Over 75% of bitcoin miners’ income is going to electricity costs

Elizabeth Kerr

Bitcoin (BTC) mining is central to the sustenance of the BTC ecosystem. Besides enabling verification of transactions, it helps secure the network. The activity is so critical that the BTC network incentivises miners in the crypto through the miners’ reward. That said, it is proving to be expensive, with miners having to dig deep for electricity costs.

CryptoMonday has been studying data on BTC mining. The site concludes that miners’ incomes are dwindling owing to soaring electricity costs. It reckons that over 75% of BTC miners’ income goes to meeting electricity costs.

Jonathan Merry, CryptoMonday’s CEO, has been discussing the data.BTC mining is a very electricity-intensive process. A study has shown that a single BTC transaction consumes about 2165 kWh of electricity. That’s what a regular American household would use in 74 days! Factor in the roughly $0.14/kWh that an average household pays, and the magnitude of expenditure becomes evident.Jonathan Merry

BTC’s Proof-of-Work Consensus (PoW) Conundrum

One of BTC’s core features, its proof-of-work (PoW) consensus mechanism, is also every miner’s headache. PoW requires them to solve complex equations for a share of newly mined coins. The equations require the use of specialized mining equipment with high computational power. The equipment consumes tons of kilowatt-hours (kWhs), ballooning the miners’ electricity bills.

BTC’s mining difficulty further compounds the situation. BTC gets its value from its scarcity. Thus the system makes it progressively difficult for miners to complete their tasks. This forces miners to invest in mining equipment with even higher computational ability. And as indicated earlier, these come with hefty power bills.

BTC’s Carbon Footprint

PoW has also come under criticism for its environmental footprint. Critics hold that it is a wasteful and unsustainable crypto for the universe. Again, studies have shown its carbon emissions to match those of entire nations. One of them estimates that BTC emits nearly 114 megatonnes of CO2 annually, a value comparable to Czech Republic’s.

Such figures raise concerns about the king crypto’s sustainability. Bitcoin is hardly mainstream, but it’s already registering a significant carbon footprint. That reality is what’s worrying its opponents. They claim that the broader adoption of the coin would significantly impact the global environment negatively.

Addressing BTC Energy and Environmental Concerns

Despite strong opposition from some quarters, BTC enthusiasts still believe in the crypto’s value. They hold that notwithstanding the environmental concerns its usage raises, humanity has a lot to benefit from its wider adoption. They further contend that BTC’s footprint is lesser than that of the traditional banking systems or idling appliances at home.

Besides, Bitcoinners hold that the industry is still in its infancy. As such, one would expect heavy investment in machines, some of which may be inefficient. But with its maturing, there’s bound to be an evolution of the mining equipment to make them energy efficient.

Greening Bitcoin

Moreover, some miners have made the switch to fully renewable energy sources. Others are in different stages of that transition. Transiting to greener and affordable alternatives should help allay environmentalists’ fears.

Other quarters have suggested a complete shift to a less energy-intensive consensus mechanism. One of the popularly touted ones is Proof-of-Stake (PoS). PoS is less energy and hardware intensive and will allow verification of transactions on everyday appliances like phones and PCs.

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President Cyril Ramaphosa: 2022 Investing in African Mining Indaba

10 May 2022

Keynote Address by President Cyril Ramaphosa at the 2022 Investing in African Mining Indaba, Cape Town International Convention Centre

This Mining Indaba is taking place at an important moment in the global recovery from the effects of the COVID-19 pandemic.

Across the world, almost every industry is having to adapt to new circumstances, confront new challenges and be prepared to seize new opportunities.

The mining industry in Africa is no different.

As it responds to the effects of the pandemic, the mining industry also needs to manage the risks and potential benefits of rapid technological change, shifting market demand, climate change and geo-political uncertainty.

Like all other industries, the pandemic caused significant disruption to mining operations.

But once again, the industry has shown its resilience.

In South Africa, mining registered growth of 11.8 per cent in 2021, the highest across all industries. Last year the sector recovered production to almost pre-COVID levels.

This was the result of significant collaboration between the Department of Mineral Resources and Energy and the Minerals Council South Africa, including efforts to keep the sector operational during the hard lockdowns in the pandemic’s early stages.

After more than 150 years, mining remains a critical pillar of our economy.

