Every Friday, SAfm’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: The planned imposition of carbon tax on South Africa’s smelters is going to put thousands of people out of work and lose South Africa billions of rands in lost export revenue.
Creamer: We have had the biggest ferrochrome production unit in South Africa in the past. We were the leaders in the world and we lead the world because South Africa hosts the overwhelmingly biggest resource and reserve of chromium, so it makes sense for us to produce this ferrochrome, which goes into stainless steel, which is in big demand the world over.
What is happening now is that the Treasury has still not backed off the idea of imposing carbon tax even though this has become unnecessary. I say it has become unnecessary because the Department of Energy has just release its Integrated Resource Plan, the new IRP. That IRP makes us less emission intensive, it brings in renewable energy and it proposes that we come down the emission intensity level where we are polluting the air.
So you needlessly still from a Treasury point of view want to impose from January 01, 2019, the carbon tax, which will just force these smelters to close. Already the high electricity tariffs that they pay is putting them in a precarious position and it has already allowed jobs to be exported. Because, although even the leader in this area of ferrochome, China is now the leader and they are the leader using chrome-ore from South Africa.
So, it is a real irony that we lose this heavyweight battle, but using our own gloves, they have knocked us down. What people are saying is let’s not impose this carbon tax. Let us really look at perhaps if the Treasury is so desperate for tax imposing some sort of export tax on raw chromium ore leaving South Africa. This will enable us to be able to expand here, regain our market share and even say to China, come and build your ferrochrome facilities here. There is a great reason for doing that, because the ferrochrome facilities in China pollute the atmosphere, they are far less environmentally protective than ours.
They have got overboard to make sure that we don’t pollute the air here. We have reached that point where nobody can go any further in the world and China hasn’t gone anywhere near that. So it will be a great inducement to say to China come and build your plant here and we will get investment. It makes sense, because China does not have any chrome of its own.
Kamwendo: The promising new gold recovery project on the Far West Rand is another example of the private sector working together constructively for the benefit of South African job creation and wealth creation.
Creamer: The way that the two companies have interacted is exemplary, both of them listed on the Johannesburg Stock Exchange (JSE), with a secondary listing on the New York Stock Exchange (NYSE). They have particular skills that mesh. We have got Sibanye-Stillwater with a lot of assets. There are dumps, tailing dumps, mine dumps with gold inside and we want to get that gold out, because it is much lower cost than if you are going to the deep dark and dangerous areas underground.
This is all on surface and the plants are already there. DRDGold, also listed on the JSE and NYSE, but heavily concentrated on the East Rand has actually perfected the way of optimising getting gold out of those dumps. They have just produced 150 000 ounces on the East Rand. Now, the two have come together and it is just an example of the way that the private sector can come together seamlessly and quickly. Now they are saying that the first gold from the new assets on the West Rand will be poured in the first quarter of next year.
As we start next year, this particular project will already be producing gold which is so important for us to export and earn foreign exchange. We are desperately in need of this foreign exchange at the moment to strengthen the rand. Because they have come together so quickly they have hit the ground running. This is for great benefit for the people for South Africa and, of course, that area where it promotes jobs creation and people get employed and wealth is also created.
Kamwendo: Australia is showing us clearly that mining can drive economic growth in a country and stopping it stops job creation and wealth creation.
Creamer: The Australian Treasurer has just reported now that there is the fastest growth in Australia since September 2012, when it was the height of the mining boom. We have got just the opposite here. This particular Treasurer is saying that mining drives growth. We have got a bigger potential than Australia to use our mining to drive economic growth, to create wealth and jobs.
But, we are going in the opposite direction. South Africa is now in a technical recession and we need to put everything we can into reversing that. It is well-known and it has been put forward so many times that something that can drive South Africa in a proper direction is attracting investment into the mining industry and now Australia has proved it this week.
Stable regulation leads to investment and investment leads to job creation. It spins across so many industries as this Treasury in Australia is pointing out. It has created a huge demand for equipment and machinery. In South Africa, we actually produce a lot of that machinery ourselves. It has a spin-off for the banks, engineering and across manufacturing.
They have also been promoting exploration, mineral exploration expenditure and it is very good news that when our Minerals Minister Gwede Mantashe was in Australia last week in Perth, he announced that he wants to spend billions of rands on pushing the exploration side and junior mining. I think the penny has dropped that this will really create a big spin-off for the country and make sure that we can also grow economically, which we so desperately need to do now in the technical recession.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.