FLANDERS INVESTMENT & TRADE MARKET SURVEY

FOCUS ON SOUTHERN AFRICA:

MINING

IN AFRICA

Mining in Africa Focus on Southern Africa

August 2014

Marc Schiltz Flemish Economic Representative

Flanders Investment & Trade Johannesburg

T: +27 11 783 47 32 | E: johannesburg@fitagency.com

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Contents

OVERVIEW (Selected Countries ONLY) .................................................................................................... 3

POTENTIALLY LUCRATIVE AFRICAN MINING DESTINATIONS .................................................................. 4

1. MINING in SOUTH AFRICA ............................................................................................................... 5

1.1 GOLD INDUSTRY ...................................................................................................................... 8

1.2 DIAMOND INDUSTRY ............................................................................................................. 10

1.3 PLATINUM INDUSTRY ............................................................................................................ 14

1.4 COAL MINING INDUSTRY ....................................................................................................... 16

1.5 IRON-ORE INDUSTRIES .......................................................................................................... 20

1.6 STEEL INDUSTRY .................................................................................................................... 23

2. MINING IN BOTSWANA ................................................................................................................. 26

2.1 INTRODUCTION ..................................................................................................................... 26

2.2 DIAMONDS ............................................................................................................................ 26

2.3 COAL ...................................................................................................................................... 27

2.4 GOLD ...................................................................................................................................... 28

2.5 URANIUM .............................................................................................................................. 28

2.6 OTHER MINERALS .................................................................................................................. 29

2.7 BOTSWANA’S MAJOR MINING COMPANIES ......................................................................... 29

3 MINING IN MOZAMBIQUE ............................................................................................................ 31

3.1 MOZAMBIQUES ECONOMY ................................................................................................... 31

3.2 COAL PRODUCTION ............................................................................................................... 32

3.3 GOLD PRODUCTION ............................................................................................................... 33

3.4 ALUMINIUM PRODUCTION ................................................................................................... 33

3.5 MAJOR MINING COMPANIES IN MOZAMBIQUE ................................................................... 34

4 MINING IN NAMIBIA ...................................................................................................................... 35

4.1 NAMIBIA’S ECONOMY ........................................................................................................... 35

4.2 MAJOR MINING COMPANIES IN NAMIBIA ............................................................................ 37

5 MINING IN ANGOLA ...................................................................................................................... 39

5.1 THE DIAMOND MINES ........................................................................................................... 39

5.2 FINANCIAL CRISIS & RECOVERY ............................................................................................. 41

5.3 MAJOR MINING COMPANIES IN ANGOLA ............................................................................. 41

6 CURRENT MAJOR MINING PROJECTS IN AFRICA ........................................................................... 43

7 REFERENCES .................................................................................................................................. 46

Mining in Africa – Focus on Southern Africa | August 2014 3

OVERVIEW (Selected Countries ONLY) The African continent is richly endowed with mineral resources. The US Geological society ranks Africa as the largest or second-largest reserve of bauxite, cobalt, industrial diamonds, manganese, phosphate rock, platinum group metals and zirconium. The products produced from these minerals are found in everyday life. Africa has a history of acting as a feedstock for the world’s mineral hunger. British, Belgian and Portuguese colonies produced precious metals and gems since the early 1800s while the majority of private foreign capital invested on the continent between 1870 and the Second World War was channelled into mining. By early 1990, however, the continent was still only receiving some 5% of global exploration and mining development expenditure. A study by the Word Bank on the shortcomings of African territories in the eyes of miners revealed a need for infrastructure, stable legal systems, a predictable fiscal regime, profit repatriation guarantees, and access to foreign exchange. The remarkable changes that took place in Africa from 2000 to 2011, resulted in the continent receiving 15% of global exploration expenditure and mining investment during 2012. The African continent contributed 6.5% of the world’s mineral exports during 2011 from mining 20% of the world’s land area. From a regional perspective, members of the Southern African Development Community (SADC) produce two-thirds of Africa’s mineral exports by value. The biggest player in the region is South Africa. The East African Community (EAC) has several mineral belts that produce (amongst other commodities) tanzanite and gold, with Tanzania being the biggest regional gold producer. Burundi has some gold reserves along with copper, cobalt, nickel and uranium deposits. Exploration activity in western Kenya has increased significantly over the past few years. Central and West Arica are increasing being seen as boom areas for iron-ore exploration and mining. The area is seeing a significant increase in railway construction in order to transport ore to ports and this has led to the opening of mines in Guinea, Liberia and Sierra Leone. The Economic Community of West African States (ECOWAS) exported US$150-bn worth of goods during 2011. The biggest challenge faced by the burgeoning mining sector in the region is country-specific political risk. Around 85% of global phosphate reserves are located in North Africa. The majority of the area’s mined phosphates are used in the production of fertilizer. The pricing outlook for phosphate is positive. There is no effective substitute for this raw material when used for making fertilizers.

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POTENTIALLY LUCRATIVE AFRICAN MINING DESTINATIONS Botswana: Botswana is the largest diamond miner in the world. The country also has well-known coal reserves, and coal production is likely to become of increasing value to the country. The country is estimated to have more than 200-bn tonnes of coal reserves and the development of the coal sector has become a key priority. Ghana: Gold is the most important mining sector. The mining landscape is dominated by foreign-owned firms. Ghana is the second-largest gold producer on the continent after South Africa. Production growth over the long-term is very favourable. Companies including Perseus Mining Ltd. and Endeavour Mining Corporation invested US$20-bn in Ghanaian gold mines during 2011-12. Mozambique: The mining sector’s contribution to overall economic activity is expected to increase significantly over the medium- to long-term on the back of a sharp projected increase in global coal production. According to the IMF, megaprojects have the potential to make a contribution of 18% of total value added in the economy by 2016. Coal production could reach beyond 100-million tonnes p.a. within the next five years. Namibia: Mineral exports constitute half of the country’s total export earnings, with the country producing diamonds, uranium, copper, magnesium, zinc, silver, gold, lead, semi-precious stones and industrial minerals. Namibia is the fourth-largest exporter of non-fuel minerals in Africa. The mining sector is expected to post a real expansion of 12.5% p.a. towards 2017. Tanzania: The mining industry remains relatively small but is exceedingly important as a significant source of export revenues. The sector contributed approximately 3.2% to GDP in 2012. It is estimated that about 90% of Tanzania’s minerals have yet to be exploited. The construction of a nickel mine is set to start in 2014 and large-scale uranium mining is likely to commence over the coming year. Zambia: The country has a wide spectrum of mineral resources including copper, cobalt, zinc, gold, manganese, nickel and gemstones. The country remains dependant on the extraction and processing of copper and cobalt for export. Copper and cobalt account for approximately 10% of GDP and around 80% of export receipts. The sector is expected to expand by 2% - 4% p.a. over the next five years. Other countries of interest include Angola, Cameroon, DRC, Kenya, Liberia, Mali, Rwanda and Sierra Leone.

Mining in Africa – Focus on Southern Africa | August 2014 5

1. MINING in SOUTH AFRICA South Africa is a world leader in mining. The country is famous for its abundance of mineral resources, accounting for a significant proportion of world production and reserves, and South African mining companies are key players in the global industry. South Africa’s total reserves remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion). Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value. It has the world’s largest reserves of manganese and platinum group metals (PGMs), and among the largest reserves of gold, diamonds, chromite ore and vanadium. With South Africa’s economy built on gold and diamond mining, the sector is an important foreign exchange earner, with gold accounting for more than one-third of exports. In 2009, the country’s diamond industry was the fourth largest in the world. South Africa is also a major producer of coal, manganese and chrome. There is considerable potential for the discovery of other world-class deposits in areas yet to be exhaustively explored. South Africa’s prolific mineral reserves include precious metals and minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals, as well as rare earth and industrial minerals. Given its history and mineral wealth, it is no surprise that the country’s mining companies are key players in the global industry. Its strengths include a high level of technical and production expertise, and comprehensive research and development activities. World-class primary processing facilities work with carbon steel, stainless steel, and aluminium, gold and platinum. South Africa is also a world leader of new technologies, such as a ground-breaking process that converts low-grade superfine iron ore into high- quality iron units. BENEFICIATION AND OTHER POLICIES

In the 2011/12 Fraser Institute Survey, South Africa was ranked 54th out of 93 countries and provinces. The Fraser Institute, a leading Canadian think tank, measures the policy attractiveness of mining destinations by polling mining company executives. Lucrative opportunities exist for downstream processing and adding value locally to iron, carbon steel, stainless steel, aluminium, PGMs and gold. A wide range of materials is available for jewellery, other than gold, platinum and diamonds; and many other semiprecious stones. For this purpose, the government has developed a minerals beneficiation strategy as a key area for potential growth. It has planned to transform the industry from being largely resource-based to knowledge-based. Downstream activities are already well-developed, and downstream products from the industry used locally include cement, steel, liquid fuels, electricity, polymers and plastics, with an estimated total sales value of R200- billion ($24.6-billion).

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South Africa's beneficiation strategy compliments other government programmes, and the mining industry value chain has been prioritised as an economic growth node in the New Growth Path, which highlights a path for the industry out of its depression until 2020. BLACK ECONOMIC EMPOWERMENT

By the end of 2011, South Africa’s mining industry was the largest contributor of economic transformation, with broad-based black economic empowerment (BB-BEE) deals worth R150-billion completed. Black economic empowerment targets apply to all companies in the country, meaning a certain percentage of local assets must be sold to black South Africans. But with black ownership of the mining sector at 8.9% in 2009 – well below the target of 15% by 2007 – the government is putting significant pressure on mines to reach the next target of 26% by 2014. THE NATIONALISATION DEBATE

The nationalisation debate holds sway over the industry and investment in it, despite the government and the ruling African National Congress repeatedly stating that nationalisation of mines is not policy. The party’s Youth League and other groups have called for mines to be nationalised, and there are ongoing debates about licences, royalties and ownership. The Mining Industry Growth Development and Employment Task Team (Migdett) was established at the height of the global financial crisis in 2008, with stakeholders from the government, industry, and labour. They committed to achieve two critical outcomes:

To help the industry manage the negative effects of the global economic crisis and to save jobs;

To position the industry for growth and transformation in the medium to long term. ECONOMIC SITUATION IN THE MINING INDUSTRY

The economy of South Africa is the second largest in Africa, behind Nigeria, and it accounts for 24% of its gross domestic product in terms of purchasing power parity, and is ranked as an upper-middle income economy by the World; this makes the country one of only four countries in Africa in this category the others being Botswana, Gabon and Mauritius. Since 1996, at the end of over twelve years of international sanctions, South Africa's Gross Domestic Product has almost tripled to $400 billion, and foreign exchange reserves have increased from $3 billion to nearly $50 billion; creating a growing and sizable African middle class, within two decades of establishing democracy and ending apartheid.

According to official estimates, a quarter of the population is unemployed, According to a 2013 Goldman Sachs report, that number increases to 35% when including people who have given up looking for work. A quarter of South Africans live on less than US $1.25 a day. South Africa has a comparative advantage in the production of agriculture, mining and manufacturing products relating to these sectors. South Africa has shifted from a primary and secondary economy in the mid-twentieth century to an economy driven primarily by the tertiary sector in the present day which accounts for an estimated 65% of GDP or $230 billion in nominal GDP terms. The country's economy is reasonably diversified with key economic sectors

Mining in Africa – Focus on Southern Africa | August 2014 7

including mining, agriculture and fisheries, vehicle manufacturing and assembly, food processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, transportation, and wholesale and retail trade. South Africa is a world leader in mining, and mining remains the back bone of the country’s economy. It has been so since the precious metal was discovered in Johannesburg around 1887. The country’s huge and varied mineral reserves play a vital role in the economy, accounting for nearly half of the country’s merchandise exports, including beneficiated products. The industry is the largest employer, rivaled only by the public service which employs over a million people. According to Brand South Africa, South Africa’s total reserves remain some of the world’s most valuable, with an estimated worth of R20.3-trillion ($2.5-trillion). Overall, the country is estimated to have the world’s fifth-largest mining sector in terms of GDP value. With South Africa’s economy built on gold and diamond mining, the sector is also an important foreign exchange earner. But economists are concerned that continued strikes in major mining companies could damage the South African economy and hold back growth and employment. This comes as reports indicate that more than 70,000 platinum mineworkers downed tools in Rustenburg on January 23. The alarm by the government and some economists is probably justifiable considering that in 2009, South Africa’s diamond industry was the fourth largest in the world. The country is also a major producer of coal, manganese and chrome. Even though the price for platinum has not been affected by the wave of strikes since last year, economists warn that things could change if the unrest continues. The Association of Mineworkers and Construction Union (AMCU), which is the majority union in the platinum belt, have been demanding R12 500 salary for its members. Impala on the other hand, is reportedly offering increases of 9% in the first year, 1.8% in the second and 7.5% in the third, which will increase entry-level wages from R9, 297 a month to R11, 746 by the third year. This apparently includes a living-out allowance, medical and retirement contributions and a 13th cheque. According to the Chamber of Mines, mining:

Creates one million jobs (500 000 direct and 500 000 indirect).

Accounts for about 18% of GDP (8.6% direct, 10% indirect and induced).

