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On-The-Air (04/03/2016)

safm04-03-16

4th March 2016

By: Martin Creamer

Creamer Media Editor

  

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

Kamwendo: South Africa is perfectly positioned to take full advantage of what appears to be a return of better days to the coal market.

Creamer: It looks like coal is coming off the bottom. The big exporters are saying it. The smaller exporters are saying it. They feel a new vibe in the market and see the prices lifting and they hope that it is sustainable. People are also talking about the margins in South Africa being very good in coal at the moment.

The weak rand is being banked by all at the moment. That is helping from a global point of few because some of the international investors are not cutting back in South Africa as they are looking to cut back in places like Columbia and Australia. So, Indonesia exporting far less coal opening the way for South Africa.

It looks like South Africa may double its exports to India at the moment, also going into Africa. We saw them do very well in volume terms last year. We know that Richards Bay Coal Terminal (RBCT) had that record of 75.4-million tonnes export in volume terms, which was very good, but prices weren’t’ good. Hopefully this year it will be good in both in volume and value. That is what it looks like in coal, which seems to be in positive turnaround.

Kamwendo: Northam Platinum is bucking the platinum downturn by going ahead with planning on new growth projects.

Creamer: These days when you go to a mining presentation, you don’t hear much about growth. You hear cutbacks, capital expenditure being reversed, you hear deferral of projects.

Northam Platinum is in a different mood at the moment. They are seeing potential in the future and saying that you have got to invest through the cycle, you can’t only invest in the good times. We haven’t heard greenfields mentioned by platinum operators for a long time. That means you develop projects from scratch, brand new. But, the word greenfields is coming out of the mouth of Paul Dunne, the CEO of Northam Platinum, who annunciated to his shareholders the various growth projects that he has got going, particularly on the western limb of the Bushveld, where he has got the big Booysendal mine. That is producing about 160 000 ounces of platinum at the moment.

He is looking to pushing that up to 500 000 ounces. That will be a big uplift and at the same time he is already going ahead of increasing the capacity of his smelter on the western limb. The processing need is also being developed, that when you have got more tons coming through you can cope with it. He is looking to the market looking better and having an undersupply in the next few years. He is talking 2020 as the date.

Kamwendo: Sibanye Gold is showing its bone fides by calling employees back to the table now that the rand price of gold is hitting heady heights.

Creamer: Again that rand price of gold looking very good, going above the R600 000 a kilogram mark. Unions probably kicking themselves that they didn’t look at what was offered during the wage talks last year. They spurned it. It was a new social and economic compact, which would make the industry have a better sustainable future.

That was kicked out by the unions, but looking at things now, Sibanye Gold is saying they were genuine about that, they weren’t doing it as a tactic during the talks. Now that the margins are improving so substantially in rand gold terms in South Africa, come back to the table, not to renegotiate the wage deal, but to talk about a new social and economic compact that is similar to what happens in Germany, where when times are good, you make sure that everyone benefits. When times are bad, you preserve those jobs but you don't look to big increases.

That is the sort of deal that Sibanye is hoping it can clinch, even though it could just sit back and say well you missed the boat. They are wanting to look long and say they were genuine about wanting to cut labour in and make sure that during time when their margins are up, mineworkers can do better. They are looking after all their stakeholders. You can see that Sibanye CEO Neal Froneman spent a lot of time at the last presentation saying to investors he is not just looking after shareholders, but he is looking after all his stakeholders. He spoke about housing that he is going into that will be such that when a miner gets a living-out allowance, that will be sufficient to pay for the bond on his house. He is building to match the living-out allowance so that mineworkers can own their own homes.

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

 

Edited by Creamer Media Reporter

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