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Dec 10, 2010

12/10/2010 (On-The-Air)

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

Letoaba: A new Constitutional Court ruling gives special new status to South Africa’s near-mine communities. How will these communities be benefitted?

Creamer: What the court decided and it was the Constitutional Court, the highest court in the land, and it over ruled a lot of other court rulings, is that people come and prospect on the land of communities, but they do not necessarily consult properly with those communities.

So what the court did is that it actually withdrew the rights from the prospecting body, which was Genorah Resources and said to the government that they must go issue those rights again, because the way you issued them now did not have a consultation process that was proper with the near-mine community.

Of course, the Bengwenyama community are very happy about all this, because they went through the High Court, the South African Court of Appeal and then finally to the Constitutional Court and all their costs have been paid. So it was quite a resounding victory, which has set the cat among the pigeons.

We had an Australian-listed company that suspended trading in its shares. The company was Nkwe, because they are linked to Genorah, which is their BEE partner.

A lot of consternation in the industry and not the least at the Department of Mineral Resources, because the head of the department is saying now that how do they define consultation and this needs to be written into our legislation, which the Minister of Mineral Resources Susan Shabangu is re-writing it and overhauling it completely. By the middle of next year we should have new legislation.

But, we see now with special rights going to the community. This could have consequences, because we know that there has been a lot of acrimony with the community.

Only this time last year we saw on the western limb at Wesizwe, the Bakubung split in two and people took some of their shares that were in this platinum company and they turned them into cash, they collateralised them and that upset the rest of the community and now there is a huge court case going on.

So, although South Africans are used to private ownership they are not used to collective ownership and I think a lot of study has got to be done on this as to how do you own things collectively.

Obviously the Bafokeng are the model and they have got 300 000 people as part of them. But, even they are experiencing problems now where certain parts of communities that should be regarded as Bafokeng in terms of the Bafokeng are now saying that they want these farms and 50 farms are being claimed by the community.

So it could have a bad impact on South Africa’s wealth creation and also job distribution.

Letoaba: Despite the strident calls for beneficiation, South Africa’s raw-material exports soared to new heights in the first half of this year. Tell us about this.

Creamer: We’ve had these calls for beneficiation, in fact, the whole of Africa is saying that we have got to add value to our metals and minerals. We don’t want to just export them in raw form and we don’t want to export them in semi-form that hasn’t been properly beneficiated.

Despite this, we see now in the first six months of this year the raw-material exports and intermediate-exports, virtually primary exports, that grew in value and volume. It is indicating that South Africa is not able to do this, its far more difficult then people imagine and perhaps there also isn’t a will to do it, because we are used to just mining and sending these goods out.

I mean a lot of countries, like Australia, say to you, look, just dig the hole, get the metals and minerals out, put it on a train get to a port and export it. That is the business, but South Africa is saying, no we have got an unemployment situation, we have got to do it differently, we have got to add value here.

A lot of people see hope in regionalising, that they feel could set this beneficiation off and get our value chain going. The figures that were presented by the State-owned Industrial Development Corporation as part of a 53-page study, and in that they are advocating the Southern Africa Developing Community (SADC) and Comesa, which is East Africa, joining together into a sort of free trade area.

That will involve 568-million people, which virtually represents 57 % of Africa’s population and gross-domestic product of about $625-billion a year. So, they feel that if we link up in that way, there will be a far better chance to get our value chain going and to add value at home to these very important metals and minerals that we export now in raw and unbeneficiated form.

Letoaba: No less that 380 entities are keen to plough money into creating renewable energy capacity in South Africa. Are we likely to see that money pouring in soon enough?

Creamer: This is a new technology so it is going take its time. The very fact that the Department of Energy called for a request for information, which is called and RFI, and they got a fantastic response of 384 different entities coming in and saying that they can supply renewable energy like wind energy, solar energy and all the other forms of renewable energy.

It is an indication that this is a new area because they are working out the feed-in tariffs, what they call refit tariffs, because all these people who generate this energy have got to get revenue stream. They have got to get money and how much are they going to get?

That is what the feed-in tariff is all about. At this refit tariff at this level you can see there is an appetite from more then 300 participants that are keen to get involved. Of the 300, a third are offering wind-power, but that capacity that was offered totalled about 20 000 MW and 4 000 for co-generation, about 70 % of what was offered was wind, so it was overwhelmingly in favour of wind energy, although we know that we have got a lot of sun here.

Another third of the applicants were for the various forms of solar like concentrated solar, photovoltaic solar. We see that overwhelmingly wind is the offering, but only about 30 of these the Department of Energy says really like firm at this stage and that could be converted into actual power coming into the grid and that Eskom will have their power purchase agreement in place.

A good stride forward, but also possibly helping to achieve our target in South Africa of 7 200 MW of electricity generation from renewable sources by 2030. That will represent about 16% of the total. Some say with this sort of response, we should do better than that by 2030, and we should be getting more from renewable energy than the 16% we were targeting.

Letoaba: Martin Creamer is publishing editor of Engineering News and Mining Weekly. Martin will be taking his usual seasonal break and he’ll be back At The Coal-Face with renewed vigour on January 14 next year.


 

Edited by: Creamer Media Reporter
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