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Jan 20, 2012

20/01/2011 (On-The-Air)

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

Gwala: The government is considering the creation of a Special Economic Zone to reap maximum benefit from South Africa’s unique position in platinum. Tell us about that.

Creamer: The government is going for these Special Economic Zones, they call them SEZs, we used to be IDZs and now they are going for something different. Platinum, they say, is a candidate for one of these Special Economic Zones and we agree whole-heartedly.

South Africa is in a unique position when it comes to platinum. Platinum needs to diversify its uses and particularly get a niche in energy. It is waiting there as Cynthia Carroll said at COP17 and the door is wide open for an opportunity to get into fuel cells.

These fuel cells are very versatile and they are very scalable and modular. Their by-product is water, what other energy source generates water? Most of these energy sources use inordinate amounts of water.

They saying that they must try and get a Special Economic Zone where you have got the proper infrastructure set in place and you have got the top up of the incentives to try and get people into South Africa to make fuel cells and also other platinum related auto catalysts.

You already have a tremendous meeting of the minds. We have never had a meeting of the minds between government and big business on an issue like platinum. You see Anglo Platinum putting out a story, which coincides exactly with what the Department of Minerals and Energy and the Department of Science and Technology is saying.

So, it is only a matter of time now for DTI to actually coordinate all this and to use this new Special Economic Zone legislation to make sure we get more value out of platinum. Here we are sitting with an Aladdin’s Cave of treasure and we need to add value to it and we have got this opportunity with fuel cells, hydrogen-using fuel cells.

Hydrogen is in abundance even in the Limpopo they have got that coal-bed-methane that you can get the hydrogen out of and generate electricity. This is zero emission electricity, this is clean electricity, so you are killing two birds with one stone.

You have got the carbon lowered and you have also got value created and, in the words of Cynthia Carroll the CEO of Anglo American, she is saying that you can create hundreds of thousands of jobs in the next 30 years through not only the extraction of the platinum in the mining sense, but also the manufacture, installation, maintenance and opportunities that now bekon for South Africa.

Gwala: South Africans are eyeing the Republic of Congo as a major iron-ore investment destination.

Creamer: We must distinguish here between the DRC, this is not the Democratic Republic of Congo, this is the Republic of Congo, which is next door.

We see South Africans going in there in quite large numbers because of the opportunity that the Republic of Congo offers in the field of iron-ore, a very vital ingredient for steel. We see Exxaro going in there and they’ve made a bid for an Australian company. It is a pity the Australians are always in ahead.

This Australian junior has got in, African Iron, and it is the most advanced iron-ore project there. Our South Africans, which is Exxaro, JSE-listed black-controlled, in other words more then 50% black owned, they have made this bid for African Iron which is listed on the Australian Stock Exchange.

If this goes through on February 14, it will mean that South Africans then take over this iron-ore project, which is close to heavy-haul rail, 2km from heavy-haul rail and is connected to Pointe Noire, the port where there is a deep-water port and potential for bulk exports to both Europe and to the East.

We see South African Airways not fast asleep on this, because you see their adverts now, they are flying twice a week to Pointe Noire. This new opportunity that we are seeing in Africa is floating a lot of boats. Once the miners get in there you can see there is another South African-linked company Xstrata there and they have got the Zanaga project there.

Already 860 people on the ground there, so it shows you how quickly these mines attract a large number of jobs and also a South African involved there Peter Freyberg, formerly from Anglo American now with Xstrata, listed in London, pushing forward the Zanaga project. That is another iron-ore project in the Republic of Congo.

Nearby there is also Equatorial Resources, listed on the Australian Stock Exchange, which has got a plan to put through five-million tons of iron-ore a year. So all thinking of iron-ore coming out of this new frontier, the Republic of Congo.

Gwala: Exciting prospects out in the Republic of Congo.
South Africa is leading the way in the distribution of shareholder-type wealth to mineworkers.

Creamer: We must give this to the South African mining companies they are innovative. You look at 16 000 mine workers now benefiting from a distribution of shareholder-type wealth. We have had a long tradition of top management getting share options and they can exercise these options at the right time when the share price is high and make themselves a lot of money.

They are saying why shouldn’t workers be cut into it. Two companies have done this, the first was Kumba Iron Ore, which turned people into half-millionaires before Christmas.

Now we have Exxaro, again a black-controlled company that have done the same thing. They have had 3% of those shares go to below-management workers and so each of those 9 694 employees have got an average of R135 000 each. So this is pre-tax of course, but this is again showing that you can do well to link your shareholders directly to the company through your workers. How they can then see that productivity is a big thing.

The stoppages of safety shouldn’t happen because then you are going to lose out on that share value. We can see how the unbundling of what was a State-asset, Iscor, both of these have come out of what was formerly a State-asset, by and large.

You can see how unbundling these big company assets can generate huge amounts of wealth. This is a gazillion-fold uplift in value through the unbundling of that old State-owned Iscor’s former mining assets. This is a reflection of that unbundling both in Kumba Iron Ore, which is now Anglo American-controlled, and Exxaro, which is South Africa’s big black-owned company.

Gwala: 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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