The Impact of Digital Technology in South African Coal Mining: A Financial Performance Analysis of Anglo Coal American, Bhp Billiton and Glencore
Date
2023-10-27
Authors
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Publisher
University of the Witwatersrand, Johannesburg
Abstract
Digital technology, typically, refers to electronic tools, resources, devices and systems that store, generate and process information rapidly. Digital technology and innovation are among the initiatives that can assist mining companies to realise productive, efficient, profitable and sustainable mines. As such, the mining industry is taking steps towards digital technology and innovations that have evolved in recent years. The objective of this report was to discuss the financial impact of digital technology of the selected South African thermal coal mining companies namely Anglo American Coal Division now operating as Thungela Resources, Glencore, and South32, previously spun out of BHP Billiton and now operating as Seriti Resources. Coal mines were selected for analysis, due to their importance with respect to energy generation in South Africa. Industry cost curves over the period 2013-2019 were constructed as part of the financial analyses to show the trend of the selected companies’ unit costs. The research also used other financial analysis methods such as operating profit, profitability ratios, Economic Value Add and Du Pont analysis to analyse the performance of these companies. There appeared to be no production and unit cost improvement directly linked with investment in digital technology, as breakdowns, commodity prices, depletion of reserves, selling of operations, mine closures, high contracting prices, inflations and other factors also affected these parameters. Results for Anglo Coal and South32 did not indicate consistent good or improved financial results in all the financial analysis methods post the investment years in digital technology, in contrast to Glencore’s results which did. Glencore also invested more capital in digital technology as compared to Anglo Coal and South32. It is suggested that this may be one reason for its success. Consequently, it is recommended that companies looking to invest in digital technology follow the example of Glencore and invest as much capital as possible in this venture in order to maximise its potential.
Description
A research report submitted to the Faculty of Engineering and the Built Environment, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Science in Engineering, in the School of Mining Engineering, in 2023.
Keywords
Digital technology, Mining industry, Seriti Resources, Thungela Resources, Glencore, South32, BHP Billiton, Anglo Coal, UCTD
Citation
Maluleke, Reply. (2023). The Impact of Digital Technology in South African Coal Mining: A Financial Performance Analysis of Anglo Coal American, Bhp Billiton and Glencore. [Master's dissertation, University of the Witwatersrand, Johannesburg]. WIReDSpace. https://hdl.handle.net/10539/38917