MINING INDABA •
GEOLOGY OUTLOOK 2024 : WILL THE ‘ ENERGY BIG SIX ’ REVITALISE EXPLORATION IN AFRICA ?
By Dr Nicolaas C Steenkamp
Based on the bleak outlook at the end of 2023 , the geological and mining outlook for 2024 is not optimistic . Investors and companies felt it in their pockets with losses and lower shareholder returns . Lack of exploration funding and active exploration could also spell the end of mining operations in the next three decades in South Africa , in particular . Optimism lies in the fact that the ‘ Energy Big Six ’ could bolster the African mining industry in the coming year .
Recently the value of commodities such as cobalt , copper and PGMs dropped to record low levels and there has been a struggle to regain ground – compounded by a marked increase in input and production costs . Iron-ore and coal revenue also decreased noticeably and contributed to the decrease in capitalisation of these companies . The weakening of African currencies also negatively affected operational input cost of key chemicals , materials and equipment . Chrome remains the exception at this time with positive revenue . 1
OPEX is up , driven by massive increases in fuel and electricity costs . The continent has also had a difficult year in terms of power security with shortages projected to continue for 2024 .
These factors have led to a decrease of available funds in budget allocations towards geological development and exploration , notably in Africa . Due to the lack of exploration programmes to either extend the life of known deposits or discover new deposits to develop the mining industry in South Africa , the industry could come to an end within a generation . If known deposits are mined at current rates , it is forecast that the gold sector could run out of operational mines in 27 years , iron-ore in 13 years , coal in 14 years and PGMs within 38 years .
There has also been a notable downward shift in the number of Western-standard studies according to mineral reporting codes for new prospect deposits . These studies across the feasibility range are expensive and time consuming to complete and do not guarantee that the deposit will be developed into an operational mine . In contrast , there has been a marked increase in the number of Chinese-style studies , which are more geared towards securing funding from Chinese financial institutions . These studies are generally much cheaper to undertake and have quicker turnaround times , with a higher potential of receiving funding to convert the deposit into a mining operation .
Costs associated with implementing net zero goals have also led mining companies to reconsider the viability and sustainability of their operations . Optimism , however , remains in that Africa offers significant potential for supplying the demand for critical minerals needed for decarbonisation efforts , notably copper , PGMs , lithium , nickel , cobalt and Rare Earth Elements ( REE ). A number of African countries , which are the main producers of the Energy Big Six , have also made significant strides in developing legislation to increase the volume of domestic beneficiation .
Furthermore , there has been a significant decrease in the number of students enrolling in the natural sciences such as geology and engineering programmes related to mining globally . This has been attributed to the increasing negative perception of mining and the lure of more lucrative careers in information technology . The perception is that Artificial Intelligence ( AI ) is fulfilling an increasing role in the exploration and discovery of new deposits , by being able to process big data resources .
In parallel , the mining industry is experiencing a significant challenge of an aging workforce and professionals reaching the end of their careers . The recessions , mining downturns and the effects of the COVID pandemic led to an exodus of mid-career professionals into other economic sectors . This can be viewed as a future risk , specifically in Western countries , but also impacting Africa .
Geoscience professionals have adapted and started to fill the gaps and needs in an environment of post-closure planning . Geologists are increasingly filling the ranks in companies looking at ways of addressing their responsibility after operations have come to an end , but with communities remaining in the area . This requires reskilling of the former employees and efforts related to rehabilitation of mine sites . Upskilling is also a critical part of reducing the risk of artisanal or illegal mining operations taking root at closed mines .
Noteworthy strides have been made in geological research in the past year and funding being made available by non-mining industries or purely academic institutions . The challenge remains the penetration of these advances into the industry and receiving seeding capital . Fortunately , the mining and geological sector has historically been more receptive to adopting new technologies and methods once the value addition has been proven .
The outlook for the geological sector is not very optimistic for 2024 , but with the global drive for decarbonisation and providing energy alternatives , recognising the need for developing mineralogy and exploration to meet the demand would potentially turn in favour of the geoscience professionals in the near future . •
Reference 1 . At the time of writing in November 2023 .
Dr Nicolaas C Steenkamp is an independent consultant , specialising in geological , geotechnical and geometallurgical projects and mining project management . He has over two decades of industry experience with global exposure . ( ncs . contract @ gmail . com )
Dr Nicolaas C Steenkamp www . africanmining . co . za African Mining Publication African Mining African Mining • January 2024 • 29