AAMEG Africa Awards 2020: Emerging ESG Leader Winner – Orion Minerals
By AAMEG | 5 November 2020
Orion Minerals is an Australian explorer that came to South Africa five years ago, acquiring the historic Prieska base metals mine and rapidly building the foundations for a significant new mid-tier global base metals producer.
Orion is focused on exploring and developing significant multi-commodity base metals deposits located in outstanding mineral belts and Tier-1 mining districts such as the Areachap Province of South Africa and the Fraser Range Province of Australia.
The ASX (primary) and JSE (secondary) listed junior mining company targets projects capable of meeting growing demand for key industrial metals – such as copper, zinc and nickel – which have strong market fundamentals because of declining global resource inventories, falling grades at major mines and a lack of investment in new mines.
Orion first came to South Africa in 2015, and since taking ownership of its flagship asset in 2017, has intensified its focus on the region. In that time, it has been able to acquire, drill out, complete a high-quality Bankable Feasibility Study and fully permit a world-class modern mine, to international best practice standards. It now has a fully licenced project – one of the few projects in the world of this scale that is shovelready, ready to go into construction.
Through the evaluation and development of the Prieska Copper-Zinc Project, Orion Minerals has become a poster child for the junior mining sector in South Africa. The R4.2 billion project, which will see a new mine resurrected in the footprint of an old one, will play a central role in establishing the Northern Cape province as the epicentre of a new era of mining and exploration activity and the key to the economic revival of several host communities left isolated after the mine was abandoned 30 years ago.
The achievement is particularly notable given the perception in some quarters that South Africa is a challenging jurisdiction, with long and drawn-out regulatory processes. Orion has adjusted its business strategy to address these challenges and has successfully permitted a large-scale, modern mine in record time. Its open and honest discourse with its host government and communities, its innovative ESG model and its willingness to take a leadership role in the industry has meant that it has become a strong and passionate advocate for junior mining in South Africa and a beacon of hope for the communities of the Northern Cape.
Beyond Prieska, Orion is also evaluating recently discovered near-mine targets, including immediate extensions of the Deep Sulphide Resource at Prieska (such as the recent Ayoba discovery) to extend the mine life at Prieska. Continued exploration of the Areachap Belt, using advanced geological and geophysical techniques to discover further clusters of Volcanic Massive Sulphide (VMS) deposits and intrusive Ni-Cu-PGE mineralisation, will also ensure a sustainable growth pipeline.
Approach to environmental, social and governance (ESG) matters
Orion has demonstrated that a junior explorer can play a significant role in fundamentally changing how mining is perceived.
Entrepreneurship and innovation are part of Orion’s DNA, but a company is only as good as the relationships it has with all stakeholders.
This is where ESG has been ingrained in the business philosophy from the outset. While many junior exploration companies tend to initiate ESG programmes and initiatives during the latter stages of the project development cycle, Orion is determined to leave a positive legacy in the communities and country that host its operations.
Leading by example, Orion has shown that ESG is integral to every aspect of mining from prospecting to production. Given that only relatively few exploration projects end up advancing from exploration to development, this proactive approach could have a significant positive multiplier effect across countries and communities globally if it was widely adopted across the junior exploration sector.
Orion has also demonstrated through its innovative ESG and community engagement strategies that a great deal can be achieved with a limited budget, providing the seeds for meaningful, impactful socio-economic development that can continue to grow as the project advances. The ripple effect created by initiating positive action moves out to the immediate host community, inspiring entrepreneurial thinking and unlocking regional business opportunities. This in turn has a fundamental impact on how mining is perceived by host communities and has the potential to significantly alter the mining industry’s ESG contribution in a host country.
Impact is also dependent on time of adoption and for Orion, it did not want to wait. The entire leadership team embraced the principals of ESG, and this is why every element of the business is structured around ESG.
The leadership believes that ESG enhances a company’s business and financial case as opposed to being and impediment to its operation. This is evidenced in almost every decision the company takes.
Application of ESG during exploration has earned Orion its Social Licence to Operate.
Example of a Company initiative in Africa that aligns with one or more aspects of an ESG topic
Orion has led the path to making junior mining and exploration in South Africa a recognised priority for economic and regional development.
Orion has invested significant time and resources to accelerate the case for all junior miners across Africa. It has created an ESG blueprint for other junior (and even larger) mining companies to emulate and continues to play a leadership role in unlocking the macroeconomic development of regions and rural communities.
In 2019, it was accepted onto South African president Cyril Ramaphosa’s list of projects of National Importance. More than R363 bn in investments was pledged during an investment conference at the time and Orion was the only junior mining company on the list.
