For The People

New Zinc Mine To Ignite Industrialisation in Namaqua

Some Northern Cape residents will recall media coverage of Anglo American’s unsuccessful attempts to prove bankable feasibility for the Gamsberg zinc mine back in 2002. On Thursday last week President Ramaphosa presided at the official opening of the approximately $1 billion Gamsberg mine by Vedanta Zinc International. The company acquired the resource from Anglo in 2011 taking the decision to develop the mine back in 2014 at a time when the prognosis for the global zinc market had become much more attractive. The mine is significant for several reasons.

At Gamsberg Vedanta is exploiting what is the world’s largest known but unexploited zinc deposit. With an initial life of mine in Phase 1 of 13 years, yielding 4 million tonnes per annum of ore and 250 thousand tonnes per annum of zinc-in-concentrate, Gamsberg reportedly has the potential to see production grow to 450 kpta and 600 kpta of zinc-in-concentrate through Phases 2 & 3 over a period of up to 30 years. A world class deposit and a potentially world class project.

Gamsberg is being cited as evidence that mining in South Africa is not a sunset industry. While that may be true, it is undeniable that in the absence of major new mineral discoveries, the mining of some mineral commodities are in the mature stage of their life-cycle. This is something that we here in the Northern Cape are only too painfully aware what with the demise of copper mining and the massive contraction of diamond mining. Sadly, this province has historically seen mining here drive economic development elsewhere.

So, when the President said in his address that “I’m hoping that with this we will see more projects opening up her to boost the economy of the Northern Cape”, we too hope that promises of a zinc industry cluster will materialize. Vedanta says it is investigating the development of a smelter and refinery complex that “speaks to both the company and government’s commitment to local metal beneficiation. In good faith they should be believed and hopefully that will come to pass in time.

At the launch, the President said that he will ask the Department of Trade & Industry to lead an inter-governmental task team to work with all three spheres of government and State-owned entities and explore the possibility of establishing a special economic zone to unlock investments in projects that could be enabled by the mining and refining of zinc at Gamsberg. But this isn’t as straightforward as it might sound. Given that Gamsberg is a volcanogenic zinc sulfide deposit its smelting, whether pyrometallurgically or electrolytically, will yield large volumes of hazardous sulphuric acid that will be difficult to deliver competitively to known markets. So, either the zinc concentrates won’t be smelted here, or a use will have to be found for the acid locally, potentially in fertiliser production. But that isn’t straightforward either. Point being, “good to hear Mr. President” but please let’s devote some resources to properly exploring these possibilities instead of paying lip service to the idea like has been the case with backward and forward linkages to the renewable energy sector in the province where almost nothing except generation of power has been achieved.

As attractive as the idea of a zinc industry cluster is, that is some way off in the future. Since the mine itself will only employ 700 people in full production, what would be of much greater use would be greater commitment to the development of so-called “backward linkages” (input supply industries) to the project. Speaking at the opening, Vedanta’s CEO, Srinivasan Venkatakrishnan, said 90% of the initial $400m on the project had been spent in South Africa. How much of that was spent in the Northern Cape procuring goods and services from local businesses? Judging from the steady stream of “GP” registered bakkies and trucks travelling the N14 between Kakamas and Aggeneys, not that much. We hope that as a good corporate citizen, Vedanta will support the development of local suppliers in addition to the other good work they are doing with communities and through its biodiversity offset agreement. Ideally, they will to an extent that goes beyond the minimum thresholds for compliance set in the recently revised Mining Charter.

While new mine developments like Gamsberg are to be welcomed, the tide is changing with regard to the “social license to operate” that mining companies must “obtain” from all stakeholders. Supporting community development and being a good corporate citizen in respect of labour practises, human resource development and the environment are no longer enough. Mining companies must look along the entire mineral value-chain and contribute more meaningfully by supporting process for both maximising economic linkages through the life of the mine, and, planning for life after the mine by devoting resources to supporting local economic diversification.

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