Is a critical earner of foreign exchange at more than 50%.

Accounts for 20% of investment (12% direct).

Attracts significant foreign savings (R1.9-trillion or 43% of value of JSE).

Accounts for 13.2% of corporate tax receipts (R17-billion in 2010) and R6-billion in royalties.

Accounts for R441-billion in expenditures, R407-billion spent locally.

Accounts for R78-billion spent in wages and salaries.

Accounts for 50% of volume of Transnet’s rail and ports.

Accounts for 94% of electricity generation via coal power plants.

Takes 15% of electricity demand.

Responsible for about 37% of the country’s liquid fuels via coal.

Total mining expenditure in 2010 was R441-billion, of which:

R228.4-billion was spent on purchases and operating costs (timber, steel, explosives, electricity, transport, uniforms, etc.

R78.4-billion went on salaries and wages for mine employees.

R49-billion on Capex (the lifeblood of mining).

R17.1-billion in tax.

R16.2-billion in dividends (only 3.7% of total).

R38-billion on depreciation and impairments.

R13-billion on interest to the banks.

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1.1 GOLD INDUSTRY

South Africa continues to hold the world’s largest reserves of gold after more than 126 years of mining; however, the country’s gold output has slowed in recent years. In December 2012, it was noted that the decline in South African gold production over the past five years has been significant. Production was down to about 180 000 kg of gold a year, while seven years ago, South Africa was producing double that.

South Africa’s gold mines are already the deepest in the world and deep-level mining has significant financial challenges, as it is particularly expensive. Mining in South Africa generally faces notable cost increases, including increased labour costs. One slight reprieve, however, is the recent announcement by the National Energy Regulator of South Africa that State-owned electricity utility Eskom will be limited to an average yearly rate increase of 8% over the period 2013 to 2018. While still significant, this increase is half of the 16% increase that was sought by the State-owned entity. As electricity is a major input cost for gold miners, this announcement represents a degree of relief. In December 2012, consultancy Deloitte’s ‘Tracking the Trends 2013’ report showed projected investment in the Australian mining industry to be 18 times higher than projected investment in South Africa’s mining industry, which had a history of better returns. The report showed that projected investment in Australia from 2012 to 2031 is $55-billion, compared with $3-billion in South Africa in the same 19-year period. Since the second half of 2012, South Africa’s mining industry has been experiencing widespread industrial action. The unrest was sparked by the August 2012 Marikana tragedy, in which 34 striking platinum miners were killed in a standoff with police. The incident shook South Africa’s reputation as a world-class mining investment destination and, in the wake of the shooting, labour discontent spread from the platinum mining industry to various other mining sectors. For some time, groups within the ruling African National Congress, including that led by Julius Malema, expelled leader of the party’s Youth League, have been fighting for the nationalisation of the country’s mines. Many commentators believe that this has deterred potential investors. While nationalisation no longer appears to be on South Africa’s policy agenda, companies continue to call

Mining in Africa – Focus on Southern Africa | August 2014 9

for government’s establishing of clear long-term regulations. Mining companies have decades-long investment horizons and fear arbitrary and unpredictable regulatory change. It is critical that they have a regulatory framework on which they can rely on when making long-term investment decisions. MAJOR GOLD-MINING COMPANIES

ANGLO SHANTI GOLD - www.anglogold.co.za

Johannesburg-based AngloGold Ashanti produced 3.94-million ounces of gold in the year ended December 31, 2012, compared with 4.3-million ounces in 2011, at a total cash cost of $862/oz, compared with $728/oz in 2011. Outside South Africa, AngloGold Ashanti owns stakes in eight African mines that collectively contributed 1.54-million ounces to the company’s gold production in 2012, compared with 1.57-million ounces in 2011, at a total cash cost of $905/oz, compared with $765/oz in 2011. Outside Africa, AngloGold Ashanti is involved in a further five operations. AngloGold Ashanti undertook capex valued at $2.15-billion in 2012, including project capital spending of $1.1-billion. Of the total project capital spent, about 80% was dedicated to the Mponeng, Kibali, Tropicana and Cripple Creek & Victor projects.

HARMONY GOLD - www.harmony.co.za

Harmony Gold is a gold mining company that has long been active in South Africa’s gold mining industry. Harmony’s current portfolio has been amassed out of extensive merger, acquisition and growth activities, which have enabled the company to develop into a significant global gold producer with a substantial asset base. Harmony has also engaged in the disposal of certain assets. Recent disposals have included the sale of the Evander mine and an interest in Rand Uranium. The company is listed on the stock exchanges in Johannesburg, New York, Berlin and Brussels. It is 28%-owned by black economic-empowerment entities and has recently introduced an employee share ownership plan – the Tlhakanelo Employee Share Trust – from which more than 33 000 employees and their dependants stand to benefit. The bulk of Harmony’s gold production stems from its operations in South Africa – nine underground mines, an open pit mine and several surface operations, which exploit the gold-bearing reefs of the Witwatersrand basin. The company’s underground portfolio comprises the Bambanani, Joel, Masimong, Phakisa, Target, Tshepong and Virginia mines, in the Free State; the Doornkop mine,in Gauteng; and the Kusasalethu mine, in the North West.

SIBANYE GOLD LIMITED - www.sibanyegold.co.za

Sibanye Gold Limited is a proudly South African gold mining company with three principal operations, namely Kloof and Driefontein in the West Witwatersrand region and Beatrix in the Free State. Sibanye Gold is the largest producer of gold in South Africa and amongst the top ten largest gold producers globally. Sibanye Gold's operations are historically some of the most productive mines in the industry and, with Reserves of 13.5 million ounces and Resources of 74.2 million ounces at the end of 2012, are likely to remain so for many years. The company is currently implementing a new operating model and strategy, following an in-depth review of the business and its high quality mines, which still have the potential to produce over 1.2 million ounces of gold per annum for more than ten years

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GOLD FIELDS - www.goldfields.co.za

Gold Fields Limited is an unhedged, globally diversified producer of gold with eight operating mines in Australia, Ghana, Peru and South Africa. In February 2013, Gold Fields unbundled its mature, underground KDC and Beatrix mines in South Africa into an independent and separately listed company, Sibanye Gold. In October 2013, it expanded its presence in Western Australia by acquiring the Granny Smith, Lawlers and Darlot mines (known as the Yilgarn South Assets) from Barrick Gold. Gold Fields has attributable annual gold production of approximately 2.02 million ounces, as well as attributable Mineral Reserves of around 49 million ounces and Mineral Resources of about 113 million ounces. Attributable copper Mineral Reserves total 708 million pounds and Mineral Resources 7,120 million pounds. Gold Fields has a primary listing on the JSE Limited, with secondary listings on the New York Stock Exchange (NYSE), NASDAQ Dubai Limited, Euronext in Brussels (NYX) and the Swiss Exchange (SWX).

RAND GOLD - www.randgoldresources.com

Rand gold Resources Limited (Randgold) is an African focused gold mining and exploration company with listings on the London Stock Exchange and NASDAQ. Major discoveries to date include the 7.5Moz Morila deposit in southern Mali, the 7Moz Yalea deposit and the 5.5Moz Gounkoto deposit, both in western Mali, the 4Moz Tongon deposit in the Côte d’Ivoire and the 3Moz Massawa deposit in eastern Senegal. Randgold financed and built the Morila mine which, since October 2000, has produced more than 6Moz of gold and distributed more than US$2 billion to stakeholders. It also financed and built the Loulo operation which started as two open pit mines in November 2005.

1.2 DIAMOND INDUSTRY

South Africa has the most diverse range of diamond deposits in the world. Deposits include open pit and underground kimberlite pipe-, dyke- and fissure mining, alluvial mining, as well as on and

offshore marine mining. South Africa produced 6,139,682.00 carats in 2009. South Africa produces in the region of 5% of global

production and is ranked 7th in the world in terms of rough diamond production. A severe downturn was experienced in the second half of 2008, but both production and prices are showing signs of stabilisation. This recovery has encouraged junior diamond miners to resume production and to continue

with proposed expansion projects. De Beers, which contributes in the region of 45% of the world’s diamond market, shut down

approximately 60% of its operations in 2009. Petra has bought many mines previously owned by De Beers. Petra Diamonds has a world-class resource base of 262 million carats - all kimberlite. Other producers include Trans Hex and Diamondcorp. Diamondcorp's primary asset in South Africa is the Lace Diamond Mine, located near Kroonstad in the Free State Province. DiamondCorp, who was awarded a mining right to the Lace property in February 2009, has recently resumed development at the Lace mine. It is hoped that the development will be completed during 2011, allowing for increased production to 1.2mtpa. Following changes in South Africa's Minerals Bill, several of South Africa's larger companies are being forced to relinquish prospective properties. As a result, this has provided excellent incentives and entry points for foreign investment and black empowerment mining companies in particular, as this aspect forms one of the cornerstones for the new Minerals Bills.

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Most production is sourced from kimberlite mines, followed by alluvials and then marine. South Africa’s kimberlite mines are located mainly in the central northern parts of the country. Over the last 100 million years most kimberlites have had a significant amount of erosion taking place, resulting in several billion carats being eroded and transported fluvially. This has resulted in numerous alluvial diamond deposits along the Orange and Vaal rivers. Finally, ancient beach terraces and marine deposits located along the west coast constitute an enormous resource. KIMBERLITE DIAMOND MINING

De Beers is the world’s largest producer of gem quality diamonds, producing around 45% of world production. It is the leader in diamond mining and recovery technology and produces diamonds from its numerous large and small diamond mining operations which cover every category of mine - open pit, under- ground, alluvial, coastal and undersea. In 2009, De Beers Consolidated Mines Ltd recovered 4.8 million carats from 11.3 million tonnes treated. The Venetia diamond mine, which opened in 1992, is De Beers’ flagship operation. Situated 80km from Musina (formerly Messina) in Limpopo Province, the mine is South Africa’s largest diamond producer, producing 2.2 million carats in 2009. The mine is currently an open-pit operation, but it is expected to convert to underground mining between 2018 and 2021 as the mine becomes deeper. The Finsch mine, established in 1961, is situated 165km west of Kimberley in the Northern Cape Province. De Beers recovered 2.317 million carats during the calendar year 2008, and announced, in June 2010, a planned restructuring at Finsch Mine to ensure it is a sustainable business in the years to come. Voorspoed is the first De Beers mine to be opened in South Africa since De Beers entered into a groundbreaking Broad-Based Black Economic Empowerment (BBBEE) transaction with Ponahalo Holdings Limited in 2006. The Voorspoed mine, located approximately 30 km North East of Kroonstad, in the Fezile Dabi District of the Free State Province, was officially opened in 2008. It is expected that Voorspoed will be operational for 12-16 years, including ramp up and closure. The mine is expected to produce up to 800,000 carats per annum. Since 2008 Voorspoed has produced 660 000 carats. Cullinan is one of the world's most celebrated diamond mines and is renowned for producing many of the most spectacular diamonds ever seen. The Cullinan kimberlite pipe is the second largest indicated diamond resource in the world and totals in the region of 204 million carats (including tailings). Petra Diamonds is currently implementing an expansion plan at Cullinan which will take production from just over 920,000 carats in the 2010 financial year to 2.6 million carats by 2019. Koffiefontein is one of the world's top kimberlite mines by average value per carat. The mine produces high-value diamonds - the average value per carat achieved in the financial year to June 2010 was US$402. In 1994, a 232.34 carat diamond was recovered at Koffiefontein, being the largest rough diamond ever produced by the mine. Petra acquired Koffiefontein in 2007 from De Beers for R81.9 million. Koffiefontein is now a significant contributor to the groups’ revenue. Kimberley Underground comprises Bultfontein, Dutoitspan and Wesselton, three historic diamond mines which were at the heart of the diamond rush in the Kimberley region of South Africa in the late 1800's. These mines have also produced spectacular diamonds in the past, such as The Oppenheimer, a nearly perfectly-formed 253.7 carat yellow diamond crystal. Petra completed the acquisition of Kimberley Underground from De Beers in May 2010. The fissure mines - Helam, Sedibeng and Star - were acquired when Petra merged with Crown Diamonds NL in May 2005. Mwana Africa has an interest in the Klipspringer Diamond Mine, located 250 km north of Johannesburg and 35 km south of Polokwane. The mine is a joint venture between Mwana (62%) and Naka Diamond Mining (Pty) Ltd (38%), a Black Economic Empowerment company.

