Every Friday morning, SAfm’s AMLive’s radio anchor Ike Phaahla speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Phaahla: South Africans will next month begin building a new tin mine in neighbouring Namibia.
Creamer: This is fantastic, because it has a lot of South African roots. It was owned by Iscor, which was a State-owned corporation.
Although it was in Namibia, it was owned by us. Now, youngster Anthony Viljoen, who has got Bushveld Minerals here in Johannesburg, he has gone across the border and has rediscovered it and is going to reopen it. This is fantastic because tin has become a green metal. All of a sudden it is used instead of lead in solder, in electric vehicles and all sorts of solar power situations and lithium battery-type applications.
Tin has become green and here we have got South Africans going across and making sure that South Africa can still be part of this, although the money has been raised in London. The junior AIM board has had a very successful listing there and has raised £4.5-million pound, which is a starting point.
You can see from the juniors that they don’t have raise enormous amounts of money. They also start off with a smallish plant and then they migrate that to a bigger plant. They have got, it was at one stage, the biggest opencast tin mine in the world. They are going to resurrect that and also put tin back on the London Stock Exchange and give it a new feature and make sure we get some of the benefit of that in South Africa.
Phaahla: The sleepy Northern Cape town of Prieska is being revived by major new investment in its expansive but dormant zinc and copper resources.
Creamer: This has been dormant since the early 90s, but I think Gwede Mantashe, our new Mineral Resources Minister, will be very happy about this, because his first job was at Prieska in mining and to see this now go from a sleepy hollow and start being resurrected is again the effort of junior miners.
We have got to back these guys. The person leading this is Errol Smart. He was born in Boksburg, but then he went to live in Australia, as so many people do. From Australia, he started studying the zinc price and he has called the zinc price correct. He has come back to South Africa and now Orion Minerals is also listed on the Johannesburg Stock Exchange.
You have got this double listing and he has gone in there and is reviving the old mine. It won’t be an old mine anymore, it will be a new mine. That will be the starting point of bring out the zinc and the copper. At the same time he is using modern technology to explore.
We don’t do enough exploration in South Africa. We have got a lot of opportunity here and we don’t use modern technology. Our geological survey, geosciences bodies, they are not sufficiently active in getting the research into what is in the ground. We knew what was in the ground at Prieska and it has taken Errol Smart to come back from Australia to wake us up. This was owned by Anglovaal and used to employ 4 000 people and there was a lot of activity in Prieska. That Anglovaal is now what we can call African Rainbow Minerals under Patrice Motsepe, but they didn’t do anything with this asset. Along comes Errol Smart reviving it.
He has got helicopters going over scanning with new technology to see what is under the ground. The latest technology can tell you so much more than what it used to in the past. Already now he has firmed up quite a lot of convincing metal and mineral in the ground.
We know that the zinc price is doing well, zinc supply not good. Copper, we are not going to have enough copper. The world is not going to have enough copper, so this could be a fantastic investment and it is going to be a moving investment, you can see just about every week a new report on what has happened and how Orion have firmed up more activity within the Prieska area, that wonderful copper area that is now being revived.
Phaahla: Strong interest is being shown a six-point plan that two independent consultants have put forward to revive South Africa’s struggling mining industry.
Creamer: Again, this is around the juniors. We hear a lot about what is happening with the big mining companies. Those big mining companies are largely content with holes in the ground, those holes are getting deeper and deeper, they are not replacing anything through exploration.
So, that has to be looked after and our new Minister Gwede Mantashe will be watching that very carefully and making sure that we can get the best out of what we have in mining. What about what we don’t have? These fellows Dr John Bristow and Dan Moagi, they presented the six-point plan, they presented it to the highest level and the medium level and they are getting a lot of interest now.
Even Parliament is very interested in what they are saying. They want transparency at Department of Mineral Resources (DMR), that is the starting point. They have got to modernise and be transparent. How can the people of Mozambique have a better chance of knowing what is available by just sitting in New York and looking on a screen then we can do here.
We don’t know, it is all very vague as to what has happened. We have pleaded with the DMR many times saying if you are going to award something just make an announcement, but they say no, it is not their job, they don’t do that the companies must. So, it has been shrouded in secrecy and that secrecy needs to go and I hope that Mantashe will make sure that it happens and we modernise the DMR, because that is an extremely important starting point. Then they want as their second point facilitate exploration and development companies.
Make sure that this is where you can get real activity going, if you can facilitate it. There is $2,5-trillion worth of metals and minerals in the ground, I am not talking billions, I am talking $2,5-trillion in the ground. There is no other country in the world that has that sort of value known in the ground. What is even unknown we don’t seem to be keen on finding out. The third point they are saying is have genuine black ownership, don’t have partly owned and copilot in a big operation and passive investment.
Have genuine black ownership where they owned this asset. The other big thing is provide incentives. When we go to Canada and in Toronto and Vancouver we look at these tall buildings are a result of mining. How is that mining so vigorous? It is incentivised through the flow-through scheme. The Canadians have got a scheme whereby the ordinary investor, who might be a taxi driver, can sit there and see his investment in an exploration company and he knows he is going to get a tax break in February, because he is an investor in this.
The benefit of that risk flows through to the ordinary individuals, so everybody in Canada has been backing this sort of idea of the flow-through scheme. What has been the result? It has been a fantastic development of mining through exploration and we see that we don't have that here. What about the fact that we were promised this flow-through scheme in South Africa. In the mid 2000s they said we are going to get this flow-through scheme. In fact, they said next year in Parliament we will put this through. They didn’t.
They then the following year said they have got something much better and they gazetted something that was so sub-standard that nobody has even taken it up, it was stingy in the extreme, not one mining company has taken it up. We need a new look at that and we need a genuine enabling environment where you have got the legislative environment that can enable people to be confident and put their money in.
If you are going to have an incentive, let is spread throughout the community, that the whole community is a backer and they can see what is on the stock exchange and they know they are going to get a tax benefit from the risk that these people have taken. When that risk actually turns into reward, they also get a reward. So, that has worked very well in other countries, so why say we have got to reinvent the wheel.
They are looking at 12J of the income tax act, perhaps that will be something very good, but we will have to give it a bit of time. That is one incentive that has been introduced already, hopefully that will bear fruit, but if not they should really look at what is happening in other countries and make sure that South Africa can benefit from the riches of metals in the ground and also use that expertise in Africa, which is right on our doorstep.
Phaahla: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly and he will be back at the ‘Coalface’ at 12h50 next Friday.