PERFORMANCE

MANUFACTURED CAPITAL

Manufactured Capital in the mining context relates to the mining and smelting process and how it is conducted as well as the assets which are being mined and beneficiated. It is important to an organisation's sustainability because its efficient use allows an organisation to be flexible and innovative and increases the speed at which it delivers.

Material issues
  • Health and safety
  • Project execution
  • Pricing and the availability of electricity
  • Raw material availability
 
  • Business continuity and profitability
  • Investing in new technology to increase energy efficiency
  • Industrial action
  • Community issues

Key points – 2021

  • Merafe's attributable ferrochrome production
    379kt
    (2020: R265kt)
  • Cost of ferrochrome production
    decreased by 5.2%
    (2020: 8%)
  • Fatality
    NIL
    (2020: 1)
  • No industrial action
  • TRIFR performance of
    2.75
    (2020: 3.91*)

* Restated (3.89 to 3.91)

We enhance our Manufactured Capital by:

  • employing our infrastructure, technologies and processes to use our resources most efficiently; and
  • devising technology and management systems that reduce our waste and emissions.

Glencore-Merafe Chrome Venture operations

  • 1 Rustenburg ferrochrome plant and Tswelopele pelletising and sinter plant
  • 2Boshoek ferrochrome plant and Motswedi pelletising and sinter plant
  • 3Boshoek Mine
  • 4Wonderkop ferrochrome plant and Bokamoso pelletising and sinter plant
  • 5Waterval (east and west) and Marikana mines
  • 6Kroondal Mine and PGMs plant
  • 7Thorncliffe Mine
  • 8Lion ferrochrome plant
  • 9Lydenburg ferrochrome plant
  • 10Helena Mine
  • 11Magareng Mine
Map

Operational review

Merafe's attributable ferrochrome production volumes increased by 42.7% from 265kt to 379kt for the year ended 31 December 2021. The increase was mainly due to production being less affected by COVID-19 shutdowns coupled with improved plant efficiencies achieved at the Venture's smelters. New annual production records were achieved for total furnaces and total plant production at the Wonderkop and Lion smelters.

Lydenburg smelter, Rustenburg smelter furnace 6, Waterval mine and Boshoek mine remain on care and maintenance. Rustenburg furnace 6 was brought back into operation in the third quarter of the year. Total unit cost of production of ferrochrome decreased by 5.2% year-on-year, mainly as a result of lower allocation of fixed costs due to higher volumes produced and the lower cost of chrome ore. However, these were somewhat offset by the higher cost of electricity and reductants.

Eskom

Reliability of supply and escalating cost of electricity remain key risks for our business. Electricity tariffs increased by 15.06% effective 1 April 2021. For 2022, Eskom has applied for a 20.5% tariff increase. However, the National Energy Regulator of South Africa only allowed a 9.61% increase from 1 April 2022. In order to mitigate against these unsustainable electricity tariffs, the Venture is pursuing Negotiated Pricing Agreements with Eskom in terms of the Department of Mineral Resources and Energy's Interim Framework for Long Negotiated Pricing Agreement. The Venture is at the request for proposals stage regarding construction of renewable energy facilities and supply of power.

Reductants

The cost of reductants was impacted by increased market prices and shortage of local supply of anthracite and coke, necessitating imports which are more expensive.

Safety

The safety of our employees remains our number one priority. The Venture was fatality free for the year. Our total recordable injury frequency rate decreased by 29.67% to 2.75 (December 2020: 3.91). A safety culture is encouraged as evidenced by a concerted effort by everyone to ensure not only their own safety, but that of their co-workers as well. The SafeWork programme is another illustration of our focus on safety. The SafeWork programme framework is risk-based, focusing on eliminating fatalities and serious injuries by identifying the hazards that can result in fatal incidents and developing life-saving behaviours and protocols to target them. This programme was reviewed and a gap analysis against new requirements was conducted during the last part of 2021, with actions to ensure continuous improvement of our safety programme in creating a safe working environment.

Health

COVID-19 is still a risk that we deal with on a daily basis. Our operations continue to manage the spread of the virus through ensuring adherence to all approved COVID-19 protocols. The implementation of antigen testing across all operations since January 2021 assisted greatly in curbing super spreader events by preventing asymptomatic positive people from entering the workplace. On average a total of 68 784 antigen tests were conducted during 2021. To confirm the reliability of the antigen test, all COVID-19 positive results were followed up with a Polymerase Chain Reaction (PCR) test which demonstrated an effectiveness rate of 99%.