Mining is a significant contributor to export earnings, it is an important source of foreign direct investment, and directly employs nearly half a million people.

And we expect mining’s significance and contribution to our economy to grow.

Like many other parts of our continent, our country is abundantly blessed with vast mineral deposits that form the basis of the most important applications used in society and economies today.

Mining companies see the potential in South Africa.

At the fourth South Africa Investment Conference earlier this year, investments valued at around R46.5 billion were pledged towards mining and mineral beneficiation.

Despite the great prospects for South African mining, we face significant challenges.

It is a matter of grave concern that South Africa has fallen into the bottom 10 of the Fraser Institute’s Investment Attractiveness Index rankings.

We are currently standing at 75th of 84, which is our worst-ever ranking.

This ranking underlines the fundamental reality that South Africa needs to move with greater purpose and urgency to remove the various impediments to the growth and development of the industry.

We understand very clearly the need to fix to the regulatory and administrative problems.

We need to clear the backlog of mining and prospecting rights and mineral rights transfer applications, put in place a modern and efficient cadastral system, and implement an effective exploration strategy.

We understand very clearly the need to significantly improve the functioning of our railways and ports, and the vital importance of ensuring a secure and reliable supply of affordable electricity.

These tasks are at the forefront of our economic reconstruction and recovery efforts.

Since the last Mining Indaba, we have made significant headway in driving a programme of policy reform for the network industries that are inextricably tied to mining and its operations.

This programme is being coordinated through Operation Vulindlela, an initiative of the Presidency and National Treasury, working in partnership with the Department of Mineral Resources and Energy and other departments.

An important area of progress is regulatory reform to facilitate new electricity generation by the mining and other sectors.

Regulations have been amended to allow companies to invest in new generation capacity of up to 100 MW without needing to apply for a license.

We are working to further cut red tape for the registration of projects, to accelerate environmental approvals and to strengthen the capacity of Eskom and municipalities to link such projects to the grid.

According to the Minerals Council South Africa, around 4,000 MW or R65 billion of such electricity generation capacity investment is in the pipeline.

South Africa’s energy landscape is being fundamental transformed to introduce greater competition, more diverse energy sources and greater energy security into the future.

The unbundling Eskom into separate entities for transmission, distribution and generation is on track, and is set to be completed later this year.

Operation Vulindlela is working with the Department of Water and Sanitation to implement a turnaround plan for the issuing of water use licenses, something that is critical to mining operations.

We are working towards a target of 80 per cent of all applications being resolved within 90 days.

On Transnet, the publication of the White Paper on National Rail Policy outlines our plans to revitalise rail infrastructure and to enable third party access to the freight rail network.

We have heard the calls from the industry for private operators to be allowed to operate the country’s dedicated coal, iron ore and manganese lines. 

We hope that such proposals will be discussed at the Indaba, drawing on the experiences of other countries.

Working together with the industry and other stakeholders, we are strengthening the capacity of our security services and law enforcement agencies to tackle illegal mining, cable theft and general damage to infrastructure.

We value our ongoing collaboration with the Minerals Council South Africa to resolve these and other challenges facing the industry.

According to companies surveyed by the Minerals Council if these regulatory hurdles could be resolved, they would be prepared to increase their investments by 84 per cent over the next five years, over and above existing capital investments.

We are committed to mobilising the necessary resources and providing the necessary incentives for a new wave of exploration, particularly of the minerals required for the global energy transition.

The recently-released Exploration Strategy and Implementation Plan lays out South Africa’s plans to move to future strategic metals such as copper, nickel, cobalt and rare earths.

As a world leader in platinum group metals, South Africa is perfectly poised to take advantage of the growing demand for such metals.

At the same time, we must continue to expand the production of some of the minerals that have been the mainstay of our mining industry, and for which there is still much demand.

We are keen to harness the opportunities of the hydrogen economy.

Last week, I attended the launch by Anglo American of the world’s largest hydrogen-powered mine haul truck.

This truck will be powered by an entire ecosystem of hydrogen production centered around the mine itself.

We aim to be not only an important hub for the production and export of green hydrogen, but also of green ammonia, green iron and steel, and sustainable aviation jet fuel.