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The Trans Hex Group is another world-class player in the exploration, mining and marketing of high-quality land and marine diamonds in South Africa. Mvela Resources holds a 20.7% interest in the Trans Hex Group. Trans Hex has operations at Baken and Richtersveld. Namakwa Diamonds is an integrated diamond resource group focused on diamond mining and beneficiation across Southern Africa. While alluvial diamond deposits, including marine, have to date constituted the primary focus of the Company, a recent kimberlite acquisition has been made in Lesotho. MARINE DIAMOND MINING

Significant advances in surveying, sampling and recovery techniques have made South Africa’s extensive marine deposits accessible. Although the sizes of these diamonds are generally smaller than diamonds produced inland, the quality is unsurpassed. All of these deposits originally coming from kimberlites in South Africa, which were washed down the Orange River and deposited at the river mouth as well as along the coastlines of Namibia and South Africa. Methods of recovering diamonds vary from shore-diving to specialised ships. De Beers uses two mining methods, namely a horizontal system, in which a seabed crawler brings diamond-bearing gravels to the vessel through flexible slurry hoses; and a vertical system, in which a large-diameter drilling device mounted on a compensated steel pipe drill string, recovers diamond-bearing gravels from the seabed following a systematic pattern over the mining block. De Beers’ South Africa Sea Areas operation, or ML3/2003, as it is called, covers a concession area of 8,000km2 along the West Coast of South Africa. The SASA project yields 240,000 carats a year. Trans Hex holds approximately 11 300 km2 of concession areas off the west coast of South Africa, situated around the De Punt and Port Nolloth processing plants. Transhex discontinued its marine operations conducted by the MV Ivan Prinsep and the MV Namakwa in March 2008. The MV Ivan Prinsep was recently sold for an amount of R35 million. Namakwa Diamonds is an integrated diamond resource group focused on diamond mining and beneficiation across Southern Africa. Alluvial diamond deposits, including marine, have to date constituted the primary focus of the Company. Approximately 25 different shallow water contractors are currently undertaking diver-based mining in the sub tidal concession areas. ALLUVIAL DIAMOND MINING

Alluvial gravels, extending from the Lichtenburg to Barkly West districts along the Orange and Vaal Rivers and on the Northern and Western Cape coasts, yield diamonds commonly of a better quality than those found in the original kimberlite. Although there are still some alluvial diggers in the North West, Northern Cape and Free State provinces, the prospects for new labour-intensive small-scale diamond mines have been greatly reduced. Alexkor, established in 1989 when the State alluvial Diggings were taken over from the Government and transformed into the Alexander Bay Development Corporation, has been run as a public Company with the state as sole shareholder since 1992. Alexkor has significant strategic importance for the Namaqualand region, with its core business being the mining of diamonds on land, along rivers, on beaches and in the sea along the north-west coast of South Africa. Thabex Ltd concentrates on alluvial as well as kimberlitic deposits. Cinprop 0002 (Pty) Ltd, 10% held by Taung Diamonds, has been successful in being granted a Prospecting Right for alluvial diamonds over a portion of the farm Taung Reserves 894 NY from the DME. Namakwa’s Albetros Project is an alluvial diamond project situated over three farms covering approximately 7,600Ha, and currently offering the Namakwa Group the best opportunity for development and growth. It is one of the only remaining tracts of prime alluvial diamond land in

Mining in Africa – Focus on Southern Africa | August 2014 13

Namaqualand available for final stage prospecting and mining development. The discovery of a 90km long fluvial palaeo channel called the Megalodon Channel in 2002, by De Beers, has created an increased potential for the region for further deposits. The sites that constitute the Albetros Project straddle a 3.3km long section of this channel. MAJOR DIAMOND-MINING COMPANIES

DE BEERS - www.debeersgroup.com

De Beers’ diamond mining operations are concentrated in Southern Africa, where the 74%-owned De Beers Consolidated Mines (DBCM) operates the group’s mining assets in South Africa and 50:50 JVs Debswana and Namdeb operate mines in Botswana and Namibia respectively. Established in 1888, De Beers is the world’s leading diamond company by value, supplying 35% of the world’s rough diamonds from mines in Botswana, Namibia and Canada. It is involved in all aspects of the diamond value chain – from exploration to mining; rough diamond sales; cutting, polishing and manufacturing; and marketing.

PETRA DIAMONDS - www.petradiamonds.com

Petra Diamonds is a leading independent diamond mining group and an increasingly important supplier of rough diamonds to the international market. Petra's exploration programme is focused in Botswana, where modern exploration techniques offer the potential to make new discoveries in previously explored areas. The Company operates both underground and open-pit operations in South Africa and Tanzania. The Company has expansion plans in place at each of its core assets.

CULLINAN DIAMONDS - www.cullinandiamonds.co.za

The mine is the world’s main source for rare blue diamonds. Owned by a three way partnership consortium, led by London-listed group Petra Diamonds, black economic empowerment group Thembinkosi Mining Investments and Saudi-based investment company Al Rajhi Holdings, the Cullinan Diamond Mine is expected to produce one million carats per year over the next 20 to 40 years. Cullinan Diamond Mine has generated 25% of the world’s diamonds over 400 carats. This famous landmark is the source of the most famous diamond ever unearthed.

TRANS HEX - www.transhex.co.za

Trans Hex has been in the diamond mining industry for nearly 50 years. The Company is a world-class player in the exploration, mining and marketing of diamonds of the highest quality. The company has established mining operations in South Africa. Its flagship operation, Baken Mine, is situated on the banks of the lower Orange River approximately 60 km from Alexander Bay. In Angola, Trans Hex holds a 33% stake in Sociedade Mineira Luana (Somiluana), a fully operational alluvial mine, where Trans Hex is also the appointed mining operator. The company also has minority interests in the Luarica and Fucaúma projects, both of which are disclosed as discontinued operations as the mining licences have been formally revoked by the Angolan State. Trans Hex is continuing with the appropriate course of action to exit from these projects.

ROCKWELL DIAMONDS - www.rockwelldiamonds.com

Rockwell is focused on creating a growth-oriented mid-tier diamond mining and development company. To meet this goal, the Company has an interest in several producing and exploration alluvial diamond properties in southern Africa. The Company has three existing operations, namely Saxendrift, Klipdam and Tirisano, which it is progressively optimizing. It also has two development projects, Wouterspan and Niewejaarskraal . and a pipeline of other projects with future development potential. Rockwell's operations and projects are all located in the Republic of South Africa.

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NAMAKWA DIAMONDS - www.namakwadiamonds.co.za

Namakwa is a diamond resource group, which seeks to extract maximum value from the marketing and sale of Group mined and contracted production. The Group's mining activities are focused on the Kao Mine in Lesotho. The Kao Mine is operated by 62.5% owned subsidiary Storm Mountain Diamonds and its leading hard-rock mining team, with a proven track record in the construction and development of Lesotho's leading kimberlite pipes. The Group also maintains alluvial mining operations and resource-development properties in the North West Province of South Africa and resource-development properties in the Northern Cape Province of South Africa, as well as in the offshore marine environment of Namibia.

1.3 PLATINUM INDUSTRY

Following several uninterrupted years of gross surpluses, the platinum market reached a narrow deficit of 375 000 oz in 2012 from a surplus of 450 000 oz in 2011, owing to far-reaching disruptions in mine production in South Africa, the world’s largest platinum producer, which resulted in the country’s platinum producers losing at least 750 000 oz of production. Meanwhile, primary supplies of platinum fell to a 12-year low of 5.64-million ounces in 2012, from 6.485-million ounces in 2011, with platinum supplies from South Africa falling by 16% from 4.86-million ounces to 4.095-million ounces. The country’s platinum sector was afflicted by cost pressures, negative market conditions, strained capital expenditure, soft platinum group metals (PGM) prices, weak demand and declining output, owing to safety stoppages, widespread industrial action and the closure of marginal platinum operations in 2012. In the six months to December 2012, 3 332 workers lost their jobs in the platinum mining sector, owing to what was called an “unfavourable economic climate”, and more job losses are expected. Before the incident at Marikina, several South African producers were already considering restructuring low-margin operations in view of weak platinum prices and high costs. Wage agreements at some mines have fuelled mining cost inflation, threatening the prosperity of platinum miners.

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CREATION OF A NEW PLATINUM-FOCUSED INDUSTRIAL HUB

A public–private partnership has been created to investigate the establishment of a special economic zone (SEZ), aimed at attracting investments that add value to South Africa’s PGM resources before they are exported. The SEZ, known as the Platinum Valley Hub, is one of ten new industrial hubs or corridors under investigation by the provinces while the Department of Trade and Industry (DTI) is pressing ahead with the approval of the SEZ Bill, which was introduced through Parliament. The legislation expands the country’s industrial real-estate portfolio beyond the export-orientated industrial development zones (IDZs) that already exist. The DTI aims to have the SEZ legislation in place by end of the year. The hub is one of the three most advanced SEZs under review, along with the Saldanha IDZ and the OR Tambo jewellery precinct. The geographical position of the Platinum Valley Hub has not been confirmed, but it could possibly be located in the North West or be set up as an industrial corridor between Limpopo and the North West. According to Platinum Valley Development Initiative, the private-sector-led model is receiving high-level government and private-sector backing. Besides the DTI, the SEZ is actively supported by the Department of Science and Technology (DST) and the DMR. The Chamber of Mines has reportedly also offered its support to the initiative, together with individual mining companies, including Amplats and Lonmin; the Platinum Trust of South Africa; the Minerals Processing and Beneficiation Industries Association of Southern Africa and Ramano’s TerraCotta Resources, which first considered the idea. Ramano says the objective is to create an innovation hub or corridor that will attract domestic and international investment for beneficiation and value addition. Given platinum’s potential to emerge as a significant energy mineral, the hub’s goal is to leverage South Africa and Africa’s need for energy that does not contribute to climate change and to capitalise on South Africa’s PGM reserves, which currently represent about 70% of global output. The SEZ dovetails with the DST’s Hydrogen South Africa (HySA) research and development programme, which aims to create knowledge and human resource capacity for South Africa’s platinum industry, which is currently focused only on mining activities. The main objective of HySA is the development of value-added manufacturing for the PGM catalysis value chain to secure a 25% global market share by 2020. Under HySA, university and science-council researchers are investigating combined heat and power solutions, portable power systems, hydrogen-fuelled vehicles, hydrogen filling stations and renewable hydrogen production. A concerted effort is also being made to research and develop better autocatalysts and to commercialise new catalysis solutions. Work on the Platinum Valley Hub project corresponds with work being conducted under the aegis of the Industrial Policy Action Plan to map opportunities for various mineral value chains, including PGMs, ferrous minerals and metals, titanium, pigments and polymers. MAJOR PLATINUM-MINING COMPANIES

IMPLATS - www.implats.co.za

Impala Platinum Holdings Limited (Implats) is in the business of mining, refining and marketing of platinum group metals (PGMs), as well as nickel, copper and cobalt. In the 2013 financial year, Implats produced 1.58Moz of platinum (approximately 22% of global supply) and 3.23Moz of PGMs. The group employs approximately 57,000 people (including contractors) across its operations. Implats’ mining interests are found on the two most significant known platinum group mineral-bearing orebodies in the world The Bushveld Complex in South AfricaOn the western limb - Impala Platinum and the Leeuwkop project on the eastern limb - Marula Platinum and Two Rivers Platinum. The Great Dyke in Zimbabwe where Implats operates Zimplats and has an interest in Mimosa Platinum.

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AMPLATS (ANGLO AMERICAN) - www.angloplatinum.com

Amplats is the world’s leading primary producer of platinum group metals and accounts for approximately 40% of the world’s newly-mined platinum. The Company is listed on the JSE Limited and has its headquarters in Johannesburg, South Africa. Amplats has eight mining operations in the Bushveld Complex, namely the Bathopele, Dishaba, Khomanani, Khuseleka, Mogalakwena, Siphumelele, Thembelani and Tumela mines. The Company is currently developing the Twickenham Platinum Mine. Elsewhere in the world, the Group operates the Unki Platinum Mine (100%) on the Great Dyke in Zimbabwe and is actively exploring in Brazil with JV exploration partners.

NORTHAM - www.northam.co.za

Northam’s business relies on the two primary operating assets – the Zondereinde and Booysendal PGM mines, and its own metallurgical operations, including a base metals removal plant and smelter, located on the Zondereinde lease area. Northam is independent of the major South African platinum producers and refines its metal through Heraeus, both in Port Elizabeth and in Hanau, Germany. Northam’s in-house marketing department is responsible for marketing and sales of product both domestically and to the major global markets in Asia, Europe and North America.

NKWE PLATINUM - www.nkweplatinum.co.za

Nkwe Platinum’s main Tubatse and Garatau Projects consist of five contiguous farms with a strike length of more than 30km. These Projects are located in an established mining district with well-developed infrastructure. It borders Anglo Platinum’s Modikwa Joint Venture to the east, Implat’s Marula mine to the north and Eastplat’s Spitzkop – Kennedy’s Vale project in the south. Nkwe Platinum’s Tubatse and Garatau Projects have a surface footprint of more than 10,500 hectares, underlain by both the Merensky Reef and the UG2 chromitite seam from surface to a depth of 1,500m.

1.4 COAL MINING INDUSTRY

The coal mining industry is of major significance to the South African economy. The mineral is the major source of energy in the country, accounting for more than 90% of electricity production, 70% of primary energy production and 30% of petroleum liquid fuels.

Coal is one of South Africa’s leading mineral revenue generators. In 2012, revenue from coal reached R96-billion, making it the country’s most important commodity by sales value. This revenue surpassed platinum sales, although it should be noted that this was a result of poor performance in the platinum industry than any significant increase in coal

production. Sixty per cent of South Africa’s 2012 coal revenue was from export sales, showing that coal is a

valuable source of export earnings and contributes to improving South Africa’s trade balance. The coal industry employs more than 70 000 people and pays about R14.1-billion in wages.

