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PGM CONFERENCE

Copper cable theft cost Sibanye ‘north of R1bn’ in production in 2022, mining forum told

Copper cable theft cost Sibanye ‘north of R1bn’ in production in 2022, mining forum told

Diversified metals producer Sibanye-Stillwater lost more than R1bn in production last year to copper cable theft, a Platinum Group Metals conference heard on Tuesday. That speaks to a surging crime problem that is literally robbing the mining sector of profits. Interestingly, the rise in criminal incidents on the platinum belt coincided with a decline in social unrest.

Crime took centre stage at the Platinum Group Metals (PGMs) Industry Day in Johannesburg on Tuesday organised by Resources 4 Africa. Royal Bafokeng Platinum CEO Steve Phiri and Sibanye’s chief regional officer for southern Africa, Richard Stewart, both spoke about the impact of crime on their operations and the investment environment.   

“Three weeks ago, we woke up in the morning and 300 metres of copper cable was stolen. We replaced it and the same evening those guys came again to steal the cable we replaced. Fortunately, we waited for them and they ran away,” Phiri told the conference. 

“To be investable as a country, you should be able as a country to protect investments … Things are beginning to fall apart,” he said.  

Sibanye’s Stewart spoke of losses last year and elaborated on his remarks in an interview with Business Maverick

“The really big number is that we lose production because of copper theft. That number in 2022 was a billion rand, actually north of a billion rand,” he said, referring only to Sibanye’s PGM operations.  

The problem is a basic one: the copper cables need to be replaced, and that cuts into time underground that would be devoted to production.  

Sibanye CEO Neal Froneman. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Stewart’s comments echoed those made by Sibanye CEO Neal Froneman in February at the Cape Town Mining Indaba, while adding more details about the costs. 

Read more in Daily Maverick:Sibanye’s Froneman says SA’s mining sector is being hammered by the scourge of crime”  

“The security costs alone now are also north of R1-billion a year,” Stewart said. So crime and security costs last year cost Sibanye north of R2-billion in capital expenditure and lost production and that is not even counting zama zama incursions in and around its gold operations.  

Highly organised crime syndicates

And this crime wave has a deeply sinister side.  

“These are highly organised syndicates and there’s human trafficking involved, forcing people to go underground,” Stewart said.  

Such theft has become rampant over the past 18 months, pointing to a criminal surge targeting the mining sector, with links to the zama zama gangs illegally mining gold. 

Stewart said that the illegal chrome mining operations that have proliferated in recent years on the eastern limb of the Platinum Belt in Limpopo and Mpumalanga had shifted their attention to Rustenburg.  

“We’ve had two pits pop up recently at our Rustenburg mines,” he said, adding that it was large-scale operations involving “yellow machines” — big excavators and the like. 

July Ndlovu, chief executive officer of Thungela Resources. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

The CEO of coal producer Thungela Resources, July Ndlovu, made similar comments this week about the rife theft of coal at its Mpumalanga operations.

Read more in Daily Maverick:Coal producer Thungela reports threefold surge in annual profits despite Transnet woes” 

Social unrest cools 

Curiously, while criminal incidents are soaring, social unrest has been cooling around the PGM operations. Stewart said this was the case at Sibanye’s PGM mines, Impala Platinum mentioned in its recent results that it had seen a noticeable decrease in such incidents, and Northam Platinum echoed the same sentiment in its interim results last week. 

“Social unrest definitely reduced in the second half of last year, but we still had more acute problems on the eastern limb. Booysendal is located in a very rural area with a dearth of economic opportunities, so it’s very fertile ground for social unrest,” Northam CEO Paul Dunne told Business Maverick in an interview. 

In the first half of 2022, it was a massive problem reported across the industry, with frequent disruptions linked to shadowy “community forums” and procurement mafias. 

Read more in Daily Maverick:Fear, loathing and extortion on the eastern limb of South Africa’s platinum belt” 

“But we did get an intervention going with the police to bring additional people on the ground. There is a bigger SAPS presence now and a very visible SAPS presence and this has helped tremendously. It’s a good police presence, well-motivated and well-trained people, and they will stay there for another year. With that police presence there is now little or no disruption,” Dunne said. 

“You can’t overstate the impact on production … Every stoppage costs you more than the cost of the stoppage because you have to reboot the system.”  

Northam’s production overall for the six months to the end of December 2022 rose by 11.9%, while operating profits rose by 55% — a reflection of how swings in production can flow to the bottom line.  

So it seems an increased police presence on the eastern limb has contributed to a decline in social unrest, and the companies have also pointed to community engagement efforts that seem to be easing tensions.  

That’s a rare piece of good news on the mining front, and a rare instance of the state rising to the occasion. 

But crime remains a growing problem, notably on the western limb, and it is also engulfing other sectors, including gold and coal. It’s almost as if the flames are doused in one place only to flare up at another and in another form.  

It may be the case that an enhanced police presence can nip protests in the bud, and that situation could easily worsen again ahead of next year’s elections — murky politics are suspected to lurk in the background of some protests — as well as in the face of failing local government services. There are already clear signs that the surge in power cuts is stoking general community unrest in South Africa. 

Read more in Daily Maverick:Service delivery protests surged in January as power cuts ramped up, research company finds” 

But the organised nature of the copper cable and coal criminal activity and illicit gold trade requires a more sophisticated approach that the SAPS does not have the capacity to undertake — or it may point to enabling corruption within its ranks. Organised crime also involves intimidation that can be lethal. We are talking about mobsters here.   

The bottom line is that it is a major and growing concern which threatens to cast a shadow over more positive trends. DM/BM

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