South Africa’s Hydrogen Strategy is aimed at stimulating and guiding innovation along the value chain of hydrogen and fuel cell technologies.

This will not only sustain demand for PGMs but also position South Africa to derive benefits from supplying high value-added products.

As a continent that has such a rich abundance of resources, Africa needs to beneficiate its mineral endowments for the benefit of the current and future generations.

Mining has an important role in South Africa’s just energy transition.

In our onward march towards a low-carbon future it is critical that our efforts are both realistic and sustainable.

We have resuscitated the successful Renewable Energy Independent Power Producers Procurement Programme, with plans to substantially upscale investment in wind and solar power.

We are diversifying our energy mix under the Integrated Resource Plan.

We have supporting legislation to mitigate and adapt to climate change.

In line with our just transition efforts, we are in the process of mobilising international finance as part of the effort to ensure that affected communities and existing industries are supported.

It is clear that as our reliance on coal is reduced, pathways towards new economic activity needed to be created for workers in affected industries.

As we confront the reality of energy insecurity and the development of new energy sources, it is critical that South Africa, like all developing economies, be given the necessary developmental space.

Countries on the African continent need to be able to explore and extract oil and gas in an environmentally-responsible and sustainable manner.

These resources are important for energy security, for social and economic development, and for reducing energy poverty on the continent.

It is important that as we undertake a just energy transition, we adhere to the principle contained in the UN Framework Convention on Climate Change of common but differentiated responsibilities and respective capabilities.

The growth and development of mining in South Africa will not be possible unless the working and living conditions of mineworkers and mining communities are improved.

It is important that mining companies engage with labour in the spirit of partnership and cooperation.

It is vital that mine safety and the health of workers becomes the industry’s foremost concern. On this there can be no compromise.

I wish to comment the mining sector for the financial and logistical support it has given to the roll-out of South Africa’s COVID-19 vaccination programme.

As of the start of May, more than 75 per cent of mineworkers were fully vaccinated, and 66 per cent were partially vaccinated.

Drawing on its extensive experience with managing other communicable diseases such as TB and HIV, the mining sector has been able to manage the pandemic carefully and systematically.

The partnership between government and the Minerals Council of South Africa stands as a fine example of how the private sector can support a nation’s development agenda.

In undertaking its vaccination programme, the mining industry has also demonstrated its responsibility to the communities in which its operations are located.

It is important that this commitment is sustained in all areas of development, including through the effective implementation of Social and Labour Plans, responsible environmental practices and local procurement.

The future of mining on the African continent holds great promise.

It holds great promise for investment, for industrial development and for growth.

We have a shared responsibility – as governments, as mining companies, as labour and as communities – to realise that promise.

As the government of South Africa, we are firmly committed to fulfil our responsibilities and to remove all impediments to the growth, sustainability and prosperity of the mining industry.

We are firmly committed to ensuring that mining occupies its rightful place as an industry of the future.

I thank you.

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ICMM Members Commit to Consistent Reporting on Social and Economic Contribution

The International Council on Mining and Metals (ICMM) has published a new Social and Economic Reporting Framework which commits members to report against a set of social and economic indicators, empowering stakeholders such as communities, governments, and investors to assess the contribution of mining to social and economic development more easily.   

ICMM members, representing around a third of the industry, have committed to report on eight key indicators which includes country by country tax reporting on revenues, payment and tax, workforce composition, pay equality, wage level, training provided, local procurement, education and skills programmes, and capacity building.

This disclosure will also help companies to better assess and strengthen the delivery of their social and economic contribution programmes, and provide a clearer overview of the contribution mining is making to economic growth, employment, skills, health, education and a range of other development opportunities in the regions close to their operations. 

Rohitesh Dhawan, CEO, ICMM said: “Mining plays a significant role in driving social and economic development in the regions where it takes place. What has been missing until now is a consistent set of indicators that measure these contributions, like for like. ICMM’s Social and Economic Reporting Framework raises the bar in several areas including the disaggregation of data by gender and ethnicity, and reporting of employee wages compared to the local living wage. This commitment represents a major step forward, and I encourage all mining companies to adopt the Framework to provide a more complete picture of the industry’s social and economic contribution and collectively identify areas for improvement. 