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Coal mining currently takes place in about seven coalfields in the country, but is concentrated in Mpumalanga, in the Central basin, which contains the Witbank, Highveld and Ermelo fields. There are also operations in Limpopo’s Waterberg and Soutpansberg coalfields, and in the Free State. In addition, there are several anthracite mines in KwaZulu-Natal. The Witbank, Highveld and Ermelo coalfields are expected to remain the backbone of South Africa’s coal industry in the coming years, and the Central basin is believed to have sufficient coal reserves and resources to grow total exports to a peak of 90-million tons a year by 2023. However, as these reserves deplete, attention will turn to some of the country’s other coalfields. Production from Limpopo’s Waterberg, Soutpansberg and Tuli coalfields is likely to increase substantially, with these fields having not yet been exploited to their full potential. The Waterberg, in particular, is expected to become a new hub of coal mining activity, with the area believed to represent South Africa’s single biggest opportunity for coal mining growth. The Grootegeluk mine is currently the only operation in the Waterberg. However, the coalfield, which consists of largely untapped resources, is being explored by several companies for steam and metallurgical coal, and several new Waterberg mines are reported to be in the planning and conceptual stages. There are, however, several obstacles to the large-scale development of the Waterberg. The region’s coalfield has thick seams, embedded in siltstones and shales, making extraction more difficult and requiring higher input costs. The Grootegeluk mine has shown that the region requires difficult bench-mining along the lines of a metalliferous quarry, but with each bench being of a different coal type and quality. Complex coal processing and marketing are required.

CORPORATE ACTIVITY

The coal mining industry is a key contributor to merger and acquisition activity in South Africa, with the industry witnessing a significant number of partnership, disposal and equity transactions, at corporate and operational levels, in recent years. Much of this activity has taken place under the banner of BEE, with the country’s coal mining industry having experienced a higher level of transformation than many of the country’s other mining sectors. This is a result of much of South Africa’s coal being located in shallow deposits and, thus, amenable to opencast mining. Opencast methods are less technically challenging and more

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affordable than underground methods. Much of the opencast mining in South Africa’s coal industry is undertaken by contract-mining companies, resulting in aspiring BEE mining companies facing fewer technical and financial barriers when entering the industry than those present in many other mining sectors. Further, the potential exists for additional BEE activity in the coal mining industry, as significant opportunities exist for BEE operators in this sector, owing to government’s intention to ensure that, by 2018, Eskom procures more than 50% of its coal from emerging black coal producers. LOCAL DEMAND

The bulk of South Africa’s yearly saleable coal production is sold locally. Local coal demand is dominated by the electricity sector, which accounts for about 66% of local sales. A further 23% of local coal demand comes from the synthetic fuels (synfuels) industry. Industrial demand accounts for about 5% of local coal demand, the metallurgical industries and small coal merchants each account for about 3% and mining accounts for about 0.2%. ELECTRICITY DEMANDS

More than 90% of the electricity used in South Africa is produced in coal-fired power stations. As a result, the key source of local demand for coal is electricity utility Eskom. The utility’s existing demand for coal is in the region of 120-million tons a year and Eskom’s demand for coal is set to increase in the coming years, as a result of the utility bringing two new major coal-fired power stations on stream, among other factors. Eskom’s coal requirements are currently met by 46 mines. Many of these are situated in close proximity to the power stations that they supply – many of Eskom’s power stations are termed “mine-mouth” facilities, where the coal is transported the short distance from the mine to the power station by conveyor belts. Much of the coal supply to Eskom takes place under long-term contracts, many of which operate on a cost-plus basis. Eskom’s coal requirements are rising and are expected to continue to do so. One of the reasons for this increase is that the utility is having to run its power stations at capacity factors higher than those envisaged in its long term supply contracts. Also contributing to the utility’s increasing coal requirements is bringing its two new major coal-fired power stations on line. OTHER DEMANDS

South Africa’s second largest consumer of domestic coal, after Eskom, is the synthetic fuels (synfuels) industry, which accounts for about 23% of local coal sales. Synfuels giant Sasol uses about 40-million tons of coal a year to produce about 160 000 bbl/d of fuel, in addition to chemicals. The coal used in the production of synfuels is largely mined by Sasol Mining. The company’s mines in Mpumalanga supply Sasol Synfuels’ coal-to-liquids plant in Secunda, while its Mooikraal mine, in the Free State, supplies coal to Sasol Infrachem’s facility in Sasolburg. In addition, Sasol purchases about five-million tons a year of coal from Anglo Coal’s Isibonelo mine, as part of a20-year external purchasing agreement, which will continue until 2025. Sasol’s coal demand is set to increase in coming years. The company is expanding the capacity of its synfuels plant, in Mpumalanga, which will result in the consumption of an additional 25-million tons a year of coal when the project is completed.

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RAIL LOGISTICS

The availability of rail capacity is considered to be integral to the success of South Africa’s coal mining industry, as it is currently structured. It will also be critical in ensuring the success of emerging junior coal miners. In the year ended March 2013, State-owned rail utility Transnet Freight Rail (TFR) transported 84.3-million tons of coal. This included the transportation of 15.1-million tons of coal on TFR’s general freight lines, and 69.2-million tons of coal on the utility’s coal export line, which runs from the coal mining areas of Mpumalanga to the country’s main export terminal in Richards Bay, KwaZulu-Natal. Performance on the coal export line in the year to March 2013 marked a 2.2% increase on the previous year’s performance, marking an ongoing departure from a previous long trend of volume declines and stagnating growth on this line. The total capacity of the coal export line is currently about 72-million tons, which falls short of the Richards Bay Coal Terminal’s (RBCT’s) 91-million-ton-a-year capacity, reflecting a lack of coordination and planning between Transnet and the RBCT. Further, the gap between the capacity on the rail line and the export capacity at the RBCT is exacerbated by the rail line operating below capacity, as a result of locomotive, wagon and skills shortages, among other issues. TFR turned the corner in 2010 and has recorded improved volumes on the coal export line since that time. Meanwhile, Transnet is pursuing a project to increase the capacity of its coal line from 81-million tons a year to 97.50-million tons a year by 2020. This will bring capacity on the coal line to more than the RBCT’s current nameplate capacity. The planned expansions to the coal export line form part of Transnet’s R307.5-billion Market Demand Strategy (MDS). Expenditure on the coal export line, under MDS, is expected to amount to R32.4-billion. MAJOR SOUTH AFRICAN COAL-MINING COMPANIES

CONTINENTAL COAL - www.conticoal.com

Continental Coal Limited (ASX:CCC/AIM:COOL) is a South African thermal coal producer with a portfolio of producing, development and advanced exploration coal projects located in South Africa's major coal fields. Continental currently has three operating mines, Penumbra, Vlakvarkfontein and Ferreira, producing 2.2Mtpa of thermal coal for the export and domestic markets. In 2013/14 Continental is set to commence development of its fourth thermal coal mine, De Wittekrans which will add 3.6 million ROM tonnes per annum once in full production.

COAL OF AFRICA - www.coalofafrica.com

Coal of Africa Limited (CoAL) is an emerging developer and producer of high-quality thermal and coking coal. Based in South Africa, there are three operating collieries and a valuable suite of coal resources in evaluation and feasibility phases; enabling them to grow well into the future. With good access to rail and port infrastructure, CoAL can effectively service domestic and international markets; providing a much-needed resource for economic growth and development for the country and the provinces in which they operate.

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KEATON ENERGY - www.keatonenergy.co.za

Keaton Energy is a South African based coal mining holding company with interests in exploring for coal deposits and developing and operating coal mines in South Africa. The company's assets comprise two operating collieries, Vanggatfontein and Vallkrantz; three development projects, Koudelager, Braakfontein and Sterkfontein; as well as three prospects that can be developed as expansions to existing collieries and projects, and two prospects that may result in new development projects. Keaton Energy's intention, since its founding in 2006, has been to take its South African exploration prospects rapidly up the value curve - through exploration and development to mining - to produce 2 milion tonnes per annum (Mtpa) of saleable coal in the short term, and to grow into a mid-tier, 5Mtpa coal producer in the medium term. Keaton Energy’s medium-term strategic intent is to grow to a 5Mtpa producer of coal, in a profitable and safe manner, having due consideration for our environment and contributing to the health and well-being of our employees and local communities.

1.5 IRON-ORE INDUSTRIES

The outlook for the South African iron-ore industry is optimistic, with the opening of Kumba Iron Ore’s R8.5-billion Kolomela mine, in the Northern Cape, and thus South Africa overtaking India as the third-largest exporter of iron-ore to China, the world’s largest consumer.

Iron-ore exports from South Africa to China increased 12% to 40.6-million MT in 2012, as compared with iron-ore exports in 2011, while Indian exports to the Asian giant plunged nearly 55% to 33-million tonnes, as the country cracked down on illegal mining operations. South Africa’s iron-ore exports increased, despite violent labour unrest in South Africa’s resources sector, which led to several deaths and severe losses for leading miners.

South Africa’s major iron-ore producers, namely Kumba and Assmang – a 50:50 joint venture between Assore and African Rainbow Minerals – are expected to reach a combined output of 100-million tons a year between 2015 and 2020 if the appropriate conditions are in place, including adequate rail and port capacity, sufficient energy and water resources, a conducive environment for generating an attractive return on capital invested, the availability of a viable market for a secure offtake of iron-ore and steel products, as well as a regulatory environment that encourages market participants to make the required investments. A lot depends on the outcome of project studies and, of course, the status of the expansion of the Sishen–Saldanha iron-ore export channel, which is owned and operated by State-owned freight logistics group, Transnet Freight Rail (TFR), and is being expanded to a capacity of 60-million tonnes a year. The aim, ultimately, is to increase iron-ore export capacity from 60-million tonnes a year to 82-million tonnes a year. A large amount of capital has also been spent on increasing iron-ore exports from the deep-water port at Saldanha Bay to meet growing demand for South Africa’s high-quality iron-ore. The port

Mining in Africa – Focus on Southern Africa | August 2014 21

currently handles 60-million tonnes a year and it is expected that at least another two-million tonnes a year could be exported after optimisation. The development that may not suit the country’s largest suppliers of iron-ore and steel – Kumba Iron Ore and ArcelorMittal South Africa (Mittal) respectively. The South African Cabinet has approved the Inter-Departmental Task Team on Iron-Ore and Steel’s recommendations on ‘developmental’ prices for iron-ore and steel to support downstream industries, which never materialized from the cost-plus-3% agreement reached between Kumba and Mittal at the time of State-owned Iscor’s unbundling more than a decade ago. The State has long been at loggerheads with industry over the supply of iron-ore and steel to the local market. It has sought more affordable prices to assist in making South African goods more competitive and in boosting their industrial development. Among the recommendations presented in the South Africa’s Industrial Policy Action Plan (Ipap) are commitments to:

Establish a set of inter-related policy instruments to ensure the long-term feasibility of the iron-ore and steel value chain for increased levels of value addition to create a competitive advantage for manufacturing in South Africa;

Amend the Minerals and Petroleum Resources Development Act, which will enable the Minister of Mineral Resources to invoke the relevant provisions of mining legislation to secure supply and developmental pricing;

Establish a new steel production facility, involving an international investor(s), with strong conditionalities to ensure that a developmental iron-ore price is passed on as a developmental steel price;

Strengthen the Competition Act to provide improved price monitoring, regulation and action against collusive and anticompetitive behaviour in the sector to ensure, in turn, that iron-ore price concessions accruing to the primary steel industry are, in turn, passed on to downstream steel users;

Introduce a price preference system to strengthen current export control measures and safeguard the supply of affordable scrap metal to domestic mini mills.

PROSPECTS

The price of iron-ore has dropped by an estimated 12% since reaching a 15-month high of $158.90/t in February 2014, owing to signs of slowing economic growth in China and expectations of increasing global iron-ore supply. According to financial news provider Bloomberg, the world’s top iron-ore producers are planning an estimated $250-billion of new mines in the next few years, portending a further price slump for the commodity, which has already been forecast to drop for the next three years. It has been that iron-ore surplus will emerge in 2014 and will continue to widen until at least 2018, with predictions estimating that prices will slump by as much as 34% to $90/t by the end of December this year as a result. While iron-ore production is expected to head for its first surplus in at least a decade, additional supply may not surface as quickly as some analysts are predicting because of the length of time it can take for an operation to reach full capacity. Other challenges are also likely to be encountered, including rising capital and operating costs, grade degradation, logistical hurdles, increasing geopolitical risk and royalty/tax penalties. Many mining companies, especially those at the higher end of the cost curve, are confronting investor pressure to postpone or cancel projects to stem the tide of the predicted price slumps.

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MAJOR IRON ORE COMPANIES IN SOUTH AFRICA

KUMBA IRON ORE - www.kumba.co.za

Kumba Iron Ore, South Africa’s largest iron-ore mining company, with production of 43.1-million tons in 2012, was established in 2006, when the iron-ore assets of Kumba Resources were unbundled and listed separately on the JSE. The company was merged into Anglo American and the remaining assets of Kumba Resources, together with Namakwa Sands and 20% of Kumba Iron Ore, were absorbed into Exxaro, comprising coal mining company Eyesizwe, Tiso, Eyabantu, Basadi Bakopane and the IDC to create a 55%-black-owned entity, from which Kumba derives its BEE credentials. Kumba Iron Ore’s shareholders include Anglo American, with a 69.7% stake, and the IDC and minorities, with 12.9% and 17.4% stakes respectively. The company, which boasted total attributable mineral reserves amounting to about 1.1-billion tons and attributable mineral resources of 1.2-billion tons as at December 31, 2012, operates three mines:

The flagship Sishen mine, located in the Northern Cape, uses 75% of the 861 km Sishen–Saldanha railway line’s capacity;

Thabazimbi, in Limpopo, where a new mine to replace production from the current operation is envisaged; and

Kolomela, which is expected to ramp up to full production during 2013.

