Sep 16, 2011
Engineering|Port|Africa|BHP Billiton|Engineering News|Iron-ore|Mining Weekly|Projects|Transnet|Transnet Freight Rail|Water|Africa|Australia|China|Greece|South Africa|Gencor Mine|Tshipi Mine|Building|Energy|Logistics|Mining|Profitable Miner|Steel|Eastern Cape|Kalahari|Robben Island|African|Brian Gilbertson|Gillian De Gouveia|Iron Ore|Iron-ore|Jason Fairclough|Martin Creamer|Rail|Saki Macozoma|Siyabonga Gama|Water|Proximity|Eastern Cape|Engineering News
© Reuse this
De Gouveia: I see this past week you had quite an interesting trip to Kalahari with Saki Macozoma. Tell us a bit about that.
Creamer: The one time Robben Island prisoner Saki Macozoma is at the forefront of South Africa’s newest mine in an impoverished part of South Africa’s Northern Cape Province and I was down there with him. He is being joined by a great mining luminary Brian Gilbertson. Of course, Gilbertson saw the future.
He was the man who turned our Gencor mine into Billiton and then BHP Billiton and it became the biggest mining company in the world and the most profitable miner in the world. He is seeing the future again and he is seeing it together with Saki Macozoma and together they see a good demand coming for the quality of manganese that we produce down in the Kalahari.
The proximity of this manganese to the surface is shallow, so it can be mined quite cheaply. The funding of this operation is very good and also the broad based black economic empowerment. So it is all equity funding, there is no debt, they are unencumbered.
There they are going and starting to turn the sods and get this new mine, which is the Tshipi mine. The big issue will come with logistics. This is where the State needs to come in. We might have the best manganese in the world and a lot of the commentators there where just saying that this is like a dream world. People with manganese interests elsewhere saying the quality of the ore is just superb.
It is large, thick and shallow, homogenous and continuous. It is like a dream the one fellow said and another said that the seams are so thick it is like standing under a 16 storey building glancing up and saying that is solid manganese. You just don’t get that in world, but it will stand or fall by our logistics.
De Gouveia: In terms of the world-wide demand for manganese, what is that look like at the moment?
Creamer: If you are going to have steel, you need manganese. Any development in the world needs steel and you can’t make steel without manganese. The quality of the manganese in China is diminishing quite substantially and we see that this has got a 37% manganese content at the Tshipi mine. Nearby you get 44% manganese, whereas in China they are looking at below 20% at the moment, which means you need more energy, which then ads to a whole lot of dynamics which could create quite a strong demand for us.
De Gouveia: You were speaking about manganese and the logistics that go with it. Now apparently increasing the capacity of South Africa’s manganese rail line to Coega is being seen as a matter of national urgency.
Creamer: I’m so pleased about that, because also down in the Kalahari with us, in the sands of the Kalahari, was the newly reinstated Transnet Freight Rail Chief Executive Siyabonga Gama.
It was fantastic to see the urgency and spirit in him. He was saying it is now a national issue, it is one of national urgency to get the logistics right for these new manganese miners in the Kalahari. Of course, these are all new black controlled, beyond 50% is in the hands of blacks, so these are all new mines coming through.
Tshipi is one of them and there are another two nearby in the Kalagadi and also you have got the UMK. So, there is going to be need for rail. Trucking is just out of the questions and we’ve seen even young kids being killed recently with trucks down there. It is important that you get onto rail and he sees it as national urgency. He wants to go the route of the Eastern Cape.
They were thinking of taking manganese down the Sishen-Saldanha line and making that a duel-commodity line and there was some preference for that. He is starting to turn eyes towards Eastern Cape and say that they have a general freight line there, we need to turn this into a heavy haul line. We have an underutilised port at Coega, we need to utilise that fully. Where else is there a deep water port without a heavy haul line, lets get that heavy haul line in.
He is talking a year to eighteen months when they start moving on this, because the window of opportunity opens for this manganese at a time when we need to have the logistics ready. We say Brian Gilbertson speaking there and saying that he has been other momentous occasions.
He was the CEO of BHP Billiton and cut the ribbon at one of the important iron-ore projects in Australia. He said because of the investment in the mine, rail and the port, that particular country has seen 10% a year compound growth in iron-ore sales. He is saying look, can’t we repeat this in South Africa?
During the same period we were ill-equipped to see the oncoming Chinese boom and we only grew our iron-ore at about 2%. Here is an opportunity, go for it, see it as national urgency and get that manganese out. There is a demand for it at the moment and it is good that people at high levels at Transnet are acknowledging this.
De Gouveia: Now, at the risk of sounding cynical, there are with positives sometimes also negatives. We look at international investors at this point that are fighting shy of South African risk and actually awarding companies that reduce their exposure to South Africa, that doesn’t sound very good.
Creamer: They give a pat on the back to South African companies that reduce their South African exposure and we see a lot of chief executives coming under pressure now and saying you are too South African. They might be a South African born and bred company, died in the wool, but you will have analysts and investors saying reduce your South African exposure.
Now at a time when we have actually got to grow, because we have got more then 51% of our young people between the ages of 18 and 25 unemployed and untrained, we have got this huge problem, its not the time of disinvestment. We saw Rio Tinto wanting to withdraw from Palabora, we see the CEO of Anglo American, which was formed here in 1917, being told by the Bank of America Merril Lynch’s Jason Fairclough to reduce their South African exposure.
De Gouveia: Before we wrap it up, why Martin?
Creamer: We are shooting ourselves in the foot in South Africa. We have these on going wage demands which result in above inflation increases with no matching productivity. This is not just a one year thing, it goes on and on. We saw what happened in Greece when they did that. The whole country can fall apart. You can’t have above inflation wage increases on an ongoing basis without matching productivity.
Your electricity mine cost inflation lifts through and we have this way above inflation electricity increase with more on the way then you add to that the nationalisation word and they run away. That is a very bad signal that is coming through to South Africa at the moment.
De Gouveia: Unfortunately, we have to leave it there. 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© Reuse this Comment Guidelines (150 word limit)
Updated 2 hours 13 minutes ago Communications Deputy Minister Stella Ndabeni-Abrahams says the Department of Communications has the responsibility of ensuring that South Africans migrate from the analogue to digital world, with the help of media and government communicators. Deputy Minister...
Updated 3 hours ago South Africa’s financial institutions have been instrumental in funding the bulk of the projects under the Department of Energy’s multibillion-rand Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), delegates heard at the Solar Indaba, in...
Updated 3 hours ago The Department of Energy (DoE) reported on Thursday night that it had concluded its first “nuclear vendor parade workshop” with a delegation from the Russian Federation and that further meetings were planned with vendor countries such as France, China, South Korea,...
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...