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Mar 04, 2011

04/03/2011 (On-The-Air)

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Every Friday morning, SAfm’s AMLive’s radio anchor Caesar Molebatsi speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

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
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