South Africa may be able to dramatically increase its gold reserves — the gold it is technically capable of mining — if a technology being piloted and financed by AngloGold Ashanti comes on stream.
The development could theoretically change the declining fortunes of gold mining in South Africa and international market perceptions that South African mining is past its prime.
AngloGold Ashanti is leading the way for gold to be extracted from reefs kilometres underground in the future, unlocking millions of ounces in areas that cannot be mined now, as well as allowing companies to go deeper still to undreamed-of depths.
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Business Day has been given a rare briefing on progress in the project.
Conventional wisdom is that mines reach their limit at 5km deep because of the higher risk to human life from extracting rock under such enormous pressure. Extraction is increasingly prone to bursting and seismic events. Ventilation and refrigeration also become too expensive to warrant mining at those depths. AngloGold’s Mponeng is the world’s deepest mine at more than 4km.
AngloGold has identified three key issues that need to be addressed if it is not to face a rapid decline in profitable production as well as the mounting ethical dilemma of mining gold from deep-level mines where workers can be killed or injured.
With decreasing production and increasing costs a break-even point is set to come before the industry tilts into economically unviable mining.
Increasing depth is leading to unsafe mining. More of the reef has to be left in pillars to hold up the working areas and minimise tremors, feeding into rising costs to mine at depth for less gold. AngloGold leaves up to 40% of ounces unmined because of this factor. Of the left-behind ounces, half are in pillars that lock in dangerous geological features.
"To mine safely and not have a single person harmed, and to have that as a reality, we needed a different way of mining," said Shaun Newberry, head of technology and projects at AngloGold, who is based in Potchefstroom, near the company’s mines.
A platinum executive said his company is very interested in the work AngloGold is doing and wants to hold talks with its team to see how the technology can be applied to the two platinum-bearing reefs mined in South Africa. The reefs are tabular in nature and platinum mines are going deeper as the shallow parts of the deposits have largely been mined out.
The technology would not only apply to narrow, tabular South African ore bodies, Mr Newberry said, and mining groups globally in a wide range of commodities are having to go deeper.
"We’ve led the world in logistics, shafts, milling, ventilation and refrigeration. We’ve led the world in all those technologies.
"We will teach the world how to get the ore bodies at depths where their methods — which are mechanised at this stage and based on drilling and blasting — will have to find the commercial argument to make those assets work," he said.
"We don’t believe mechanised drill-and-blast mining is the answer to commercial deep-level mining. (The answer) is in creating a continuous drill-and blast-free environment," he said.
As far back as 2010, AngloGold started calling in experts from research groups, universities, equipment makers, engineers and innovation companies such as DuPont and 3M.
"The reason we wanted this grouping of entities was to understand why in the past, several attempts at this had been made, but we’ve never really seen a full push towards a new mining method or paradigm. We wanted broader thinking to bear, for people to think beyond what we saw as problems," Mr Newberry said.
"It took a year to understand and define what was creating the roadblock to our safety performance, the conversion of resources to reserves, and the nonsustainability of our current mining method."
AngloGold mines 270 days out of 365 days a year and the time needed to clear the mine to detonate explosives, the wait for the fumes to clear and the working area to settle, means that mining companies spend only 40% of the year breaking reef and clearing it up to haul to the surface.
The new method looks at extracting all the gold continuously and safely. It has minimal dilution of reef with waste rock, unlike conventional mining which entails a lot of waste to make space for people to work in. Conventional mining also entails handling the reef seven times, with fine gold being lost each time.
Srinivasan Venkatakrishnan, the hard-nosed CEO of AngloGold who is cutting jobs, slashing costs and talking about selling loss-making mines, said the last place he will cut funding is for this work. "It’s a real game-changer. When it comes to competing for a dollar in AngloGold, they’ll be … at the front of the queue," he said.