Mzila Mthenjane Sustainability in the resource industry post 2015 - - PowerPoint PPT Presentation

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Mzila Mthenjane Sustainability in the resource industry post 2015 – an Exxaro perspective

Exxaro Resources Limited @mimthenjane ¡ @ExxaroResources ¡

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Sustainability in the resource industry post 2015 – an Exxaro perspective

Mzila Mthenjane

Executive Head, Strategy and Corporate Affairs

27 October 2014

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Our ¡business ¡philosophy ¡

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Sustainability ¡= ¡strategic ¡objec7ves ¡

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Invest

Invest in energy, metal & mineral resource commodities that generate sustainable economic returns of 1.5xWACC

Develop

Develop market insights for our products & appropriate innovations, throughout the value chain for added value & competitive advantage

Grow

Extract industrial application energy, metal & mineral resource commodities from diverse geographies by using our own capabilities & relevant partnerships

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Exxaro ¡group ¡structure ¡

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OWNER-CONTROLLED OPERATIONS NON-CONTROLLED OPERATIONS

Enabled by human resources, sustainable development and innovation processes

Coal

• Third largest coal

producer in RSA

• Three tied operations
• Six commercial operations
• Acquisition of TCSA*
• GMEP** commissioned

Ferrous

• Mayoko Project
• AlloyStream™ project
• FerroAlloys

Energy

• Underground coal

gasification

• 19,98% in SIOC##
• 44,18% in Tronox
• 26% in Black Mountain
• 50:50 JV^ :Mafube JV

with Anglo

• Cennergi JV with Tata

Power

• Secure supply to Eskom
• Increase domestic supply
• Manage mines in closure

responsibly

• Increase exports
• Increase productivity
• Optimise the operating

model

• Review Mayoko Project
• Review alloy business
• Apply UHDMS# in lower

grade iron ore beneficiation

• Explore and

integrate

• pportunities in

Africa’s energy markets

• Manage emerging

carbon related risks

• Maintain SIOC

investment

• Analyse and review the

long-term fundamentals

• f the titanium dioxide

industry

• Divest from Black

Mountain and Chifeng

* Total Coal South Africa Pty Ltd ** Grootegeluk Medupi Expansion Project #Ultra high dense medium separation ## Sishen Iron Ore Company Pty Ltd ^ Joint venture

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Outlook ¡for ¡mining ¡

SA MINING OUTLOOK

MACRO ENVIRONMENT

• Subdued economic growth
• Slow improvement in poverty,

unemployment and inequality

REGULATORY REFORM

• MPRDA: strategic resources,

beneficiation pressures

• Licensing and approval delays

E M P O W E R M E N T

• May 2014 MPRDA anniversary
• Offers potential opportunities for

some

L A B O U R

• T

e n s e L a b

• u

r e n v i r

• n

m e n t , u n i

• n

r i v a l r y

• P

r

• d

u c t i v i t y i s s u e s

COST PRESSURES

• Across the board: labour,

electricity, stores

• Structural: maturing
• rebodies

INFRASTRUCTURE

• Rail infrastructure delays
• Water and electricity challenges

containing growth

LICENSE TO OPERATE

• P

r e s s u r e t

• p

r

• v

i d e h

• u

s i n g , c

• m

m u n i t y i n f r a s t r u c t u r e

• l

a c k

• f

g

• v

e r n , c a p a c i t y t

• i

m p l e m e n t

Source: Exxaro Strategy Analysis and Analysts Reports

GLOBAL MINING OUTLOOK

DEMAND OUTLOOK

Subdued cyclical and structural demand confronting industrial and bulk commodity markets

E X C E S S C A P A C I T Y

Selected commodities starting to experience impact of bull market excess capacity

S T R U C T U R A L

Maturing orebodies - new

• pportunities in higher risk regions

LICENSE TO OPERATE

• R

e s

• u

r c e n a t i

• n

a l i s m

• S
• c

i a l , e n v i r

• n

m e n t a l , fi s c a l p r e s s u r e s i n c r e a s i n g w

• r

l d w i d e

DEVELOPED WORLD

• US - QE tapering impact
• Mixed/weak Europe recovery
• Japan - Abenomics impact

