Arnot OpCo

Community Coal

With people-centric values at the heart of its operations, we speak to Bontle Aphane, CEO of Arnot OpCo, about the company and its historic establishment as the first community-owned coal mine in South Africa  

Writer: Marcus Kääpä  |  Project Manager: Joshua Mann
 
 
Broadly speaking, the mining industry in Africa is gigantic. 
 
The continent is a major producer of several minerals, such as gold, diamond, iron ore, copper, and bauxite, from a number of rich reserves spanning multiple countries. Thanks to its station as the second largest continent, encompassing approximately 11.7 million miles of land and consequently a large quantity of resources (accounting for around 30 percent of global reserves), mineral mining industry is in fact the largest on the globe. 
 
Mining remains key to the economic growth of many countries, and within the continent, the Democratic Republic of Congo (DRC), Namibia, Zimbabwe, and South Africa, stand as hosting the largest mining production industries above all others.
 
Within South Africa, the mining sector remains one of the world’s largest producers of many resources (chrome, platinum and manganese to name a few), as well as being within the top five largest exporters of coal as of 2020. In the country’s coal mining space, open-pit mining accounts for around 50 percent of all operations, with the other half being subterranean, owned and operated by various coal mining companies.
 
Arnot OpCo
Previously owned by Exxaro - one of the leviathans of South African coal mining - Arnot OpCo stands as a unique player within the space. The Arnot Coal Mine, located in Middelburg, Mpumalanga Province, with reserves amounting to 192 million tonnes of coking coal; one of the largest coal reserves in Africa and the world, was transferred under the new ownership and management of Arnot OpCo (Pty) Ltd in 2019. At present, 1,038 retrenched employees now hold a stake in the Arnot Colliery, and the mine is driven towards the future of holistic sustainability within the mining industry.
 
“Arnot OpCo is a coal mining company with one of the best remaining ore bodies in the country,” Bontle Aphane, CEO of the company, explains. “The quality of our ore body enables us to produce multi products that can be sold to both the domestic and the export market. 
 
“Our transport infrastructure (rail and conveyor belt) gives us a significant competitive advantage from a pricing point of view in the market. We sit in a unique position in that we can compete with the majors from an infrastructure and multi-product point of view, and at the same time compete with the juniors from a cost production point of view. Our lean and flat organisational structure allows us to be agile from a decision-making perspective, which is extremely important for cost control.”
 
The Arnot Coal Mine, the years-long coal supplier to the nearby Arnot Power Plant, resumed operations in 2020, following the closure of the mine in 2015 after a coal supply agreement with Eskom expired. With the expertise surrounding the colliery now coming from the recognised mining company Wescoal Holdings, the Arnot Coal Mine broke new ground in the South African mining industry when 50 percent of the mine’s ownership was transferred to former employees on Workers’ Day 2019.

“Our team is empowered to hold themselves accountable for the success of the business”

Bontle Aphane, CEO, Arnot OpCo
Unique in the Industry
For the first time in the history of South Africa, a mine is owned by its former employees and community.
 
Arnot OpCo have a shared value model in terms of integrating with the community, green energy and partnerships with all other stakeholders. The company’s unique BBBEE structure allows it to have support from both government and local communities, resulting in a stable operation with little to no community and employee unrest.
 
“Since we took over operations in February 2020, we have not experienced any community or employee unrest, which is an achievement we are extremely proud of given the current economic climate in the country,” Aphane elaborates. “At the moment, nothing is as normal. With COVID-19, the pandemic has had a significant impact on businesses, the economy and healthcare at large. With this came significant challenges not only for the mining industry, but a lot of closures of retail, transport companies and lots of retrenchments happened because of this.
 
“It is now more critical for entrepreneurs to create opportunities to help the government create jobs. It gives me pride to be where we are today as a company - we chose to transform and participate actively in the ownership of the sector we operate in. A major obstacle for junior mining companies in South Africa, is the issue of raising finance. Funders see you for what you do not have rather than for what you have to offer which is the drive to succeed. We can fix our issues if we do not give up – if we work together and push ahead.”
 
