S.Africa seeks to revamp disused gold mines - CNBC Africa

S.Africa seeks to revamp disused gold mines


by Reuters 0

South Africa’s 130-year-old gold mining sector has produced a third of the bullion ever mined. PHOTO: Luxury Rules

This has left billions of dollars of plants, worker housing and pipelines at risk of demolition and the scrapyard.

(READ MORE: Energy is sub-Saharan Africa’s gold)

Keen to avert this scenario, the government wants mining companies to find alternative uses for disused facilities to support communities and even continue to provide jobs.

“Mining communities must remain sustainable the day after the mine closes,” mines minister Ngoako Ramatlhodi told Reuters.

“When we talk about mine rehabilitation we are not talking about just putting back the sand, but actually rebuilding those communities,” he said.

South Africa’s 130-year-old gold mining sector, which has produced a third of the bullion ever mined, has been contracting as ore grades decline and shafts plunge to hard-to-reach depths of up to four km, the world’s deepest.

The issue of disused facilities has become more pressing in recent years as labour unrest, sliding bullion prices and surging costs have accelerated the decline of an industry that once laid the foundation for Africa’s most developed economy.

Since 1994, after the end of apartheid, the government has been pushing mining companies to ensure that communities are taken care of when they close prime assets.

Retooling plants and equipment, which can no longer be used to produce gold bars, is no easy task, however. In the event that companies can find no alternate use for infrastructure, they can demolish the facilities and sell off equipment for scrap.

In a dusty corner of South Africa’s Free State province, Harmony Gold is leading the way as it finds a use for one of its plants and for nearby land fouled by the industry.

(READ MORE: Harmony Gold production for FY stable)

Standing in a wind-swept field, Johann Raath, the Harmony manager overseeing the project, plucked a large sugar beet from the soil and held it up for inspection.

“You would not want to eat this but it will be fine as a biofuel,” said Raath.

The plan is to transform the crop into biofuel at a decommissioned leaching plant, where cyanide was used as part of the complex chemical process of extracting gold from ore.

The facility is an imposing piece of infrastructure with several massive conical tanks and a maze of piping.

Building a new one would cost tens of millions of dollars. Tearing it down and selling it as junk would yield a fraction of that and also be a massive waste in a developing country keen to step up industrialisation.

The leacher is being converted into a “digester”, which will transform biofuels into methane gas.

This in turn will be used as a substitute for fossil fuels at another [DATA HAR:Harmony] plant, where the final stages of extracting bullion from the ore still takes place.

When that plant has finally run its course, the hope is that other uses or markets could be found for the biofuels being produced. Ultimately, Harmony says the aim is for the project to promote “skills development and job creation for communities and ensure a sustainable legacy in the Free State”.


The above-ground physical legacy of mining is not limited to plants and processing facilities.

Africa’s top bullion producer, [DATA ANG:AngloGold Ashanti] has handed over a former mine-owned clinic to the local community and transformed unoccupied housing units into police stations in the Orkney area west of Johannesburg.

South Africa accounted for 79 per cent of world production in 1970, when Johannesburg was dubbed the “City of Gold”, but in 2013 it was only the world's sixth-largest producer, according to Thomson Reuters’ GFMS data.

Its output last year of 174.2 tonnes was its lowest in over a century, and the sector has shed tens of thousands of jobs over the past two decades.

If the spot price, down more than a third in three years and currently around 1,240 dollars an ounce, falls below 1,200 dollars, a “tipping point” could be reached that would hasten the closure of a number of marginal gold mines worldwide.

For mines minister Ramatlhodi, finding alternative uses for abandoned equipment has another social function: crime prevention. The theft of copper, pipes and wiring is rife.

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“If we put the infrastructure to good use, then the community will defend it and protect it,” he said.