FUTURE QUEST - JSE MAGAZINE

FUTURE QUEST

Improved technology is allowing much more capacity for mechanisation in SA mines – but how will this impact on labour relations and can machines be relied on entirely?

FUTURE QUEST

At the height of the last commodities boom, mining companies were less concerned about efficiency and more interested in maintaining production. On some hard-rock mines a trend towards mechanisation, which had begun in the 1980s and 1990s, was stalled or even reversed. Labour-intensive methods were preferred while demand and prices were high. But when platinum prices fell and investors turned away from gold as a hedge, companies started looking at ways to boost productivity and reduce costs and risk.

These days mechanisation is top of the agenda in current discussions about mining – in SA and worldwide. It was a central topic at the recent Joburg Indaba with the theme Investing in Resources and Mining in Africa. Local moves towards increased mechanisation have been driven by the prolonged standoff between some mining companies and their workforces, although safety and general efficiency are also cited as motivations.

New mechanisation and automation technologies could provide a better way to mine the deep and difficult ore bodies that characterise the gold and platinum sectors in SA. They could also offer improved occupational safety, new skills training and higher average salaries for mineworkers. But there are also risks, particularly when the transition entails a reduction in total employment – and it is still unclear whether mechanisation can be achieved effectively.

Sectors such as coal have been mechanised for decades in SA. Over the last 30 years there has also been extensive mechanisation of minerals in expansive orebodies – such as diamonds, chrome, manganese and copper. The development of ultra-low profile drill rigs, loaders and haul trucks that operate in restricted spaces and on relatively steep gradients, has allowed mining companies to introduce labour-saving machinery into areas previously only accessible by underground workers.

However, platinum and gold, which make up the core of the SA mining industry in terms of both employment and export earnings, remain relatively unmechanised. This is largely due to the difficult geology of narrow orebodies that make up much of the Witwatersrand gold fields and the Bushveld platinum reefs, where metal-bearing seams are sometimes only a metre thick or high.

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Rock drill operators and other underground workers, able to accurately identify and target the reef, have traditionally been the best way to ensure that mines excavate a minimum of waste rock along with the ore. In terms of overall costs, they remain competitive with mechanised teams on mines where complicated geology does not permit high-volume production. A 2012 study conducted by Peter Valicek on behalf of Anglo Platinum concluded that ‘where production per half level is less than 1 800 m2, the rand per ounce costs of [mechanised] methods are comparable to the costs of conventional mining’.

With improved technologies and new approaches to mine planning, there’s arguably now greater scope for mechanisation, and some SA mining houses are taking advantage of its potential. In platinum, several large mines have moved towards full or part mechanisation in recent years.

Anglo Platinum’s Bathopele mine, which is near Rustenburg, has extensively used low- and ultra-low profile equipment to reduce its below-ground workforce. In 2014, its per-capita productivity received a boost with 111 000 ounces of platinum produced. Each employee was 24% more productive.

Similarly, Northam Platinum uses a largely mechanised system at its relatively new Booysendal mine, comparable to that deployed on many of the country’s chrome mines. Northam Platinum is developing a platinum resource currently estimated at 103 million ounces, with targeted production of 160 000 ounces a year when the mine reaches full output in 2015.

Training and local research knowledge will be crucial for the effective use of mechanisation

Mine manager Willie Theron outlined what Northam Platinum sees as the key advantages of mechanisation, in recent comments to Business Day. He said 1 500 people mined 200 000 tons at Booysendal, a volume that he estimated would take 5 500 to 6 000 people at an unmechanised operation. Better pay and higher workforce skills meant strikes were seen as less likely, and working conditions were considered to have improved.

In the gold sector, the South Deep mine in Gauteng, operated by Gold Fields, has also turned to machines. The company has developed a fully mechanised operation at the Upper Elsberg section using small teams operating long-hole drilling rigs to precisely target the gold-bearing ore.

In comments to media and analysts earlier this year, the company estimated that an eight-person team employing the mechanised long-hole method could do the work of ‘hundreds’ of miners using conventional rock drilling equipment. With production expected to continue until 2080, Gold Fields is currently expanding production at South Deep towards 700 000 ounces per year.

AngloGold Ashanti and its partners have developed one of the most futuristic visions of what SA hard-rock mines could look like. Central to their approach – aimed at leapfrogging conventional technologies towards full automation – is developing low profile, automated raise-boring machines. These excavate ore directly with little resulting waste rock and eliminate the need for drilling and blasting. The company already produces gold this way, in tandem with a high-strength backfill technique that allows it to mine the rock pillars. Previously these pillars had to be left in place to ensure stability as well as worker safety.

