Industry Outlook
As the global economy began recovering from the pandemic in the second half of 2020, the metals and mining sector benefited from rebounding commodity prices. Demand for most metals was driven upward by the release of pent-up consumer spending, new government stimulus efforts and an accelerating global energy transition.
Global decarbonization is a hot topic and countries striving for carbon neutrality, the demand for “green metals” such as Platinum, Nickel, Copper, Cobalt and Zinc are at an all time high. South African miners and providers of mining equipment are strategically poised for an increase in growth and demand based on global energy transition agendas.
Green energy revolution leading to increased mining activity in Africa
Forecast for Copper demand used in solar and wind energy generation.
Projected increase in EV battery lithium and cobalt use to 2025.
Estimated increase in primary nickel consumption used in passenger plug-in electric vehicles.
Estimated Copper demand boosted by electric vehicle market growth.
Mining Equipment Landscape
Mining Equipment outlook in South Africa
Underinvestment in mining equipment and infrastructure has been a key theme in the South African context. Demand for “green metals” rising globally, miners are reconsidering their capital requirements and looking to increase current investment in mining equipment to support the surge in global mining activity.
Renewable Energy and “Green Metals”
The global energy transition has increased the need for ‘green metals” used in the development of solar PV panels and batteries. This presents new long-term opportunities for the mining industry and mining equipment companies.
ESG Considerations
The advent of ESG has called for companies and government to relook at their existing energy requirements and programs, to reduce carbon emissions. ESG has become a key consideration for most stakeholders and compliance with environmental standards at the forefront of most sustainability discussions contributing to the need for more “green metals” and reduction of traditional fossil fuels used in energy production globally.
Large players diversify underlying operations through M&A activity
The resumption of mining activities post the pandemic led to a global increase in local and international M&A activity.
The landscape has been characterized by consolidations, with larger companies looking to increase market share through acquisitive growth and smaller companies typically seeking higher multiples upon sale of businesses.
Sibanye-Stillwater
In February 2021, Sibanye announced the acquisition of a stake in Keliber Oy, a Finland-based company focused on the exploration and production of lithium minerals, for EUR30m. Sibanye subsequently acquired an additional EUR10m stake of 30% and is now the largest shareholder with 80%. The acquisition allows the PGM focused miner to diversify into the battery metals sector as it looks to capitalize on the continued growth in the demand for green technologies.
Anglo American
Anglo American led two of the largest M&A deals since the beginning of July last year: The demerger of Thungela Resources Limited, a leading South African based thermal coal exporter, from Anglo American. Anglo’s commitment to improving its ESG profile, coupled with stakeholder pressure associated with the thermal coal industry, this transaction allows the mining giant to provide shareholders with the opportunity to diversify away from fossil fuels. As part of the demerger, Thungela Resources shares were listed on the JSE, with 100% of the issued share capital being held by Anglo Americans shareholders on day one.
The disposal of its 33.33% stake in the Columbian-based Cerrejon Joint Venture, to Glencore, for USD294m. This transaction solidified Anglo’s transition away from thermal coal and is expected to be completed during the first half of 2022.
Northam
Northam would up its empowerment deal with Zambezi Platinum and announced that it would implement a new empowerment transaction worth R33bn, which is set to enhance employee and community ownership in the company for the next 15 years.
