At the end of February, Vedanta Zinc International celebrated the “grand opening” of the Gamsberg project, near Aggeneys in the Northern Cape. The mine’s first blast ceremony had taken place on July 27 2015. The grand opening marked the culmination of a decade of planning, feasibility analysis, calculated investment decisions, risk-taking and sustained engagements with regulators and logistics authorities. The upshot is the emergence of the world’s largest zinc mining and processing complex.
President Cyril Ramaphosa unveiled the plaque and delivered the guest of honour speech, declaring his tour of the mining complex “a breath of fresh air”, auguring well for the country’s mining industry. He cited Vedanta’s focus on young people, gender diversity and the use of cutting-edge digital technology for taking care of workplace safety and other purposes as groundbreaking.
Sharing the stage with the president, Vedanta Resources Group chair and acclaimed mining entrepreneur and philanthropist, Anil Agarwal, promised this was just the beginning, with much more to come. He emphasised his commitment to and excitement about investment in SA’s mining sector.
He used the Gamsberg project to highlight Vedanta’s investment strategy across the ups and downs of the commodity cycle, political uncertainty and policy controversies, contrasting this with the attitude and investment approach of the previous owners of Gamsberg, Anglo American, which failed to recognise the potential in the project.
Agarwal, now the largest shareholder in Anglo American, went one step further. In a refreshingly honest manner, he appealed to the group to prioritise SA, invest in the country’s mining projects and help unlock the considerable opportunities the SA mining sector offers.
The story of the Gamsberg project illustrates that with proper and professional collaboration between the private sector and state departments across all spheres of governance, SA can achieve effectiveness and efficiency in the administration of its mining laws and regulations. As one of the top five mining jurisdictions in the world, the country remains deeply dependent on the effective and integrated use of its national resource endowment. This is important not only for economic growth and foreign exchange earnings but also, and as importantly, for job creation, industrialisation and social development.
The mining industry worldwide has faced growing socioeconomic, environmental and political challenges over the past two decades. In SA this sector has experienced further policy uncertainties and administrative as well as logistical complexities in recent years. So much so that some commentators have declared that the industry is facing an existential sunset.
While it is a fact that the mining sector’s contribution to the country’s GDP has dwindled to a fraction of what it once was, and SA’s share of global exploration investment has diminished to about 1% of world investment in exploration, these by no means reflect the potential of the SA mining sector. If anything, such statistical trends need to focus the minds of both the public and private sector players to rethink their approaches to the governance and management of this critical sector.
There is a growing realisation that the sustainability of mining and industrial activities will increasingly depend on the degree to which business operations are congruent with the social and environmental parameters within which economic activities take place.
— Doing things differently and collaboratively needs to be the hallmark of the country’s new approach to turning the mining sector into a sunrise industry.
Worldwide, communities and social groupings are growing impatient with the prevailing milieu, where around them wealth is being created and yet communities remain trapped in poverty and structural unemployment. Governments and businesses are under pressure to rethink their modus operandi.
Predictably, sociopolitical pressures are building up across the board. Accordingly, all social structures need to re-examine their operations and mindsets. The process of re-examination will mean different things to different sectors and industries.
In this context, the establishment of the Gamsberg zinc complex is a welcome development. Key to success in this regard is a value-driven business strategy based on profitability balanced with the welfare of the workforce, optimal use of technology, care of the mining communities and genuine custodianship of the environment.
It is noteworthy that the Gamsberg mine had more than 3,000 species of flora and seedlings that needed to be taken care of professionally and sustainably. As important was a co-ordinated focus on beneficiation and the establishment of sustainable enterprises and industries associated with the production, processing and smelting of zinc. In the short term, the management of the supply chain and its maximum impact on the surrounding businesses and communities were of paramount importance.
The Gamsberg mine has a long (over 50 years) expected economic life, which is necessary for extracting benefits from the associated upstream industries as well as the project’s supply chain opportunities. To this end, it is self-evident that all the stakeholders need to rethink their ways. Doing things differently and collaboratively needs to be the hallmark of the country’s new approach to turning the mining sector into a sunrise industry. Vedanta Group has demonstrated its commitment to a progressive and new approach to mining. This creates a favourable platform for the other stakeholders to rise to the challenge.
In the context of the mineral complex, one aspect that stands out loud and clear is this: we cannot continue to mine and export ore and other raw materials for processing elsewhere as this severely limits the benefits we can derive from the exploitation of the nation’s resources. In addition, there are environmental concerns that are increasingly receiving serious attention. Shipping millions of tons of raw materials across the oceans entails massive environmental damage. There is, therefore, a need to increase value addition to the country’s minerals before they are exported.
Of course, for different commodities, there are varying degrees of beneficiation possibilities in SA. With regard to the Gamsberg zinc complex, as Ramaphosa highlighted in his speech that there is much yet to be unlocked in establishing beneficiation opportunities including, but not limited to, fertiliser production, power generation, rail and logistics and port developments.
Each of these enterprises has its associated service industries. Collectively, these integrated and interrelated enterprises could culminate in the emergence of a sustainable socioeconomic ecosystem wherein skills development, job creation, industrialisation and socioeconomic development would become a lived reality of the region’s population.
Clearly, there are many socioeconomic developmental benefits to be gained by co-ordinating and collaborating across social stakeholders in the mining sector, with a renewed mindset. The Gambsberg zinc complex can become the pilot case, the new dawn SA mining so badly needs.
• Abedian is chief economist with Pan-African Investment & Research Services and a consultant to Vedanta Zinc International.
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