment compared to the
rest of the continent. Mining in South Africa can become
a win-win for investors, believes Pabst.
However, South Africa will still
have to first overcome its issues in order to continue its
development. Times have changed and unions have become more
difficult to deal with. Good technical mining experts will also
have to be trained instead of being sourced abroad.
The necessary BEE programme will have to be enforced in an
economically viable way to meet its 2014 deadline. Then, the
department of mineral resources will also have to consider the
ambiguities in the reviewed mining charter and to drastically
improve internal service delivery internally, implementation
capacity and to apply the law impartially and diligently.
Otherwise, doing business in South Africas mining
industry might well become more difficult, warned
South Africa at a
President: Jacob Zuma
Largest city: Johannesburg
GDP growth: 3.1%
Languages: 11 official languages
including English, Afrikaans, Sesotho,
Setswana, Xhosa and Zulu
Main industries (% world
Platinum: 1st producer (77%)
Gold: 3rd producer (11%, 13% reserves)
Diamond: 4th producer (5%)
Iron ore (2%)
Share of world IM
Share of world IM
Phosphate rock (10%)
- Nickel (5%)
South Africas main minerals production
South Africas main mineral production (2008)
* Total for South Africa; ** Capacity of operation
1 Not operating in 2008;
2 Most of Foskors phosphate output is from
phosphate concentrates supplied by the neighbouring Palabora
Source: South Africas
Ministry of Mines, USGS 2008, IM