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Aug 12, 2011

12/08/2011 (On-The-Air)

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

De Gouveia: We see that gold is shining brilliantly as the ultimate safe haven these days. Now, you say that South Africa’s biggest gold miner is keen to take a journey to the centre of the earth to liberate 100-million ounces of deep gold. Tell us about that.

Creamer: That is AngloGold Ashanti and it is booming at the moment, it has got money coming out of its ears. I think it will have free cash after capital expenditure of something like $2,3-billion that is R18-billion this year.

It is looking at going deep as greenfields exploration, like it goes into Africa and it does exploration from scratch. Looking at going to about 5 km and below where we have never ventured before, to get something like 100-million ounces of gold. If they don’t do it then it is going to be left there sterilised.

They are setting up a new technology base, they have got in the biggest companies in the world. Working with them are the likes of General Electric of the United States, 3M of the United States and Schlumberger. They are not going to do this on their own, they are not going to reinvent the wheel, they are going to bring in technologies that are know and get down deep, but in a different way.

Also very safe, because they don’t want to go for the blasting techniques that we are use to, because when you blast underground you shake-up the earth. They want to try and avoid that and go for mechanical boring means and also reduce their dilution. The prize there is 100-million ounces of gold at a time when the world is short of supplies. They are looking at a prototype type next year and they are looking at bigger details by September.

De Gouveia: What does this ultimately mean for the South African economy?

Creamer: For the South African economy it means that we get a competitive advantage, because if they are able to go 5 km, we know that all those mines around the world that just can’t do it, that are open pits at the moment, but that will go underground. We will be able to bring that technology and turn it to account.

De Gouveia: So it is a good thing then for South Africa’s economy?

Creamer: A very good thing.

De Gouveia: The government is going all out to give new impetus to its R860-billion public investment programme.

Creamer: We have this R860-billion to spend. Can you believe it, it is hard to spend it. Every year we come up with this hardy annual that we are unable to spend. It is not just the local authorities out there that can’t spend it very sophisticated State-owned enterprises are unable to spend their budgets.

We saw Eskom, and we need the energy, unable to spend what it was budgeted for two years running. Eskom is sort of pledging now that it will spend that R75-billion.

We saw Transnet unable to spend its budget and we suffer because if we don’t export that coal we don’t have the revenue coming in, we don’t have the jobs. Now they are saying take it to the centre and they have got a new infrastructure commission and they are putting Jacob Zuma right there because they want it to have clout.

They are saying give it impetus, work from the top, but make sure that we do it in a way that we did with the FIFA World Cup. We had a top-down structure, but we got it to work. Let’s make it to work again and it will be interesting to see whether centralisation rather then decentralisation works or just becomes another bottleneck.

De Gouveia: Do you think that the fact that President Jacob Zuma is personally going to be heading up this infrastructure commission that it means they really are taking a step in the right direction?

Creamer: Well I hope that it is so. The Minister in the Presidency Collins Chabane has come out with these details and he is talking about capex underspending being a chronic problem and how it needs to be solved at this point in time, because we need those jobs. The actual construction economy in South Africa is really in recession and we don’t need that at this stage.

The contribution of official infrastructure expenditure to gross-domestic product is falling I think to an all time 8% low, which is very low and I know that is concerning the Economic Development Minister Ebrahim Patel.

De Gouveia: On to a different topic, when we look at South Africa in terms of aeronautical research. There is something happening there?

Creamer: Yes, South Africa has succeeded as establishing itself as Europe’s fourth most important aeronautical research partner. It is sort of a mouth full, but they are talking in these acronyms of a International Cooperation Partner Country.

They are even using the ICPC. They say South Africa is number four here. We have got nine projects with European Union all involving aeronautics, which is a feather in our cap for a country of our size. These projects range from creating an environmentally friendly aircraft engine to also advanced alternative fuel.

So, we have only got one big company Sasol involved on the fuels side, but we have got a lot of institutions involved and 75 % of those funds about R18-million worth of funds come from the European Union and into our access and also give our researchers access to the top companies to the likes of Airbus, Volvo, Rolls Royce.

They also then get other spin-off contracts that are outside of what they call this framework programme seven which must end in 2013. In the meantime, South Africa number four, Canada is below us, Australia is below us.

We have got nine projects going, Canada has only got six and Australia only one, but the top most project performer – and this is all in emerging countries, they take the best brains, the brightest minds, because they want to try and develop this knowledge economy of the EU and they want help from around emerging countries – is Russia with 52 projects, China with 14, Ukraine 10 and then South Africa 9.

De Gouveia: 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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