We recognise that there is still more to do to measure, prevent and manage the negative impacts mining activities can have on local communities. We will continue to work closely with stakeholders to assess the potential evolution of the Framework so that we can build on the data already being provided to give a clear picture of our members’ performance.”

Chris Griffith, CEO Gold Fields, said: “Along with other ICMM members, Gold Fields was actively involved in the development of the Framework as we believe the reporting of social and economic indicators is critical to help provide a clear picture of the contribution we make. This transparency is key to winning the trust of our stakeholders, particularly host communities and governments. We are already aligned with several of the indicators – as reported in our annual Report to Stakeholders – and are working towards disclosure against the full Framework.”

The Framework was developed through an assessment of existing reporting frameworks and company practices relating to social and economic contribution. It was informed by consultation with a range of external stakeholders including investors, civil society, customers, and international organisations and tested at sites by ICMM members. It builds on existing frameworks such as the Global Reporting Initiative (GRI), thereby ensuring a streamlined approach to reporting. Where indicators were not available in existing frameworks, new ones have been developed and included in the Framework.  

ICMM members have already started the work needed to incorporate these indicators into their reporting systems and are committed to disclose against the indicators by 2024, except for country-by-country tax, for which reporting is expected from 2025.

Rohitesh Dhawan will be moderating a panel at African Mining Indaba, where ICMM Council member Chris Griffith (Gold Fields CEO) and Anglo American South Africa Chair Nolitha Fakude will discuss mining’s overall contribution to society, the importance of consistent reporting on contribution, and how transparent reporting will help to build trust across the sector.

  • You can view the Social and Economic Reporting Framework and Guidance here

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Equipment supplier is moving with the times

ELB Equipment is taking a hands-on approach to solve rapidly evolving needs of customers in the mining and construction industries where access to finance and longer lifespans of equipment are among the many issues being faced by operators of equipment in post-pandemic times.

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Investing in African Mining Indaba 2022

Investing in African Mining indaba is solely dedicated to the successful capitalisation and development of mining interests in Africa.

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High Court Ruling on Mining Charter 2018: “Once Empowered, Always Empowered”

Once empowered [is] always empowered [after all] – this is the effect of the judgment handed down by the High Court, Pretoria on 21 September 2021 in the matter between Minerals Council of South Africa vs Minister of Mineral Resources and Energy and thirteen others [Case No.20341/19] (the “Judgment“) in relation to the challenge to the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter III“).

The Minerals Council of South Africa instituted its application to review and set aside certain provisions of the Mining Charter III (the “Review Application“) in terms of section 6(2) of the Promotion of Administrative Justice Act, 2000, alternatively in terms of the principle of legality as set out in the Constitution on the basis that:

  • the Minister of Mineral Resources and Energy (“Minister“) lacks the power to publish Mining Charter III in a manner that suggests that it is a legislative instrument, and doing so amounted to the Minister assuming the functions of the legislature;
  • the clauses are unauthorised by section 100(2) of the Minerals and Petroleum Resources Development Act, 2002 (“MPRDA“) and therefore the decision to publish them as part of Mining Charter III was materially influenced by an error of law.

A copy of our bulletin on the salient features of the Minerals Council’s challenge is available here.

The High Court Judgment

The full bench of the High Court (Gauteng Division, Pretoria) characterized the question in dispute that had to determined as concerning the ambit of the powers of the Minister under section 100(2) of the MPRDA to make law in the form of subordinate legislation, and the legal nature and role of the Mining Charter III in the context of the MPRDA. Therefore, at issue, was whether the Mining Charter III constitutes law or policy.

The Minerals Council contended that the Mining Charter III is a formal policy document developed by the Minister in terms of section 100(2) of the MPRDA. To this effect, it argued that the Mining Charter III is binding on the Minister whenever he considers an application for a mining right by virtue of the provisions of section 23(1)(h) of the MPRDA. This provision only permits the Minister to grant a mining right if, amongst other things, the grant of such right would be in accordance with the charter contemplated in section 100(2) of the MPRDA.

To the contrary, the Minister argued that section 100(2) of the MPRDA empowers him to make law through the development of the Mining Charter III, hence that the charter (which he developed) constitutes a sui generis form of subordinate legislation which is directly binding on holders of mining rights.

