In the stark and arid Northern Cape, 60km from Pofadder, lies the world’s largest undeveloped zinc resource.
Gamsberg, part of Vedanta’s Zinc International SA operations, started first-phase production in 2018 and the project is expected to act as an anchor for the company’s ambitious growth plans, adding as much as 600,000 tons of zinc to the company’s annual production in its final phase.
Vedanta Zinc International is a subsidiary of Vedanta, a diversified resources company in India. It is one of the largest foreign direct investors in India and aims to become one of the largest in SA too.
Vedanta bought Anglo American’s zinc assets in 2011, which included Black Mountain Mine, the developer of Gamsberg, Skorpion zinc operation in Namibia, and the Lisheen zinc mine in Ireland that is being closed.
Exploration drilling by Vedanta allowed it to extend the life of the zinc assets and has led to the development of Gamsberg, SA’s largest recent mining project with an investment of $400m.
In 2017 Vedanta Zinc International produced 160,000 tons but as phase one kicks off at Gamsberg, it is expected to add 250,000 tons to the company’s annual production from its open-pit operations. Phase two will bring production at Gamsberg up to 450,000 tons and phase three, which requires more exploration but would involve underground mining, could bring it up to 600,000 tons per annum.
“If we get this to work in SA, it will become one of the largest zinc complexes in the world,” says Vedanta Zinc International CEO Deshnee Naidoo.
Vedanta Zinc International also aims to become the world’s most sustainable, integrated mining company, capable of producing 1-million tons of zinc.
A key part of the company’s ambitious plans for Gamsberg and Vedanta Zinc International is to build a smelter. The company pledged to spend $800m on the project as part of President Cyril Ramaphosa’s drive to attract $100bn in investment to SA over the next five years.
But a smelter demands reliable power supply at good prices. In SA, investor confidence and subsequent economic growth have suffered due to an unreliable power supply and growing electricity tariffs as utility Eskom struggles with worsening operational and financial challenges. Recently it even reintroduced power cuts, dubbed “load shedding”.
“We are under no illusion this is easy to do,” says Naidoo, who adds that the company will not look to Eskom for the entire solution.
In fact, Vedanta is the world’s largest independent power producer and produces 10,000MW of its own power in India, largely with coal-fired power but also with renewables.
In SA, solutions can be found on the renewables side, Naidoo says, but it must be to supplement what is already a sizeable baseload of coal-fired grid power.
The strategy is one of risk mitigation, on an interim basis. “But long term, I am taking my chances on Eskom as a proud South African,” she says. “As Vedanta, we have something to put on the table and we have a government that will unlock it because they know they need the investment so desperately.”
The Gamberg project has already overcome a number of challenges. As soon as the project broke ground in 2015, zinc prices began to fall but adjustments were made and Vedanta forged ahead.
“I think [it is] something that’s never been done before, to build in the downturn,” says Naidoo, who notes the company took advantage of negotiating an agreement and ultimately have delivered the project in a stronger price environment.
Located in one of the world’s 35 biodiversity hotspots, Vedanta Zinc International had to relocate 85,000 plants and acquired a habitat of 12,900ha (equivalent to the size of Table Mountain National Park) as part of a biodiversity offset agreement.
Naidoo says she anticipates a long lead time to get environmental approvals and engineering work in place for the smelter, though Vedanta Zinc International has started appointing companies to assist with a feasibility study.
Phase two of Gamsberg, which will see the pit expanded and production increased, is likely to be approved within six months.
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