EM GROWTH

• EM growth concerns: post China

growth down, increasing India/ Brazil concerns

CURRENCY VOLATILITY

• Global currency realignment
• EM markets currently benefiting

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Emerging ¡trends ¡

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Sustainability ¡ Mega ¡ Regions ¡ Massive ¡ infrastructure ¡ budgets ¡by ¡ government ¡ Mega ¡consump;on ¡

• f ¡steel, ¡copper, ¡

iron ¡ore ¡& ¡coal ¡ Compe;;on ¡ for ¡skills ¡ Intelligent ¡ machinery ¡and ¡ equipment ¡ Fully ¡automated ¡ and ¡integrated ¡ mines ¡ Coal ¡to ¡Liquids ¡& ¡ Power ¡Plants ¡ Niche ¡markets ¡& ¡ stable ¡income ¡ streams ¡ Market ¡char ¡ & ¡coke ¡ Geography ¡ Commodity ¡ Reduce ¡ geopoli;cal ¡ risk ¡ ¡ Mega-­‑energy ¡ projects ¡ Diversified ¡energy ¡ mix-­‑ ¡renewable ¡& ¡ nuclear ¡ Increased ¡coal ¡ consump;on ¡ Massive ¡ produc;on ¡of ¡ automobiles, ¡ appliances ¡ Integrated ¡ economies ¡ Modern ¡ transporta;on ¡ solu;ons ¡ Intelligent ¡logis;cs ¡ and ¡transporta;on ¡ systems ¡ Social ¡ license ¡to ¡

• perate ¡

Energy ¡ ¡and ¡ water ¡efficient ¡ technologies ¡ ¡ Demand ¡for ¡ electricity, ¡ housing, ¡ roads ¡& ¡water ¡ Environment, ¡ health ¡& ¡safety ¡ issues ¡ Human ¡ Capital ¡ Impacts ¡ Remote ¡Controlled ¡ Opera;ons ¡

Urbanisation lndustrialisation Energy Diversification Beneficiation Mega Corridors Mega Cities Technology New Business Models Infrastructure

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400 380 360 340 320 300 280 260

CO2 DATE

1000 1200 1400 1600 1800 2000

Source: Promethium Carbon 2006

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Climate ¡change ¡

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Going,

going...

gone?

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More ¡from ¡less ¡

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Urbanisa7on ¡

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Emerging ¡shiI ¡in ¡economic ¡power ¡

11 ¡ “Chindia” - Almost half the global economy by 2050

2004 2025 2050

China + India = 6% 20% 45% US = 28% 27% 26% EU = 34% 25% 15% Japan = 12% 7% 4%

Other U.S. Japan E.U. China India

2004 2004 EST. 2050 EST.

20% 28% 21% 27% 34% 12% 4% 2% 25% 7% 15% 5% 10% 26% 15% 4% 28% 17%

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Smart ¡and ¡nano ¡technology ¡

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Innova7ng ¡to ¡Zero ¡

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Increased ¡life ¡expectancy ¡

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15 2010 2025-2030 2040-2050 2100 2200

Source: Exxaro Analysis

Ø Steel (iron ore, coking coal, manganese) Ø Base metals (Al, Cu, Zn, Ni, Pb, Sn) Ø Steam coal Ø Industrial minerals Ø (TiO2, zircon) v Light metals (Al, Ti, Mg) v Base metals (Cu) v Uranium, Thorium v Rare Earths and Metals (incl PGMs) v Nano-materials v Industrial minerals v Carbon v Composite materials ü Organically produced materials ü Memory materials ü Molecular engineering ü Sci-fi materials and energy*

Gradual and overlapping evolution

* An acknowledged source for foresight thinking

An7cipated ¡impact ¡on ¡commodity ¡life ¡cycles ¡

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Exxaro’s ¡NXXT ¡(New ¡Exxaro ¡Tomorrow) ¡journey ¡

INDUSTRY RESEARCH

Benchmarking ¡visits ¡and ¡conferences ¡scou7ng ¡

STREAM 1

World in 2030 Global “DRIVERS”

STREAM 2

Resource Industry 2030 Industry “DRIVERS”

STREAM 3

Exxaro NXXT Programme 2030 Exxaro “ STRATEGIC THRUSTS” Update ¡technology ¡thrusts ¡and ¡roadmaps ¡ Develop ¡value ¡proposi7ons, ¡prioro7se ¡ ¡ Execute ¡R&D ¡projects ¡ 16 ¡

