Mbuyelo Coal

A cut above the rest

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Their assets are considered a cut above the rest within the group, and worthy of being flagged on a public platform. The company’s vision is to draw investor interest and highlight the success of a South African transformation agenda, under the Mineral and Petroleum Resources Development Act (MPRDA) No.28 of 2002.

Mbuyelo has been involved in some key coal mining projects such as Manungu Colliery, Welgemeend Colliery, Vlakvarkfontein Colliery, Welstand Colliery, Rirhandzu Colliery and Klipfontein Colliery. Their compelling success story has drawn hard-to-please international investors from countries as far afield as Canada, India, and most notably, Germany, England and The Netherlands.

To find out more, Gregory Simpson caught up with Siweya, CEO of Mbuyelo Coal.

What was the inspiration behind Mbuyelo Coal?

While the source of our creation and existence is the MPRDA, so much entrepreneurial flair and drive stemming from humble beginnings underlines the formation of both the Mbuyelo Group and Mbuyelo Coal alike. The company was founded by myself, with unparalleled support from my family – in particular my wife, Lerato Gloria Siweya – in an internet café and then moving to a garage. Additional support was received from my younger brother, Vutomi Siweya and a cousin Neel Shilubane. The evolution of Mbuyelo highlights humility, drive and passion – a “riding of crest of the wave” story.

What are some of the challenges and opportunities facing the mining industry? What is your outlook for 2018 after more positivity in the air?

While so many challenges exist in the mining sector, those which stand out are regulatory reconciliation as well as management of community expectations in the transformed dispensation. Different government departments are not reconciled in their diverse agenda to fulfil their specific mandates. For example, the Department of Mineral Resources (DMR) is committed to promoting the creation of mines, in a responsible way of course. On the other side, Water Affairs natural mandate is water conservation. My take is that it would be more productive for the two departments to work together, and maybe even consider a common approval platform, thus promoting unity in diversity, as both their mandates are necessary interventions in the greater scheme of things. The alignment of community expectations to the practical commercial realities on the ground are also cause for concern as municipalities are not reconciled into the DMR’s social and labour plan. Equally, farmers’ cooperation in allowing mining companies to purchase or work on their farms with some form of reasonable commercial arrangement, is also a problem.The flipside of all of the above is that South Africa (SA) has an abundance of minerals and creates opportunities for economic development. With more creative ideas, such as beneficiation and the conversion of mineral products to a finished product, this country provides an amazing opportunity to be an economic powerhouse, not only in Africa but the rest of the world.

Zooming into our mineral of interest… from around 50USD per ton of exportable products to over 90 USD in recent times….” same paragraph… “Positive trends are also glaring in the other commodities, even though some of them are still facing difficulties. This is fairly exciting for the mining industry.

Mbuyelo Coal has some key partners and stakeholders, what is the key to building and maintaining these relationships?

For any business to sustain, deep introspection into business models and approaches is essential. For Mbuyelo Coal in particular, we have followed this approach consistently and through asking ourselves the right questions and taking the necessary criticism, we have been able to build and maintain long-standing relationships with partners and stakeholders alike. In essence, it is imperative to be honest with yourself before trying to sell what you believe to be a credible story. Our partners, such as German-listed Ichor Coal, can bear testimony to this.

What are some of the exciting projects that you are involved in, and planning for the next 12 to 24 months?

Through our evolution, Mbuyelo has been involved in various project developments and all of them have been unique and exciting in their own right. However, the two that stand out for us are our Manungu and Welgemeend Collieries situated in Delmas and Hendrina respectively. Manungu Colliery has an estimated 30 years of 350 million tonnes in mineable coal, and Welgemeend has 25 million tonnes to be mined through opencast with future underground. We are also planning to open another operation in Welstand Colliery in the next 12 to 24 months, and that is excluding any other new prospects that we are currently working on. We are targeting anything between 10 to 12 million tonnes per annum production within the next 24 months.

Are you satisfied with the pace of transformation in mining, and areas that can be improved?

There is a satisfactory regulatory platform to fast track transformation in mining. Our existence is proof of that. However, transformation enablement should be matched by zeal, passion and determination to succeed. It is important to note that by nature not every human being is meant to be an entrepreneur. Notwithstanding the above, the government could perhaps do more to unearth and equip prospective and “fitting” mining entrepreneurs to partake in the mainstream transformation agenda. This can be achieved through identifying and workshopping with these qualifying individuals on the processes necessary to help them achieve their dreams.

What is your mid to long-term prediction for the coal industry in SA? How is Trump affecting international coal trading?

Our mid to long term prediction for the coal industry in SA is that demand will continue to grow for the inland market, such as supply to the power utility, i.e. Eskom. We equally believe that the coal export markets will continue to stabilise, especially for suppliers from SA, for example. his because the SA coal industry in particular is not entirely dependent on the unpredictable markets such as that of the United States. We also believe that the current strategic blockages of American markets provides an opportunity for Africa to begin to look among itself for coal and other mineral trading. This will come with its own challenges, given infrastructural constraints. Other long-standing export markets for the SA coal mining industry, i.e. the East, shall continue to sustain us in the medium-to-long term, but it is essential for Africa to begin to look beyond the dependency syndrome and start taking the necessary steps to stimulate inter-Africa commodity trading, hence the need for African governments to invest in infrastructural development.

Are we seeing more clean coal production in SA?

SA regulatory changes in line with international regulations are imposing an obligation for coal mining companies to conduct cleaner coal production. Even though this is done in the spirit of compliance, clean coal production is becoming more of a norm than a choice.

