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

Gwala: Before we get to platinum fuel cells and investor confidence, broadly let’s talk mining, in your view Martin, where is mining today?

Creamer: It is in a rough spot and you can see a lot of the governments of the world are trying to collaborate with mining. Here in Africa, you find Botswana did it from last year deferring royalties. We find Ghana now reaching out to South African investors. So, that is what is being done, because they can see the hardship, but they also know the benefits that come from mining.

Gwala: Frans Baleni former NUM General Secretary said that mining is still a sunshine industry, it is not a sunset sector.

Creamer: Exactly, we have got to turn it back into a sunrise industry and that is going to take a bit of collaboration.

Gwala: Platinum fuel cells hit a new high yesterday with a sensational launch in Ekurhuleni.

Creamer: The smiles were broad and the broadest smile came from the Minister of Science and Technology Naledi Pandor, who also brought with her the Premier of Gauteng David Makura, who was very excited about what is happening with fuel cells. These fuel cells we have been talking about for decades and they were discovered more then 100 years ago. But, they are so important to us because they use platinum.

We saw how clean they are and how quite they are when we watched these forklifts that are powered by fuel cells going around at the Impala Platinum refinery. We were hosted by Terence Goodlace, the CEO of Implats, and he was also very sober about this, saying that we still have to get through the barrier of economic competition, but they are well on the way to doing it. You could see how appreciative the drivers of those fork trucks were because there were no diesel fumes.

They didn’t have to have respirators on and these can go for the whole day before they get refueled by hydrogen, which was already on site from Sasol, so they could just go ahead with it. But a bigger picture is also emerging there, because they use 20 MW of Eskom power.

They are now doing studies that will go further. Can they use the fuel cells to give them that 20 MW? They are starting small with about 8 MW collectively, but there they believe they will be competitive and out of the economic competition wood in that. This will be a business proposition to give them energy at a lower price using fuel cells, which use platinum and therefore use their own products from Impala.

Also, nickel – another metal Implats mines as a byproduct – is used in some of the storage of the hydrogen, so a good use of metals and they are hoping not only will it be for these fork trucks, but they will use this for equipment underground.

Gwala: Ghana led the way this week by boosting investor confidence in the West African country.

Creamer: You can see these mining companies having to take harsh decisions, particularly where their revenue stream is solely dollar based and the commodity price is down. We know that our South Africans that are investing in Ghana. Gold Fields has a mine there called Damang, which is under question mark are they going to close it or are they going to recapitalise it? They had to do one or the other.

Now, you can see some wisdom coming from Ghana. The government not just narrowly saying we want those jobs, but also saying how can we preserve the jobs and make sure that we continue with our exports to benefit the country, as well as foreign investment. The decision was do we close this or do we recapitalise it? With this background now Ghana said we will cut your corporate tax immediately by 2.5%.

Then from the first of next year we will cut your royalty by another 2%. Royalties are very damaging, because they are not on profit, they are on revenue. Whether you earn a profit or not you pay those royalties. We can see that Ghana is collaborating.

We also look at Australia, where they bought out a paper saying their corporate tax rate for capital investors is too high at 30%. Ghana is not even at that level. We saw Botswana last year saying they will defer royalties, because they know that not only do they keep the jobs going, but they keep that economic activity going where the companies are exporting and bringing in foreign exchange, which is so important, and having foreign investment.

Gwala: Experts believe it will take another two years for the stuttering diamond industry to get back into sync.

Creamer: Yes, we need that diamond industry to get back into sync. Botswana particularly needs that diamond industry to get back into sync. They have moved the centre of gravity of diamonds to Gaborone.

Only when it happened, they realised there were a lot of unintended consequences there. The stuttering in the diamond industry has really not only been brought around by over supply, because we see the big producers are cutting back. They are leaving diamonds in the ground admirably.

That is De Beers and Debswana saying we are not going to mine these diamonds, because we don't want to oversupply. We also see the Russians, Alrosa, the world’s biggest supplier by volume at the moment, saying they will keep their diamonds on a stockpile so that they don’t oversupply the market. Also, there was a problem in the middle of the market where the cutters and the polishers are. They had access to cheap capital, so they over-bought the rough diamonds.

So you have got a disconnect between the price of the rough diamonds and polished diamonds to the point where some of the cutters and polishers are rebelling now as they want much lower prices for rough diamonds, because of this going out of kilter. At the same time, you have got diamonds themselves facing competition from lower-priced synthetics.

We know that synthetic diamonds have always been around, even out at Springs we used to make them at Uhpu, now Element Six. That was largely around the industrial sector where you used them for industrial hardness. Now, they are coming also into jewellery and people are saying we must cope with that in a way that benefits the industry.

Gwala: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.