ü Exxaro’s sustainability plan into the future ü Innovation is embedded in the strategy ü Fully resourced with people and budget ü Multi-dimensional: triple bottom line perspectives

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Traits ¡of ¡a ¡future ¡resources ¡extrac7on ¡industry ¡

• 1. Sustainable License to Operate (LTO):
• Creating inclusive wealth for all

Stakeholders

• Balanced and sustainable partnership

between government, community and resources industry

• Small footprint / limited environmental

impact

• Self-sustaining economically viable

community > Beyond a Life of Mine (LOM)

• 2. Smart Exploration: Accurate, predictable,

instant, information and models

• 3. 100% resource extraction
• 4. Zero Waste
• 5. Zero Harm - safety/health
• 6. Energy, carbon and water neutral
• 7. Workforce equipped to support the 2030

business

• 8. Hybrid/renewable/alternative energy

solutions

• 9. Capitalise on trend of advanced / light

Materials /Metals

• 10. Integrated, optimised and redefined value

chain

2030 2013

1. Increasing Shareholder expectations (Profits) 2. Extreme escalation in operating costs 3. Rapid Technological Innovation i.e. IT/ Com’s.. 4. Increased pressure on Social and Regulatory Compliance. 5. Un-balanced relationship between government, community and mining. 6. Current core processes are sub-optimized (exploration, geology, mining processing and logistics) 7. High levels of waste and discard materials from production. 8. High Impact on Environment and in- sufficient Rehabilitation 9. Fossil Fuel based Economy / Carbon Emissions

• 10. Energy Supply / Cost constraints
• 11. Limited focus on downstream beneficiation
• 12. Current workforce ill-equipped for the

future (High levels of semi-skilled employees and shortage of highly skilled employees)

• 13. Communities dependant on Mining

Activities

Smart Exploration New Mining Technologies New Processing Technologies Asset Management/Logistics Clean Coal Technologies Innovation to Zero Harm Social Responsibility Sustainable Energy Automation Integrate/Redefine Value Chain

10 Strategic Thrusts

2030

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Thrust ¡1: ¡Smart ¡explora7on ¡

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Next generation geo- physics technologies

Will make geology more effective and accurate, reducing costs, increasing yields and enabling full extraction of the reserve’s potential.

Next generation drilling technologies

• Sonic Drilling
• Intense vibration/liquefaction
• Automated resonance

(waterless and energy efficient)

• Oil & Gas industry

technologies applied in exploration drilling

• Automated, multidirectional

drilling

• Real-time ore

characterisation influencing drill plan in real-time

• Integrated geological,

mining, environmental and survey data for improved interpretation of geological conditions

Drone exploration

• Solar powered drones

can fly for long durations without major maintenance

• UAVs can be fitted with

magnetometers or multispectral equipment.

Titan Aerospace Drone

Geometallurgy

Integration of geology and metallurgy data for optimum plant design.

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Thrust ¡2: ¡New ¡mining ¡technologies ¡ ¡

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Autonomous hauling

Trucks are controlled entirely using a supervisory computer at an operations centre, contributing to surface collision avoidance, fuel savings, increased safety, less maintenance and uninterrupted production.

In-pit crushing and beneficiation

Eliminates truck haulage. Less sensitive to commodity prices. Less dependant on human factor. Reduce operating costs. Increase productivity. Improve safety. Reduce environmental impact.

Fully autonomous mining

• Geology to market data used to

integrate planning and control for effective resource and asset management.

• Selective mining will allow
• ptimal extraction of the reserve

and in turn realise less waste.

• New blasting technologies.
• Wireless equipment.

Minestar Automation by CAT

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Thrust ¡3: ¡New ¡processing ¡technologies ¡

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AlloyStreamTM

• In-house developed

technology to process certain alloys at lower costs and with lower feed grades than conventional furnaces.

• Patented and tested for

commercial viability in 2012/2013.

Fines processing

Utilisation of fines in power stations and reductants markets through briquetting/ agglomeration of fines material.

Ultra High Dense

Medium Separation (UHDMS)

In-house developed technology enabling iron ore separation at RD >4. Project is in demonstration phase

Dry processing

• Waterless processing offers

significant environmental and cost benefits in a water scarce future scenario.

• For slimes handling, drying

technology, paste technology, electro-kinetic drying, absorbent polymers and hgh density slurry pumping.

