An old copper and zinc mine in the remote Northern Cape Province of South Africa is emerging as a litmus test for an industry and government effort to revive the country’s once great mining industry.
The planned redevelopment of the Prieska mine has started to attract international attention in the days leading up to the annual Mining Indaba conference which starts in Cape Town tomorrow.
The world’s mining leaders will flock to Cape Town in South Africa this week but it’s a small project in the Northern Cape Province where the future of the country’s industry is being re-shaped. Photographer: Dean Hutton/Bloomberg.© 2016 Bloomberg Finance LP
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Billed as Africa’s biggest mining event, Mining Indaba attracts thousands of delegates and observers from around the world with a site visit to Prieska one of the hot tickets, not because there’s anything special about the mine or what it produced, more because of its history and potential future.
The Australian Connection
Orion Minerals, a small company listed on both the Johannesburg and Australian stock exchanges, plans to re-start production at Prieska in 2021 when it will yield two product streams, one copper and the other zinc, much like it did when the last ore was hauled to the surface from a 3000-foot deep shaft in 1991.
But what’s very different with the re-birth of the old mine is that it’s occurring in a new South Africa, using new and highly mechanized technology rather than the labor intensive methods of the past which saw tens of thousands of workers in a single mine, often with deadly results.
If the Prieska experiment works, and it does have strong government support, it could blaze a trail for other mine developers who have shied away from South Africa because of its high risk profile and difficult labor relations.
Closed In Tough Times
Abandoned prematurely, partly because of a capital drought during South Africa’s apartheid years the previous owners left a large amount of commercially valuable ore at the bottom of the workings.
Perhaps more significantly the earlier owner had no access to the sort of exploration and mine development technologies available today. It’s the latest technologies which should ensure the financial success of the redevelopment and play a key role in finding new orebodies around the old mine.
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Another aspect to the planned redevelopment of Prieska is the role it might play in helping the Johannesburg Stock Exchange (JSE) expand its modest market for small companies.
History, which weighs heavily on everything in South Africa, has left legacy issue in its capital markets which are almost as complex as the issues which played a role in first closing Prieska and then inhibiting attempts by miners to return.
Not Enough Small Companies
The lack of a vibrant small companies section on the JSE coincided with land ownership and access laws which favored big mining companies and gave mineral ownership rights to the farmers working on the surface.
Breaking down those barriers in the post-apartheid era has been difficult with the big miners reluctant to release their grip on potential new mines, and even when that happened the first flush of Black Economic Empowerment laws did little to encourage exploration and a lot to discourage international investment.
Cyril Ramaphosa, South Africa’s relatively new President and a former union leader, is keen to see growth return to the country’s mining industry and will deliver a keynote talk at the Mining Indaba conference.
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Putting his weight behind efforts to attract international investment in mining should counter-balance the wage and conditions demands of the labor movement which have had a deadening effect on the industry.
A Breakthrough Project In Several Ways
Prieska is a potential breakthrough project because it will start (or re-start to be correct) without legacy issues and because it is classified as a new mine it will be able to use the latest low-labor, automated equipment, which means employing people in the hundreds rather than the 4500 who work at the mine when it last operated.
In some ways, Prieska is a test case for the introduction of the technologies which have cut costs and boosted the efficiency of mines in Canada and Australia, two of South Africa’s prime rivals for minerals industry investment.
The second phase of the Prieska experiment can be seen in its joint stock-exchange listings with much of the early capital coming from Australian investors who have greater comfort with early-stage exploration and mine development.
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In a single old mine can be found flashes of an unhappy history and hopes for a brighter mining and capital formation industry.