ASSMANG - www.assmang.co.za

Assmang, a 50:50 JV between African Rainbow Minerals (ARM) and Assore, comprises three divisions – iron ore, manganese and chrome. The company has been mining and processing ferrous metals, including iron-ore, for decades and is the second-largest iron-ore mining company in South Africa. Its opencast iron-ore mines – Beeshoek and Khumani – both located in the Northern Cape, produced 13.7-million tons in the year to June 30, 2012, compared with the previous year’s 9.69-million tons.

EVRAZ HIGHVELD STEEL AND VANDIUM - www.highveldsteel.co.za

Evraz Highveld Steel and Vanadium, a subsidiary of vertically integrated global resources group Evraz, owns and operates the Mapochs mine, a titaniferous ore producer, located about 140 km north-east of eMalahleni, in Mpumalanga. Mapochs, an opencast operation that mines to a depth of 30 m, produces ore fines and lump ore, with the former sold to third parties and the latter transported to the JSE-listed company’s steelworks at eMalahleni, where the vanadium and titanium are separated from the iron during a complex process. Meanwhile, the Evraz group has announced plans to sell 85% of Evraz Highveld to a BEE consortium for $320-million. A nonbinding term sheet has since been signed with the consortium, represented by an entity known as Nemascore.

AFRICAN RAINBOW MINERALS – (www.arm.co.za)

African Rainbow Minerals (ARM) is a leading South African diversified mining and minerals company with long-life, low unit cost operations and significant growth opportunities. ARM mines and beneficiates iron ore, manganese ore and alloys, chrome ore and alloys, platinum group metals, copper, nickel and coal. ARM also has an investment in gold through its shareholding in Harmony.

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1.6 STEEL INDUSTRY

South Africa is the largest producer of crude steel in Africa, accounting for more than half of the continent’s output and for about 1% of the world’s total production. Arcelor Mittal South Africa is the country’s largest steelmaker. Other industry players include Scaw Metals, Cape Gate, Columbus Stainless and Evraz Highveld Steel & Vanadium. Cape Town Iron & Steel Works, which was mothballed in 2010 by its previous owner, construction and engineering group Murray & Roberts, and is to be reopened by its new Turkish owners, DHT Africa, later this year. The steel making industry is a significant contributor to the South African economy, with the big players in the sector – Mittal, Evraz Highveld Steel & Vanadium, Cape Gate and Columbus Stainless – employing a total of 24 000 contractors and full-time employees at the end of 2012, according to the South African Iron and Steel Institute (Saisi). However, this represented a significant decline from 29 000 at the end of 2011, primarily as a result of sagging demand. The sector also earns the country a considerable amount of foreign exchange. The range of carbon steel products and semi-finished products manufactured in South Africa includes billets; blooms and slabs; forgings; light, medium and heavy sections and bars; reinforcing bar; railway-track material; wire rod; seamless tubes; plates; hot- and cold-rolled coils and sheets; electrolytic galvanised coils and sheets; as well as tinplate and prepainted coils and sheets. The industry also produces stainless steel products and semi-finished products, including slabs, plates and hot- and cold-rolled coils and sheets. Steelmakers in South Africa collectively produced 6.9-million tonnes in 2012, compared with 7.5-million tonnes in the previous year, subsequently dropping in the world steel production rankings from 21 to 22. However, the country remained the continent’s largest steel producer, producing about 44% of the total crude steel production in Africa in 2012. The decline in South African primary steel production has continued in 2013, with first-quarter production down 11.3% year-on-year and 18.8% lower than production for the first quarter of 2011. While government’s plans to spend an estimated R4-trillion on strategic infrastructure over the next 15 years are expected to have a positive impact on the country’s steel and construction sectors, regulatory and funding constraints still need to be addressed and will continue to block South Africa’s infrastructure potential. Over the next three years, government plans to invest R844-billion in public infrastructure projects, into which more than 2.5-million tonnes of steel have been absorbed so far, according to figures provided by State-owned enterprises. The bulk of this steel use is attributed to State-owned power utility Eskom’s Medupi and Kusile power stations, followed by freight logistics group Transnet’s investments in rail and port projects and the Department of Water Affairs’ dam-building projects. The steel industry’s woes have also been compounded by South Africa’s historic dependence on EU demand for its steel-related products and, with demand in the EU not expected to rebound to peak levels until after 2020 and structural overcapacity a continuing issue in the region, South Africa’s faces a steel surplus.

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In light of the depressed demand, Mittal has already reduced its yearly nameplate capacity from 7.8-million tonnes to 6.5-million tonnes and has no immediate plans to restart capacity that has been idled. Instead, it aspires to raise capacity use on the lowered base to 80%. In 2012, the group’s liquid steel production was down 7% to 5.1-million, translating into capacity use of 66%. A NEW STEEL MILL IN SOUTH AFRICA

The DTI announced in December 2012 that the discussions with potential offshore investors regarding the establishment of a new steelmaking entity, in South Africa, had reached a relatively advanced stage, and the proposed facility would be for a niche, high-value product aimed at the manufacturing sector. The plan for the new steel mill is to boost industrial activity with cheap supply, following government’s oft-repeated dissatisfaction with Mittal about its unfavourable pricing model. It is intended that the new mill, which, according to an Industrial Development Corporation of South Africa (IDC) study, would reduce the local price of a range of flat and long steel products by 10%. It would also use technology that eliminates the need for importing coking coal, the second-largest cost item in the production of steel using blast furnaces. A detailedR350-million feasibility study is expected to start this year and to be completed in 18 months. It will be undertaken concurrently with an environmental-impact assessment (EIA). While government is looking for offshore investors, the DTI insists that any agreement should “contain strong conditionalities” to ensure government control of the project to avoid any shortcomings, which resulted in the downstream steel industry not benefiting from developmental pricing, as had been envisaged. The new venture will be based on the IDC’s acquisition of Scaw Metals, which will provide it with access to the former Anglo American subsidiary’s distribution network. THE MAJOR STEEL COMPANIES IN SOUTH AFRICA ARE

ARCERLORMITTAL SOUTH AFRICA – (www.arcelormittalsa.com)

ArcelorMittal South Africa’s steel operations comprise four major facilities, which produce both flat and long steel products. The flat steel operations at Vanderbijl park and Saldanha together have the capacity to produce 5.6 million tonnes of liquid steel per annum making them the largest suppliers of this commodity in Africa. Vanderbijlpark has the capacity to produce 4.4 million tonnes of liquid steel per annum, which constitutes some 78% of South Africa’s flat steel requirements. Its product range includes hot rolled steel in coil and plate; cold rolled; hot-dipped galvanised; electro-galvanised; colour coated and tinplate coil and sheet. Saldanha is one of the world’s most technologically advanced and environmentally friendly steel mills, producing ultra-thin hot rolled coil for stringent applications in the domestic and select export markets. The state-of-the-art plant produces 1.2 million tonnes of steel per annum.

MACSTEEL – (www.macsteel.co.za)

With a proud history spanning more than 100 years, Macsteel Service Centres SA has developed and expanded into the leading steel service centre and distributor in Africa.

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Consisting of 10 dynamic Business Units and operating from a network of 79 service centres, branches and warehouses, MSCSA supplies the entire sub-Saharan geographic region with the full range of carbon steel, special steel, stainless steel, aluminium products and value added steel processes to all sectors of industry.

BSI STEEL – (www.bsisteel.com)

BSI Steel Limited is a South African JSE Alternative Exchange listed group of companies with strong ties to the greater Southern African market. BSI Steel's corporate office is located in the city of Johannesburg in the South African province of Gauteng. The company's primary product range consists of mild (carbon) steel in all its different forms.

AVENG TRIDENT STEEL – (www.avengtridentsteel.co.za)

Aveng Trident Steel's main operation is centrally situated in Roodekop, Germiston with other facilities in Alrode, Rosslyn, Durban, Port Elizabeth and Cape Town. They supply a wide product range to the steel industry in South Africa as well as Sub-Saharan Africa from the extensive steel yards, modern and comprehensive steel processing and steel service centers, specialty steel division and tube manufacturing plant.

ROBOR – (www.robor.co.za)

Robor is a world-class manufacturer and supplier of welded steel tube and pipe, cold formed steel profiles and associated value added products. They supply, distribute and add value to carbon steel coil, sheet and plate and structural profiles. They have built a reputation on quality products, a customer-centric philosophy, and a focus on perfecting service levels. As one of the largest steel tube and pipe manufacturers in Southern Africa, Robor is active in most industries, including mining, transport - rail and road, construction, engineering, manufacturing, agriculture, energy, water and automotive. They also have the capability to manufacture specialised items suited to the unique requirements of these markets.

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2. MINING IN BOTSWANA

2.1 INTRODUCTION

The history of mining in Botswana is thought to go back many thousands of years. Ancient hunter-gatherer (Bushmen) communities mined red haematite and blue-black specularite for use as cosmetics, dyes and paints. Mining as a basis for metalworking began in the iron-age, and is thought to have commenced in Botswana around AD 400, having been introduced to southern Africa by Bantu-speaking farmers who migrated from further north from AD 200 onwards. The remains of many iron-ore smelting settlements in eastern Botswana have been identified by archaeological excavations, going back to around AD 800. The early miners excavated iron, copper and tin from open cast pits, crushing the rock and then reducing the ore in furnaces to produce fairly pure metals, although later mines also used underground shafts. The ore-bearing rock was most likely obtained by making fires against the rock face, and then throwing water on the rock when it was very hot, causing it to crack. Travellers to Botswana in the early 19th century came across iron smelting, blacksmithing, and locally-made copper jewellery. Although there was no large scale mining activity in Botswana in the pre-independence period, prospecting did take place, especially following the establishment of the department of geological survey in 1948. The Bangwato territory covering large areas of central, eastern and north-eastern Botswana was the focus of mineral exploration activity. Within this area, prospecting for diamonds began in 1955, following the discovery of a few diamonds in the bed of the Motloutse River, while prospecting for copper and nickel began in 1959. Over the past decade the mining sector has continued to make the largest single contribution to the economy. Mineral revenue rose from BP4.68 billion during 1997/98 to BP12.99 billion in 2012/2013. Revenues increased by over 25% from its 2010/2011 level (P10.18 billion). Total mineral revenue for FY 2012/2013 was about P12.99 billion (31% of total revenue) and is budgeted at P13.25 billion in the 2013/14 budget, the second largest revenue contributor after Customs and Excise.

2.2 DIAMONDS

The economy of Botswana has been transformed by diamonds since their discovery in the late 1960s. In 1969, the Botswana government signed a 50/50 deal with global diamond giant De Beers to explore and mine all of the country's diamonds. The partnership, called 'Debswana’, has helped turn Botswana into one of Africa's most prosperous countries, boasting today a robust economy and one of the highest per capita incomes on the continent. The state mines the country's riches as an owner, getting a share of the profit in addition to just collecting taxes and royalties like many other mineral-rich African governments. This unique arrangement has allowed Botswana to make significant investments in education and health care.

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Botswana's diamond industry looks set to get a further boost after De Beers announced last year its decision to shift its rough diamond trading operation from London to Gaborone, the Botswana capital. The company says it expects the move to bring an extra $6 billion of diamond sales into the country. A new head office is also under construction while 80 staff members will be relocated from Europe to Africa. Diamond industry in Botswana:

account for 81% of total minerals contribution to GDP (2012);

Debswana diamond output (2012): 20.22 million carats, slightly down from its 2011 output of 22.89 million carat;

After earlier recovery in the international diamond market, global demand for diamonds fell sharply in the second half of 2011 and throughout 2012;

Both Lerala mine and BK11 are on care and maintenance;

Rough diamond prices slumped by 12% in 2012, some moderate recovery made in 2013.

2.3 COAL

The Government of Botswana has developed a national strategy on coal development, the Coal Roadmap (2012). With estimated coal deposits of 212 billion tonnes of which 7.1 billion tonnes are measured reserves, coal presents a major growth opportunity for Botswana and a route to diversification, reducing the overreliance on diamonds; Botswana has the capacity and potential to produce up to 90 million tonnes of seaborne thermal coal per annum for export markets. The main export market is Asia, in particular India and China; The Government lifted its moratorium on the issuing of new coal, coal bed methane and related minerals prospecting licenses in January 2012. Progress on the Coal Road Map is as follows:

Moratorium on new coal, coal bed methane and related minerals prospecting licenses was lifted in January 2012;

The Government set up a Coal Development Unit under the Ministry of Minerals, Energy and Water Resources to oversee and ensure the implementation of a strategic coal monetization plan, optimization of the coal value chain, coordination of related infrastructure projects and act as a contact between government and private sector;

First successful Government open tender for coal was held in June 2012 (Mmamabula south and central coal fields);

Government has opened a tender for a 300 MW coal fired power station in April 2013;

The signing of the bilateral agreement between Namibia and Botswana for the building of the Trans Kalahari railway line, planned for April 2013, has been postponed; no final commitment has been made to either Namibia or Mozambique for the development of port/rail infrastructure;

Continuous work on securing additional water supply (a BIDPA study estimates that a 90 Mt pa exportcoal industry requires 40 million m³ bore water annually).