Kathree-Setiloane J (with Van der Schyff J and Ceylon AJ concurring), held that having considered the language of section 100(2) of the MPRDA in light of its ordinary meaning, the context in which it appears and the apparent purpose for which it is directed, section 100(2) of the MPRDA does not empower the Minister to make law.  In other words, the Mining Charter III is not binding subordinate legislation but an instrument of policy.

Therefore, in its decision, the High Court held that the Mining Charter III is a policy document and not law; and that such finding is dipositive of the main grounds of review that the challenged clauses of the Mining Charter III are unconstitutional because the Minister lacked the power to publish a charter in the form of a legislative instrument binding upon all holders of mining rights, the breach of which will be visited by the consequences and penalties provided for in the MPRDA.

Accordingly, the clauses of the Mining Charter III as challenged by the Minerals Council in the Review Application are reviewed and set aside.

Implication of the Judgment

The Judgment set aside a number of clauses in the Mining Charter, including amongst others:

  • clauses 2.1.1.2, 2.1.1.4, 2.1.1.5 and 2.1.1.6, which provided that the recognition of continuing consequences will not be applicable upon the renewal and/or transfer of a mining right and that a renewal of an existing mining right will be subject to the requirements imposed under Mining Charter III at the time when the renewal application is submitted (i.e. 30% BEE shareholding);
  • clause 2.1.3.2, which required that the minimum 30% BEE shareholding for new mining rights must comprise of a minimum of 5% non-transferable carriedinterest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women);
  • clause 2.1.5.2, which provided that the prescribed minimum 30% target shall apply for the duration of a mining right;
  • clause 2.1.7.1, which permitted a mining right holder to claim the beneficiation equity equivalent against a maximum of 5 percentage points of a BEE Entrepreneur shareholding only;
  • clauses 2.2, which dealt with the provisions of Mining Charter III in relation to inclusive procurement, supplier and enterprise development targets;
  • clause 7.2, which provided that for mining right holders, the ownership and mine community development elements are ring-fenced, requiring 100% compliance at all times;
  • clause 9.1, which dealt with the penalty and enforcement provisions of the Mining Charter III in case of non-compliance.

Therefore, mining right holders who, at any stage during the existence of their mining right achieved a minimum of 26% BEE shareholding, and whose BEE partners exited prior to the commencement of Mining Charter III, will be recognized as compliant with the BEE requirements of the Mining Charter for the duration of the mining right; and such recognition does not lapse on the renewal or on the transfer of the mining right (the so called “once empowered always empowered” principle).  In other words, existing mining right holders’ historical BEE transactions will be recognised for the purposes of the renewal and transfer of existing mining rights and the applicant for renewal or the transferee, as the case may be, will not be required to comply with the BEE ownership requirements applicable to new mining rights.

Although applicants for new mining rights are still required to have a minimum of 30% BEE shareholding, such 30% BEE shareholding does not need to comprise of the 5% (minimum) non-transferable carried interest to each of Qualifying Employees and Host Communities, and a 20% effective ownership to BEE entrepreneurs (5% of which must preferably be owned by women).  Mining right holders are free to structure their BEE shareholding as they deem fit.

Moreover, non-compliance with the ownership and mine community development elements of Mining Charter III will no longer render a mining company in breach of the MPRDA, and subject to the provisions of section 93, read with section 47, 98 and 99 of the MPRDA. Accordingly, non-compliance with the Mining Charter III will not render a mining right subject to suspension and/or cancellation in terms of the MPRDA.

Conclusion

It must be noted that not all of the provisions of the Mining Charter III were reviewed and set aside. These clauses include amongst, that new mining rights must have a minimum of 30% BEE shareholding, the clauses which concern employment equity, human resource development, mine community development, and housing and living conditions. Given that the Court held that the Mining Charter III is a policy document rather than a legally binding instrument, mining right holders may, but are not legally obliged to, comply with the remaining requirements imposed under the Mining Charter III.  

It must be noted further that section 23(6) of the MPRDA provides that a mining right is subject to the terms ‘prescribed’ by the Minister. Section 23(6) of the MPRDA requires the holder of a mining right to comply not only with the terms and conditions of its right, but also the ‘prescribed terms and conditions’. The term ‘prescribed’ is defined in section 1 of the MPRDA to mean prescribed by regulation. In terms of section 107 of the MPRDA, the Minister may make regulations regarding “any other matter the regulation of which may be necessary or expedient in order to achieve the objects of this Act”. In light of the above, the Court indicated that the Minister is entitled to prescribe any regulations in order to achieve the objects set out in sections 2(c), (d), (e), (f) or (i) of the MPRDA.

