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Diversified mining and marketing company
Glencore views the ferrochrome market as being particularly strong currently.
“We've seen very healthy ferrochrome prices
and good cash generation in that business,” Glencore CEO Gary Nagle said.
In response to Mining Weekly during a media
conference following the company’s presentation of record half-year results,
Nagle highlighted ferrochrome’s good fortune as being driven by the very strong
global production of stainless steel, in which it is a key ingredient.
Fiscal stimulus has boosted demand for
white goods and the like, and stainless steel and its ferrochrome twin have
provided the necessary innards to meet that demand.
Nagle was unequivocal about ferrochrome
forming part of the green revolution that is currently sweeping the world with
ever-growing vigour: “Without a doubt it is,” was his comment on ferrochrome’s
contribution.
“Obviously our South African ferrochrome
business is slightly challenged in the sense that our Scope 2 emissions are
quite high given that our electricity supply comes from Eskom.
“But Eskom, as you know, is working on
reducing its reliance on coal and focusing on renewables, which would naturally
bring lower Scope 2 emissions.
“Without ferrochrome, you’re not going to
have stainless steel, and without stainless steel, you’re going to have to
produce more steel more often, because stainless has greater longevity.
“In the longer term, stainless steel is better
for the environment than using non-stainless type products that have shorter
lives and need to be replaced more regularly.
“Ferrochrome doesn’t get the headlines like
the coppers and the nickels and the cobalts of the world do, but certainly in
being essential for stainless steel, ferrochrome is a critical part of the
green mix,” said Nagle.
Meanwhile, on the operational front, firm
steps are being taken to generate renewable energy and cogenerated energy for
the production of ferrochrome.
This was made clear by Glencore ferroalloys
head Japie Fullard, who said three distinct areas were under scrutiny.
“First of all, steps are being taken to
generate electricity from cogeneration, which involves taking the plants’
offgas and turning that into electricity. We’ve got a couple of projects
currently on the go doing that and we’re also investigating taking that
further.
“Secondly, we’re also looking at on-site
renewable energy in terms of solar and wind.
“And thirdly, we're looking at off-site
generation – we’re in a big feasibility phase looking at virtual power plants,”
added Fullard.
At the main presentation, at which Glencore
announced the setting of a more aggressive short-term target of a 15% reduction
in total Scope 1, 2 and 3 emissions by 2026, an analyst questioned Glencore on
what it was doing to reduce the heavy contribution to Scope 1 and 2 emissions
of its ferroalloys business in South Africa, owing to Eskom’s carbon-heavy
coal-fired electricity supply.
Nagle’s response was that “it’s certainly
front and centre for us”, and that medium- to longer-term decarbonisation
strategies were in the process of being implemented in South Africa.
In the half-year, attributable ferrochrome
production of 773 000 t was 307 000 t (66%) higher than in the corresponding
period of 2020, reflecting that mining and smelting operations were suspended
for much of the second quarter of last year owing to South Africa’s national
Covid lockdown.
Vanadium pentoxide production of 11-million
pounds was 2.7-million pounds (33%) higher, also mainly reflecting the national
lockdown in the base period.
SOUTH AFRICAN COAL EXPORTATION TO CHINA NOW
THE NORM
Glencore’s production of 48.7-million
tonnes of coal in the six months to June 30 was 9.4-million tonnes (16%) lower
than in the first half of last year, reflecting mainly continued market-driven
supply reductions initiated in the second half of last year.
On the export of South African coal to
China seemingly being the norm now rather than the exception, Nagle replied in
the affirmative.
China stopped importing South African coal
about seven or eight years ago. This was because of some slight concern about
trace elements.
But with the issues around Australia, China
has returned to being a regular importer of South African coal.
“It’s hard to see the Australian/Chinese
situation resolving any time soon and with that said, subject to freight rates
and qualities, there’s no reason to believe that South African coal can’t
continue to supply the import Chinese market,” said Nagle.
In early 2019, Glencore capped its coal
capacity at 150-million tonnes of coal a year, in the interests of
transitioning to a low carbon global economy. It was then that it undertook not
to build any new coal mines and to deplete its existing mines.
On the steps envisaged to rehabilitate coal
mines as they deplete, Glencore head of coal in South Africa Murray Houston
said the company was governed by mine works plans in terms of mine life
considerations with the Department of Mineral Resources and Energy, and also
through environmental agencies.
Houston explained that the opencast mines
are run on a rollover basis where the rehabilitation follows a couple of cuts
behind.
“One does end up with final voids, which
have to be provided for and closed up at the end of the day, and the mines have
ultimate closure plans in terms of recycled land form as well as putting back
the top soil and planting seed.
“Obviously, they wouldn’t be exactly the
same as what they were before but largely they would be returned to a natural
state,” said Houston.
Glencore this week announced additional
shareholder returns, comprising a $0.5-billion special cash distribution for
payment in September and a $650-million share buyback to be completed by the
release of full-year results next year. This overall top-up lifts planned 2021
shareholder returns of the London- and Johannesburg-listed company to
$2.8-billion.