SA mines to close for three weeks in Covid-19 battle

Mine workers walk past the pit head at Sibanye Gold's Masimthembe shaft in Westonaria. Picture: REUTERS/MIKE HUTCHINGS
Mine workers walk past the pit head at Sibanye Gold's Masimthembe shaft in Westonaria. Picture: REUTERS/MIKE HUTCHINGS

Mines in SA, the source of most of the world’s platinum group metals (PGMs), chrome and manganese, will shut for three weeks as the country goes into a lockdown to stem the infection rate of Covid-19.

President Cyril Ramaphosa said on Monday night that the country will begin the lockdown from midnight on Thursday until April 16.

“Companies with operations that require continuous processes, such as furnaces [and] underground mine operations, will be required to make arrangements for care and maintenance to avoid damage to their continuous operations,” Ramaphosa said.

SA’s mines employ 450,000 people and support large numbers of supply and services businesses in SA.

Roger Baxter, CEO of the Minerals Council SA, whose members account for 90% of the country’s mineral production, said the industry is in talks with senior government officials around the three-week shut down.

“The Minerals Council is also exploring what will be required to prevent the lockdown leading to permanent damage of the industry. There are marginal and loss-making mines that would likely be unable to re-open should they be required to close fully, without remedial measures,” he said in a statement on Tuesday.

“In addition to the measures announced by Ramaphosa, there are other creative solutions being explored, including by organised business as a whole, that could assist the survival and eventual recovery of the industry and the economy,” Baxter said.

These measures entail ensuring mines have sufficient staff and capital to make sure mines are adequately cared for during the lockdown so they can be quickly and safely re-opened.

Talks will also address smelters and refineries that cannot be turned on and off in short time periods, needing long shutdown and restarting times to avoid damage.

The PGM industry is, for example, dealing with a backlog of inventory that it has not smelted or refined, making this the ideal opportunity to process these already mined metals with relatively small staffing requirements.

Coal and gold

Coal mines, employing about 44,200 people, supply state-owned power utility Eskom fall under the definition of essential industries and will remain open.

SA produces about 250-million tonnes of coal a year, of which 120-million tonnes goes to Eskom. Another 50-million is mined by JSE-listed energy and chemical company Sasol, which converts it into liquid fuel.

PGM miners and companies in chrome, iron ore and manganese, for example, have supply contracts with customers. It’s likely they will have to trigger force majeure clauses in these contracts if they cannot deliver minerals because of the closures.

Harmony Gold, the largest producer of SA’s gold, said it is putting its mines into care and maintenance and the shutdown will negatively affect its 1.4-million ounce production target for 2020, as well as its earnings.

“This is an unprecedented time in the history of the mining industry and our country. The health and safety of all South Africans must take precedence and, as such, we are committed to making decisions that will ensure the continued viability of our company,” said Harmony CEO Peter Steenkamp.

AngloGold Ashanti said it is shutting its Mponeng mine, the world’s deepest at 4km below ground, and its tailings treatment business, which last year accounted for 419,000oz of gold. These assets will pass over to Harmony in a $300m deal that should be concluded at the end of June.

SA’s companies have attempted to keep their labour-intensive mines open, sending tens of thousands of people underground daily while facing reduced productivity and higher costs to keep their workers safe.

“It is our understanding that South Africans are being ‘locked down’ where they are currently located. It is not desirable, we understand, for South Africans to be travelling across country, or into neighbouring countries. This is part of the current planning process,” said council spokesperson Charmane Russell when asked about sending mine employees home.

Mining the data

Globally, about 17,000 people have died and more than 390,000 have been diagnosed with the coronavirus, with more than 100,000 of these recovered (mostly in China), according to Johns Hopkins University in the US.

Impala Platinum ordered “significant quantities” of thermal scanners, vitamin supplements, flu vaccines, gloves, face masks, oxygen and chronic medication as far back as February to prevent the disease, said spokesperson Johan Theron.

Sibanye-Stillwater, the world’s largest PGM miner and a major source of SA gold, employs 80,000 people but has PGM operations in the US that will remain in operation, setting it apart from its SA peers. “The nature of our business means that large groups of employees may gather in areas in the workplace,” it said on Monday.

At its US operations, Sibanye has removed contract workers from its site, slowing development of its new Blitz mine, while the maker of the mills to be used in expansion of the concentrator complex has said it cannot honour the contract.

“Our US PGM operations are a ‘critical infrastructure industry’ as defined by the Cybersecurity and Infrastructure Agency, with PGMs essential components of many chemical, medical and biochemical applications,” Sibanye said, adding that it will do all it can to keep production uninterrupted.

Update: March 24 2020 
This article has been updated with industry comment.

seccombea@businesslive.co.za

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