Effective stakeholder engagement, consensus aimed at outlining key strategies for alleviating pressing industry challenges and the promotion of profitable and sustainable operations are effective steps for advancing South Africa’s junior mining sector growth aspirations, says midtier coal producer Ndalamo Resources CEO Shammy Luvhengo.

While noting that the transformation of the junior coal mining market may be predicated on a variety of variables including the provisioning of coal to State power utility Eskom, he says favourable coal market conditions and the export potential of coal, has the potential to increase the quantum and diversity of exploration projects in South Africa and throughout Africa.

“There should be a general agreement on how things are going to work before you go in and put money at risk . . . part of the growth required effectively comes from stakeholder engagement,” says Luvhengo.

In addition, besides ensuring that investors get their money back, mine staff also need assurances that they will get fair wages and bonuses, he explains.

Most of these aims may be funded by local and international investors who should, ideally, be compelled by a miner’s business, labour and environmental plans to back mining investments.

“As a junior miner, you’ve got to talk to all of these stakeholders and get consensus on the implementation of a sustainable management strategy; however, juniors tend to be sensitive to this as they lack the cash and flexibility to consider this suggestion,” Luvhengo says.

In this regard, he notes that Ndalamo invests a lot of time and energy in ensuring that their stakeholder engagement is orchestrated timeously before making any investment decisions.

Equipment Optionality, Logistical Reform Appraisal

One of the biggest advancements that Ndalamo sees in the junior mining sector is the influx of optionality on machinery in South Africa.

From a machinery point of view, Ndalamo has observed the emergence of Chinese companies getting into this space in a more aggressive manner compared with other global mine machinery operators.

Luvhengo notes that in some instances the company has also started to see a reduction in the cost of operating based on where miners are getting their equipment, adding that there is significant adoption of technology in terms of how miners manage their operations, particularly in inventory and diesel management.

“The way that I look at innovation and technology is based on whether it could help me lower operating costs and positively affect the bottom line of the company. We’re beginning to see, practically, that innovation in our operations is coming through the lowering of costs and how we manage fleet, maintenance and all our plants,” he says.

Luvhengo says more action is urgently required to effectively implement reform plans for South Africa’s freight logistics system, as soon as possible, to bring optionality with regards to some of the potential service providers that could unlock the system for the benefit of the juniors.

Optionality, he says, is important in the logistics space and the framework of the reform initiative will help refocus State rail operator Transnet Freight Rail on the specific areas where they could become highly profitable.

This could also yield new opportunities for junior miners through differentiation in their route to market.

“I think we’ve learned that the monopolisation of this space has wreaked havoc for us as junior miners. It’s time that we found a middle ground, not necessarily with Transnet Freight Rail alone, but also with other stakeholders to accurately assess the opportunities where we might best be able to get coal out of this country,” Luvhengo concludes.