Can you estimate how many more years of coal are available for production?

It is very difficult to estimate how many more years of coal production is available globally given various factors, i.e. infrastructure rendering far-to-reach areas is speculative at this stage, as well as the race between the transition to alternative energy sources and the appetite to mine lesser quality reserves. For Mbuyelo Coal in particular, we have for instance estimated a minimum of 30 years life-of-mine at the Manungu Colliery and that is excluding any future development.

Skills development is vital to move the industry forward, what are some of your programmes?

As Mbuyelo, we offer financial assistance for educational programmes such as mentorships and tutoring to qualifying individuals at different levels and to encourage and stimulate interest in mining as an industry. This is often done under the most difficult historical challenges of under-privileged communities’ wrong perceptions about courses and subjects, which are supposed to up-skill them in mining. At the semi-skilled level, we offer machine-operator training for a number of community members. This training is aligned to the Mining Qualification Authority (MQA), and wherever opportunities arise at any of our operations we absorb the trainees. More than anything, it is imperative to note that up-skilling these individuals qualifies them for any job opportunity at any other operation over and above us.

AI and the IoT is making news, just how far can tech be taken into the mining space. Will we ever see a fully autonomous mine, and the effect on labour/re-skilling?

While technology is making news globally, we choose not to invest our efforts or to conduct any research and development on it given the negativity it portrays and presents towards community empowerment and employment. We also believe that although it is conceptually out there, not so many countries or companies, if any, would be able to successfully implement it, given its complexities and consequential exclusion of community upliftment.

Social responsibility is key to longevity, what sort of community input do you get when planning new projects?

The MPRDA provides for the creation of structured community steering committees before the implementation of any project. The challenges that we have seen in this regulatory and prescribed approach is that there is always a disconnect between existing community structures and municipalities on the composition of these committees. We do our best to harmonise the creation of the community structures and workshop them on our obligations to deliver acceptable social responsibility projects and their responsibility to cooperate in a mutually beneficial process.

Corruption is a problem in certain sectors of SA business, how do you safeguard against that?

Mbuyelo’s approach in running our business is to ensure that we conduct proper checks and balances on our governance and implementation systems. Equally, we adopted a zero tolerance approach to corrupt activities, both internally and externally. Our subscription to this principle is informed by our quest to be in business for the long haul as we believe corrupt activities always find their way back to bite you.

What other mining sectors/commodities are showing promise and how do you keep up with international trends and innovations?

As Mbuyelo Coal, we stick to our core business, which is coal mining. Anything outside that, is our close monitoring and research of other alternative energy sources. We are premised on coal and energy, and that underlines our existence. Focus is important for us as it improves knowledge of our specific commodity and increases efficiencies.

Are the rights of women in mining better protected in 2018, and where do the challenges still arise?

From a legislative and regulatory framework, women’s rights in mining are certainly protected. The difference arises in the implementation by one mining company to another. In our specific case, we do our best to protect and recognise women’s rights in mining, not because we have to, but because it is the right thing to do.

How might the change in leadership in SA promote more foreign direct investment (FDI) and the mining industry’s performance?

Investor interest in any country is driven by policy frameworks and to a certain extent, perception. The current SA policy framework is still very enabling for investors to consider the country as an investment destination. However, certain policy uncertainties, which are not unique to SA, may potentially drive some investors to think that SA has some element of risk. The latter is a perception. The change in leadership presents a glimpse of hope to a lot of foreign investors. While pressure continues to mount for the new leadership to balance between the transformation agenda and the need for FDI, the cushion is that the new leadership is very consultative and considerate of the plight of the country in the greater scheme of things. It is my belief that more investment should be made in SA after the 2019 elections.

Who are some of your role models as you have risen through the ranks?

The background that we as South Africans come from, has been my motivation or driver throughout the years. That and my own personal development and the quest to change my stars, coming from a humble background, has been a huge motivating factor.

When buying new/used mining equipment, what are the key features you look for?

In buying any mining equipment, we look for a brand that will make it cost-effective for us to maintain and replace parts and components as the need arises. It does not really help much to get just a good brand without considering the cost effectiveness of running such mining equipment. We are after all in the business of making money out of the equipment, which will give us the most hours at the most cost-effective rates.

Are you seeing more renewable energy and better environmental practices on mines?

Renewable energy will always find its way into the energy space at some point and to a limited extent has already begun to make its mark. The reality though, is that the cost and logistics associated with the transition to renewable energy does not make it an immediate solution. This therefore leaves coal as a bigger player for a long period of time. Better environmental practices are being seriously imposed on the mines to reverse the negative impact. This is an ongoing process, which requires both regulators and mining companies to play their part.

The Mining Charter 3 has been in the news, do you expect to get some finality on this issue and your views on its merit for developing the industry?

The Mining Charter 3 has been received with mixed feelings by the mining sector. This is because existing mining companies believe that it creates policy uncertainties and reduces the value of a potential non-black investor’s control at a prospecting right level. Given the need to balance between foreign direct investment and redressing historical imbalances, this process continues to require industry players and the regulator to engage at a very creative level.

Its finality is hence a moving target given the latest triumph by the Chamber of Mines to put the process on ice. At the end of the day, black mining players and government have a bigger responsibility to ensure that true transformation objectives are achieved without reversing the reputational gains and losing out on foreign direct investment. Overall, all stakeholders need to ensure that this issue is handled with the care and diligence it deserves.

Gregory Simpson

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