• BUSINESS
of the government , the policymakers , the legal regulators , and the population itself . With a more sophisticated , more highly educated staff compliment there , during COVID , remote ‘ fly in and fly out ’ operations became very unattractive , and retention of employees became a massive issue .
“ The official response of the Canadian government was also quite brutal . In contrast , the South African government was more supportive as the mining sector in South Africa was one of the first industries allowed to return to 50 % capacity , while the first world jurisdictions operated very differently . On the other hand , he said that Canada offers an ease of transacting in M & As versus the difficulty in transacting in South Africa – referring to a current acquisition locally , which has proven to be extremely complicated and drawn out in comparison .
Moving back to current strategy , he emphasised , “ We are particularly bullish on platinum , perhaps less so on palladium long term , and neutral on rhodium . We believe that we are in a very robust upside cycle and our strategy is firmly based on strengthening our competitive position within the PGM industry .” To this end , the company is investing in the extension of the LOM of key assets . These include the Two Rivers project in South Africa with African Rainbow Minerals ( ARM ) on the Eastern Limb of the Bushveld Complex , and the North Hill extension at Mimosa in Zimbabwe , jointly owned with Sibanye-Stillwater . Added to this are three important expansion projects focused on lowcost mechanised , safe assets which promise to increase current production by 260 000 ounces over the next few years , said Muller . Further , he stressed that the investment of significant funds in optimising and debottlenecking base metal refining capacity , increasing smelting capacity and shifting some of the smelting capacity to Zimbabwe was being made at the time of writing ( November 2022 ).
“ Our investment pipeline for the PGM business is fairly rich . One last step in that chain is the consideration of a base metal refinery in Zimbabwe to provide greater access to renewable energy in the country and to provide more flexibility in terms of processing capacity in South Africa . Given our life of mine extensions and now capacity expansions , I don ' t think that there are any short-term prospects locally other than of course the fact that we have a 50 % stake in the Waterberg project ."
Although South Africa is a challenging jurisdiction , it has got good resources and good geological potential .
The Great Dyke in Zimbabwe is however where Muller sees the best potential for new investment . “ Although investments are driven by value , jurisdiction is important as it does impact on access to capital and the cost at which that comes ,” he said . However , although Zimbabwe in particular is rated as a high-risk jurisdiction , there is more there than meets the eye according to Muller . Unseen benefits include the ability of the rest of the industry to support the mining industry in the country – manufacturing , supporting industries , infrastructure – and access to appropriate skills . “ This is compared to South Africa , being a fairly young democracy – we probably have fictitious
40 • African Mining • January 2023 requirements from different stakeholders in terms of expectations from the mining sector and a growing social discontent , whereas in in Zimbabwe we find a much stronger alignment between government , the communities and employees in terms of the expectations and regard for what the industry is doing . And in many ways it is therefore more stable and a lot simpler to operate assets in Zimbabwe .”
Gold ’ s future lies in internationalisation Turning to gold mining , Griffith explained that Gold Fields has developed as ‘ an international company with roots in South Africa ’ and is on a drive to be a leading ESG ( Environmental , Social , Governance ) producer . The company is in a unique position of 20 % industry leading growth – already in the pipeline to be delivered in addition to current production . The company produced 2.3 million ounces in 2022 and this is set to grow to 2.8 million ounces by 2024 .
However , he noted that to deliver the next phase of value growth , the company is following a strategy of internationalisation and is focusing on the quality of its asset portfolio to address declining production and reserves of gold in South Africa , which is to become an industry challenge in the future . Hence the USD6.7-billion acquisition of Yamana ( at the time of writing this acquisition was still on the cards 1 ), a Canadian-based precious metals producer with significant gold and silver production , development stage properties , exploration properties , and land positions throughout the Americas , including Canada , Brazil , Chile and Argentina .
Griffith said , “ Gold is a mature industry in South Africa . The opportunities for safer , longer-life , lower-cost , more productive assets to grow a company like ours are not in South Africa . For gold miners in South Africa , the opportunities are international , particularly if one looks at shallow open pit operations , but even in the underground operations – the margins that you can generate offshore are substantially higher than those in South Africa , of course with the exception of the mine that we have retained in the country , which is South Deep .”
He noted the massive investment in PGMs , manganese , chrome and even coal locally , demonstrating that South Africa is still a mining friendly enough jurisdiction where one can generate returns . “ One is protected by the judiciary , and relatively speaking , South Africa has tax and fiscal stability , which is actually quite unique in the mining industry globally .” This of course , he juxtaposed to the extreme challenges in South Africa – the unstable and unfriendly mining regulatory framework , the issues with Transnet and Eskom , crime and malfunctioning municipalities .
He pointed out that Gold Fields operates four mines in Australia representing around 45 % of the cash flow with good margins ; two mines in a joint venture in Ghana ; one in South Africa , a mine in Peru and a new mine coming on stream mid-2023 in Chile , added to this , at the time , were the opportunities that Yamana offered in Chile , Brazil and Argentina , but very importantly in the tier-one jurisdiction in Canada – an area that has been targeted by Gold Fields for some time now .
According to Griffiths , the growth opportunities for the company will come in both gold and copper , which is a commodity diversification playing into the energy market and very beneficial for gold miners going forward . “ There are lots of very good reasons to be in South Africa , but lots of very good reasons to make sure that one has got a diversified portfolio globally , particularly in gold and copper .”
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