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May 13, 2011

13/05/2011 (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: The South African gold-mining industry is being shaken by the claims of silicosis sufferers. Tell us a bit more about that and the possible effects.

Creamer: Some of the numbers that have been bandied about, about what claims could total against the South African mining industry have been quite startling. In fact, some of the analysts in London have put a figure of US$100-billion, which is like three times more then the market capitalisation of our biggest gold miners.

I think that they are talking in numbers like that, because this silicosis scourge, we used to call it phthisis in the old days, but silicosis is so widespread in the mining industry and it’s a legacy issue as well as a current issue.

You can imagine if there are, and they estimate like 300 000 suffers, if those people come forward and claim it could be exceeding onerous on the South African mining industry.

What has happened is that the Constitutional Court, the highest court in the land, has opened the door for this. We do have two statutory levels where statutorily you could claim and the two levels one was more generous then the other.

The mining industry, I think, unfortunately at their peril, chose the less generous option in terms of compensation, whereas the ConCourt is now saying you should have possibly chosen the more generous option. In the meantime, they’ve opened the door and said sufferers from silicosis are now able to impose a civil lawsuit against the mining companies.

So, the mining companies now rushing out and saying that they should get this compensation in order, let them go to the more favourable compensation, but let us sort it out very quickly. You can see the reaction of investors, where investors are starting to get a bit shaky over this issue of silicosis.

Analysts in London have really laid it on thick and saying that it must be taken seriously. We noted that Anglo American in their introductory remarks at their AGM, their Chairman and their CEO immediately referred to the silicosis issue and they have offered to pay for healthcare for people up until this case is decided. There is still a long way to go with actually the merits of the case, so we will have to watch this space.

De Gouveia: What about people that already passed away as a result of silicosis? Would their family members be able to claim as well?

Creamer: This is an issue that the National Union of Mineworkers raised. They are starting a bit of crusade getting a register going on the number of people that are suffering from it and they also mentioned that people who have died will also be on this list. So it could be a pretty extensive list.

De Gouveia: I suppose one of the key issues there would be how far back they would actually go?

Creamer: Exactly, because it goes way back, 130 years.

De Gouveia: If we are looking at an amount, what did you say US$300-billion that could potentially wipe out the gold mining industry, do you think?

Creamer: Well, we are talking about the number that was bandied up and has been heavily criticised by AngloGold Ashanti’s Mark Cutifani, the number that they calculated based on the claim of one of the individuals of R2-million. If you extrapolate that over 300 000 people, they are calculating, these analysts from the Royal Bank of Canada in London that this could be a damage of US$100-billion, which would be enormous.

De Gouveia: Well, we are done with the bad news, moving on to some potentially good news with respect to platinum. Tell us a bit about that.

Creamer: We have got three big platinum mining companies and the smallest of these Lonmin has sort of given a lead in how much its going to spend over the next five years and they are looking at R13-billion worth of expenditure. This is going to be good for the Rustenburg area, concentrated around Marikana mine, and again focussing on platinum.

We have had criticism from various think tanks saying perhaps that we are under producing with platinum, we are also behind, undersupplying and that could be dangerous in the long-term. If platinum is going to play this big energy role that people think, that the fuel-cell will be the engine that drives our cars, then perhaps we are under-capitalising here and allowing the price to go a bit too high.

If the price does spike, people look for alternatives. They are saying protect the industry and produce at a level that comes close to meeting demand. So, we see that Lonmin now listed in London and Johannesburg, said they will be spending R13-billion on expanding their Marikana mine, mainly over the next five years.

De Gouveia: Now if platinum producers can meet the demand, what sort of spin-offs are looking at for South Africa?

Creamer: You know, I think that if platinum does play the role that some people expect it will in the future, what Saudi Arabia is to crude-oil, South Africa could be to the future new-age energy. So, I think there is reward.

De Gouveia: A new push is under way to make engineering attractive to South African youth.

Creamer: That’s right. The Engineering Council of South Africa (ECSA) has taken cognisance to the fact that we need a lot more engineers to come into the system and they’ve launched this ‘engenious’ programme.

Of course, this does come against the background of the government wanting to spend R215-million on education and training and also looking to try to get 30 000 more engineers by 2014, which people say is a pretty tall order.

I mean if you look at ECSA now, that is the statutory body, its register says that we have got 35 000 engineers. Now, not all engineers are registered, because it’s not mandatory to register. That is the sort of level we are looking at of about 35 000, less then 3 000 of them women.

So, they are trying to get more activity from women in the industry and at the same time get youth interested, get this put on the table, get this into the schools, they are getting a website listed, they are doing a lot of brochures, they are going outreaching to the schools. One of the areas of great concern is municipal engineering, with the municipal elections coming up this is really one of the Achilles’ Heel of the engineering equation.

There was an attempt to try and get retired engineers to twin with young graduates and youth and this has helped at the municipal level, but certainly still inadequate. We look at the global numbers and we are way behind. We have got about one engineer for every 3 000-plus people. Brazil has got one engineer for every 200-plus people.

So, we are like 13 times behind. Australia has similar numbers. We are falling behind on the engineering front and our service demands are growing as accentuated by our elections next week.

De Gouveia: Why do you think it is that we have such a shortage of engineers in the country?

Creamer: This is a maths and science issue as well, so the teaching starts at a very early stage and one has to look at the whole education system and see that maths and science are key.

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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