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Sep 10, 2010

10/09/2010 (On-The-Air)

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Every Friday morning, SAfm 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 South African mining industry has committed itself to an era of zero-harm by 2013. Is it on track to attain that crucial target?

Creamer: Well, you know, these 30 CEOs of mining companies came together and they have decided that safety has to be brought into South Africa's mines and they brought in the watch-word ‘zero-harm' by 2013. There has just been a 104-page study by a social-scientist who says that this is not going to happen.

This is Dr Phillip Frankel and his biggest finding in his study (he has also done studies in the military) is that the organisational development in some of these mines is underdeveloped. It's immature, so even if you put a very good behavioural safety system, if you super impose on, it is not going to work, because the organisational underbelly is immature.

He is saying that some of these mines haven't come into the new Democratic South Africa, they are still behind. We are killing 138 people a year; well, we killed 138 people in mines last year and injured many more. Of course, the statistics are coming down, but he is saying to actually get through this, you've got good procedures. You can't actually bring in something from Canada or somewhere else.

It has got to be tailored to South Africa, because we have got particular circumstances and a lot of people are using Canadian solutions and Australian solutions. He is saying that they are super imposing them on organisational underdevelopment that needs to be matured.

He is saying that the laws are good and that we have got great laws, the government can even come in and close mines, but often it is done in a hand manned way. There is an under capacity in the Department of Mineral Resources as well, not enough experienced people to police these laws, to enforce these laws, so you've got this outlook that we are not going to solve the safety issue.

Molebatsi: Now the CEOs have made this pledge, do they publish anything of how they will do the accountability situation and the strategy they are going to follow, rather than just importing solutions?

Creamer: A lot of strategy, I mean, the Chamber of Mines has got all sorts of hubs going and they are really working hard. But, he is saying to them, directionally, his opinion as a social scientist is that they are on the wrong track.

Molebatsi: Mining-law snarl-ups have damaged South Africa as an investment destination. Is our minerals treasure chest big enough to turn adversity into opportunity?

Creamer: We have had a lot of adversity at the moment. We have had the Kumba saga, we have had the Lonmin saga and this has created that people are shivering and shaking in the investment community. The bedrock of our community is the rule of law.

Once you start moving away from that, people start thinking that we have got no security of tenure, what's going to happen to our investment? So many journalists are being taken by major companies into off-the-record briefings at the moment. We have been told that we are going ex-growth in South Africa, we are going to not concentrate here, we are going to de-emphasise South Africa.

This is very bad. It is against the background of this mining law snarl up. Now, it needn't have happened and there are also some positive things. Do we have the treasure chest to lift ourselves out of this? We have got a treasure chest second to none.

I mean, Citi Bank has just told us that we have got assets to the ground that are worth R18-trillion. Second are Russia and Australia, far behind. So we have got this leverage that we can use. What we need is a good legislative backbone and I think that, although Susan Shabangu, the Minister of Mineral Resources, has done quite well, I mean, she said that they acknowledge that they are wrong, there is ambiguity in the law and they are going to change it.

They are going to bring in proper systems, we are going to have transparency as far as licensing is concerned [because] there is always a time lag. In that time lag people go elsewhere. When they go elsewhere we don't create wealth. When we don't create wealth then we don't create jobs.

When we don't create jobs you create an unemployment situation that is untenable. Already, the Minister of Finance is saying that he is very worried about the unemployment situation and how to get this joblessness out of the way. The mining law snarl-up doesn't help; we need to sort it out.

Molebatsi: Botswana has expressed confidence that it will emerge from its diamond-hit recession next year. Is that confidence well-founded?

Creamer: You know, I think it is, because at all the investment conferences I go to, Botswana is being held up as the number one. That is the place to go in Africa. There is certainty, they give you security of tenure, they are competitive as far as investment is concerned.

If you look at the Fraser Institute, on all their surveys now they have put South Africa not too high up. They put Zimbabwe right at the bottom and they put Botswana right on the top in Africa, all the time, consistently, over and over again.

You can see now that the Minister of Minerals Kibaki Kibaki is saying that they are going to introduce additional improvements to their legislation and they have also gone into budget deficit to make sure that there is infrastructure.

They are a one-trick pony as far as diamonds are concerned. From their economic point of view, they are too heavily dependant on diamonds. When the diamond price fell out of bed in 2008/09 it went from 33-million carats to 17-million carats and it hit them very badly.

But, because of the confidence people have in that country and the fact that they are continually improving their legislative framework people support them. Now they are saying that they can give a mining licence in 30-days. We take 12-months and that often doesn't even happen in 12 months.

They want to give it in 30-days, they say that if you want a diamond export permit they want to give it to you in two days. This is the new thinking there, so they are competitive, always compounding and bringing in new things.

Molebatsi: Are they feeling the threat of Zimbabwe now because Zimbabwe is putting up a $20-million plant to try and beneficiate their Marange diamonds?

Creamer: Marange could be bigger than people imagine, so it would be a competitive environment for them, but I can tell you that on the investor scale, Zimbabwe is on the lowest rung of hell and Botswana is up in the clouds.

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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