How strategic investment secured the future of Palabora and the people of the Limpopo...
Palabora Mining Company was incorporated in South Africa in August 1956 and was owned and managed by Rio Tinto until 2013 when it was acquired by a consortium led by the Industrial Development Corporation (IDC) of South Africa Limited and China’s Hebei Iron & Steel Group. Acting CEO Maboko Mahlaole was working at the company in the capacity of HR Director at the time of the acquisition, and has seen PMC pursuing new and encouraging strategies under its new owners.
Nobody could say that Rio Tinto and its minority partner Anglo American were not committed to the mine, but at the time of the recession, the implementation of an expansion plan to extend the mine’s life for a further 20 years was in doubt. The high copper grades obtained from the original open pit mine, which created the ‘biggest hole in South Africa’ having been largely exhausted, and the $410 million underground mine, whose production capacity reached 30,000 tonnes of ore per day reaching the end of its life, a decision had to be made, and in November 2014 the board finally approved a $9.3 billion expansion programme to extend the mine at a deeper level. The Lift II mine will be dug 450 metres below Lift I and will ensure a continuation of copper mining in Palabora to 2030 and beyond.
This long term vision had to encompass not only building the deep mine, but also addressing the beneficiation operations. As much as 30 percent of the headline cost will be taken up with the addition of a new processing plant.
Copper is not PMC’s only product. Though copper had always been the main revenue earner until three years ago, when it started to earn more from magnetite, an iron ore. Today a greater share of turnover still comes from magnetite. To take advantage of this the company wants to increase its capacity to process magnetite. Two years ago it was processing a little over three million tonnes per annum (tpa) of magnetite, says Mahlaole. “Our target is to increase magnetite production to ten million tpa.” In June 2015 a new magnetite plant was commissioned that will ramp production up to six and eventually ten million tpa.
Internal logistics were also constricting magnetite production, he says. “We are working on a project that we call the magnetite expansion. Two years ago our magnetite capacity was just over 3 million tpa. The target is to be able to produce up to 10 million tpa. This project is under way, in fact we just commissioned a new magnetite plant as part of the ramp up to 6 million tpa and eventually 10 million. The higher figure will be reached by optimising the logistics internally. We have a stockpile of around 220 million tonnes of magnetite spread over a big area – currently it’s moved by tractors, and dried using outdated fan technology.” The new plant incorporates modern drying technology, and a study is taking place on how best to optimise transportation of iron ore to the railhead of Transnet, and how the latter might help to facilitate this.
Another key part of the process is the copper smelter. Being able to produce 99 percent pure copper anode differentiates Palabora from its regional competitors, however the old smelter is reaching the end of its useful life since its emissions no longer meet South African regulatory standards. Permission is being sought to stretch its life into next year by retrofitting it with new technology. That would allow a completely new, environmentally efficient smelting plant to be sourced from China and commissioned early in 2016. There was no appetite for investing in a new smelter under the former ownership, says Mahlaole, but Hebei did not flinch at the need to invest in this plant – another long term strategic commitment.
The mine’s new-found sustainability is a win-win, he says. I think the divestment from Rio Tinto and the investment in the mine and the smelter bought a new lease of life for this region. PMC has benefited from China’s policy of investment overseas, particularly in Africa. They see Palabora as a showcase for that policy, securing copper and iron ore supplies, a business success story and also a launching pad for their Africa policy. We are fortunate to be in this situation!”
Most fortunate of all in the eyes of Maboko Mahlaole is the fact that PMC will continue to be able to employ large numbers of local people, and improve life for their families. “Unemployment in this region is over 30 percent. Fortunately at Palabora we have a training centre, accredited by the Department of Higher Learning, where we already run a lot of courses. We train fitters, boilermakers, electricians, rock breakers and other trades.
“So we have a large training footprint of our own within the business. But in the light of the expansion project, we have partnered with the contractors like Murray & Roberts and Master Drillers to put together a programme to standardise training. At the same time we brought in the community leaders and local authorities to ensure there is fairness in employment.”
Having seen the problems that can rise in large projects such as the stadium building programme for the 2010 World Cup and some of Eskom’s energy programmes, he believes it’s important not to over-fuel community expectations, while making sure that community based service providers get a fair share of the cake. The main contractors are encouraged to source and outsource locally, employing as many skilled people as they can rather than bringing in workers from other states or abroad.
Environmental management has always been a part of Palabora culture. “We live side by side with vulnerable fauna and flora; we need to look after that as well as the safety of our employees. For example we need to look after the Limpopo river that runs through our mine – it provides sustenance to many communities in South Africa and through into Mozambique.”
PMC has a total demand of 110MW across its site. In 2012 Palabora Copper engaged the Australian energy consultant Ensight to review its energy expenditure, during which process it identified $20 million of potential savings. Three years on the exercise has really delivered. “We saved $5.3 million in energy costs, received R 23.1 million from Eskom in recognition of our performance, saved enough power for 77,400 households plus enough water to sustain 2,050 elephants for a year, and cut greenhouse gases weighing as much as 12,850 fully grown elephants!”
Continuing the analogies, his favourite one is that enough coal was saved to drive a steam train from Cape Town to Cairo and back, 17 times. “It has gained us awards and set an example to other big businesses in the country. In our way we are trying to fight climate change and contribute towards good environmental practices,” he says.
For Maboko Mahlaole, who has been tackling employment issues for 35 years, people come first. “I am optimistic that the focus is not now solely on the individual – there is a new concern for communities. If you do not pay attention to what is happening around you may not survive long as a business!”
Perhaps that’s why PMC has seen very little in the way of industrial discontent (over a period of some turmoil in the country as a whole). There is no migrant labour here, living in camps. Almost all of the 2,400 employees working at Palabora live en famille within 20 kilometres of the mine, coming to work on company buses.