Geotimes
Feature
South Africa’s
Geological Gifts
Mike G.C. Wilson
Sidebar: Sweeping
changes for South African Mining Policy
South Africa has a long and complex geological history which goes back some
3.7 billion years, and the country is blessed with an amazing array of mineral
resources of various ages. South Africa ranks second only to the United States
in production of the greatest variety of mineral commodities in the world. Only
two strategic minerals are not available in adequate amounts in the country:
crude oil and commercially viable bauxite, the principal ore of aluminium. The
more than 65 mineral commodities known to occur within South Africa continue
to be vital for the growth of the country’s economy.
Geological wealth
Geologists and
others have long wondered why there is a disproportionate concentration of minerals,
such as gold, diamonds, platinum, chromite, manganese and others, in one small
part of the planet, and the answer remains an enigma. What we do know about
South Africa’s geology is that it hosts some of the oldest surviving Archean
rocks. The crust here was stable and strong enough during the late Archean to
support large sedimentary basins, such as the Witwatersrand, which is the world’s
largest known repository of gold. In many other parts of the world, such large
sedimentary basins seem only able to have formed after the Archean and during
the Paleo-Proterozoic. Whether this, or the subsequent tectonic and erosional
history that allowed the preservation of such a large area of Archean rocks,
has had any bearing on the current level of mineralization is not certain.
Coal: Multi-seam opencast mining at Ingwe Coal Corporation’s Optimum Colliery
in Mpumalanga Province, South Africa, which produces 16 million tons of export
and power station coal per year. The photograph was taken by Achievement Management
Services (Pty) Ltd. Courtesy of Anglo Platinum Corporation Ltd.
The keystone on and around which the rest of the geological formations of South
Africa have developed is the Kaapvaal Craton, which underlies the northeastern
part of the country. It is made up largely of Archean gneisses and granitoids,
along with lesser volumes of metamorphosed volcanic and sedimentary rocks known
as greenstone belts — the best known of which is the Barberton greenstone
belt, from which more than 10.93 million ounces of gold have been produced.
Large sedimentary basins of the Kaapvaal Craton hold some of South Africa’s
richest mineral resources. The auriferous (gold-containing) sedimentary strata
of the Witwatersrand Supergroup are confined to a basin south of Johannesburg,
measuring some 320 kilometers by 160 kilometers, and were deposited between
about 3.1 and 2.7 billion years ago.
Between 2.6 and 2.1 billion years ago, infilling of the Transvaal and Griqualand
West basins occurred. The rocks contained in these basins include enormous resources
of dolomite and limestone, along with more than three-quarters of the world’s
exploitable manganese, substantial deposits of banded iron formation and some
lead/zinc deposits.
Andalusite mineralization occurs in the pelitic strata of the Transvaal basin,
where they fall within the metamorphic aureole of the Bushveld Complex that
intruded the Transvaal Supergroup sediments about 2,050 million years ago. This
complex is the world’s largest known layered intrusion, with an estimated
areal extent of 66,000 square kilometers. At its base is a suite of mafic and
ultramafic rocks that hosts more than half of Earth’s chrome ore and platinum-group
metals (PGM), as well as significant deposits of vanadium, iron, titanium, copper
and nickel. Its overlying acidic rocks contain fluorspar, tin and copper mineralization.
A substantial amount of black norite and red syenite of the Bushveld Complex
is quarried as building and monumental stone.
The Premier diamond pipe near Pretoria is the oldest productive diamond-bearing
kimberlite in South Africa; it was intruded into the Kaapvaal Craton 1.3 billion
years ago. The Venetia kimberlites, from which the largest quantities of diamonds
in South Africa are currently produced, are significantly younger at 560 million
years old, while the bulk of the productive kimberlites were emplaced less than
200 million years ago, during the breakup of Gondwanaland. It is widely believed
that for kimberlites to host diamonds, and bring them to the surface, they must
be intruded at great depths into thick, stable crustal zones, such as the Kaapvaal
Craton.
The vast Karoo basin, which covers about two-thirds of South Africa, hosts the
fluviodeltaic sediments and coals of the extensive Carboniferous-age Ecca Group.
