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South African Business 2022

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Welcome to the 10th edition of the South African Business journal. First published in 2011, the publication has established itself as the premier business and investment guide to South Africa, supported by the website Regular pages cover all the main economic sectors of the South African economy and give a snapshot of each of the country’s provinces. This issue has a focus on Special Economic Zones which are being rolled out across the country with specific economic areas of focus. The importance of the revival of minerals exploration and the significance of onshore and offshore gas discoveries is the subject of another special feature.

OVERVIEW Mining Record

OVERVIEW Mining Record earnings for miners have been good for the national Treasury. Credit: Pilanesberg Platinum Mines Commodity prices buoyed the South African mining sector in 2021. Rhodium palladium, platinum and gold collectively rose in price by more than 50% at one stage during 2021. Increased demand for platinum group metals PGMs has been a trend for some years, driven by the vital role played by PGMs in reducing pollution in the automotive sector. This was boosted more recently by applications for renewable energy and by supply constraints brought about by Covid-19 with production volumes down and shipping made more difficult throughout 2020 and into 2021. More than R23-billion in dividends was paid out to Kumba Iron Ore shareholders in July 2021. Interim earnings reached record highs on the back of a commodity price surge that followed the lifting of many pandemic restrictions around the globe. The company paid R9.2-billion in taxes and royalties in the six months to the end of June. With other mining companies recording similar figures, the government was able to keep paying social grants beyond the time when it thought it would have to scale down on support for people afflicted by the Covid lockdown and the slowing economy. Share prices seldom deal in irony, but when the coal company that was hived off from Anglo American in 2021 greatly improved its share price in just four months, some wry smiles might well have been exchanged by traders. Thungela Resources listed on the JSE in June and by early October its share price had increased fourfold to almost R100, giving the company a market value of R13-billion. There was irony in this result because Anglo American had gone to the trouble to promise to support Thungela financially until the end of 2022 if thermal coal prices did not hold up. With many companies getting out of coal and the global investor community under pressure to divest from fossil fuels, a new coal company seemed like a long shot. But the economic growth surge that followed the lifting of lockdown regulations caught energy planners by surprise. With not SECTOR INSIGHT Northam buys a stake in Royal Bafokeng Platinum. enough renewable energy yet on stream, the world started scrambling for energy sources. Cue Thungela Resources, the new owner of Anglo American’s thermal coal assets in South Africa. Other news in 2021 from Kumba Iron Ore was the appointment as CEO of Mpumi Zikalala, currently the managing director of De Beers Managed Operations, who became the first woman to head the company. In 2020, Amplats announced the appointment of Natascha Viljoen as CEO. An organisation called Women in Mining (WiMSA) aims to empower women in the South African industry, giving them a platform and a network. Current chairperson Petro Du Pisani is Head of Business Improvement Projects at Anglo American. A previous chairperson, Thabile Makgala, is the Executive: Eastern Limb at Implats. SOUTH AFRICAN BUSINESS 2022 44

Sales and profits PPC Lime has changed hands. A transaction for R515-million was expected to be concluded by the end of 2021, with the Kgotelopele consortium taking over ownership. The new owners see the green economy as advantageous to the company’s future. Harmony Gold expects to spend R2.3-billion in 2022 on capital expenditure in South Africa. The Zaaiplaats project in Limpopo and a tailings project between Klerksdorp and Potchefstroom in the North West are the major areas of focus. Together with a project in Papua New Guinea, the new initiatives will allow Harmony to continue to produce 1.4-million ounces of gold until FY 2027 (Mining Weekly). Coal giant Exxaro has disposed of its stake in Tronox Holdings (mining and processing of titanium ore, zircon and other minerals) but has taken full ownership of renewable energy company Cennergi, owner of two wind farms in the Eastern Cape. Exxaro has tasked Cennergi with installing renewable energy plants at its mines. In March 2021, Implats announced headline earnings of R14.5-billion, an increase of 328% over the previous year and a reflection of all of these trends. Implats intends expanding production at its Two Rivers PGM mine by 180 000oz. The project will take four years and cost R5.7-billion. In the fourth quarter of 2021 Northam Platinum Holdings announced a deal to secure a one-third stake in Royal Bafokeng Platinum. The sale in 2020 by AngloGold Ashanti of its Mponeng mine and Mine Waste Solutions to Harmony Gold for 0-million (about R4.4-billion) marks the end of an era. Harmony Gold’s acquisition strategy, including the purchase from AngloGold of Moab Khotsong mine in 2017, will result in it being the country’s biggest gold producer. With 350 000 new ounces coming from Mponeng, it could produce an annual total of 1.7-million ounces. De Beers is expecting its Venetia underground project to start delivering its first ore in the second half of 2022. Investment in the project will amount to about .1-billion. The investment is expected to extend the life of the mine to 2045 and possibly beyond that date. Afrimat continues to expand its commodities portfolio. Previously focussed on construction materials, Afrimat bought a 27.27% stake in a high-grade anthracite mine in Mpumalanga, ONLINE RESOURCES Council for Geoscience: Minerals Council South Africa: National Department of Mineral Resources and Energy: Coal prices surged in 2021. Credit: Thungela Resources Nkomati and followed this with the purchase of Coza Mining, an iron ore and manganese company in the Northern Cape. Afrimat’s first foray into commodities was also in that province, the R322-million acquisition of the Diro mine. In 2020 Afrimat applied for Nkomati to be placed under business rescue because of the Covid-19 lockdown but stated that it believed the business could indeed be resuscitated. When phase three is reached, the biggest new mining project in South Africa will deliver 600 000 tons of zinc for Vedanta Zinc International. Located at Aggeneys in the Northern Cape near the border with Namibia, the Gamsberg zinc project has so far attracted 0-million in investment from the company and has started trucking product to the Port of Saldanha. Phase one of the openpit operation will deliver an annual load of 250 000 tons of zinc. If it proceeds to phase three, it will likely go underground. The Northern Cape Province is planning for a deep harbour at Boegoebaai. Part of the strategy involves the creation of a commodities corridor linking the Upington Industrial Park with the port. ■ 45 SOUTH AFRICAN BUSINESS 2022

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