JOHANNESBURG—South Africa’s gold-mining companies are facing a question of life or death—and the answer is likely robots.
With
more than half of the country’s gold mines currently unprofitable,
companies are looking for ways to stay in business long enough to mine
what is left of the world’s largest gold deposit. That means miners have
to figure out how to dig up more gold less expensively from deeper
underground than ever before.
The proposed solution: echo the auto and diamond mining industries by replacing as many people as possible with machines.
Johannesburg-based AngloGold Ashanti Ltd.
, the world’s No. 3 gold producer, has already begun to operate
prototype construction sites to mine in a super-mechanized manner to
boost output and productivity, as well as cut costs. The technologies
include powerful machines that break rock without explosives, and a
patented liquid material that helps support the mine roof—which means
miners don’t have to leave some gold behind for safety reasons.
The
stakes are high for South Africa’s gold miners at a time of upheaval in
the nation’s commodity-dependent economy. If the technology
transformation fails, AngloGold estimates that essentially all of its
29,000 South African employees will be out of work by 2045. If the
company can make mechanical mining work, it expects to retain employment
for about 7,500 people through 2060 and beyond.
“One would argue that it is a sunset industry,” said Shaun Newberry,
senior vice president of technology and projects in South Africa for
AngloGold. “This is an effort to make sure that’s not a reality.”
Some
gold producers elsewhere, including in deposit-rich Australia, have
already moved in this direction. “It’s been positive from a safety
perspective and very positive from a cost perspective,” said Douglas
Rowlings, analyst for South African mining companies at Moody’s
Investors Service. “You’ve actually had projects go ahead [in Australia]
that may not have gone ahead without that mechanization.”
For
South Africa, the move to mechanize marks another gyration for an
industry trapped between tumbling prices and surging production costs.
The world’s largest deposit of the yellow metal turned Johannesburg into
the City of Gold 130 years ago, and South Africa was the world’s top
producer for decades. But as miners had to dig ever deeper, the business
became less profitable thanks to massive cost increases including labor
and electricity. Since 2007, South Africa has slid from the No. 1 spot
to No. 6, with production halving over the last decade.
“Now
we’re stuck with great depths and excessive costs for ventilation and
refrigeration, and, as you increase depth, you increase the amount of
ore you have to leave behind” to hold up the roof of the mine, Mr.
Newberry said.
AngloGold is trying to overhaul the conventional method of drilling into rock and blasting it apart with explosives by using new machines that mechanically shatter the rock without blasting. This method increases productivity, because mines don’t have to be evacuated to blast and workers don’t need to wait for the noxious fumes to ventilate.
At
its test site, AngloGold fills the holes that its machinery has made
with its patented “super-high strength backfill,” essentially liquid
rock that once poured hardens into a material that can support the mine
roof, allowing the company to theoretically remove all of the gold,
rather than the 60% it can extract with conventional mining.
If the pilot technology proves viable, AngloGold executives hope it will see South Africa’s workforce operating around the clock, as they do in other markets.
South Africa’s Sibanye Gold Ltd. is developing new drilling technology to keep workers about 12 meters away from the rock face, decreasing injuries and boosting productivity. “That takes the employee well away from the danger zone. Rock falls account for 50% of fatal accidents or more in our company,” said Peter Turner, Sibanye’s senior vice president of technical services.
But even successful mechanization doesn’t transform a mine’s prospects overnight: South Africa’s only fully mechanized gold mine—called South Deep and run by world’s No. 7 producer Gold Fields Ltd. —is still not profitable as not enough gold is being extracted for the time being.
“If you look at how we operate at the moment, we’re pretty horrific,” said Nico Muller, executive vice president for South Africa at Gold Fields. Gold Fields expects South Deep, which accounts for 70% of the company’s gold reserves, to start making money by the end of 2016. One major obstacle has been sourcing the skilled laborers needed to operate the more complicated machinery used at South Deep.
“They must skill the workers so they can operate the machines,” said Livhuwani Mammburu, spokesman for the Nation Union of Mineworkers, the majority union in the gold industry. “It’s the duty and the responsibility of the mining industry to empower them.”
But with 25% national unemployment—and the country already grappling with a 30% drop in the gold mining workforce since 2007, according to the Chamber of Mines of South Africa—authorities are desperate to avoid job losses. The government is trying to help miners looking at layoffs to transfer and re-skill their workers as well as come up with ways to improve productivity and seek buyers for distressed assets.
At the same time, gold miners are embroiled in extended negotiations with unions over wage increases, with economists and analysts portending a strike before any agreement is reached.
“That’s a social challenge, but it doesn’t mean you stop mechanization,” said Nick Holland, Gold Fields’ chief executive. “It’s coming like an express train at us.”
Write to Alexandra Wexler at alexandra.wexler@wsj.com
Source : The Wall Street Journal