Continuous surface miner

• Extract, crush and load material in
• ne continuous process.
• Selective mining of coal and

interburden results in:

• Increased calorific value and

lower ash contents.

• Improved ROM quality
• Reduced processing effort
• Reduced volume of overburden

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Thrust ¡7: ¡Societal ¡responsibility ¡& ¡accountability ¡

21 ¡ Social License to operate Community involvement Environment: stewardship through effective rehab & mine closure Water & energy consumption Energy efficient equipment Health & Safety Protect & promote health, safety & wellbeing of living organisms

Source: ¡Frost ¡& ¡Sullivan ¡

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“Tweaking ¡exis;ng ¡processes ¡cannot ¡deliver ¡the ¡ massive ¡shiRs ¡mining ¡companies ¡need ¡in ¡ today’s ¡capital-­‑constrained ¡environment. ¡To ¡ build ¡true ¡compe;;ve ¡advantage, ¡companies ¡ must ¡look ¡beyond ¡incremental ¡performance ¡ improvement ¡to ¡determine ¡how ¡they ¡can ¡revise ¡ their ¡systems ¡to ¡embrace ¡the ¡ ¡broad ¡theme ¡of ¡ innova;on.” ¡ ¡ ¡ ¡ ~ ¡Jürgen ¡Beier, ¡Mining ¡Leader, ¡Canada ¡ “We, ¡as ¡an ¡industry, ¡are ¡woefully ¡under-­‑ spending ¡on ¡innova;on ¡and ¡business-­‑ improvement ¡programmes ¡given ¡the ¡state ¡of ¡ extrac;on ¡challenges. ¡On ¡a ¡revenue ¡to ¡revenue ¡ basis, ¡the ¡mining ¡industry ¡spends ¡80 ¡per ¡cent ¡ less ¡on ¡technology ¡and ¡innova;on ¡compared ¡to ¡ the ¡petroleum ¡sector.” ¡ ¡ ¡ ¡ ~ ¡Mark ¡Cu=fani, ¡Anglo ¡American ¡(WRC) ¡

‘Exxaro ¡will ¡be ¡required ¡to ¡ enhance ¡its ¡internal ¡ innova7on ¡and ¡project ¡ execu7on ¡capabili7es ¡in ¡the ¡ coming ¡years ¡in ¡order ¡to ¡ meet ¡stakeholder ¡ expecta7ons’ ¡ ¡

~ ¡Sipho ¡Nkosi, ¡ ¡

CEO ¡Exxaro ¡Resources ¡Limited

¡

The ¡challenge ¡-­‑ ¡innovate ¡to ¡remain ¡relevant ¡

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Exxaro’s ¡vision ¡of ¡the ¡future ¡

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Exxaro’s ¡vision ¡of ¡the ¡future ¡

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Thrust 4: Asset management/logistics

Inland blending facilities

• Cost effective distribution inter-modal

transportation model and allocation decisions.

• Minimise total logistics costs, procurement

cost, shipping cost, and inland delivery cost

• Blending of products according to customer

needs (VIU).

Logistics business (multi-modal)

An in-house logistics business will provide competitive advantage, reduce costs and open up new revenue streams. A multi-modal solution provides the greatest opportunities in conjunction with an inland blending facility, ensuring supply to all take-off opportunities.

Bulk Transport by air...

Carbon nano tube structures...mega planes

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Thrust 5: Clean coal technologies

Fluidised bed combustion

• Suspend solid fuels in upward-blowing jets of

air during the combustion process.

• Provides more effective chemical reactions

and heat transfer

• Suited to burning fuels that are difficult to

ignite such as high ash coals and coal mine wastes, and fuels with highly variable heat content, including biomass – Waste stream and Dried tailings are suitable sources for this power generation methodology.

Outotec – FBC Facility

Gasification plant

A refinery process to convert gas into longer-chain hydrocarbons such as gasoline or diesel fuel. Methane from UCG could be converted by gas synthesis, Fisher-Tropsch process and cracking.

• Underground coal gasification
• Carbon sequestration
• Energy from Coal Waste (CFB)
• Coal Bed Methane
• Energy generation from low grade coal
• Biofuels

Other technologies

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Sustainability is the single biggest business opportunity of 21st century… it will be the next source of competitive advantage.