Moreover, it is open to the Minister to impose elements of the Mining Charter III indirectly, through incorporating the principles as terms and conditions of a mining right.

As at the date of this bulletin, none of the respondents had yet to indicate whether they will appeal the judgment. 

 Courtesy: FASKEN

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Premier Job Mokgoro on illegal mining

An integrated approach in combating illegal mining must be strengthened – Premier Mokgoro

North West Premier, Prof. Tebogo Job Mokgoro believes the integrated approach in combating illegal mining activities must be strengthened to achieve greater results.

Premier Mokgoro made the remarks during his visit to Matlosana Local Municipality following the discovery of 20 dead bodies suspected to be that of illegal miners near Lawrence Park’s mine ventilation shaft which is no longer operational in Orkney near Klerksdorp.

Premier Mokgoro said the situation is very much unacceptable and this calls for immediate action.

“The situation calls for drastic deliberate action that should happen almost immediately. I made it very clear that we have to strengthen our integrated approach towards dealing with illegal mining. Our efforts must be more sustainable and long-lasting in terms of effectiveness.

We really believe that not sufficient role players have been taking part in operations. Going forward we will pull all resources together to combat, counter and eradicate this menace completely” remarked Premier Mokgoro.

In his visit, Premier Mokgoro was accompanied by MEC for Community Safety and Transport Management, Sello Lehari as well as the Acting Provincial Commissioner-General Dintletse Molefe.

Before the inspection, Premier received a report on efforts by the South African Police which included different operations geared towards dealing with the illegal mining.

The reports painted a sophisticated operation by the heavily armed illegal miners in different Matlosana municipality towns. Over 50 people have been arrested in different operations and gold material as well as firearms were seized. They are still appearing in court.

MEC for Community Safety and Transport Management Sello Lehari said residents’ needs to work with the police to arrest those who are behind these operations which are problematic to the communities in the area.

“Police are on high alert and investigation are ongoing. Others have been deployed in the identified hot spots. We are expecting more arrests soon. Residents must work with us and give us the necessary information. Thus far the information that came through is not enough. We need to educate our people to work with the police and inform us because the perpetrators are part of our communities. Indeed an integrated will go a long way in dealing with the illegal miners” said MEC Lehari.  

Sustainable joint operations are expected to ensue in due course.

Courtesy: www.gov.za

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Environmental stewardship and the mining sector – powering a greener future

By Advocate Tsheko Ratsheko, Group Manager of Environment, Mining Licences, and Sustainability at ‎Exxaro Resources

We and our planet are in an environmental crisis. Climate change, population growth, pollution, poverty, and an increasing demand for natural resources which are damaging to our natural ecosystems, are some of the most significant challenges we must overcome. The impact of human industry on our atmosphere, land, water, and biodiversity is not only visible today but is also increasing over time.


But with these pressing challenges also come unique opportunities for change. Reducing the environmental impact of the mining industry has become more than an ethical or regulatory imperative; it can also be a viable business model that capitalises on resource efficiency to achieve long-term sustainability and business resilience.

Exxaro is one of  South Africa’s largest coal mining companies but also one of the first significant investors in renewable energy solutions. Protecting our ecosystems and transitioning towards cleaner, renewable energy has long been a core strategic objective for Exxaro.

The importance of environmental stewardship

Responsible environmental stewardship is about protecting and preserving natural resources for the greater good of all our stakeholders. Water scarcity, air pollution, biodiversity threats, hazardous waste, and climate change all pose significant environmental and financial risks that we need to manage while delivering on other business objectives. Without a clear environmental strategy in mind, it is not possible for the business to be able to respond effectively to the emergent systemic shocks and be sustainable. Given our dependence on natural resources and systems for human sustainability, an inconsiderate approach to environmental stewardship will undermine much-needed development and human progress.

