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Mar 24, 2011

25/03/2011 (On-The-Air)

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

Presslin: The Russians have ploughed R1,5-billion into a new black-controlled manganese mine in the Northern Cape.

Creamer: That’s right. The Northern Cape is known for its manganese. The Russians have come in quite astutely, because they got the shallow manganese. Traditionally they mine underground there and they’ve got the surface mining and they have been able to partly self-fund this by actually mining quickly and selling manganese quickly so that they could get a revenue stream.

We are talking about a R1,2-billion mine here, which is black controlled. The 51 % is held by a black company, which is very broad-based and also backed by the Industrial Development Corporation.

One of the things that was pointed out there by the Minister Susan Shabangu when she opened this is that there is a lamentable situation that South Africa has got 80 % of the world’s known high-grade manganese reserves, but only 15 % of the market. So, this presents a huge opportunity.

We have been rail constrained and obviously the rail will have to play a huge part here to get us going, but also we can see that there is a lot more focus on it, because of the demand for steel in the world. This manganese is an essential ingredient in steel and therefore it has a good future going forward and it gives confidence to investors to come in and plough their money in.

Presslin: Foreign investors have provided R4-billion in funding for Bakgatla community’s platinum mine in the North West.

Creamer: Again, confidence by foreign investors. We see R4-billion coming in to this moderately sized mine in the North West Province and a lot of it coming in even from pension funds from Europe. So, it shows you that confidence. The Bakgatla community there is determined to try and turn some of their positive assets to account.

We see them approaching it in the correct way. We know that this is the Platmin operation, but nearby was Wesizwe, which is being rescued by Chinese investors now. The local community collateralised the shareholding before one ounce of platinum was produced, they cashed in their shares.

That money is dissipated now, where as the Bakgatla is saying now that every bit of cash we get we ploughing back into this investment, because we want sustainability and long-term. That is the way to do it and they have also set up an academy of training where they are bringing out apprenticeships and they are bringing tradesman into the mine.

So, the big advantage here is that there are no hostels in site, because a lot of the community members of this 1 050 people work at that mine and go home at night to their families.

A much better situation there and it has been master minded, of course, by an icon of the mining industry, which is Brian Gilbertson who is the chairperson of Pallinghurst, one of the big investors here in Platmin also listed in Toronto.

So the funding has been there, the geology has been challenging, but they’ve gotten over this now with a new deal they’ve just done to double their resource and their horizon is now of positive view.

Presslin: Wonderful job creation and much needed projects in these two areas in the Northern Cape and North West.

Transnet plans to spend R110-billion on much-needed rail, port and pipeline projects.

Creamer: We have got constraints here and these are the logistics. We know that the State handles those. We have also, of course, got energy constraints and the State also handles those. So, the State has got to come to the party if they want growth, if they want to generate wealth and if they want jobs, they have got to come to the party.

Here we see Transnet now belatedly talking about R100-billion wanting to modernise the ports. Pier two in Durban, if you are kind you’ll say its aged, if you are realistic you’ll say it’s obsolete. I mean, this is not the sort of thing we should have in our biggest port and they need to plough some money into that.

The bulk of the money, about R63-billion, will go into the Transnet Freight Rail, because rail is a constraint. They want to put about R11-billion into the iron-ore line, which the manganese we were just talking about, they need to augment that, also, the coal line about R16-billion.

This is the situation now where a lot of modernisation is needed, a lot of quick decisions, but right decisions. We can’t be affording to take the wrong decision. I think there has been a time to plan this too long in the planning, now we need the implementation in order to turn this to account.

We see a new broom sweeping at Transnet, Brian Molefe, a lot falls on his shoulders now to make sure that we do these things in an accelerated manner, but we do them correctly and he is talking about a massive expenditure of R110-billion.

Presslin: 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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