South Africa’s bid to be the continent’s copper giant within the next 10 years is playing out as a two-pronged approach: outbidding rivals to buy copper mines across Africa, and deepening exploration at home – especially in the key Northern Cape province.
Blue-chip miners Impala Platinum, Exxaro Resources, and Sibanye Stillwater are outbidding each other to buy up Khoemacau, the lucrative Botswana copper mine thought to hold $2bn worth of high-grade copper and silver ore deposits.
While everyone is scrambling, they are forgetting about what we have in our own backyard
Sibanye Stillwater, the South Africa deal-making giant, is also among the shortlisted suitors to buy Mopani Copper Mines, the Zambian asset that’s expected to ramp up 200,000 tons per year by 2027.
Breathing down the neck of South Africa’s miners is a consortium of cash-flush bidders like China’s Zijin Mining Group, potentially coming in as a partner for Sibanye in Mopani.
Untapped potential
“While everyone is scrambling, they are forgetting about what we have in our own backyard,” Jan Nelson, chief executive of Copper360, tells The Africa Report.
Copper360, South Africa’s sole listed copper producer, has an estimated R560bn ($30bn) of unmined copper holdings and is making a big play in the country’s Northern Cape province.
The company’s Northern Cape Rietberg mine alone, which it aims to bring online by the end of 2023, is thought to hold 25 000 t of copper ore to extract. The value of the haul would be R1.4bn ($74m), Nelson told local media in June.
Nelson, who believes Copper360 has found “treasure island”, rebuts claims about South Africa’s dismal copper prospects.
“Everyone overlooks South Africa. We used to have a major copper district that became dormant, everyone has forgotten about it,” he says. “The Northern Cape will become a major copper district.”
Of the 696 copper mines in the world, 127 are located in South Africa with the five biggest in the country being Palabora, Mogalakwena, Rustenburg Complex, Styldrift 1 Project, and Pilanesberg Mine.
Big in the north
The Northern Cape province – an arid and sparsely populated region that borders Namibia and the Atlantic Ocean – is tipped as being the next big thing in global copper ore production.
As South Africa’s flagship gold mining industry enters into the doldrums on the back of dwindling output, all eyes turn to the north.
The Northern Cape holds 75% of all the world’s manganese deposits and a vast array of battery-metal minerals like lithium, according to the South Africa Minerals Council.
However, apart from the Northern Cape province, it is not clear if South Africa has other big copper deposits that will outrank the likes of Zambia and Democratic Republic of Congo (DRC) in the next decade.
“In haste – South Africa has no copper deposits of consequence,” Adrian Saville, former chief strategist of Citadel Wealth Management, tells The Africa Report.
The upper hand
South Africa’s gold industry suffers from the dilemma of what experts say are deposits now left in deep locations, which are complicated and expensive to mine.
People have realised that the copper in DRC and Zambia is expensive, and attention will inevitably turn to SA’s copper
In comparison, South Africa’s copper deposits are on the surface, high grade and those deposits that are underground are shallow and predeveloped. There are also mines where the ore bodies have already been developed.
“We have a major advantage that we can just start mining,” Nelson says. “People have realised that the copper in DRC and Zambia is expensive, and attention will inevitably turn to SA’s copper.”
South Africa remains one of the foremost mining nations in the world – the first country on earth to sink shafts of up to 4km deep, Nelson adds.
Copper cash cow
The mad rush for copper in South Africa is catalysed by the accelerating global energy transition.
McKinsey predicts that decarbonising aviation, vehicle mobility, homes and industrial plants demands a whopping 36,6 million tons in global copper output by 2031. But 6,5 million tons of copper (about 20% of the target) remains to be found.
“This is where South Africa jumps into the match,” says Dennis Juru, president of the South Africa Cross Border Traders Association, whose members truck vast quantities of mineral ore by road to the country’s ports.
If, as expected, 50% of all new global car sales in 2030 will be electric, South Africa’s miners can earn “billions of rands” if copper extraction is ramped up by then, Juru says.
Environmental impact
“The global electric mobility and energy transition will bring a copper cash windfall to South Africa in next decade, but it is highly likely environmental destruction at home will top out, too,” Tapiwa O’Brien Nhachi, an independent climate and natural resources researcher, tells The Africa Report.
A 2020 study by researchers at the University of Johannesburg’s geology department investigated the contents of copper and potentially harmful elements in the tailings of the Musina mine, an abandoned Cu mine in the northern Limpopo province.
Substantial commercial scale copper mining is established in the province and researchers sought to establish whether the public was being safeguarded against exposure to cancerous elements.
The study concluded that only “short term solutions” of storing waste in tailing dams and revegetating rock dumps are in place. Relocating communities living in affected areas in future could not be ruled out.
Operating with impunity
Gangs of illegal copper miners, who are increasingly employing sophisticated machinery, are terrorising mining communities and causing environmental damage.
“Illegal smelters are spilling toxic mercury chemicals into rivers, unsecured pits expose humans/livestock to danger, and gun battles among rival copper mining syndicates leave children terrified,” says Ronald Da Kook, a community leader in Kimberley, the capital of Northern Cape province.
“Just like gold, coal and chrome, the curse of copper societal degradation will visit South Africa’s mining towns by 2030,” Nhachi says, pointing to the chokehold gun-toting cartels have on coal-producing western communities’ water routes and highways to key port towns in the east.
Across South Africa authorities are on the backfoot as armed-to-kill copper syndicates strip Transnet railways, public buildings, and Eskom’s transition gridlines of copper cabling.
In May, Transnet, the state rail operator, said ferocious copper cable theft had reduced operations on its 740km-long network by a whopping three months. Authorities have vacillated back and forth on scrapping copper export bans to try and suppress the R8bn ($424m) annual shadowy copper trade.
“If the black-market copper economy is worth R8bn today, expect it to double by 2033 if new copper mines come online in South Africa,” says Nhachi.
The transition to renewable energy will require large volumes of copper cables, coating, and wiring.
With Eskom battling to provide power, green energy is top of the agenda. South Africa’s own energy transition will no doubt serve as a driver to increase copper production at home.