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On-The-Air (20/02/2015)

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20th February 2015

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: A new global study shows that mining operations are powerful engines of growth for host countries.

Creamer: This is a 214-country study being done by the International Council of Metals and Minerals. That has become a veritable global chamber of mines and a third of it is made up by South African companies. All the big South African companies that are listed on the Johannesburg Stock Exchange are there.

You have got Anglo American, African Rainbow Minerals, which is Patrice Motsepe’s company, Glencore, Gold Fields and AngloGold Ashanti. They are saying that mining operations can really be engines of growth. It is now proven and they are saying that there is over emphasis on the taxation and royalties side and under emphasis on the foreign direct investment and export earnings that these operations bring in. They want growing emphasis on that.

If you look at all the potential for poverty alleviation, you see that this is going to become profound in future, because the whole formula around poverty alleviation is being accentuated. If one thing is always repeated by different Minerals Ministers it is the triple evils of poverty, inequality and unemployment and asking what can mining do to help this? At last the mines are coming together to actually work on doing this not only in South Africa, but it's a global thing. We know how important mines are and even when they are finished we see that we are still going here in Johannesburg. There is no mining activity, but gold put us here.

Kamwendo: Mining-country governments must budget on commodity prices falling not rising, global investment superstar Jim O’Neill advises.

Creamer: He is the man who created the acronym Brics and, of course, the ‘s’ is South Africa in those Brics. He is saying that good governments assume lower commodity prices. Now if you are going to work on a formula, he is saying assume a lower price than this year’s price. If you are budgeting and we know we have got a big budget coming through a day now, assume that the price is going to be lower, then work on a strategy that if it is higher you have now got a bonus, then use that bonus.

He is saying interestingly not only for education and health, but also technology. One of the other important aspects he brought up is that we should look for model countries that have used their resources to wonderful effect for their people. He holds up Norway as the model. We know that this is very interesting, because the unions also hold up Norway.

Here we have got the capitalist Jim O’Neill, who was actually in charge of $800-billion worth of investment during his time at Goldman Sachs, is saying the same as what the unions are saying that we should look for models and that one of the models is Norway, which really does well with its hydrocarbons in particular.

Kamwendo: Foreign investment in Africa’s consumer sector is now seriously outstripping foreign investment in mining.

Creamer: This is one of the sad stories now. Mining investment, the foreign direct investment (FDI) for mining in Africa, has slumped to an all-time low of about 2% overall FDI. The big money is going to technology, media and telecommunications, which got about 20% of the FDI in Africa. So, it shows that Africa is stepping up as well beyond just being a commodities producing country. In second place, retail and consumer products 17% of the FDI and 15% in financial services, with mining down at 2%.

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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