Two water projects are at the feasibility stage: Zambezi Integrated Agro-12 Commercial Development Project at Pandamatenga (495 million m³ of water per annum from the

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Chobe/Zambezi River system) and a cross border water supply system project which would augment water supply in some parts of Kgalagadi region and Southern Botswana.

Priority of overcoming the current power supply issues continue.

2.4 GOLD

Galane Gold Ltd (listed on the TSX and BSE) owns Mupane Gold Mine since 2011 and there has been a downward trend in gold prices in 2013. There has been intermittent gold mining activity over a long period in northeast Botswana. However, in 1998, Gallery Gold discovered a one million ounce gold resource at Mupane. Production commenced in late 2004, and quickly reached the rated capacity of 100,000 oz p.a. In March 2006 Gallery Gold was taken over by IAM Gold. In August 2011, Galane Gold Ltd. bought Mupane gold mine from IAM Gold for $34 million. Mupane mine produced 48,940 ounces (1.39 tonnes) of gold in 2012 and sold just over 49,000 ounces plus incidental silver. This was slightly below 2011 output of 55,027 ounces produced. The average combined selling price in 2012 was $1,671 per ounce. Galane Gold updated its mineral resource in December 2012 for the first time since the last technical record in 2011. Total measured and indicated mineral resource is 508,400 ounces of gold and a total inferred mineral resource of 261,100 ounces of gold, an increase of 17,600 ounces since the 2011 reporting. The company also recorded for the first time a measured mineral resource of 91,800 ounces of gold at the Mupane Slimes Dump in December 2012. Throughout 2012 the company worked on different pits which provide ore for the processing plant. The accelerated stripping programme at Tholo pit is expected to be finished in Q2/2013 and Tholo will provide 50% of ore for processing at a higher grade than other pits. Signal Hill pit was closed in Q3/2012 and transferred to the new Golden Eagle pit for ore extraction. Galane Gold continues the upgrade of its processing plant and has started an application for extension of the existing tailings storage facility (Mupane Slimes Dump). Galane Gold, through its subsidiary Mupane Gold Mining acquired Northern Lights Exploration in April 2012 which gives the company additional prospecting licenses in the Tati Greenstone Belt. Access to these licenses combined with the licenses already held by Mupane Gold give Galane over 1,200 km² of prospecting ground in the Tati Greenstone Belt. Galane undertook further exploration in six of its prospects in 2012 and identified targets which will be further explored in 2013.

2.5 URANIUM

Uranium prices set to strengthen and increase over next years, A-Cap has upgraded its uranium resource at its Lethlakane site. Lethlakane is one of the world’s top 10 underdeveloped uranium projects and one of only four which is capable of commencing production within five years. An advanced scoping study has been completed and a pre-feasibility study is to be finalized by December 2013 followed by a bankable feasibility study to be completed by December 2014. First production at the mine is anticipated for Q2/2016 with an annual output of 3 million pounds of U₃O₈ with a life of mine of over 20 years. In 2013, a 35% increase from 261 million pounds to 351 million pounds (at a 100 ppm cut off) of U₃O₈ was recorded, with a large high grade resource of 90 million pounds at 284ppm U₃O₈ (at a 200 ppm cut off).

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It was in December 2007 that A-Cap Resources produced Botswana’s first ever uranium resource at its Letlhakane project site. In late 2009, a new surface, secondary mineralization was discovered at Lethlakane. This secondary mineralisation represents the most profitable ore due to its high grades and metallurgical characteristics and its closeness to the surface. Exploration drilling at its Bolau Discovery (coal) has shown new zone of sediment hosted uranium and could present an additional uranium site. A-Cap is both ASX and BSE listed.

2.6 OTHER MINERALS

Diamonds, copper-nickel, soda ash and coal are the main minerals being mined in Botswana at present. Historically, other minerals have been mined, including manganese and asbestos. Semi-precious stones are mined on a small scale, and there is increasing demand for sand, crushed stone and gravel from the construction sector. Clay is mined near Lobatse for the domestic brick industry.

2.7 BOTSWANA’S MAJOR MINING COMPANIES

DEBSWANA (www.debswana.com)

Debswana was formed in 1978, as a partnership between Botswana and De Beers to mine Botswana’s diamonds.Today, Debswana boasts four open-pit mines, Jwaneng, Orapa, Letlhakane and Damtshaa. Jwaneng is the world’s richest diamond mine and Orapa is the world’s largest open-pit diamond mine. Debswana has been recognised by leaders around the world for how a true partnership between a well-managed government and a commercial enterprise can create value for both the country and the product.

GALANE GOLD (www.galanegold.com)

Galane Gold is an unhedged gold producer an explorer with mining operations and explorations tenements in the Republic of Bostwana. The Company is committed to operating at world-class standards and is focused on the safety on employees, respecting the environment and contributing to the communities in which they operate.

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A- CAP (www.acap.com.au)

A-Cap Resources Limited is an ASX listed (ASX/BSE: ACB) exploration Company that focuses on the investment friendly low sovereign risk country of Botswana in Southern Africa, where it holds over 3,600km2 of exploration licenses. The Company is actively focused on advancing its impressive multi-commodity energy portfolio of projects which consists of, Letlhakane Uranium and Coal Project, Mea Coal Project, Bolau Coal Project

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3 MINING IN MOZAMBIQUE

3.1 MOZAMBIQUES ECONOMY

Mozambique’s economy is based primarily on agriculture, which employs 83 percent of the country’s population and accounts for nearly 80 percent of its exports. Although the country has significant mineral resources, they remain largely untapped, resulting in their low contribution to the economy. During 2013, the real GDP growth rate is expected to reach 8.4 percent — owing to the increase in coal production, large infrastructure projects and credit expansion to the private sector. The country’s nominal GDP is expected to reach US$15.8 billion, whereas its GDP based on purchasing power parity (PPP) is expected to reach US$28.9 billion during 2013. During 2012, the percentage share of services in the country’s GDP is estimated to be 43.6 percent, which is the highest for any sector. This was followed by agriculture (31.8 percent) and industry (24.6 percent). Mozambique’s economy is expected to grow at about 8 percent for both 2014 and 2015, driven by high foreign direct investment (FDI) inflows — mostly in extractive industries, continued increase in coal production, infrastructure investment and credit expansion. Inflation in the country, which was as high as 12.7 percent in 2010 and 10.8 percent in 2011, reached historical lows of 2.1 percent in 2012 against an expected 7.2 percent, which has allowed for monetary policy easing, resulting in credit expansion. The fiscal deficit is expected to increase from 8.2 percent in 2012 to 9.2 percent and 9.5 percent in 2013 and 2014, respectively. The government intends to invite private investments in the country through public-private partnerships to finance infrastructure development. The growth in Mozambique’s mining sector is expected to increase from 1.5 percent of GDP in 2011 to 2.9 percent of GDP in 2017. Mozambique is set to benefit from large coal demand from China and India and could well become one of the 10 largest coal exporters globally by 2017. Coal output is forecast to reach 41.8 million tons by 2017, driven mainly by Vale and Rio Tinto. Vale production is set for China, whilst Indian companies have shown great interest in developing mines in Mozambique, which is expected to be driven by three coal licences that the Mozambican government is expected to award towards the end of 2013. There are some downside risks to the mining sector in Mozambique with, most notably, the lack of proper infrastructure, resulting in an inability to meet the demands of the mining sector. As a result, Vale is investing in the development of the Nacala corridor project for transporting coal from the mine to the sea port of Nacala. The 912-kilometre transport corridor will have a transport capacity of 18 million tons of coal per year. Furthermore, Mozambique is almost entirely focused on coal, which makes the country highly susceptible to fluctuations in the price of coal. To curb its looming infrastructure woes in light of the expected growth in the mining sector, Mozambique will have to invest substantially in electricity supplies, export infrastructure as well as in transport routes. Plans are currently in place to increase capacity at the port of Beira to 18 million

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tons per annum by 2014, and the railway line linking Vale’s Moatize mine to the port of Beira is in the process of being expanded and rehabilitated to meet increased capacity demand. Despite its infrastructure constraints, Mozambique’s sound business environment has been favourable to investment for two decades. This fact, in conjunction with low taxes and a general lack of political interference, places the country and Southern Africa at the forefront of attractive mining destinations.

3.2 COAL PRODUCTION

In Mozambique, coal mining is the fastest growing industrial segment. Significant reserves of coking coal have been discovered in the Tete province and the Zambezi area, which have attracted a number of prominent mining companies. Vale Mining and Rio Tinto are developing mines in the country and constructing key infrastructure to facilitate export of mining commodities. Vale has been producing coal from the Moatize mine since July 2011. The company has invested in developing two railroad projects — the Sena railroad project and the Nacala corridor project for transporting coal from the Moatize mine to the sea port for exports. The 575-kilometre long Sena railroad project is already in operation and connects the Moatize mine to the port of Beira, in the south of Mozambique. It has a transport capacity of 6 million tons of coal per year. The Nacala corridor project, which is currently under development, will connect the Moatize mine to the port of Nacala. The 912-kilometre long corridor is expected to have a transport capacity of 18 million tons of coal per year. In addition, the company is expanding production by developing a phase II project at the Moatize mine. The phase II operations are expected to double the current 11 million tons per annum production capacity from the mine. The company is slowing down the development of the phase II mine to ensure that it comes into operation simultaneously with the new Nacala corridor rail route, which will transport the coal from the mine. These projects are significant foreign mining investments for Mozambique, with a major share of Mozambique’s future coal production expected to come from the Moatize project. Rio Tinto holds mining and exploration licences in the Moatize basin in Tete province of Mozambique. It manages the Zambeze Project, Tete East Project and the Benga mine. The company is considering total or partial sale of its operations at the Benga coal mine after a downward review of coal reserves at the mine along with challenges in transporting coal from the mine after the Mozambican government disallowed barging of coal in early 2012 on environmental grounds. The Benga coal mine, which was opened in May 2012, undertook its first coal exports in June 2012. The company has paused coal transport through the Sena railway line in northwest Mozambique after threats by Renamo, to disrupt rail traffic. Mozambique is expected to be a key driver of global coal production going forward, reaching coal output of 41.8 million tons by 2017 from 6.3 million tons in 2011, according to BMI forecasts. Despite this bullish outlook for Mozambican coal, Mozambique is still expected to account for less than 1 percent of global coal output by 2017. However, the majority of this coal is destined for export, most notably to China and India, which could make Mozambique one of the top 10 largest coal exporters in the world.

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COAL PRODUCTION LEVELS

3.3 GOLD PRODUCTION

Gold production in Mozambique is expected to increase significantly, albeit from a low base, driven mainly by Auroch Minerals Manica Gold Project which is expected to come online. Despite being largely overshadowed by its booming coal sector, gold is still expected to boost the mining industry and economy. By 2017, Mozambique’s gold production is expected to increase from 25,000 ounces in 2011 to 85,000 ounces by 2017.

GOLD PRODUCTION LEVELS

3.4 ALUMINIUM PRODUCTION

Aluminium production is one of the most important revenue generators for Mozambique. The Mozal aluminium smelter operated by BHP Billiton is one of the largest aluminium smelters in Africa. Currently, Mozambique is actively seeking investments from more developed economies. During June 2013, South Korea agreed to work closely with Mozambique to develop the country’s rich energy and other natural resources. The Mozal aluminium smelter is the only aluminium producer in the country and sources its electricity primarily from South Africa. During 2012, Mozambique produced 550 metric tons (MT) of aluminium.

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MINE PRODUCTION OF ALUMINIUM OF TOP PRODUCING COUNTRIES

3.5 MAJOR MINING COMPANIES IN MOZAMBIQUE

AUROCH MINERALS NL (www.aurochminerals.com)

The Company is aiming to develop an consolidate the relatively unexploited Odzi-Mature-Manica (OMM) gold belt in Mozambique into a major gold producing camp. To date the Company has a JORC compliant resource base of 2.82 million ounces at 1.79 g/t Au at its Manica Gold project, located on the eastern limb of the OMM Gold Belt. The OMM belt extends around 160km from the Save River in Zimbabwe eastwards into Mozambique and truncated by Pan- African Mozambique belt.

RIO TINTO (www.riotinto.com)

Rio Tinto Coal Mozambique holds mining and exploration licences in the Moatize Basin in the Tete province of Mozambique. Rio Tinto Coal Mozambique manages the Zambeze Project (100 per cent); Tete East Project (100 per cent); Benga Mine (65 per cent); and the Zululand Anthracite Colliery (74 per cent). The Benga coal mine was officially opened in May 2012 with first coal exported in June 2012. Rio Tinto Coal Mozambique produces two types of coal - hard coking and thermal coal.

