50 years in mining: The Legend of 'Jan King' Part II

Digging Deep continues to unpack 50 years in mining: The Legend of Jan King and in this Part II we focus on responsible sourcing of battery metals and artisanal mining.

Digging Deep: What factors are affecting the responsible sourcing of battery metals in Africa? What role is Africa playing in the budding electric vehicle (EV) market?

Jan King: Africa has the benefit of shallow outcropping orebodies, which allow the artisanal and small-scale mining (ASM) sector to thrive. Copper, Cobalt, Gold, Diamonds, Tin, and Coltan is easily accessible and the technology to process is well-known. This allows the ASM sector to thrive. However, this especially with Copper, Cobalt, and Tin is not sustainable. The average grade and the cost of transport stop the mining in its tracks as soon as there is a substantial drop in the price of the commodity. This happened last year between January and October when the copper price was subdued. The solution would be to mechanically increase the grades, but there is seldom money to develop and purchase this equipment. The alternative is to handpick the higher grades rocks, this is where females and children become active. (Just mentioning a fact).

I met with quite a few people who had plans to stop the production of charcoal with innovative ideas around alternative fuels, stoves, etc. They managed to get huge sums of money to develop this project and since I preferred staying in guest houses off the beaten track I have often been consulted about the potential success of their ventures and marketing strategies. Unfortunately, no one could ever answer the simple question: “How are you going to replace the income of the charcoal maker?” Nobody could ever answer that, or even considered the income they are trying to kill. To solve the problem in the city or town where a relatively comfortable life can be enjoyed, does not change the fact that the guy in the bush needs money to buy things he cannot produce himself. This is also the case with ASMs. Provide them with a livelihood and the problem will disappear. If it is a problem.

In the DRC, it is estimated that 200?000 people are making a living from ASM cobalt. That is about 25% of the annual production of 100K tons. This is a fraction of the estimated 45m, or according to other sources, 200m people making a living from ASM worldwide. But if you consider that 80% of the DRC population in DRC lives on less than $1,90 per day, it is 200?000 people who are not suffering from hunger. I recently saw an opportunist quoting that these miners are paid $1,90 per day. Bad if you mix up your numbers, there are seventy-odd million people living at less than $1,90 per day. This is quoted in a recent 世界银行 report.

?I am not going to go into more detail about this, but some people see this as a problem, I would like to see it as a challenge.

?Digitization and blockchain technology have been suggested and implemented by NGOs like Pact , but once the concept is proven the owners move to more lucrative ventures where it is easier to make money. It provides a token to secure the traceability of the metal, but unfortunately, it never lasts.

Africa will supply the bulk of the commodities needed for the EV market; however, I don’t see a lot of EVs being sold in Africa in the next 20 to 30 years. There is not even enough electricity to provide power uninterrupted daily, how will you charge a car battery? ?(Genset in the boot?).

The climate activists will be horrified if they take the trouble to visit Africa, everywhere you have Generators permanently installed to provide electricity for up to 12 hours a day, more than one day per week, because there is no electricity. Vehicles (other than taxis) seldom have small engines because going is tough. I recently learned that some places only get electricity one day per week.

Billions are needed to provide power, but the rollout is slow, and funding is difficult to obtain. I suppose the plan is to keep Africa the digging ground for minerals and metals to create wealth elsewhere through beneficiation.

I would like to see the reaction if African leaders decide, enough is enough.

Digging Deep: The nexus between demand and supply for battery materials has accelerated conversations of intersections between artisanal mining and mainstream mining. How can communities be at the heart of it all?

Jan King: The ASM sector will always be with us, as long as orebodies outcrop and even if you have to hollow out the earth. I do not see anything tangible happen other than lip service. Multi-Nationals companies build tier 1 operations that require intensity and focus to make money sustainably. All the side shows like ESG, the UN sustainability goals, and climate change requires a tremendous amount of paperwork which adds to costs. I understand the thought process behind these “sideshows” and don’t want to take anything away from it, but my experience is that mining companies are much more supportive in times of abundance than in times of need. Boards will be loaded with specialized directors to cover all these added angles and mining expertise on boards will dimmish completely.

?The mining industry as we know it developed from what we know today as the ASM sector. Consolidation of these small assets became the basis of larger operations and slowly a pyramid was created. Today the top tier is getting bigger through M&A activity and not by building new mines, (Barrick and Randgold: Newmont and Newcrest: a lot of value is created but no new jobs), and this is going to continue especially with all the market turmoil in recent weeks. All the available data indicate slower and smaller discoveries, permitting takes longer and becomes more difficult. Nobody wants a mine in their neighborhood. The current feedstock is busy stalling. The current multi-asset junior miners will be swallowed by the tier 1 and 2 companies, followed by the single-asset juniors who happen to have decently sized orebodies. This will happen wave upon wave until all the tier-one deposits are depleted. The base of the pyramid is going to reduce over time, especially since there are also a huge skills vacuum in the Junior mining sector. ?

How will this play out? Somehow the Junior mining sector will have to take charge of the ASMs. As it is, it is already a problem for the juniors to get funding. ASMs do not have resource statements to warrant investment. If juniors are subject to the same standards pertaining to ESG and UN developmental goals it is going to stretch them even further. By now the juniors that did not get consumed by the top tier will anyway not have much to offer. I recently had a discussion with a Canadian friend who told me how companies fight for relevance in a very crowded market.

?Large-scale consolidation of ASMs might be the answer, but being one asset juniors will have reduced their capability to manage such extensive operations. The answer might be found among the contractors who are used to running a widespread service among a wide selection of companies. (As a contractor I had up to 14 different sites where we had teams executing contracts) The demand for commodities will sort this out. People are innovative and solutions will come from unexpected places. Contrary to popular belief there are lots of highly skilled, willing, and able people in Africa that are just waiting for an opportunity to present itself. We are working on a business model to address this issue.

Be on the lookout for Part III and Part IV of 50 Years in Mining: The Legend of 'Jan King'

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