These coal horizons are actively exploited mainly in the northern and eastern
parts of the basin and provide the main source of energy for South Africa.
Sparkling start
The country’s
mining industry can be traced back to ancient iron and copper mining and smelting
operations, some believed to be as old as A.D. 750. The extraction of iron pigments
for decorative and cosmetic purposes commenced even earlier than this. And as
early as 1445, the local inhabitants of the Rooiberg area, west of present-day
Bela-Bela (Warmbaths), were mining tin. The first metallic mineral deposits
to be brought to the attention of the European settlers were the copper deposits
in the O’okiep district of Namaqualand in the Northern Cape Province, which
were visited by Dutch governor Simon van der Stel in 1685.
This jumbo drilling rig, which is being
cleaned, was used in the deepening of Freegold’s Freddies No. 4 shaft in
the Free State Province. The rig supports eight percussion drills, each of which
can drill blast holes up to 6 meters deep in the base of the shaft.
However, in terms of modern mining, the discovery of diamonds in
1866 and their large-scale exploitation beginning in 1870, in the Kimberley
area, initiated the transformation of South Africa from an agriculture-based
economy to a mining- and industry-based one. The diamond rush, which made South
Africa the world’s dominant producer of diamonds for 70 years, established
a local need for technology and specialized equipment, thereby triggering the
development of supporting industries, while the money it generated created the
first pool of capital in the country.
South Africa continues to produce significant quantities (over 11 million carats
in 2001) of mainly high-quality gem diamonds annually, and it ranks fifth overall
in terms of world production by mass and third in terms of production by value.
South Africa is the only country in the world where diamonds are extracted from
both kimberlite pipes and dykes or fissures, as well as from both onshore and
offshore (marine) alluvial deposits.
Golden era
The prospectors who came to South Africa for the diamond rush soon began to
use their skills to search for other precious minerals such as gold. In 1871,
the first profitable concentrations of gold in the country were discovered and
mined at Eersteling, just south of Polokwane (Pietersburg) in the northern Limpopo
Province. From here, prospectors searched the areas to the south and east, and
it was not long before they discovered the Transvaal Goldfield near Pilgrims
Rest and Sabie, which has yielded in excess of 6.43 million ounces of gold.
The Barberton Goldfield, the most significant greenstone goldfield in South
Africa, was discovered soon after. Additional goldfields continued to be found,
but it was the 1886 discovery of one of the principal reefs of the Witwatersrand
deposit that transformed the local gold-mining industry into a world leader.
The Witwatersrand is the largest known gold deposit on Earth, having yielded
more than 1.511 billion ounces of gold between 1886 and 2002, which represents
an estimate of almost 40 percent of all the gold ever produced by humankind.
Perhaps even more remarkable is that the remaining gold resource in the basin
is calculated at an additional 1.157 billion ounces of gold or 45.7 percent
of the known remaining gold resources on Earth. How much of this can still be
extracted economically depends on numerous factors, including the price of gold,
cost of labor and technological breakthroughs. What is certain is that the revenue,
employment and development of support industries generated by the exploitation
of the Witwatersrand gold mines has been the biggest catalyst in growing and
sustaining the development of the South African economy and the growth of its
impressive infrastructure. The Witwatersrand mines have also yielded vast quantities
of silver, pyrite and uranium minerals.
South Africa’s peak annual gold production of close to 32.15 million ounces
occurred in 1970 and since then has declined to a low of 12.67 million ounces
in 2002 — the first time production has been below 12.86 million ounces,
or 400 metric tons, since 1953. The decline is mainly the result of the increasing
cost of extracting gold ores from deeper levels within the basin, the increasing
cost of labor, and the steady overall decline in the price of gold, from a brief
peak of over US$700 an ounce in 1980, to an average price of US$271 in 2001.
Despite the steady decline in gold production, in 2001 gold still accounted
for 32 percent of South Africa’s mineral export earnings and employed 50
percent of the mining industry’s workforce.
