impossible to mechanise, with thousands of workers using handheld machinery in searing heat. Rockfalls are common. So are strikes. Police shot 47 mineworkers dead during a protest in 2012.
Thicker deposits, newly discovered, on the Bushveld's northern limb, promise to end the industry's pattern of violence and strikes. Waterberg is 140 metres from surface and will use air-conditioned dump trucks, driven to the heart of the mine.
Financier Robert Friedland is building a similar operation, Platreef, directly to the south, but the first mine to open on the northern limb is Mogalakwena, meaning fierce crocodile, owned by Anglo American. It is fully mechanised and is easily the lowest cost platinum mine on the planet. Margins are high and union disputes are not on the radar. Production has risen steadily from under 200,000 ounces in 2007 to over 400,000 last year.
That is only 10 per cent of South Africa's current platinum production, but the mine's margins and mechanisation point to an unavoidable future. Mogalakwena, and its cousins on the northern limb, are gobbling up the future of platinum.
If Waterberg and Platreef follow Mogalakwena into production, their combined output will total 1.5 million ounces per annum, equal to over a third of South African supply. It is happening. Platreef began sinking its shaft earlier this month. Moving at two metres a day, it will take a year to complete. The stock market “doesn't really believe Waterberg,” Jones says. But Eskom, South Africa's formidable utility group, is plotting out the power lines.
Senior mine bosses at deep-level platinum mines say the biggest brake on production shifting to the northern limb is smelting and refining capacity. “Getting a million ounces from the area will not happen quickly,” one chairman says. Platinum has also halved since its peak in 2008, slowing the flow of new investment. But
few doubt the transition will happen.
South Africa's state pension fund, PIC, recently invested in Lonmin, a company with deep mines founded by Tiny Rowland, a ruthless British industrialist. It has had three rights issues since 2009, but Jones does not think South Africa will prop-up lossmaking operations. “The government has never been in the business of keeping uneconomic mines open. What they want to see is transitions managed well.”
Jones has feet in both camps. Platinum Group Metals is also ramping up its $500m Maseve mine on the Bushveld's western limb, a stone's throw from the industry's oldest and deepest mines. Maseve is shallower, less than a kilometre deep, but it has narrow seams and sells its production through a tolling agreement.
Jones rules out buying other mines. “Things that are cash flowing in this environment are interesting. Things that make money are interesting. But why would you dilute Waterberg?”
He has some form when it comes to staking valuable ground. Jones' father was a geology professor, so he learnt geology when he was “knee high.” In his twenties he was founding companies and raising money to explore in Canada. A major extension to the Porcupine gold trend popped up on a private farm, Jones negotiated an option deal with the owner's son and “the first drill hole hit.”
After 19 deals and four years, he then put together a land position “all the way around” Lake Shore Gold, which owned the Timmins West gold mine in Ontario. “We made Lake Shore into the hole in the doughnut and we owned the doughnut.” Jones drilled the properties and Lake Shore launched a bid. “It cost them $450m to buy the doughnut.”
Each discovery, he says, has been found using a ruler, looking for a mine's distant extensions. Jones also acquired land in Mexico, co-founding MAG Silver, a market darling. But his most complex deal was a four-way land transfer
at Maseve. Each party held intertwining mining rights and Jones was struggling to persuade Anglo American to turn over several farms. “We couldn't figure out how to solve it.”
The project partners eventually sat down at London's Heathrow airport and cracked the deal using a napkin. “We called it retreat to your corners, so we put everybody in their happy place and then worked backwards. We had to do it all at once, so that nobody ended up between the bases.” DMR, South Africa's mineral department, said it was the most complicated land transfer in the country's history.
“It took us five years,” Jones says, leaning in over the table, his head like a hammerhead shark, “so if nothing else, we're tenacious, right? We've built a $500m mine in the worst mining market for thirty years. Don't doubt our tenacity. If you think Waterberg's just going to stay in the ground, forget it.”