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

Makwetla: South Africa is in sync with the US and China in budgeting to spend an impressive R787-billion on infrastructure in the next three years.

Creamer: Yes, it is great to spend on infrastructure. Economists of old always said that the public sector needs to come in at a time when the private sector is not spending. We see Trevor Manuel budgeting R787-billion for infrastructure over the next three-years.

This fits in very well with what is happening to resuscitate economies elsewhere. We see the Chinese also about to spend $3,3-trillion over the next five years and a lot of that going into infrastructure as part of its stimulus package.

We also see new US President Barack Obama coming in with his very impressive $800-billion. A big slice of that also going into infrastructure. Just to get some sense of the impact that this infrastructural investment has, if we look at Obama’s package, the American economists have worked out that for every $1-billion he spends on infrastructural development, he creates 35 000 jobs.

He also creates another economic spin-off worth about $6,5-billion. So, if you superimpose that over these activities that are going on in South Africa, we are fortunately ahead of the game. We started because of 2010 and because of our energy crisis well ahead of the rest, so our infrastructural programmes are well on the go.

What Trevor is talking about is over and above that, in many instances. That is a very good expenditure. If you go back to China, that economic stimulus package has an impact on South Africa. Three commentators have already said that they can begin to feel in South Africa the effect of what is being spent in China on infrastructure.

One of the most articulate of those was the new CEO of Kumba Iron Ore, which is our biggest iron-ore producer. He is saying that iron-ore that was cancelled, that South Africa was trying to sell into Europe and Japan, has been taken already by China.

He can feel the benefit of that stimulus package coming through. In fact, China have taken beyond their contracts. When it comes to iron-ore, the iron-ore stockpile in China is beginning to fall from 90-million tons to 60-million tons and that is always an indication of development taking place, because that goes into steel.

So, this infrastructural development can be a big contributing factor towards ending this economic impasse that we are having in the world.

Makwetla: New Eskom chairperson Bobby Godsell is pleading for a “Team SA” approach to South Africa’s national energy strategy. What exactly does that mean?

Creamer: Bobby Godsell is a strategist and we are fortunate to have him as the new non-executive chairperson of Eskom. His initial look at it says that we need a “Team SA” approach to solving our energy problems. We will do that through mulit-stakeholder forums.

So, stakeholders will be involved by trying to set-up a new strategy for Eskom. One of the big things that is apparent is that the business model of Eskom is flawed. For a start, Eskom’s strategy of pricing below the real cost of production has to end.

As Godsell has mentioned, this sort of cash-book accounting approach that they have got leaves nothing for yesterday or tomorrow. It is more appropriate for a “spaza shop” to have cash-book accounting than for a big organisation like Eskom, which needs to have a strong balance sheet. We see that fundamental re-evaluation needs to be done.

Godsell believes that Eskom will be a good doctor if they can get some good patients. We are the patients and we both have to take advantage of this window of opportunity to try and re-strategise for a very important sector in our economy.

Also take into account that we are very coal-based at the moment and might need to move away from that. We see, with Barack Obama’s lead on renewable energy, that we have to take that into account. People also have to take into account the possible costs.

Makwetla: Finally the South African Navy is insisting that the next three naval ships that it orders are built in South African and not outside of the country.

Creamer: We see the Navy now wanting six more naval vessels. Three of them will be offshore patrol vessels and three inshore patrol vessels. The interesting clause there is that they want these built in South Africa.

That, of course, could set off a new strategic advantage for the country. We used to have shipbuilding here before, perhaps we can resuscitate that. It will all depend on the economics of it. In the meantime, within these tenders they are calling, they are going to insists that ships are built here.

They are not saying that the ships must be designed here, because we haven’t got that sort of capability and there are others with good designs around the world. They are saying that the winner of those contracts must come to South Africa and build those ships in either Cape Town or Durban where we used to have our facilities and tie up with a South African group or create their own facilities.

We are seeing that these particular vessels that they want are going to be multi-mission vessels and they have invited other navy’s to partake in this project. Other naval officers have come from around Africa and the world to partake in this project, so we might be creating a business niche here at the same time that we made these patrol boats available.

We must always remember that our country doesn’t end at the seashore, but that it continues another 200 nautical miles out to sea. That still belongs to us and we need to patrol it. Obviously this is one of the reasons for the need for these boats.

They are multi-mission and have helicopter facilities on them. In being multi-mission, at one time they can be mine sweepers at another time they can be mine hunters and they can be used for general training. So this is the demand from South African Navy that the next six-vessels be built in South Africa.

Makwetla: 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.