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On-The-Air (12/06/2015)

SAFM_120615

12th June 2015

By: Creamer Media Reporter

  

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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’s search for new metals and minerals is “desperately” underfunded, according to Nedbank Capital.

Creamer: This has been put very succinctly by Paul Miller, who is the head of metals and minerals of Nedbank Capital and he has done a study and has found that our geoscientists are desperately underfunded and also to earn their pay, they do work outside of South Africa. They are working on the continent outside of South Africa for multilateral agencies and other governments rather then for ourselves.

This is damaging our geological potential, because if you’ve got no exploration, then you’ve got no new mines. At the same time he said there are other ingredients that are extremely important to getting this exploration going. One of them is a regulatory framework and he was complaining that there is a back door to the Department of Minerals Resources, where people have to meet opaquely in coffee shops and hotels in order to resolve mineral rights disputes.

We are saying that the only way to deal with this is to shine a big light on it and that they should have the Flexicadastre, which is in 17 other countries. In South Africa, we have self-made Samrad system, which is a digital system for looking at all the mineral rights. In other countries they are using the South African developed Flexicadastre, which you can challenge people to google immediately what the situation was in Tanzania, Namibia, but they could not find out what was going on in South Africa unless they drove to Pretoria and made a special application.

Theoretically you would have to make 25 000 applications to know what is going on. At the same time there is also the capital that is needed and he is saying in Section 12J of the Income Tax Act is an absolute laugh. This is supposed to incentivise people, but it just has not in the last eight years.

Kamwendo: Diamond beneficiation in Botswana has hit a very rough patch.

Creamer: Good intentions can come unstuck. The b-word is big in South Africa and beneficiation also very big in Botswana. They decided to implement it on a grand scale and they actually forced the changed of the centre of gravity of diamonds from London to Gaborone. They actually changed that and made all the aggregation of diamonds be done in Gaborone.

This has come back to haunt them because going along this route has more complexity then they realised as they admitted at the Botswana Resources Sector Conference this week. They are saying that it also upsets your balance of trade and if you don’t have the proper offtake of the polished diamonds, you almost think why did we ever go into this.

Some of the situations you have there is that two of the polishing and cutting companies are already closed and they say there is just a defensive attitude in 20 others that are still existing all talking about downsizing, retrenching and even liquidating. So, it is something that is really worrying the Botswana Diamond Hub, because this was meant to create a lot of jobs and it is not. Formal sector employment in Botswana is only growing at 1% and we know that Botswana has made $50-billion the last 40 years from diamonds.

They have spent it well on infrastructure and human capital, but putting that 20% to 25% of the money into education is also now being highlighted because you get 15 000 to 20 000 matriculating every year. With the formal jobs only growing at 1% there are too few jobs for these people.

It is really keeping the Minister awake he said at the meeting. he is also going out to mining companies on a case-by-case basis deferring the payment of royalties, because royalties payments is a big thing whether you make a profit or don’t make a profit, you have got to pay royalties, even if you are making a loss you still have to borrow money to pay royalties. So he is actually deferring that so that people are not too hard pressed in that country, where diamonds are not making the contribution that they used to.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly, he’ll be back with us at the same time next week.

 

Edited by Creamer Media Reporter

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