With the emergence of the Delta variant, we have seen a substantial increase in positive cases throughout South Africa and across our operations; this was followed with the identification of the Omicron variant and the emergence of the fourth wave in South Africa. 2 873 members of our workforce tested positive during 2021 compared to 694 positive cases during 2020. It is with great sadness that we report that during 2021, we have lost 26 of our colleagues due to COVID-19. The impact of the virus on our people only reinforces our determination to ensure the safety and health of our workers.

In partnership with Ndlovu Laboratories, we have embarked on a vaccination campaign in support of the vaccination drive by government. As at 31 December 2021, 59% of our workforce had been fully vaccinated, with another 21% having had one dose.

Railways and ports

The deteriorating infrastructure of the railways and the ports continues to be a challenge to the South African ferrochrome industry. The inability of the railways to transport our product and inefficiency at the ports causes an excessive reliance on road transport. Inefficiency at the ports also results in backlog and delays at the harbours. This not only results in delays in shipping our product (and impacts the reputation of South African producers as being reliable suppliers), but also creates opportunities for corruption and theft. The Venture continues to engage proactively with the governmental departments and attempt to find solutions to these critical issues.

New Platinum Group Metals (PGMs) plant – Western Chrome mines

Merafe and Glencore reached an agreement in 2021 to construct a Platinum Group Metals (PGMs) plant at the Kroondal mine. The PGMs plant's main operations will be the treatment of material arising from the Venture's mining operations and tailings facilities in Western Chrome mines. The PGMs plant has the capacity to treat 21kt of PGM-bearing material per month. The estimated cost to complete construction of the plant in 2022 is R23 million which will be paid for by the Venture.

Venture safety performance

TRIFR 2008–2021

Chrome ore production

Production

The Chrome mines' (including UG2) saleable chrome ore production for 2021 is at 22% more than the previous year.

Higher tonnages (29%) at the UG2 operations were mainly due to more feed received from external PGM concentrators, which had been affected by the COVID-19 national lockdown in 2020.

Chrome produced at the mines in 2021 was 19% more than in 2020 due to the Western Mines cash preservation plan and COVID-19 national lockdown in 2020.

Costs

The Chrome mines' (including UG2) saleable chrome ore production cost for 2021 was in line with mining inflation of 7%.

Production costs from mines were 13% more than the prior year due to the Western Mines cash preservation plan in 2020 (Kroondal on care and maintenance for an extended period in 2020).

Production costs from the UG2 platinum tailings were 9% less than the prior year due to an increase in feed (6%) received from PGM concentrators and lower prices of raw material buy-in from PGM producers which were 11% lower than the previous year. The latter was the result of market factors such as lower prices and a more favourable exchange rate.

Resources and reserves

The Venture has in excess of 30 years of ore available at the current rate of mining.

Power and ore consumption efficiencies

The Glencore-Merafe Chrome Venture's operations

Ferrochrome plants Capacity Technology Mines
Western Limb (North West province)
Wonderkop 553 000
tpa FeCr
Bokamoso pelletising and sintering plant using Outotec technology Kroondal, Waterval and Marikana
6
furnaces
Conventional semi-enclosed furnaces  
Rustenburg* 430 000
tpa FeCr
Tswelopele pelletising and sintering plant using Outotec technology Kroondal, Waterval and Marikana
6
furnaces
Conventional semi-enclosed furnaces  
Boshoek 240 000
tpa FeCr
Motswedi pelletising and sintering plant using Outotec technology Waterval, Kroondal and Boshoek
2
furnaces
Enclosed furnaces  
Eastern Limb (Mpumalanga and Limpopo provinces)
Lydenburg** 396 000
tpa FeCr
Premus – kilns Thorncliffe, Helena and Magareng
4
furnaces
Three enclosed furnaces and one semi-enclosed furnace  
Lion Phase I 360 000
tpa FeCr
Premus – kilns Thorncliffe, Helena and Magareng
2
furnaces
Enclosed furnaces  
Lion Phase II 360 000
tpa FeCr
Premus – kilns Thorncliffe, Helena and Magareng
2
furnaces
Enclosed furnaces  
* Furnace 6 under care and maintenance.
** Smelter under care and maintenance.

The Venture has access to various UG2 plants in the Western Limb including EPL, Kanana, Kl, K2, K4 and Rowland, and Mototolo in the Eastern Limb. The Venture constructed and operates a PGM processing plant at the Kroondal and Waterval mines.