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On-The-Air (01/08/2014)

1st August 2014

By: Martin Creamer

Creamer Media Editor

  

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AMLive anchor Sakina Kamwendo on Friday presented another Update From The Coalface with Martin Creamer, publishing editor of Engineering News and Mining Weekly.

Kamwendo: The level of productivity in South African coal mines is way, way, way below that of Australian coal mines. No surprises, but do tell us more.

Creamer: Anglo American has coal mines in Australia, and coal-mines in South Africa. They’ve studied the difference between the two and we’re not talking about Australia being mechanised and South Africa not being mechanised, because in the coal space, we’ve been mechanised for a long time. It’s mechanisation versus mechanisation, but we are 50 % below.  Now they’re scratching their heads to think, how can they fix this, because it’s got to be fixed, particularly with the coal price being down, the only thing you can go with is productivity, so, they feel that they can reduce that 50% gap quite substantially by a new operational model, and also by skills development and skills training, but what they cannot change are the number of days worked.  In our South African mines, we have far fewer days worked and this is a huge constraint. So now they want to work as an industry to try and change this whole mindset about the number of days worked and why we work so many fewer days than any other mining destination in the world.  So going through the industry now, bringing in the Aussies is just becoming a theme.  The Aussies knock us into a cocked hat when it comes to mechanised mining, because we saw Northam Platinum come in with Australians to try and help them with their mechanisation.  And Gold Fields is bringing in Australians, here just down the road, to try and help them with their mining and now we see that the confidence that Anglo is getting that it can close this productivity gap, is in the platinum space, because during that period of strike, we know that the Rustenburg mines weren’t operating but in Limpopo their Mogalakwena mine was going full tilt and it actually produced a record 23% higher under a new leadership, so they’re saying, bring in a new leader, like they did with Richard Cox at Mogalakwena and, we believe we can close the gap, but when it comes to days worked, it’ll have to be a national and country effort.

Kamwendo: The first billion rand has been invested in a massive new coal mine project in coal-rich Limpopo.

Creamer: Again, an Aussie leading this, of course, he sees the gap.  These Aussies see the gap everywhere.  Stephen Miller, the CEO of Waterberg Coal Company. He realises the coal in the Witbank area is depleting. We’ve got all our power stations there, but coal is depleting. Now he wants to open up in the Waterberg. He has already spent a billion rand there and a big difference will be that he will speed high-quality coal into Mpumalanga. So, we know how much it costs to build a new power station. We see how slow Medupi is in there. We know Matimba is working well in Limpopo, but Medupi is taking an age, and it’s way behind. There are power stations that are going to be needing coal in Mpumalanga, and we cannot afford to import it. He’s saying “just rail it”, and already Transnet has come to the party with an upgrading of the rail.  He’s planning to do ten million tons a year.  All he needs is a price that matches the higher heat value.  He’s saying “I’m going to give you higher heat value.” They’ve already done the tests at Majuba power station to say that this coal from from Limpopo will work in Mpumalanga, but “I’m going to give you the export quality to make it efficient so I don’t have to split the two coals.” The Aussies are very good at digging the coal out, putting it on the train and getting it to the place, fast.  “I’m going to give you the coal, but because my coal has got more heat value, I want a price commensurate with that heat value, then we’re in business.”  If they get that price from Eskom, it will trigger R10-billion investment immediately.  We will have a hundred-year coal mine here and it’s right next to Exxaro, which is mining in existing Grootegeluk, so the model does work and he’s already got 80% of his backing in the form of international funds. He’s saying that eventually with the triggering and the going ahead of this new mine, he hopes to attract 60% foreign money and 40% South African money.  He’s on the Johannesburg Stock Exchange already.

Kamwendo: Black-controlled Exxaro Resources is forking out a whopping R5-billion to take over foreign-owned South African coal-mines. 

Creamer: We heard the former mineworker and now Secretary General of the ANC, Gwede Mantashe, saying, “it’s better for South Africans to own mines than foreigners”, well here we come with a black-controlled Exxaro and it has taken over from Total, the French company, it has taken over their coal mines in South Africa for a whopping R5-billion.


Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coalface at the same time next Friday.

Edited by Creamer Media Reporter

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