At a national level, Orion works with the Minerals Council South Africa to encourage investment in junior mining and leverage the potential of exploration as part of South Africa’s post-COVID economic recovery. CEO and Managing Director, Errol Smart, was part of the industry team that played an integral role in the negotiation of Mining Charter 2018, which was hailed a major step forward in unlocking the regulatory uncertainty that limited investment in South Africa as a key mining investment destination. Through Mr Smart, Orion has also been active in special working groups established to coordinate government and industry action plans. These groups are currently engaged with government on major structural reforms including mooted corporate and mining taxation incentive schemes.
At a regional level, Orion has been active in the economic stimulus of the Northern Cape, including collaborating with other companies to encourage investment into the province. Orion has backed the creation of special economic zones and has worked collaboratively with the municipality and the provincial government to support economic development within the province.
With Orion’s support, the Siyathema Local Municipality (Orion’s host community municipal authority) has made a special application to become a Special Economic Zone (SEZ) within the Northern Cape ‘multisite’ cluster. A multi-site development consists of several industry specific precincts while the SEZs are geographically designated areas of a country set aside for specifically targeted economic activities, which are supported through special arrangements (that may include laws) and systems that are often different from those that apply in the rest of the country. These special measures may include discounted tax rates, infrastructure support and reduction of administrative red tape.
The South African government has identified SEZs as key to the repositioning of the country in the world economy. Orion’s leadership and support can ensure the success of these SEZ in the Northern Cape and are a clear demonstration of the potential of junior mining and the significant benefits that it can mobilise.
At a municipal level, Orion has involved local authorities to discuss and plan the socio-economic benefits that the Prieska Project may offer for local communities, to align its social and labour plans with municipal development aims.
Orion signed an MOU with the Siyathemba Local Municipality in 2017 to facilitate collaboration on community and social investment projects. Aside from employment and community benefits, Orion was mindful that resource management is imperative in a hot, arid region like the Northern Cape and looking beyond the immediate needs of its project, agreed to revive the municipal water treatment plant and to provide water to the community.
From the outset, water conservation and the use of renewable energies were central to the company’s plans to minimise the environmental footprint. To this end, Orion entered into a collaboration agreement with juwi Renewable Energies in 2019 (prior to the completion of its BFS) to investigate the feasibility of generating and supplying 35MW of electricity for the Prieska Project from a hybrid power system using integrated wind and solar technologies.
Developing the renewable energy potential of the region is also a strategic goal of local government, as communicated in its Integrated Development Plans. Orion and juwi continue to work closely with local government, under the auspice of the collaboration agreement entered with the Siyathemba Municipality, to maximise the employment and enterprise development potential of the renewable energy project.
At a project level, Orion was determined to do the right thing from the start.
Orion’s flagship project is fully permitted – it has all the necessary environmental water and mining rights in place. Environmental management is planned in compliance with South Africa’s National Environmental Management Act, as well as the Equator Principles and International Finance Corporation standards.
Community engagement has commenced with the establishment of an active Stakeholder Engagement Forum to guide the mine development process. Orion’s CEO and CSI team all speak the local language and talk to local communities on a regular basis. Organised meetings provide regular information on the project’s progress, potential long-term community benefits and the role it can play in sparking economic activity in the region. These frank conversations also allow community members to express their concerns and aspirations. Aside from formalising a stakeholder engagement forum with representatives of every local community and local government, Orion has actively sought out CSI collaboration with other companies in the area. This proved particularly beneficial during the COVID-19 pandemic when these companies pooled resources to get food parcels to impoverished families and distribute children’s activity books to keep them engaged while being confined to their homes.
Orion is passionate about empowering other emerging miners and ensured that they were included in the ownership structure of the Prieska Copper-Zinc Mine. The Prieska Project is now 30% owned by historically disadvantaged South Africans, including 5% by its staff and 5% by its host communities. This transformative black economic empowerment transaction was formalised in April 2019, five years ahead of the regulatory requirements set out in Mining Charter 2018, and later restructured the transaction to include additional local partners, one of which has subsidiary mining operations in the Northern Cape. These local partners are fully aligned with international investors as Orion shareholders.
The stakes held by historically disadvantaged South Africans, its host community and employee were facilitated via vendor finance. Community and employee stakes are held through legally recognised trusts to ensure the community and future employees will benefit from future dividends remitted by the owners of the mine. To the best of the Company’s knowledge, no other junior explorer in Africa has empowered its workers and communities by putting structures in place.
To conclude, Orion’s inclusive and engaging pre-production ESG approach sets it apart from its junior exploration peers on the continent. Orion has established strong relationships with all stakeholders and has facilitated efficient business engagement, demonstrating what can be done in South Africa.
Australia is one of the top investors in mining in Africa, but few junior explorers have achieved so much in five years: taking a project from exploration to shovel-ready while forging lasting relationships with its host community, including emerging miners in its ownership structure and perhaps most significantly, making an active contribution to shaping its host country’s regulatory environment.