This notion of collaboration runs deep in Arnot OpCo, and alongside this, the health and wellbeing of people associated is a core aspect of the company. Arnot OpCo is committed to the health and safety of all its employees, shareholders, suppliers, their families and the community surrounding where it operates.
Industry Collaboration
Despite the turbulence caused by the COVID-19 pandemic, Arnot OpCo remains optimistic in its operations. The company has an upcoming Coal Supply Agreement (CSA) with Eskom, a South African electricity public utility company, that will be a long-term coal supply agreement between the two businesses intended for Arnot OpCo to provide coal for the next 10 years. 
 
“Once this comes through, the doors are wide open for us!” Aphane affirms. “As part of the agreement, Arnot OpCo will deliver coal to Eskom’s Arnot power station through conveyor belts. This method of delivery will minimise costs for the both of us.”
 
This project is a big boost for the mining company, ex-employees, and Middelburg’s neighbouring community, where Arnot OpCo operates. As well as restarting the mine, the company made a decision to continue with the rehabilitation of the old workings, have completed the bulk of the surface rehabilitation, and are looking into reuse of the land, such as agriculture and solar plant installations. And throughout its operations, it is the people and the community that remain the core of Arnot OpCo’s focus and mission.
 
“I am super proud of our team, the growth that I have seen in them since we started is amazing,” Aphane says. “There’s been a level of trust, transparency and endurance since we took on this journey to re-establish the mine. 
 
“As shareholders, our team is empowered to hold themselves accountable for the success of the business which will directly benefit them. We all want the same thing, for this to work and we understand that a lot of people and the community are looking up to us to make this a success.”
 
Arnot OpCo’s unique place as historically the first community and employee-owned operational mining company stands as a testament to its ability to maintain a people-centric company. The Arnot OpCo team is not only driven to succeed by their individual and collective efforts to grow and benefit from their endeavours, but they are also fuelled by the knowledge that they represent the first of a new kind of mine. This is one that turns away from corporate standardisation within the industry and towards each individual as a key part of its function as well as ownership; a refreshing new take on a mining operation.
 
For Arnot OpCo and the people that make it work, this personal stake and leadership, as well as communal environment, collectively brings to the fore of South African mining a company that works for the people over the organisation, while trying to do its best for the environment along the way.
A Corporate Responsibility
Arnot OpCo is committed to empowering and investing meaningfully in the communities it operates in. The company’s journey has helped to revive the economy of the communities surrounding the mine at a time when so many jobs had been lost. 
 
“Arnot OpCo’s communities have experienced what happens when a mine does not operate; and they understand that they will benefit if this business works,” Aphane tells us.

“Education is where real change starts. We recently handed over additional classrooms at Arnot Colliery Primary School in Sikhululiwe Village, an informal mining settlement in the Steve Tshwete Local Municipality, Mpumalanga. We partnered with Exxaro in this initiative, and this project alone created 64 job opportunities for people in our communities, and 180 local children now have access to education.”
 
For Arnot OpCo, this represents a significant triumph in fighting the triple threat of poverty, unemployment and inequality within the areas and communities in which it operates.
 
Moving Forward
Looking ahead, Arnot OpCo’s main focus will be achieving stable sustainable production from both the company’s open-pit and underground mines, at the lowest cost to production possible, at the same time as ensuring the business is resilient during unfavourable market conditions by maintaining cost control methods.
 
“The company will then look into how we optimise our production based on lessons learned,” Aphane informs us. “The focus after achieving optimised stable production at a low cost of production, will be to grow the business organically. We’ve got one of the best remaining ore bodies in the country, it will be important for us to upgrade the processing plant in order toproduce multiple products and maximise sales.”
 
On top of this, Arnot OpCo’s alternative upcoming investments include looking into the reuse of rehabilitated land in partnership with communities as part of its contribution to a cleaner environment. For Arnot OpCo, people, the community and environmental welfare are at the forefront of its operations in the present and into the future.