Since 2006, we have developed group-wide environmental management standards which are reviewed annually and guided by reference to global instruments. In the next 10 years, we plan to increase our efforts and focus on environmental stewardship by reducing our greenhouse gases through investing in self-generated renewable electricity and alternative fuels, ensuring water availability through efficiency and recycling efforts, managing the potential effects of severe weather events (such as heatwaves) through best practice adaptive methods and waste management through increased recycling considerations.

Transitioning to a low-carbon future

Fossil fuels are becoming a less acceptable energy source and global energy generation is moving towards renewable energy, hence Exxaro has made the strategic decision not to seek further growth in thermal coal. As the largest supplier of coal to Eskom, however, our coal portfolio remains a valuable natural resource that must be extracted optimally and responsibly to continue providing energy security, which will support economic growth and social development in South Africa. An early maximisation of the value of our coal assets will enable our transition to low-carbon alternatives while minimising the social impact on employees and communities that depend on the coal economy and enabling a Just Transition to a low-carbon economy.

In 2009, we made our first significant investment in renewable energy with the Tsitsikamma Community Wind Farm, providing 95 megawatts of clean, zero-carbon energy into the national power grid. In 2012, we partnered with the Tata Power Company to form Cennergi and began our second renewable energy project: the Amakhala Emoyeni Wind Farm. In 2019, we further bolstered our renewable energy portfolio by acquiring the remaining 50% share of Cennergi.

With these investments, we have firmly established ourselves as a leader in green energy while continuing to deliver high-quality coal to our existing clients. Building our renewable energy portfolio not only gives us long-term resilience to climate-related risks but also opens up alternative economic activities. 

Full carbon disclosure

Because we currently still rely on fossil fuel as our primary energy resource in South Africa, managing our emissions remains a priority. South Africa has arguably set the most aggressive emissions target of any developing country, aiming to reduce emissions by 34% by 2020 and 42% by 2025. Global leaders are meeting in Glasgow in November 2021 at the UN Climate Change Conference (COP26), and each member party (including South Africa) must present revised commitments on their carbon emission targets. If anything good has come from the pandemic, lockdown periods have shown that these targets can be met, albeit through severe restrictions on economic activity.

Exxaro measures manage and report energy and carbon data in terms of the Greenhouse Gas (GHG) Protocol, which provides a standard measurement platform to compare emissions internationally and locally. During 2020, we reported a 9% decrease in carbon intensity and a 7% reduction in electricity intensity due to energy efficiency projects at our business units.

The Carbon Disclosure Project (CDP), a UK-based organisation that oversees a global environmental disclosure system, provides valuable insights into corporate strategies for environmental stewardship. The system also helps to channel investment to companies adhering to sustainable carbon and emissions management. It also provides our environmental reporting with a central data repository that is audited and assured externally every year. That level of transparency in environmental reporting is crucial, as it holds organisations liable for their emissions.

Water, waste, and air

Environmental stewardship must also extend beyond carbon considerations. Water is a strategic natural resource for South Africa and our business, which is why we have committed to responsible and sustainable water use through efficient reuse and recycling,

Our waste management policy is also critical to maintaining our licence to operate. We have moved from a cradle-to-grave philosophy to a more circular, cradle-to-cradle approach. We see waste as a business opportunity and have developed cost and benefits analyses of our hazardous waste stream. Using digital systems to track and monitor sources of our hazardous waste, we are also able to eliminate or reuse waste at the source.

Mining activities such as drilling, blasting, crushing, transportation, materials handling, and storing generate dust. We therefore regularly improve our mitigation measures to reduce the impact of these on the surrounding atmosphere, such as avoiding blasts during high wind conditions, applying chemical dust suppressants, or using vegetation on topsoil stockpiles.

During 2020, we focused on going beyond compliance and implemented our reviewed air quality management system at various business units. The dust fallout rate at most of our operations complied with the regulated residential and non-residential limits, largely due to these dust suppression measures.

Preserving biodiversity is critical

Biodiversity loss has been identified as being at significant risk in the context of climate change. Considering this, we have been implementing several projects to ensure that our mines coexist in harmony with the natural environment. These include an Alien Invader Eradication Programme, a Wetland Rehabilitation Project, and Biodiversity Relocation Programmes.

These initiatives and programmes aim to protect indigenous flora and fauna species and support local ecosystems beyond the areas Exxaro operates in. We have committed to exceeding our biodiversity goals so that both current and future generations can enjoy a clean and flourishing natural environment.

