Mintails Spurs Economic Revival

A new generation of South African mining companies is changing long-held perceptions that the country’s gold mines are deep, dangerous and dirty.

While a few large mine houses are still extracting ore from operations as deep as four kilometres (such as Mponeng on the West Rand of Gauteng), many other companies have walked away from the depleted shallower resources. They often left a polluted landscape behind them, with no recourse, as the laws at the time did not penalise irresponsible mine closure.

But in that polluted landscape lie opportunities for renewed cleaner and safer mining, and upliftment of local communities. At the same time, it affords mining companies environmental, social and governance (ESG) kudos for doing the right, responsible things for the environment and its people.

Even though gold mining’s importance to the South African economy has declined over the last 100 years, it remains an important source of jobs, tax revenues, foreign earnings and socio-economic development. It is estimated that in South Africa, each mining job supports ten dependents, meaning the planned workforce of 500 people at Mintails will have an impact on 5 000 lives directly – a massive boost for the local economy.

In 1970, South African mines produced 1 000 tonnes of gold and the industry employed around 350 000 to 400 000 people. In 2023, gold mining in South Africa employed 93 589 people to produce 95.6 tonnes of gold, valued at R105.7 billion. South Africa was ranked by GlobalData in 2022 as the world’s eighth-largest gold producer (down from the biggest producer at the turn of the century) and as the second-largest gold producer in Africa, after Ghana.

South Africa is unlikely to regain top slot as the world’s biggest gold producer, but there are still decades of gold production in the future, from deeper mines and the reprocessing of historic mine tailings. Additionally, the higher gold price, especially in rand per kilogram terms, makes previously marginal resources economic once again, increasing the life of these older operations and making new, lower grade mines feasible.

Gold mine tailings contain trace quantities of gold that are economic to extract using modern technology, and at current gold prices. But they were usually deposited long before environmental impact assessments and compliance with global industry standards became a prerequisite for mining and waste deposition management. As a result, they are a source of pollution, specifically dust and tainted water run-off, both of which affect surrounding communities. They may also attract illegal miners, contributing to urban degradation and crime.

Reprocessing these tailings in a responsible way, which also reduces their footprint, makes a positive contribution both to the economy and the environment. 

One of the companies that has tackled the task with energy and purpose is Pan African Resources, a group which mines the country’s oldest deposits – the greenstone belt around Barberton – but has also been investing in new tailings reprocessing operations. Pan African’s emphasis is on “future-focused mining”: harnessing the latest technologies for sustainable mining and to leave a better legacy.

Revitalising the economy through innovative mining

1. Catalysing Economic Growth with Renewable Energy Initiatives

Reliable and affordable power is a basic requirement for mining. Companies like Pan African Resources have had to find their own solutions since 2017, when capacity constraints at state-owned power utility Eskom started to translate into bouts of power curtailment or load shedding. This has had a severely negative effect on all businesses. In the last decade, “green” power has also become a necessity. Since most of Eskom’s electricity is generated from coal-fired power stations, its customers incur heavy Scope 2 carbon emissions attributions.

Switching to renewable energy is a solution that provides reliable and affordable power, enabling mining companies to stay in business, retain and even grow jobs, while minimising their impact on climate change.

In 2021, Pan African began construction of its first renewable energy project, the 9.9MW solar plant at Evander Mines, constructed on 22ha of rehabilitated mine ground. In 2023, it started to build a second, 8.75MW solar plant at Barberton Mines and is finalising the feasibility study to expand the Evander plant by 12MW to 22MW. In the same year, Pan African also signed a 40MW power purchase agreement with independent power producer Sturdee Energy to buy wheeled renewable energy for up to 15 years.

A third solar PV plant with up to 15MW of capacity is planned for the Mintails project on the West Rand.

In its 2023 financial year, Pan African generated 23 770 megawatt hours of its own electricity through solar renewable energy. Its goal is to generate 30% of its energy from renewable sources by 2030 and 50% by 2035. This should reduce carbon emissions by 30% by 2030 and deliver cost benefits. In 2023, the solar plant at Evander contributed about 30% of Elikhulu’s energy requirements and saved about $1.9 million in electricity tariffs paid to Eskom. Current Group cost savings are estimated at $13/oz from the Evander facility alone.

These investments reflect Pan African’s commitment to apply climate-conscious practices in its operations, reduce long-term production costs and to harness the latest modern technology to improve efficiencies.

2. Mechanisation and Efficiency

Another area where the South African mining industry is changing is in its adoption of technologies to become safer and more efficient. Pan African’s mine planning department uses modern mine planning and scheduling systems, which allows them to plan all production activities against monthly budgets  and timetables. The survey department has cutting-edge mine-design software, including computer-aided drawing and 3D systems. The group is installing a Mineware reporting system which will provide data on production, planning and labour for active decision-making.