Metallic might
The famous German explorer Karl Mauch was the first person to record the occurrence
of chromium in South Africa when he noticed it in the Hex River near Rustenburg
in 1865. Thereafter various official papers reported occurrences of chromite
on both the western and eastern limbs of the Bushveld Complex. Sustained mining
of these chromites began in 1921, and by the start of World War II, production
had reached 180,000 tons a year. By the 1960s, South Africa had become a major
exporter of chromite ore, and this continued to be the case into the 1970s,
when local industries gave increasing attention to the local manufacture of
chromium ferro-alloys. Today, South Africa is both the world’s largest
producer and exporter of chromite and has the largest known reserves. In 2001,
the country produced 45.3 percent of the world’s chromite, with 17 percent
exported. Much of the remainder was converted to chromium ferro-alloys, the
bulk of which are used in the production of stainless and specialized steels.
Associated with the chromites of the Bushveld Complex as well as in more sulphidic
horizons are PGM (platinum-group metals), the most common of which is platinum;
the others include palladium, rhodium, ruthenium, osmium and iridium. In 1906,
a sample of chrome-iron ore from the Bushveld Complex was found to contain PGM.
Later, some chromite horizons were found to contain PGM but there was no viable
means of extracting it at the time. The first primary PGM mine in South Africa
was a small and unusual hydrothermal deposit discovered by Adolph Erasmus, who
was prospecting for tin in the Waterberg mountains near Naboomspruit in 1923.
This high-grade deposit was exploited between 1924 and 1926.
Also in 1924, a farmer named Andries Lombaard sent a sample of a grayish-white
concentrate he had panned on his farm, Maandagshoek, north of Lydenburg in the
eastern Bushveld, to the famous geologist Hans Merensky, who identified it as
platinum. The farmer’s initial prospecting soon led to the discovery of
what became known as the Merensky reef, which has provided the bulk of the world’s
platinum since then. This reef was soon located in the western Bushveld, near
Brits, in 1925, then even closer to Rustenburg. At this latter site, the sustained
mining of PGM began in 1929. More recent exploration has shown that the Merensky
reef can be traced for a distance of 145 kilometers on the western lobe of the
Bushveld Complex and for 138 kilometers along its eastern lobe.
Within the last decade, the problem of extracting PGM from chromite ores has
been overcome. Therefore, the Upper Group Chromite seam number 2, known as the
UG2, will provide increasing amounts of the world’s PGM. In 1925, PGM were
also found on another farm, north of Makopane (Potgietersrus) in what has become
known as the Platreef, but as the grades of PGM were significantly lower than
those on the western limb of the Bushveld Complex, mining stopped in the Platreef
at Sandsloot and production only started there again in 1990.
South Africa is the world’s largest producer of PGM, having contributed
51 percent of production in 2001. This was also the second year in a row that
the country’s income from PGM — R33.4 billion or US$4.8 million —
exceeded that from gold. (This is at the current exchange rate of 7.35 rand
to the U.S. dollar and not at the average ruling rate during 2001.) PGMs contributed
32.6 percent of the country’s mineral export earnings. South Africa also
has 56 percent of the world’s known PGM resources and will thus continue
to dominate production for some time. Significant quantities of nickel and copper
are produced as by-products of PGM mining, along with lesser amounts of gold.
The government of South Africa is currently in the process of introducing a
new suite of mineral laws, two of the principal objectives of which are to ensure
that the state becomes the custodian of the country’s mineral wealth and
that previously disadvantaged sectors of the population have greater access
to that mineral wealth (see sidebar). It is vital that
in introducing these sweeping changes, investor confidence does not become a
casualty.
Sweeping changes for South
African Mining Policy
The Bushveld Igneous Complex of Mpumalanga, Northwest and Limpopo provinces,
South Africa, holds more than half of the global supply of chromium, platinum
and vanadium. But the layered igneous intrusion represents just a fraction
of South Africa’s mineral wealth. The country holds the largest reserves
of manganese, gold, aluminosilicates and vermiculite and is the fifth largest
producer of the world’s gem diamond supply. The mining industry accounted
for 8.1 percent of South Africa’s gross domestic product in 2002 and
employs more than 400,000 people.
Until now, private entities held all mineral rights. With two new pieces
of legislation, the South African government has undertaken a significant
restructuring of the country’s mining policy in an effort to correct
past wrongs and bring the mineral rights system in line with those of other
mining nations.
