Northern Cape Business 2017-18 edition

OVERVIEW Mining Zinc and

OVERVIEW Mining Zinc and diamonds are shining brightly in the Northern Cape. SECTOR INSIGHT The Northern Cape’s vast mineral reserves are attracting foreign investors. • 30% of South32’s iron ore is processed locally. • Petra Diamonds announced a 48% revenue rise in the second half of 2016. The volumes of iron ore mined in the Northern Cape make it the mineral that will always be in the news (world prices have a big effect on employment rates in the province) but diamonds and zinc have recently been in the headlines. In the six months to December 2016, Petra Diamonds reported a 24% increase in production and a 48% improvement in revenue. Expansion continued at the firm’s Northern Cape property at Finsch and at the Cullinan mine in Gauteng province. Full-year production was said to be on track for 4.4-4.6Mcts (with cautions) and the company has a stated goal of getting to about 5.3-million carats by FY 2019. Petra has also entered into a joint venture. KEM JV comprises Petra, Ekapa Mining (jointly owned by Petra and Ekapa Mining) and a third party, Super Stone Mining. When Vedanta started work in 2015 on its R9.4-billion Gamsberg Zinc project, it was very big news for a sector in need of good news. The new mine is in the Namakwa District Municipality south of the N15 road that links Pofadder and Springbok. About 1 500 jobs are expected to be created in the construction phase, with about 500 permanent positions for the running of the mine. The year 2015 was also the year in which BHP Billiton spun off South32, and that company is very active in the Northern Cape. The Hotazel Manganese Mines is made up of two mines, Wessels (underground) and Mamatwan (open cut), and the Metalloys manganese smelter. The company has 30% of the product from its mines processed at the smelter where a managese alloy is made. Hotazel is also the site of a relatively new manganese mine, Tshipi Borwa. Tshipi é Ntle Manganese Mining (Tshipi is a joint venture between Pallinghurst Co-Investors (led by Brian Gilbertson) and a black empowerment company representing several groups called Ntsimbintle Mining. A number of non-governmental organisations (NGOs) such as the Black Sash have a 2.2% stake in the mine through Ditikeni Investment Company. Indications are that Tshipi can produce about 2.2- million tons of ore per year, for about 60 years. NORTHERN CAPE BUSINESS 2017/18 52

OVERVIEW Initiatives Most of the area’s mineral riches are processed outside the province so there are excellent prospects for investors interested in establishing value-adding beneficiation plants in a wide range of minerals, from iron ore and manganese to copper and limestone. The provincial government of the Northern Cape has made a number of interventions to assist small miners and communities in the context of the downturn in the broader mining sector. Grants from the Co-operative Incentive Scheme are being given to cooperatives to help them buy mining equipment. Steps have been taken to protect and enhance the growing Tiger’s Eye industry and exports to China have been increasing. However, illegal mining has been a problem. Provincial government has stepped in to create co-operatives and to assist such groups to get mining licences. Land owned by municipalities at Prieska, Niekerkshoop, Marydale and Griekwastad is the focus of these initiatives. The National Youth Development Agency (NYDA), the provincial government and Mintek are collaborating on the Prieska Loxion Hub (PLH), which beneficiates Tiger’s Eye for jewellery and stone-cutting products. The Northern Cape Provincial Government has estimated that procurement by the large mining houses exceeds R18-billion annually. The political leadership is hoping that closer interaction with mining companies will bring more direct benefit to local communities. All mining company already have corporate social investment plans but recent engagements (a Provincial Mining Summit and a meeting between provincial government and mine managers) aim to increase the percentage of localised procurement (parts, consumables and services), directing work to companies owned by black people and women, and investment in skills training. Assets Mining contributes 23.4% to the Northern Cape economy and makes up nearly 7% of South Africa’s total mining value. Whatever cyclical ups and downs affect the sector, it remains a most important component of the provincial economy. The mineral resources of the province are wide-ranging and impressive with significant deposits of iron ore, manganese, zinc, copper, lead, titanium, pig iron, zircon and gypsum. The Northern Cape Department of Economic Development and Tourism’s “Economic and Investment Profile” highlights the fact that the province is responsible for: • 95% of South Africa’s diamond output • 97.6% of alluvial diamond mining • 13.4% of world lead exports • 80% of the world’s manganese resource • 25% of the manganese used in the world • 100% of South Africa’s Tiger’s Eye • largest national production of sugilite (a semi-precious stone). 53 NORTHERN CAPE BUSINESS 2017/18