~ Lee Scott

Wal-Mart CEO

Sustainability

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Continuous rehabilitation- restoration

• Restoration planning from core

logging to design to ensure

• ptimal material usage.
• Continuous restoration during
• peration activities.
• Minimal Impact and Liability
• More efficient mine closure

Thrust 6: Innovation to zero harm

30 Floating/constructed wetlands

• Man-made ecosystem
• Provides an efficient, natural way

to improve water quality and buffer habitats against surges in nutrients and pollution.

Fatigue sensors

• Installed in equipment - can

detect fatigue levels of the

• perator then sound an alarm
• r immobilise equipment if it

is safe to do so.

• Collision avoidance and

proximity detection systems.

• New technology will make the

re-processing of waste economically viable

• Unlock value inside what is

currently regarded as waste.

• Open up new revenue streams,
• Lower environmental liability
• Increase life of mine.

Waste re processing

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Thrust 8: Sustainable energy

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Modular Thorium Nuclear

• Could support electricity needs of remote locations as they

are usually small and highly variable, can operate for 4 years without refuelling and can be combined into a power station

• f any size.
• Technology in demonstration phase.
• Construction times estimated to be around 3 years.

Biomass

• Fuel production for remote
• perations.
• Plantations combat soil

degradation and deforestation

• Employment opportunities
• Downstream processes

(flooring, furniture ) beyond LOM.

• Carbon sequestration.

Co-generation

Generate electricity using off- gases, excess heat and other waste energy streams in the value chain to reduce energy costs and ensure security of supply.

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Thrust 8 cont: Sustainable energy

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Skyfuel’s CSP Technology

Concentrated solar power

• For thermal energy and base load using

molten salt storage

• It is the highest performance, lowest-cost

utility-scale solar power system in the world

• Smooth and Predicable Output
• Solar Carports pay back 5 years

Hybrid energy - Smartgrids

• Modernised electrical grid automated to improve

the efficiency, reliability, flexibility, economics, production and distribution of electricity through load adjustment

• Next-generation transmission and distribution

infrastructure will be better able to handle bi- direction energy flows

• Suitable for remote areas

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Thrust 9: Automation

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Integrated and automated management control centre

Effective integration of management information

• ffers benefits such as integrated mine planning

and execution, warehouse and workshop automation, real-time online monitoring of assets And wifi availability throughout the business.

Robotic sampling plants

Automated sample preparation. All processes including sample dividing and splitting, crushing and pulverising, density measurement, sieve analysis, moisture analysis, building of composites for subsequent fusion and XRF analysis.

Virtual training, modelling and simulation

• Visual modelling of new operations facilitates

buy-in from local communities and governments and License to Operate, assists with mine and environmental planning, supports safety and operational activities.

• Simulating new concepts and plans

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Thrust 10: Integrate/redefine the value chain

UCG

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Nano-materials

• Carbon nanotubes and Graphene are lighter,

stronger than stainless steel and titanium and have a reported intrinsic superconductivity greater than copper cable.

• Mitshibushi Royan Resin – BMA .

UCG

• New mining method redefining the value chain.
• nvolves horizontal drilling into a coal seam, oxygen

injection and ignition of the seam which acts as a gasifier.

• Syngas used in power generation or to produce gas

to liquid fuels.

• Exxaro is in a JV with Linc Energy to evaluate

development of UCG applications in Southern Africa.

3-D printing

• The process of making a three-dimensional

solid object of virtually any shape from a digital model using an additive process.

• Metal alloys, stainless steel, aluminium,

photopolymers and thermoplastics can be used.

• Graphene (Carbon nanotubes) already printed.
• Downstream industries such as electronics will

be a major market in the future.

Thrust 10: Integrate/redefine the value chain

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In summary – future resources industry characteristics

• 1. Sustainabale License to Operate (LTO):
• Creating inclusive wealth-all Stakeholders
• Balanced and sustainable partnership between

government, community and resources industry

• Small footprint / limited environmental impact
• Self-sustaining economically viable community

> Beyond a Life of Mine (LOM)

• 2. Smart Exploration: Accurate, predictable, instant,

information and models

• 3. 100% resource extraction
• 4. Zero Waste
• 5. Zero Harm - safety/health
• 6. Energy, carbon and water neutral
• 7. Workforce equipped to support the 2030

business

• 8. Hybrid/renewable/alternative energy solutions
• 9. Capitalise on trend of advanced / light Materials /

Metals

• 10. Integrated, optimised and redefined value chain

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