Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Gwala: South Africa’s once-proud ferrochrome industry is on its knees, struck down by China.
Creamer: That was the news now in Johannesburg, in the throes of a global ferrochrome conference in Johannesburg. The news coming out of that is that South African ferrochrome profitability is down to zero or below. On top of the world now are China.
We were the biggest producers in the past. This is an industry that has 200 000 jobs, it contributes R42-billion to GDP. The forex that it puts into our economy is comparable with what gold puts in, but it is seriously on the decline and knocking it down are the electricity issues and also the whole infrastructure here that has been developed is now lying idle.
We are helping the Chinese, the Chinese don’t have the chrome ore of their own, 50% of that ore now comes from South Africa. This flies directly in the face of our beneficiation policy. This was an example of beneficiation; you add six-fold value to your normal chrome and you export ferrochrome, but it is an industry that people are saying the situation is worse now for ferrochrome then when it was during the global meltdown.
Present were representatives of the Department of Mineral Resources and they are saying that they are now two weeks into rescue talks. The Indians used to be the biggest suppliers of this chrome to China, but they stopped in 2006 and said that they are going to impose taxes on the export of it.
What has been asked for by the industry is that in the interim please just impose and export tax of $100 a ton. That still hasn’t happened so the talks now are progressing and hopefully something will come out of this. The government is saying that the they will look at it holistically and make sure that South Africa Incorporated wins.
There is very expensive infrastructure that has been built for about R13-billion with much of it lying idle. This is good environmentally, because it doesn’t spew carbon dioxide in the air. The furnaces that the Chinese have does just that.
They have smaller furnaces, so even environmentally there is an argument for South Africa retaining this market. Hopefully they will put their heads together and do something. There was a lot of activity going on calling for restructure of the industry in Johannesburg. I don’t see that happening, but still I think there will be some sort of rescue from government.
Gwala: There has to be, because there are jobs here and all sorts of benefits that we should have as a country.
Should migrant mine workers be flown home during their off periods? That’s the suggestion from new thinkers in the mining sector.
Creamer: Marikana has got people thinking out of the box. This situation of a hundred year old culture still being developed in labour here is just not on anymore. People are saying that migrants having to live dual lives, one around the mine and they never seem to get home for long periods of time and also to going back every now and again to their home.
They say that should be looked at, because in other countries people are flown thousands of miles to back to their families every 10 to 15 days. Look at Argentina where they will fly people 2 500 km to Buenos Aires from Patagonia area. The suggestion now is let’s look at the economic feasibility of this versus the living-out allowance, which has caused such a lot of problems.
Here you have got the mines saying that they don't contribute the squatter camps around the area, but if you are giving a living-out allowance, then how do you know? Because people are going to just develop their own homes because their families are in distant areas, maybe in the Eastern Cape, or Lesotho or Mozambique, so they think, let me get the cash, I don’t mind how our live here, even though I may be suffering from TB which is going to make it worse.
So they are saying, lets relook at that because they can have mass transport arrangements, getting people back to their families at greater frequencies of 10 to 15 days. One of the protagonists of these are AngloGold Ashanti’s newly appointed social and sustainable development executive David Noko, who is also very keen on trying to bolt-on an education type school onto mines.
Like we have academic hospitals where people would go in there and do research and advance themselves, can’t we have bolt-on education in mining activities and maybe even academic mines to try and uplift this situation of employing minimally educated people.
This has probably been the biggest down-fall of the mining industry employing minimally educated people and now expecting high productivity. By appointing these minimally educated people you are building lack of productivity into the system. That has to be rethought.
A lot of comment coming up now even from Patrice Motsepe saying that you have probably got to draw the line with labour demands. A lot of these labour demands are becoming unreasonable and Motsepe, from African Rainbow Minerals, is saying that there are now times that you have got to look your labour in the eye and say we can not pay you what you want because it is totally unreasonable.
So with the movement in of less mature unions and sometimes not unions at all, these demands don’t seem to be based on any rationality and the line now is starting to be drawn and new thinking coming into the industry to take us out of that mould that we were in, that probably was a 100-year-old-culture.
Gwala: South Africa needs more oil-refining capacity, the South African Petroleum Association says.
Creamer: This is also a very critical thing. Sapia says that we need this extra capacity. We note that some of our refineries are 50 years old, ageing and not much has been done to upgrade them.
There is the new Clean Fuel 2 legislation coming in by 2017. Around all that activity people are saying what are we going to do to ensure that we are going to have security of supply of fuels. We need more capacity and the industry needs to talk to government.
Gwala: 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.