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Training and local research knowledge will be crucial for SA mines to make effective use of mechanisation’s potential, develop workforce skills and minimise loss of employment. In this regard, institutes such as the Centre for Mechanised Mining Systems (CMMS) at Wits University are likely to play an increasingly central role. Around 300 people attended courses there in 2014.

Director of CMMS Declan Vogt says mechanisation is spreading, particularly in the platinum sector where it accounts for around 30% of production. However, it requires careful management to achieve results. ‘Mines that adopt mechanisation are having mixed success and whether they succeed depends on two things: their consideration of the whole system and how they manage their people.

‘We’ve seen a number of cases where simple changes, for example to shift times, can move a project to profitability. We’ve also seen specific mechanisation efforts stop or fail spectacularly because the miners were not convinced of the value. Technically, the major change of approach required is to a capital-intensive mindset where making the assets sweat becomes the business priority,’ he says.

Vogt sees mechanisation continuously developing in SA. ‘The major expansion is likely to be in the platinum industry in the new underground mines of the northern limb of the Bushveld Complex. Projects like those of Ivanplats and Platinum Group Metals will be large-scale, underground bulk mining rather than narrow reef – and will be entirely mechanised.

‘South Africa is poor, with no specific government funding outside the health and safety arena. This is a major concern, with many of the industry experts retired or close to retirement. There are several initiatives to address this concern. At Wits, we are developing the Wits Mining Research Institute, which is targeted at rebuilding national capacity in mining research,’ he says.

This shows that there is potential for further mechanisation in mining in the country. However, some analysts remain unconvinced that cost-effective mechanisation can be achieved at SA’s hundreds of existing mines in the gold and platinum sectors.

Some companies ended up spending a great deal to de-mechanise after unsuccessful attempts. Speaking to Reuters in 2014, Lonmin’s then-CEO Simon Scott said: ‘If someone comes up with something that is going to show significant benefits, we will follow, but we have invested a significant amount of money over the years in mechanisation and it has come to nothing.’

There are other factors at play too. In a study on mechanisation in the SA platinum sector, Paul Stewart of the School of Social Sciences at Wits reasoned that one of the topics mining companies keen on mechanisation will have to deal with is low skill sets.

He wrote: ‘Regarding labour specifically, an impeding factor has been a “mechanised mining skills shortage” and “a dire shortage of artisans” sufficiently skilled to ensure the maintenance of mechanised equipment – identified a decade ago and which continues to be the case.

‘Personal experience strongly suggests the trackless mechanised mining method at JCI’s Western Area gold mine in the mid 1980s failed due to not only excavating an excessive amount of waste rock, but because there was a lack of skilled diesel mechanics.’

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‘Whether mines succeed depends on their consideration of the whole system and how they manage their people’

DECLAN VOGT, DIRECTOR, CENTRE FOR MECHANISED MINING SYSTEMS

Conventional mining, argues Stewart, will ‘continue to dominate until mining methods some time in the future combine open-pit and underground forms of mining, with the latter aiming at full mechanisation. The difficulties mechanisation has faced further suggest mechanised technologies at the rock face are not about to become the norm and replace conventional mining across the Bushveld Complex’.

He went on to say that ‘mechanisation remains fraught with numerous constraints and challenges and has proven much more difficult to achieve than initially envisaged. The social implication of this, as has been argued in relation to the gold mines, is the continuation of a mass-based – though more internally differentiated – mining labour force on the platinum mines in the foreseeable future’.

Regarding worker safety and skills, a 2010 study by TS Hattingh and colleagues at the CMMS argues that mechanisation may offer a way to improve safety and reduce mineworker exposure to underground conditions, while boosting average pay and introducing skills that could be transferred to other industrial sectors.

Some analysts remain unconvinced that cost-effective mechanisation can be achieved at SA’s hundreds of existing mines in the gold and platinum sectors

However, further mechanisation will almost certainly come at a cost to total employment and distribution of earnings at a time when these are central issues for the country.

‘This can contribute to conflict between mine owners and organised labour movements. Mechanisation can also be seen as having a negative impact on the communities within which mines operate,’ the study stated.

Francis Baleni, general secretary of the National Union of Mineworkers, recently told Reuters: ‘We have a problem with the introduction of mechanisation if its sole purpose is to replace labour. But if it’s about safety and workers getting more pay, then we don’t have such a problem.’

Negotiating a fair transition will be critical to the successful implementation of available new technologies, which are likely to transform aspects of mining work over time. Both will be critical to the long-term survival of SA’s mining industry.

By David Bannister
Image: Gareth van Nelson/HSMimages