VALE – MOZAMBIQUE (www.vale.com)

This is the world’s largest iron ore producer, also operating in other mineral sectors, and through investments in technology and logistics they assure efficiency, growth and sustainability in their operations.

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4 MINING IN NAMIBIA Namibia is a world-class producer of gem quality rough diamonds, uranium oxide, special high-grade zinc and acid-grade fluorspar, as well as a producer of gold bullion, blister copper, lead concentrate, salt and dimension stone. Rio Tinto plc and Vedanta plc mining companies, produce uranium oxide at Rossing mine and special high-grade zinc at the Skorpion mine and refinery respectively. Paladin Energy's Langer Heinrich Uranium mine is in full production and achieved nameplate production sustainably in 2013. The world's number one diamond producer, De Beers, works with the Government of the Republic of Namibia (GRN) through Namdeb Holdings in a 50:50 joint venture, producing some of the world’s finest gem diamonds. Namdeb's output increasingly comes from under the sea, thanks to the technical expertise of Debmarine Namibia. Further value addition is boosted by about 17 diamond cutting and manufacturing factories that utilise about 16 percent of diamond production by Namdeb Holdings. AngloGold Ashanti produces gold bullion at Navachab Mine near Karibib. Rosh Pinah Zinc Corporation produces zinc and lead concentrates at Rosh Pinah. Weatherly Mining Namibia operates the copper mines and Dundee Precious Metals Tsumeb produces blister copper at the Tsumeb smelter, from imported copper concentrates.

4.1 NAMIBIA’S ECONOMY

Preliminary statistics produced from the Namibia Statistics Agency (NSA) show that the mining sector performed moderately well in 2013 and contributed 9.3 percent to the country’s Gross Domestic Product (GDP) in 2013, down from 10.8 percent in 2012. The decline in contribution to GDP was largely a result of escalating input costs, depressed commodity prices and declining ore grades. Despite the decline in overall contribution by mining in 2013, significant investments were made, particularly in the development of three new mines – the Otjikoto Gold mine, Husab Uranium mine and the Tschudi Copper mine. Namdeb developed the new Sendelingsdrif diamond mine along the Orange River and Debmarine achieved a record high diamond production as a result of massive capital investments in the new mining vessel, the MV Mafuta. As such, economic spin offs and growth contributions from the new developing mines were most notably seen in the construction phase with massive job creation and procurement of goods and services from Namibian suppliers and contractors. Namibia’s mining sector generated N$11.3 billion of value added towards the country’s GDP. Diamond mining delivered N$8.23 billion of value added, while other mining and quarrying contributed N$3.07 billion to GDP. If copper smelting and zinc refining were also included, the value added by other mining and quarrying would have been significantly greater, as well as the overall contribution to GDP by the mining sector. Statistics show that Namibia’s mining industry generated revenue of N$20.93 billion in 2013, a 13 percent increase from 2012 which totalled N$18.51 billion. Total revenue from non-diamond mining reached N$ 11.89 billion, which includes revenue from zinc refining and diamond mining earned N$ 9.04 billion.

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According to preliminary figures released by the NSA in March 2014, exports from the mining sector reached N$ 20.87 billion to which must be added exports of copper and refined zinc, giving a grand total of N$ 25.2 billion in 2013. Mineral exports accounted 53% percent of total merchandise exports. The mining sector spent N$13.17 billion on fixed investment in 2013 and once again contributed more than any other sector of the economy, except for Government which spent N$5.27 billion on fixed investment during the period under review. The huge contribution made by the mining industry highlights the positive economic impacts on the Namibian economy through the development of new mines. Statistics generated by the Chamber of Mines shows a drop in exploration expenditure of 15%, from N$815 million in 2012 to N$662 million in 2013. The significant decrease in exploration expenditure was as a result of the shift from exploration to mine development for several projects as outlined above and depressed commodity markets which saw exploration budgets severely curtailed, particularly for uranium projects.

MINERALS

The production of the mining industry, including mineral resources such as diamond and uranium, totalled NAD 7,700 million and accounted for 8% of GDP in 2012. Diamond mining accounted for NAD 2,800 million while other types of mining represented NAD 4,900 million. The gross export value for mining products reached NAD 10,900 million in 2009, accounting for 44% of gross export value of the country.

ORES

In 2010 the export value of uranium ore was NAD 5,400 million, accounting for 86% of the gross ore export value (NAD 6,200 million). Uranium ore, mined near Swakopmund, is formed into yellow cake (roughly refined uranium ore) and exported to uranium processing factories all over the world. The second largest export, in terms of value, is zinc ore (NAD 750 million), mined mainly in the southern regions. The primary destinations for ores were France (29% of export value), Canada (29%), the U.S.A. (16%), China (13%), and South Africa (12%).

ZINC & ZINC PRODUCTS

Namibia produces 150,000 tons of zinc annually in Rosh Pinah, a town along the border with South Africa. Zinc is exported from Lüderitz to the world following refinement in refineries near the quarry. In 2010, the export value of zinc and zinc products totaled NAD 2,604 million (157,000 tons).The primary destinations for zinc and zinc products were Italy (44% of export value), the Netherlands (28%), the United Arab Emirates (6%), Malaysia (6%) and China (5%).

COPPER & COPPER PRODUCTS

Namibia has copper mines in the central and the north eastern part of the country with copper being extracted mainly from mines in central Namibia. There is only one company mining copper in Namibia; Ongopolo Mining and Processing with the Matchless mine (located at 30 kilometers west of Windhoek), the Otjihare mine (located at 30 kilometers east of Windhoek), and the Kombat mine in Tsumeb. Copper ore extracted from these mines is transported by freight train to the refinery of the Namibia Custom Smelters (owned by Dundee Precious Metals) in Tsumeb. This refinery also refines

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copper ores from Zambia, South Africa, Zimbabwe, and Chile. Of the copper ores refined at the refinery, 40% are produced domestically and 60% imported. However, the refinery is currently operating at only half operational capacity. Copper products refined in Tsumeb are exported overseas from Walvis Bay with the volume of those exports demonstrating an upward trend over the recent years. The national gross export value of copper and copper products in 2010 was NAD 1,545 million (45,000 tons) with the major export destinations being the Netherlands (36% of export value), Germany (24%), Japan (20%), and China (9%).54 The gross import values of copper and copper products was NAD 489 million (10,000 tons) in 2010.

IRON & STEEL

In 2010 the import value of iron and steel was NAD 523 million (58,000 tons), mainly imported from South Africa (97%). Imports included iron plates, iron materials and wires, which were either South African products or products from third countries imported via South Africa. Total export value was NAD 154 million (93,000 tons in 2010), equaling only one third of total import value. Iron and steel were exported to many countries including South Africa (48% of export value), Angola (13%), India (11%), and Zambia (9%).Since 60% of export products were iron scrap, it is assumed that most of the exports to South Africa were of such iron scrap. Exports to other countries were of iron or steel products from South Africa via Namibia.

PRECIOUS STONES

Namibia produces a wide range of precious stones, such as diamond, amethyst, topaz, rose quartz, tourmaline, garnet and emerald. Namibian diamonds in particular are highly recognized by the international market for their size and quality. Since exporting precious stones in a raw form is prohibited, stones are exported primarily to Europe after undergoing primary processing or being processed into pendants, brooches, rings or necklaces at foreign-affiliated jewelry processing companies in Windhoek. In 2010 the export value of precious stones reached NAD 8,950 million (4,200 tons). The major destinations for these products were the U.K. (53% of export value), South Africa (9%), the U.S.A. (6%), Belgium (5%), and Sweden (5%). Namibia also imports raw diamonds from Botswana, South Africa and Canada, and then domestically processes and exports them. The import volume for precious stones was 994 tons (NAD 1,317 million) in 2010, accounting for 24% of the export volume, of which raw diamonds accounted for 94% of the gross import value.

4.2 MAJOR MINING COMPANIES IN NAMIBIA

NAMDEB (www.namdeb.com)

Namdeb is a wholly owned subsidiary of Namdeb Holdings (Proprietary) Limited Holdings which is owned in equal shares (50:50) by the Government of the Republic of Namibia and De Beers. Namdeb performs land-based prospecting (exploration), mining and rehabilitation operation and services for Namdeb Holdings. Namdeb is a significant contributor to the Namibian economy and as a glittering corporate citizen; the company has contributed more to the national GDP than all other mining activities combined.

ANGLOGOLD ASHANTI – NAMIBIA (www.angogoldshanti.com)

AngloGold Ashanti has one wholly owned gold mining operation in Namibia, Navachab. In 2008, Navachab produced 68,000 ounces of gold, equivalent to 1% of group production. Gold production at Navachab declined by 15% to 68,000 ounces in 2008, largely a result of the significant production challenges encountered. This included the substantially reduced availability of drilling machines, with

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respect to both performance and capacity which affected mining throughput, as well as the shortage of skills which contributed to a decrease in tonnes broken for the year.

KOMBAT COPPER (www.kombatcopper.com)

Kombat Copper Inc. (TSX-V : KBT) is a publicly traded Canadian exploration and development company. Our core operations are focused on copper resources in Namibia, one of the world's most prospective copper regions, where we have substantial assets in place and significant exploration upside. The Company holds an 80% interest in five Mining Licenses and five Exclusive Prospecting Licenses ("EPLs") in the Otavi Mountainlands, an area of Namibia particularly known for its high-grade copper deposits.

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5 MINING IN ANGOLA

Angola is the seventh largest country in Africa, but one of the poorest in the world. In addition to diamonds, the country’s other – main – resource is oil, which contributes 85% of the country’s Gross Domestic Product (GDP). Diamond reserves, in the form of both kimberlite and alluvial fields, have been estimated at between 180 million and 200 million carats. At present, however, it is believed that Angola only exploits 40% of the total potential of its diamond sector, leaving much still to be tapped into. In response to the significant impact the global financial crisis (commencing in 2007) has had on the country’s diamond sector in terms of falling prices, job losses, and closure of mines, the Angolan Government is intent on diversifying the mining sector away from merely extracting diamonds to include other previous minerals. Exploring and mining copper, iron ore, manganese, and gold are among the projects that will be undertaken. One of the biggest of these involves the construction of a copper mine that is estimated to produce approximately 20,000 tonnes per month. In 2008, AP Services and Genius Minerals, two Angolan firms, started prospecting the area of Mavoio in Uige province. Exploration is set to begin before the end of 2011, and the mine made operational in a few years. Additional resources and potential sources of revenue include bauxite, feldspar, phosphates, and uranium.

5.1 THE DIAMOND MINES

There are three big diamond mines in Angola: Catoca, Fucauma, and Luarica. The Catoca diamond mine is the fourth largest diamond mine in the world and extracts diamonds from a kimberlite pipe. The mine was established in 1993 and has acquired several other alluvial concessions in the country over the years. Catoca and the other (alluvial) concessions (7) account for nearly 70% of Angola’s diamond production. The mine is owned by Endiama, with a 32.8% stake, and a consortium of international mining companies, including Russia’s Alrosa which owns 32.8%, Brazilian Odebrecht Mining Services with a 16.4% stake, and (Bukharian-Israeli) Lev Leviev’s Daumonty Financing Company with 18%. This diverse ownership of the Catoca mine indicates that various countries are interested in Angola’s diamond reserves. More countries, including China and South Africa are also eager to gain a foothold in the sector. The Fucauma diamond mine is still under construction in the Lunda Norte province of Angola. The mine is also owned by a consortium of companies: the two largest stakeholders being Endiama with 40% and Trans Hex Group with 35%. Endiama and Trans Hex also have two large stakes in the Luarica mine, 38% and 32% respectively.

