JOHANNESBURG (miningweekly.com) – South Africa's energy and logistics threats should be turned into opportunities, says African Rainbow Minerals (ARM) CEO Mike Schmidt.

Speaking to Mining Weekly in a Zoom interview following ARM’s presentation announcing 40% higher headline earnings at R5 171-million, Schmidt urged the country to never let a crisis go to waste. (Also watch attached Creamer Media video.)

“These open significant doors and opportunity, particularly for a company like ARM,” added Schmidt, who is also going all out to cut the current rampant mining inflation to the lowest possible level.

ARM executive chairperson and founder is Dr Patrice Motsepe.

“Where we are in our diversified portfolio, logistics and power are so important. The question raised to me one day that I’ve never forgotten is how do you ultimately, as a diversified bulk player, reduce your dependency on electricity and on logistics, because those are ever above-inflation increases,” he said.

Besides keeping absolute focus on beating logistics and energy constraints, ARM under his leadership is focusing on everything it can manage to keep lean as it sets out to ultimately, as a diversified player, go green and ultimately reduce its dependency on carbon and lower its carbon intensity.

“We’re doing a lot of work and research in terms of feeding into that space and it is early days and I don’t want to shoot off our mouths prematurely, but reducing that is key and ask what we can do as a mining industry. The next transition has to pick up undoubtedly.

“Get clean, get highly efficient and most importantly where industry is struggling with today worldwide are declining grades,” he said.

ARM has put the value-addition spotlight on conventional-type submerged arc furnaces that are highly dependent on electricity.

“We are quite aggressively busy at looking at other more energy efficient methods of smelting and whilst that’s not going to make an impact in the first 12 to 18 months, it certainly puts us on a platform and we owe it to the industry to focus on reducing and getting our costs down,” he said.

Mining Weekly: What lasting positives do you foresee coming out of collaboration and partnerships?

Schmidt: There’s absolutely no doubt that collaboration and partnership is the way to go, and I’ve been privy to being part of many of the early stage interventions and discussions, which are gaining in intensity. We may not be the cause, but it’s certainly our problem, so unless there’s a collective collaboration, partnership and absolute resolve to find low-hanging fruits and opportunities to improve efficiencies, pointing fingers at each other is not going to get us there. The indications are that we’re certainly stepping in the right direction and I’m cautiously optimistic we’re going to see a good result. There’s political will, there’s undoubtedly from government the drive to improve the mining industry for obvious reasons, and most important I think that level of collaboration will improve our sustainability and make enterprises like Transnet and Eskom a lot more profitable and sustainable.

Are you looking to the sun to give your operations some energy?

The 100 MW where we are now is purely a wheeling opportunity from the Free State to our platinum group metals operations, but we are looking intensely in the Northern Cape as to where we put standalone units with battery storage facilities. This will be for every one of our operations to ultimately become more efficient, greener, less dependent on Eskom per se, or fossil fuels. Yes, we’ve got diesel generators but they’re very expensive to operate.

And what about bulk logistics?

Up until very recently we would have said well the cheapest and most profitable way is to put ore on a rail and export it, and that probably has been true for many years, but when you look at the logistical constraints, cost of power, demurrage concerns, the world where it is today, there’s no doubt that, even for a product like iron-ore, you can ask why don’t we reduce dependence on logistics, and significantly add value. We owe it to ourselves to look into this and we are doing so aggressively. Take manganese – 15% of what we produce is high grade but value must be added to slimes and fines. You’re undoubtedly going to see that transformation over the next couple of years.