Two big themes dominated the Investing in African Mining Indaba, which drew more than 7,000 people to Cape Town this week, adding miners to the city's buzz of cricket (SA v England on Tuesday), tennis (Federer, Nadal et al on Friday) and classical music (cellist Yo-Yo Ma at Kirstenbosch on Saturday).
One big theme was platinum - or rather, the platinum group metals (PGMs), especially palladium, whose price has more than tripled over the past couple of years, and rhodium, whose price has more than quadrupled, as tougher emissions standards for cars lift demand for the metals used in autocatalysts.
Platinum group metals were "the only game in town" at this week's Indaba, quipped Allan Gray mining analyst Sean Munsie, while his colleague Tim Acker noted that if current prices held, the platinum group metals could significantly boost the South African economy.
R100bn
The increase in revenue SA’s platinum producers are generating, double what they were getting 12 months ago, according to Allan Gray portfolio manager Tim Acker
"South African platinum producers are currently getting revenue of double what they were getting 12 months ago, an increase of R100bn. R100bn is roughly 2% of the gross domestic product," said Acker.
Nor is it just PGMs' uses in cleaning vehicle emissions that has contributed to their "green" credentials.
There was much at the Indaba about the hydrogen economy and its potential for SA, given how central platinum is in the hydrogen fuel cells that are being punted as an alternative to batteries, particularly to power large vehicles such as trucks.
Mineral resources & energy minister Gwede Mantashe told the Indaba in his opening address that Anglo American's first hydrogen fuel-cell-powered mining truck would start operating this year. Anglo CEO Mark Cutifani said in his address that SA has the opportunity to lead in the hydrogen economy, with its abundant PGMs enabling the development of sustainable clean energy and offering a range of other possibilities.
It tied in to the other big theme at the Indaba - environment, social & governance (ESG), which has suddenly become a mainstream issue for investors in mining in a way that it wasn't even two years ago.
For international investors it is the environmental issues of climate change and water around mining that now loom large, but for South Africans it's more likely to be the social & governance issues.
Investec portfolio manager Unathi Loos said the rhetoric has completely changed and the pressure is coming from clients, such as pension funds.
"Clients are coming to us to say: 'We want you to integrate ESG into your everyday investment decisions - we want to know that you're making sure that the companies in which we are invested don't just offer good investment returns but also operate responsibly and uplift communities and have a social licence to operate. And the big global investors want to know about carbon emissions and water," said Loos.
Deloitte and Barclays were among those whose recent studies on decarbonising mining were presented at the Indaba.
— Platinumwas ‘the onlygame in town’at this week’sMining Indabain Cape Town
There could have been a third big theme at the Indaba - the coronavirus pandemic, which could have a significant impact on China's growth and its demand for commodities and has already hit global copper and iron ore prices in the past two weeks.
But though the coronavirus featured in the conversation in Cape Town, it was too early to tell how important it might prove to the fortunes of the mining producers and investors who gathered.
Meanwhile, much of the interest at the Indaba was in investing in mining in other African countries, rather than in SA. Though Mantashe has brought some certainty to the regulatory regime for mining, investment in SA's mining sector has not recovered, with the energy crisis and rising crime levels targeting the mines taking their toll.
And SA hardly features when it comes to mining exploration, which is key to the sector's future growth. In 2018 the rest of Africa attracted 13% of global exploration expenditure; SA attracted just 1%, of which little was new greenfields exploration.
The number should be 3%-5%, said Minerals Council CEO Roger Baxter.
