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Aug 10, 2012

10/08/2012 (On-The-Air)

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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: Five hundred Chinese workers are building South Africa’s newest cement factory in Lichtenburg – and 200 more are due to arrive in the next few weeks.

Creamer: We haven’t had a cement factory built in a quarter century and this is the Sephaku Cement is doing out at Aganang in Lichtenburg in the North West. They have given the contract to a Chinese company Sinoma International Engineering.

Already on site are 500 Chinese workers and 200 more coming in the next few weeks and 1 000 at the peak. For every three Chinese workers there will be one South African worker who will learn the job and get the technology transfer. They are saying that the culture that the Chinese are bringing on to this site is quite phenomenal.

Firstly their price was 25% below anyone else’s and it was a turnkey bid, so they have got an appetite for risk. That means that the plant must work when they hand it over. If it doesn’t work then they have got to make sure it works.

This time next year this plant should be producing its first cement. It will also have an addendum at Delmas. Of course, it involves beneficiation of limestone, because they are mining the limestone and then they are using the chemical process to turn this into clinker.

The whole idea of bringing the Chinese on was around money, saving 25% on a R2,3-billion project, saving them about R575-million on that. They say if you look at the whole thing, the Chinese will only be on site for the next two years. The South Africans will then have 30-years worth of work in a very competitive business.

One of the big shareholders, a 64% shareholder, is Aliko Dangote from Nigeria, one of the richest Africans in the continent, and also the CEO of Sephaku Holdings, which is listed on the Johannesburg Stock Exchange, Dr Lelau Mohuba, who is also very much involved in fluoride benefication.

Gwala: Transnet is insisting on a minimum 60% South African content for the 599 new locomotives it has on order.

Creamer: Today is the last day where you can get the paperwork to bid on this. By Thursday, bidders have to sit in a compulsory meeting in Johannesburg for the locomotive tenders.

By October 2 they have to put in their bids for 599 electric locomotives, 465 diesel locomotives. So that is 1 064 units in all and the electric locomotives must have a 60% local content, the diesel ones at least a 55%.

You can see that this is a target of getting reindustrialisation going using this big procurement of Transnet for the general freight business side and building up this loco fleet by 2019. Also involved, of course, is a lot of wagons, 19 400 additional wagons.

What Transnet is looking at is lowering the age of its fleet from beyond 30 years to about 20 year average and making sure that we come up to speed with the transport equation in South Africa. They are looking rather ambitiously at being one of the top five globally active rail companies by 2020.

Gwala: New technology is seen as absolutely critical for the long-term future of South African gold mining.

Creamer: We have had two negative reports coming out of the gold mining industry even though we find that the gold price is not too bad at the moment.

We see Gold Fields telling the Australians that the investors are getting tired of ‘jam-tomorrow’ approach and never really fulfilling their promises from the gold mining industry. We also had Dr David Davis coming through with a rather disturbing report that they have been miscalculating the reserves of our mature gold mines.

They have used the wrong yardsticks to actually calculate so the market is actually under the wrong impression about the life of many of these mines.

Davis is saying that because they have miscalculated, within the next 12 to 36 months a lot of these mature gold mines are going to have to be downsized otherwise they could face bankruptcy.

Against that background, we see a much better news coming out of AngloGold Ashanti where they are going hammer and tongs into this new technology and saying it is absolutely critical.

We can see from some of the reports coming out that it is critical. All they need to do now is to get it in to the commercial phase.

The technical hurdles have been well cleared, because this will keep our gold mining going in a very viable way for the next 20 to 30 years.

We are talking about peopleless stopes, no longer using blasting techniques and having rock around the clock, because people will be able to mine 24-hours a day 365 days a year. People say it is like taking a sausage out of your hot-dog, that is the way they will mine.

They will use raise boring that gives you all the gold and nothing but the gold, you take that out with raise boring method and then you use a backfill so that Mother Nature doesn’t know that you’ve taken this gold out.

That is the sort of thinking and saying it is absolutely critical and you can see why with the cost situation in gold mines and these problems now with the reserve miscalculations that this technology succeeds.

The reward if it does succeed is going to change the face of South African gold mining industry and possibly the world industry and other mining activities as you migrate it across a broader spectrum.

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.

Edited by: Creamer Media Reporter

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