Powering a greener future

There is a common misconception that the mining sector cannot coexist with environmental stewardship but Exxaro has proven otherwise. Guided by environmental sustainability practices and our vision “Resources Powering a Clean World’ to direct our business strategies, we have strengthened our organisational resilience while protecting the future of our environment. These are stewardship practices will transfer to future mining opportunities for sustainable growth.

Over the years, we have developed a comprehensive response for climate change that will continue to reap benefits for our company, our communities, and the environment for years to come.


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Are businesses ready to attract tomorrow’s investors?

Thought leadership article by Joe Keenan, Managing director, BME, a member of the Omnia Group

The world has become rapidly alive to the threats posed by climate change, and mining companies are seeing their shareholders demanding more than just a financial return. Investors – both institutional and private – want their mineral portfolios to speak to their value systems, and these values now centre increasingly on sustainability and shared value for all stakeholders.

Like the mining companies they service, mine suppliers and technology providers should be looking beyond the customer demands of today to remain relevant to the investors of tomorrow.By the same token, others in the mining ecosystem should have similar concerns about their respective futures. The question for our sector might be posed along these lines: How does a blasting and explosives company, for instance, position its brand to be relevant not only to its current customers but to future investors?

To be sure, supply companies receive business from mines because they provide valuable solutions that make mines productive and help keep them viable. That is no longer enough, however. Just as the South African mining sector is subject to the country’s Mining Charter and BEE compliance requirements, so there is a growing expectation globally that mines prioritise environmental, social and governance (ESG) concerns. The once ‘optional’ approach that businesses serve the broader good is now becoming mainstream as more businesses aspire to make a positive impact and leave behind a better world.

In mining, there are already thresholds for suppliers to clear in the field of safety. Many mining companies will not entertain tenders from suppliers whose recordable case rate (RCR) exceeds a certain maximum level. The same often applies to inclusive procurement, where mines expect suppliers to support their efforts to place business with local firms in the vicinity of the mining operation.

While some companies are already driving compelling, integrated sustainability strategies, others are exploring how best to diversify themselves. The emphasis is on going beyond their current offerings and moving further into the sustainability spectrum, with a focus on ESG and ‘green mining’ imperatives. Looking ahead 30 years, for instance, it is clear that fossil fuels will be playing a much-diminished role in energy production – and will be in considerably less demand. European countries are applying their Green Deal, through which the region aims to achieve carbon neutrality by 2050. We are already seeing major mining players extracting themselves entirely from the coal sector – for reasons related partly if not largely to the strategic recalibration of many investors and lenders in the light of climate change. Equally, responsible businesses are increasingly choosing like-minded partners, who share their vision for sustainability.

It is worth remembering that coal is still the planet’s most mined mineral – at almost 8-billion tons in 2019. The anticipated decline in this segment of the market is therefore likely to have a considerable impact on most supply companies to the mining sector; it will certainly have an effect on explosives and blasting providers – although this will depend on regional location and other factors.

The uncertainty in mining’s future might not stop there. Alternatives to coal-fired generation will have to be found, and this is already leading to greater interest in other commodities such as battery raw materials. Some of these will continue to require blasting in a hard rock environment, while others will not – being mineable by free digging. As technology develops, there is even the prospect of energy being generated or stored using materials or substances that are not mined at all; for example, research is being carried out into the electrical storage capacity of certain plant-based material.

The pace of this technological change is being spurred on by tomorrow’s generation, who see in it an epochal opportunity for a more sustainable future. Those who make up this generation are not just the pioneers of a new age but are the investors of the future. It is they who will set the preconditions for investment in coming decades, and it is clear they will prioritise sustainability.

Many – perhaps most – financial institutions have set demanding goals for their investment portfolios, and it is increasingly vital for capital-seeking firms to know what those comprise. They are certainly not ‘tick box’ requirements that can be applied when capital is needed; they are strategic elements that require considerable planning and years of dedicated implementation.

As suppliers to mines, our current commitment to creating value for customers – and to building the technology that will help us to achieve this vital goal – should not blind us to the broader, tectonic shifts underway in society. These promise to drive our economies toward greater sustainability, but they will demand fundamental changes in value systems that many businesses do not yet seem ready to embrace.

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