After seven years of voluble public debate and numerous revisions to the
draft bill, the Mineral and Petroleum Resources and Development Act passed
into law in October 2002. Some of the act’s main objectives are to
“recognize the internationally accepted right of the State to exercise
sovereignty over all its mineral and petroleum resources, to promote equitable
access to the nation’s mineral and petroleum resources to all the people
of South Africa, and to expand opportunities for historically disadvantaged
persons to enter the mining industry.”
The first objective will be carried out through the transfer of mineral
rights from private mining companies to the state, which is estimated to
take five years. During this time, mining companies can apply for and receive
licenses granting them the right to mine.
In order to be granted licenses, companies must comply with the Socioeconomic
Empowerment Charter passed along with the Mineral and Petroleum Resources
and Development Act. The charter requires that the mining industry transfer
a proportion of currently held assets to historically disadvantaged groups.
Also called the Black Economic Empowerment (BEE) Charter, it has mining
companies scrambling to partner with black-owned businesses.
“The requirements are that mining companies have 15 percent BEE equity
ownership within five years, and 26 percent in 10 years,” says Anne
Dunn, a spokesperson for Anglo American, one of the biggest mining companies
in South Africa. Anglo American owns 45 percent of DeBeers, whose mines
produce 90 percent of South Africa’s diamonds, and it also holds interests
in gold, platinum-group metals and coal. “Anglo American will comply
with these requirements and is working to achieve the various other requirements,
such as employment equity,” Dunn says.
Although the changes brought about by the legislation are sweeping, the
impact on the international mineral commodity markets will be minimal according
to George Coakley, the country specialist on South Africa in the U.S. Geological
Survey (USGS) Minerals Information Team.
“I don’t think it’s going to affect their role in the market
or their share of the mineral commodity markets,” Coakley says. “The
minerals development act should actually open mineral rights on currently
idle mineral lands and allow local African companies to partner with local
and foreign investors, thus providing more opportunity for local African
participation in mineral projects.”
A second piece of legislation, the draft Mineral and Petroleum Royalty Bill,
was released in March 2003 by South Africa’s Department of Minerals
and Energy. The bill proposes royalties on mining companies’ gross
revenue to be paid in addition to income tax. The royalty rates would vary
by sector and range from 1 to 8 percent, the highest of which would be levied
on the diamond industry. The gold and platinum sectors, however, would be
assessed at 3 and 4 percent respectively.
The Chamber of Mines, an industry group that represents 90 percent of South
Africa’s mine owners, has protested the royalty bill. It says that
the bill will quell investment and that a tax assessed on revenue, rather
than on profit, will keep smaller companies from entering the market. The
group says it thus conflicts with one of the objectives of the Mineral and
Petroleum Resources Development Act.
In an address to shareholders in April, Tony Trahar, the chief executive
of Anglo American, said the company was “disappointed by the relatively
high royalty levels” because they might damage competitiveness and
reduce investment.
Because of the additional cost royalties would add to a mining venture,
the proposed bill “might prevent or delay some new projects from getting
off the ground,” Coakley says, “but you’d have to look at
it on a project-by-project basis.”
The publication of the draft royalty bill provoked a deluge of submissions
to South Africa’s Treasury Department from stakeholders. After receiving
so many submissions, Finance Minister Trevor Manuel announced on Sept. 17
that the royalty bill will be set aside until early 2004 to allow for review.
The delay has meant both relief and anxiety for some in the mineral industry,
Dunn says. “We would prefer clarity as soon as possible, but are encouraged
that Treasury is taking a wide view of all submissions and considerations.”
Sara Pratt
Geotimes contributing writer
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Mike Wilson emigrated to South
Africa in 1980 and has since worked as an economic and exploration geologist both
in the private sector and for parastatal organizations. He was a contributor to
and editor-in-chief of a handbook entitled The Mineral Resources of South Africa,
published by the Council for Geoscience in 1998. He managed the Council’s
Metallogenic Mapping Programme for several years, and now as a senior economic
geologist, he continues to undertake a wide range of regional economic geology
research.
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