Mar 04, 2011
Johannesburg|London|Toronto|AEMFC|Engineering News|Eskom|Johannesburg Stock Exchange|Merafe|Mining Weekly|Brazil|Canada|Chile|China|Democratic Republic Of Congo|South Africa|Zambia|ZAR|Electricity|Caesar Molebatsi|Jacob Zuma|Martin Creamer|Sizwe Madondo|Susan Shabangu|Engineering News|The World Cup
© Reuse this
Molebatsi: The black-owned mining company Merafe wants the government to put an end to the export from South Africa of raw chrome ore. It’s about time.
Creamer: Yes, it’s about time. We have seen them lobbing for this for some time now and still no action from the Department of Mineral Resources or the government legislature.
What is happening is last year again three-million tons of unbeneficiated metallurgical chrome ore went out to China. Now, they produce a million tons of ferrochrome and South Africans then have to compete with themselves.
They are saying for the sake of jobs, and we know that President Jacob Zuma has appealed for beneficiation and has appealed for jobs and those two are inextricably linked. We see that the partners of Merafe, which is listed on the Johannesburg Stock Exchange, their partner is listed in London, the big Xstrata, the two of them together are putting R5-billion in to a new beneficiation plant called Lion Two.
We had Lion One, which was very successful in Mpumalanga, now they have got the second phase of the Lion project. The only reason why they are allowed to go ahead with this, because they have got special proprietary technology Premus, which cut the use of electricity by between 33% and up to 50%.
So Eskom said that they’ve bought themselves into getting more electricity for their expansion. This sort of investment becomes riskier if the State continues to allow the unbridled export of raw unbeneficiated chrome that is cutting our own throats.
Molebatsi: South Africans are planning to build a new copper mine in the Democratic Republic of Congo (DRC). Are they trying to compete with Chile?
Creamer: You know, we see Metorex, which is listed on the Johannesburg Stock Exchange, is the only South African company that has really done much in copper in the DRC.
We know that the DRC is the prettiest girl on the copper block. We should be in there, but of course when you speak to Metorex they say their neighbours are Australians and Canadians and North Americans, so the South Africans are not really getting into the territory there. Now, we see that at least Metorex is showing some ambition.
They have turned the corner with their Ruashi project and collectively they are producing about 54 000 t a year of copper. They have also got an operation in Zambia. But, now they are looking to another new mine, Kinsenda, which will be a billion rand investment.
Their partner will also be the State coming in, in the form of Sodimico. Those people from the DRC were in Johannesburg recently and they are firming up the second mine for Metorex in the DRC around which South Africans should be showing more ambition. We know that the future of Chile, which is the biggest producer of copper, is going to decline, the grades are declining, the volumes are declining.
The next big area of action for copper and cobalt credits is the DRC. I think that the JSE should start gearing itself up to be the main financier of that development.
Molebatsi: Currently it’s Canada that is doing a lot of the financing.
Creamer: Toronto raises a lot and on all the world bourses you get activity related to that area, so people are recognising this as a future copper producer.
Molebatsi: The government is walking the tightrope of being both “player and referee” in South Africa’s already tarnished mining industry.
Creamer: We have got a situation where everybody that has watched the World Cup knows that there is a big difference between people who play the game of soccer and the referee.
Now, what we’ve got in South Africa, we saw it launched on Saturday and President Jacob Zuma launched it. Zuma clearly said that the South African government is no longer just going to be a regulator in the mining industry, but it is also going to be a participator and it must participate more.
I think that South Africa is going to have to take a serious look at this, because at the moment the legislative framework is such that the government is the regulator, so the government becomes the player and the referee. I think what they need to do with this new legislation is to hive off a regulator that’s at arm's length.
Like Eskom has got a regulator. You need a separate regulator here, because you can already see the anomalies developing. At the very function from the platform we had the Minister of Energy Dipuo Peters saying it would be wrong not to show bias in favour of this State-owned company which is the African Exploration Mining and Finance Corporation (AEMFC).
Now she was sitting next to Susan Shabangu, the Minister of the Department of Minerals Resources, who said no bias, no preference. We also had, while we were sitting there, as journalists these days you get bombarded while the President is speaking, you are getting your emails on your laptop from the National Union of Mineworkers, who are saying, "nothing about us without us. "Why weren’t we invited to this, we are the workforce?"
Then you also had the President saying to Sizwe Madondo who is the new CEO of AEMFC that he must employ local people. Again, you see these influences coming in. I think we really need to work out a fair framework here and make sure that if the government is going to be player and referee, there should at least be some regulator with an arm's length just as Eskom has a regulator. They should provide for it within this new legislative framework, which they are working on now.
Molebatsi: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...
Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria on Friday. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s...
The South African new vehicle market may well dip to 640 000 units in 2014, says Toyota South Africa Motors (TSAM) sales and marketing senior VP Calvyn Hamman. This is the first prediction that anticipates a drop in the market. To date economists and industry bodies...
Nissan will re-enter the South African minibus taxi industry in March, when the new NV350 Impendulo goes on sale. The 16-seater has been specifically tailored to meet the terms of government’s Taxi Recapitalisation Programme, which aims to replace South Africa’s...