As it builds out its portfolio of tailings projects, Pan African is applying as far as possible the Global Industry Standard on Tailings Management (GISTM). The GISTM is designed to prevent catastrophic failures of tailings dams through active aerial monitoring systems and addresses related issues such as engagement with communities, strengthening environmental awareness and protection and public disclosure.

The Mintails Project: a Visionary Investment

1. Unveiling the Mintails initiative

Pan African’s latest bold step into the future of gold mining in South Africa is its commitment to invest R2.5 billion, the biggest recent investment in the local gold mining industry, in Mintails.

In October 2022, Pan African closed the transaction to acquire  Mogale Gold and the Mintails SA Soweto Cluster from a company in business rescue. The seller had been struggling to make a profit for several years from re-mining old gold tailings on the West Rand of Johannesburg and faced a huge unfunded environmental liability.

These gold tailings provide Pan African with 227 million tons of remineable material on surface, containing gold at a grade of about 0.3g/t. The deposit represents about 2.1 million oz of gold in situ. Payback on the investment is expected within 3-5 years of full-scale commissioning. 

Full-scale construction of the Mintails Tailings Retreatment (MTR) plant began in July 2023 and it is expected to take about 18 months to complete, with plant commissioning expected in December 2024.

2. Economic Implications and global investor interest

 

This acquisition will increase Pan African’s annual production by about 50 000oz a year or 25% of baseline production in the first 13 years of steady-state production, and the potential exists to continue mining these tailings for another seven years, for a total life of mine of some 20 years. Initial all-in sustaining costs of production are estimated at under US$1 000/oz, a profit margin of over 100% at current gold prices.

It will also mean that about half of the group’s gold output will be sourced from low-cost, high- margin surface remining.

This is important because it should stimulate foreign investor interest in Pan African’s shares. Shallow gold mining is more common around the world than deep-level mining and it is recognised as generally safer, lower cost, less labour intensive and faster to bring into production.

Innovation at the core of Mintails

1. Technological advancements in ore processing

Ore processing technologies refined and applied by Pan African will turn Mintails into an opportunity, rather than a liability. It has already applied these techniques at its Elikhulu and Barberton Tailings Retreatment Plants.

The mining method will be hydro mining, which entails loosening the material using grey (non-potable) water in high pressure hoses and piping the slurry to a state-of-the-art automated treatment plant, which will have capacity to process 800 000t/month of tailings material. This is a proven, low-cost, low-impact mining method.

Initially the tailings will be deposited in the West Wits Pit, and once that has reached capacity, in a new tailings storage facility that will be built. It will be properly lined to prevent leaching into groundwater. Mogale will have nine carbon in leach tanks and a smelt house, all of which will be highly automated.

2. Renewable Energy and sustainability

Pan African is examining the feasibility of building a 15MW solar plant at Mintails to ensure uninterrupted operations, control electricity costs and lower carbon emissions. As it mines, it will rehabilitate the land at the same time and the land will be available for alternative use such as housing or agriculture. Rehabilitation will result in lower levels of air pollution because there will no longer be sand blowing from poorly vegetated old dumps onto surrounding residential areas and it will stop seepage of polluted water from these areas into the local streams and groundwater.

Local labour, contractors and small businesses will be used and the project will create 300-400 permanent jobs. Over the life of the project, Pan African will set in motion community social investment initiatives that will help with the economic revival of the area.

Enhancing community and investor confidence

1. Community engagement and development

Pan African has held discussions with representatives of the local community and government about the needs of local communities, which will be incorporated into the Mintails Social and Labour plans. There will be business incubation for local small businesses. In the short term, the focus will be on helping local community organisations and schools, and later, as land becomes available, the company will help to develop agricultural projects, based on lessons from its successful blueberry farming project at Barberton, which employs 300 seasonal workers.

2. Building investor trust

The Mintails project represents a vote of confidence in the future of gold mining in South Africa and demonstrates how issues like community expectations, crime, illegal mining and environmental pollution can be tackled and properly managed. The success of this project will encourage investors to think differently about Pan African and the South African mining industry in general. It may serve as a blueprint for tackling similar projects in the country’s historic mining areas around Gauteng, Mpumalanga and the Northern Cape.

Conclusion

Pan African’s R2.5 billion investment in the Mintails and Soweto Cluster surface dumps is expected to breathe new life into an economically-depressed and polluted area while significantly raising the company’s annual gold output and profitability per ounce.

This project has wider implications. It will increase job opportunities and skills and generate more tax for the fiscus. By showcasing how South African mining companies are able to generate their own power, mine safely and at low cost, and create solid relationships with surrounding communities, the Mintails project should help to inspire foreign investor interest in the long-term viability of gold mining in South Africa.

To find out more about the Mintails project, visit here.