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ALLUVIAL DIAMOND MINING

Apart from the numerous artisinal workings scattered throughout the Lundes, some commercial operations are producing good quality stones, despite extensive smuggling and security threats. Sociedade de Desenvolvimento Mineiro de Angola, S.A.R.L. (SDM) is a joint venture with Endiama (50%) and Odebrecht (50%) to exploit the Tazua deposit at its Luzamba project. Field exploration investigating further alluvial deposits continues, despite numerous withdrawals of personnel due to the security situation. Bulk sampling of river terrace gravels in the vicinity of the Ganzo, Tázua and Ginge river diversions have revealed economic diamond grades. SDM produced a total of 419 000 ct in 2001. Southern Era discontinued its alluvial mining programmes along the Cuango River, which produced 144 300 carats in 1998. America Mineral Fields holds the Luremo and Cuango licenses with Endiama. These two licenses cover the northern half of the Cuango Basin, historically a major producer of Angola's diamonds. Based on the security situation in the country, no work has been carried out, although AMF are keen to begin development once the situation is controlled. Sociedade Mineira do Lucapa (SML) was formed in 1992 as a company representing Endiama (51%) and Sociedada Portugese de Empreendimnetos (49%). SML has invested significantly in the development of several projects in Angola, including exploration concessions totalling 35 000 km2. SML, along with operators ITM Mining operate several alluvial concessions in the Lundes, viz the Calonda project that produced 199 000 ct, the Mufuto project that yielded 244 000 ct and the Lucapa project 69 000 ct in 2001. SML also holds a 15% interest in Southern Era’s Camafuca project and 50% of DiamondWorks’ Yetwene project. Another major alluvial diamond producer is Associacao Chitotolo that is owned by Sociedada Miniera de Lumanhe (15%), ITM Mining (50%) and Endiama (35%). Chitolo produced 232 000 ct in 2001. KIMBERLITE PRODUCTION

The Catoca Mine is the world’s 4th largest kimberlite and is currently being operated by SMC (Sociedade Miniera de Catoca), which is in turn owned by Endiama (32.8%), Russia's Alrosa (32.8%), Brazil’s Odebrecht Mining (16.4%) and the Diamond Finance CY BV Group (18%). The mine produced just over 2.6 Mct in 2001. The kimberlite yields quality diamonds, of which 35% is gem quality, fetching prices of around $75 - $100/carat. Reserves are estimated at 60 million carats. SMC intends increasing production to as much as 5 Mct per year. DiamondWorks, through its wholly owned subsidiary, Branch Energy, has numerous interests in Angola, including alluvial and kimberlite operations. DiamondWorks operated the Luo and Yetwene kimberlite mines. The Camatchia and Camagico diamondiferous kimberlite pipes are also located within DiamondWorks’ license areas. The Luo mine began production in 1997 and has produced almost 200 000ct, with diamonds fetching between $120 and 350/carat. The largest diamond recovered to date has been a 232.6 carat stone. The Yetwene mine began production in June 1998. Exploration activities on this property have been suspended due to the security situation. DiamondWorks have alluvial concessions in and around the kimberlite operations, including the Luarica property (North of Luo) and the Alto Kwanza property in the Bie province of central Angola. The Alto Kwanza concession is Diamondworks’ largest, with an area of 18 000km2. Southern Era is currently investigating the Camafuca - Camazambo kimberlite pipe in the Calonda area of the Lunde Norte province. Camafuca is estimated to be the world’s largest undeveloped diamondiferous pipe with a surface area of 160 hectares. The pipe is approximately 3.3 kilometres in length and 500 metres in width, and lies 40 kilometres north of the Luo concession on the Chicapa

Mining in Africa – Focus on Southern Africa | August 2014 41

River. Camufuca was the first kimberlite pipe to be discovered in Angola. Recent sampling of the Camafuca pipe yielded just over 1000 carats from a bulk sample of 3 500 m3treated. This represents a significant increase from previous historical estimates. Grades ranged from $126 - $140/carat, with 32% of the diamonds being greater than 1 carat in size and 21% greater than 2 carats. KIMBERLITE & ALLUVIAL EXPLORATION

Several foreign companies had been carrying out exploration programmes in Angola, including De Beers, Botswana Diamond fields, Amcan, American Mineral Fields and Petra Diamonds. De Beers has been given approval by the Angolan council of ministers to prospect for five years on three prospects covering a total of 63,000 km2 in the Quela, Mavinga and Lunda Norte areas of the country. The company plans to spend $ 75 million on this venture. In June 1996, De Beers and Endiama signed new prospecting agreements. De Beers Consolidated Mines has started drilling for kimberlites on its three concessions near Saurimo in Lunda Norte province, the first drilling De Beers has done for diamonds in Angola since the country's independence from Portugal in 1975. De Beers also has concessions at Mavinga in the southern Cuango Cubango province and at Quela off the Cuango River valley. These concessions await progress in ending the civil war. De Beers and Endiama uncovered two kimberlites north of Saurimo near the Catoca mine of north-eastern Angola.

5.2 FINANCIAL CRISIS & RECOVERY

Angola is the fourth largest diamond producer in the world after Russia, Canada, and Botswana by order of production. The world financial crisis has caused the gem’s prices to drop by up to 60%, significantly cutting into the country’s diamond profits and culling its ability to invest these in development. Two mines have closed, five others are idle, and mining giant BHP Billiton has pulled out of Angola altogether. This has resulted in job losses and a decline in state revenue, motivating the Government to buy diamonds in a bid to steady prices. Then, according to the Africa Report, “a glimmer of recovery came in May 2010 when Trans Hex Group became the first company in three years to sign a deal with diamond parastatal Endiama [Empresa Nacional de Diamantes de Angola].” Endiama holds a monopoly over diamond exploration in Angola and was awarded a 39% stake. Trans Hex Group, a South African company, was granted a 33% stake in the Luana diamond project. The remainder is held by three privately-owned Angolan firms, namely Caxinji, Wenji, and Za-Kufuna. Antonio Carlos Sumbula, Chairman of Endiama, has described the agreement on the Luanda concession “as a sign [that] the industry was recovering from a crisis.”

5.3 MAJOR MINING COMPANIES IN ANGOLA

ENDIAMA (www.endiama.co.ao)

The Company is engaged in prospecting, research and exploitation of diamonds through its subsidiary, ENDIAMA MINING, established in April 2012. Still on the mining activity, ENDIAMA E.P formed in the 90’s and 2000’s joint-ventures with the world’s major mining companies, particularly: Alrosa, De Beers, Escom Mining and Odebrecht, exploiting productive mines in partnership.

TRANS HEX (www.transhex.co.za)

Trans Hex has been in the diamond mining industry for nearly 50 years. The company was originally incorporated in South Africa as Buffelsbank Diamante on 30 December 1963. It was subsequently

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appointed as a contractor to the then Small Business Development Corporation of South Africa to prospect for diamonds on the state-owned Komaggas farm in Namaqualand. In the 2000s Trans Hex expanded into Africa by acquiring a stake in three diamond projects in the Lunda Norte province of Angola, approximately 1 000 km northeast of Luanda.

LUCAPA DIAMOND COMPANY (www.lucapa.com.au)

Lucapa Diamond Company Ltd is based in Perth, Western Australia, and is listed on the Australian Securities Exchange (ASX: LOM and LOMO). Lucapa is the operator of the 3,000km2 Lulo Diamond Concession in Angola’s diamond-rich Lunda Norte province, which has been the Company’s sole focus for the past six years.

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6 CURRENT MAJOR MINING PROJECTS IN AFRICA

Democratic Republic of Congo: Ivanhoe starts Kamoa construction

TSX-listed project developer Ivanhoe Mines has started construction on the boxcut for the initial portal

to planned decline ramps that will provide underground access to the proposed Kamoa copper mine,

in the Democratic Republic of Congo. Construction of the boxcut is expected to take about five months,

after which the first set of twin declines will be developed.

Democratic Republic of Congo: Tiger secures more funding for Kipoi

Copper miner Tiger Resources has arranged for a further A$25-million advanced payment facility from

financier Gerald Metals SA to its subsidiary in the Democratic Republic of Congo. The advance payment

is in addition to the A$50-million advance payment facility currently provided by Gerald, and will

provide the Tiger subsidiary with working capital for its Stage 2 solvent extraction electrowinning (SX-

EW) plant, at its Kipoi operation. The SX-EW plant is expected to reach full capacity by August, and will

produce about 25 000 t of copper cathode in its first full year of operation. Meanwhile, Tiger has

reported that it produced 1 499 t of copper cathode during its first production quarter, which ended

in June.

Ghana: Asanko gives flagship project the green light

The board of West Africa-focused project developer Asanko Gold has given approval for construction

to start on the first phase of its flagship project in Ghana. While work is expected to start in seriousness

during the third quarter, Asanko will forge ahead with work to complete a National Instrument 43-101-

compliant technical report, including a definitive project plan with an updated resource estimate, by

the last quarter of this year.

Guinea: Russia’s Rusal launches Dian-Dian bauxite project

Russian aluminium producer Rusal has launched the Dian-Dian bauxite project, in Guinea. The first

stage of the project involves the development of a bauxite mine with an capacity of three-million

tonnes a year, with the potential to be expanded to a capacity of up to six-million tonnes. The total

investment for the first stage of the project will be more than $220-million, with a significant portionof

this being reserved for infrastructure development, including railway and port development.

Mali: Hummingbird awards Yanfolila engineering contract

Gold exploration and development company Hummingbird Resources has signed a letter of intent

(LoI), to appoint Johannesburg-based project management and engineering firm Senet to start

engineering work on the Yanfolila processing plant and associated infrastructure, in southern Mali.

Senet has agreed to begin engineering services under the LoI until the contract has been drafted and

accepted by both parties, thus maintaining the fast-track schedule.

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Mozambique: Timing ‘tough’ for $4.5bn Thai-Mozambique coal rail-port project

A Thai-Mozambique consortium, which has set a 2018 target to commission a $4.5-billion coal export

railway and port terminal project in central Mozambique, has noted that the depressed global coal

price outlook will make the timing of the project”tough”. Late last year, Mozambique selected

Bangkok-based contractor Italian-Thai Development to construct a 537 km rail from Moatize coal

mines, in Tete province, to Macuse, on the coast in Zambezia province.

Namibia: North River secures $12m to kickstart Namib mine restart

Aim-listed North River Resources has secured $12-million in equity funding from long-term strategic

investor Greenstone Resources. The deal will enable North River to complete the study and approval

process for the Namib lead and zinc mine’s restart, accelerate development through early works, place

long-lead item orders and provide construction equity funding.

Meanwhile, North River has been granted environmental clearance by the Namibia Ministry of

Environment and Tourism for the environmental assessment and management plan for the proposed

recommissioning of the mine.

Namibia: Weatherly advances Tschudi project

Copper asset developer Weatherly International has reported “excellent progress” on the

development of the Tschudi project, in Namibia, which is 57% complete. Weatherly has completed the

recruitment to fill key managerial positions for the project, with the mining manager, processing

manager and plant maintenance manager all in place. Recruitment of the mining department’s senior

staff has also been completed, with a senior geologist, senior surveyor and senior mining engineer

having been appointed.

South Africa: CoAL eyes year-end for Vele plant modification construction

Coal of Africa Limited (CoAL) is on track to start the beneficiation plant modification project at the Vele

colliery, in Limpopo, at year-end. The front-end engineering and design process, legislative compliance

work and technical review for the project are expected to be completed by the third quarter of this

year. The proposed plant at the coking and thermal coal colliery will result in the simultaneous

production of semisoft coking coal and export quality thermal coal.

South Africa: De Beers Murray & Roberts to Venetia underground project

Diamond major De Beers has awarded Murray & Roberts (M&R) subsidiary M&R Cementation a R2.6-

billion contract to develop an underground mine beneath the company’s openpit Venetia mine, in

Limpopo. The contract will result in M&R developing the entire underground mine and will include the

sinking, equipping and commissioning of a decline shaft and two vertical shafts; horizontal tunnel

development to give access to and establish loading levels; as well as the development of associated

ventilation, ground and water handling infrastructure. De Beers expects to invest about R20-billion in

the Venetia underground mine to extend its life to beyond 2040, with the conversion from an open pit

to underground operation expected to begin in 2021.

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Meanwhile, De Beers Group has announced an updated model for the allocation of rough diamonds

by its primary rough-diamond distribution arm, Global Sightholder Sales (GSS), for the March 2015 to

March 2018 contractual period. The updated allocations model will involve a new method for

determining GSS’s rough diamond customer base, with a simplified, compliance and demand-based

customer qualification process being introduced.

South Africa: Diamcor completes in-pit plant expansion

South Africa-focused Diamcor Mining has completed a planned plant expansion of the in-field dry-

screening plant at the company’s Krone-Endora at Venetia project, in Limpopo. The upgrades included

installing a second Dabmar Bivitec screening unit and designing, building and installing significant

additional conveyor and material-handling structures to create a closed-loop automated system to

enhance the processing of fine materials under 1.2 mm in size. The company also installed a large

material storage and transfer bin and associated conveyor structures so that screened material could

be automatically loaded for transport to its treatment plant.

South Africa: Lace UK3 production to reach steady state by H2 2015

South African diamond development and exploration company DiamondCorp expects to achieve

steady-state underground production of 30 000 t/m at the upper K4 (UK4) block of its Lace diamond

mine, in the Free State, by the second half of 2015. Following the completion of scoping and mine

design studies on the block, it has also been confirmed that the project could be commercially ramped

up during the first half of next year, in line with the company’s revised underground development

schedule and budget.

South Africa: Protech Khuthele liquidation delays Resgen coal project

Coal hopeful Resource Generation (Resgen) has alerted shareholders that the development of its

Boikarabelo mine, in South Africa, will be delayed by between three and six months, owing to the

liquidation of construction and engineering firm Protech Khuthele. Protech Khuthele had been

undertaking the earthworks and rail link development, as well as the development of all site

infrastructure and roads for the project. Resgen does not expect to have any difficulty in appointing an

alternative contractor, at a similar cost, to complete the project.

While the company works to find a new earthworks contractor, it is undertaking development of

various projects, including the completion of the construction camp; the completion of the first three

of seven rail link bridges and the main water supply infrastructure; and the completion of a

construction office complex. Construction of the 132 kVA main power infrastructure will also continue.

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7 REFERENCES www.miningweekly.com

www.engineeringnews.co.za

www.gov.za

www.dmr.gov.za

www.chamberofmines.org.za

www.debeersgroup.com

www.angloamerican.co.za

www.angloplatinum.com

www.debswana.com

www.bcm.org.bw

www.mines.gov.bw

www.nme.gov.na

www.chamberofmines.org.na

www.samda.co.za

www.minssa.co.za

www.coaltech.co.za