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: An investment of billions of rands is on the cards for the deep Mponeng gold mine on the Far West Rand.
Creamer: AngloGold Ashanti reported very good cash rich results this week. They turned their back on what we call M&A, that is mergers and acquisitions. So, they made it clear that they are not going to use this cash to go and buy another company.
They are going to look at their assets and how they can actually enhance them. We are lucky that in South Africa they are looking at Mponeng gold mine. One would think that they would turn their back on that, because it is the deepest gold mine in the world. It is at 3,8 km on its way to 4 km, but it turns out that deep can be cheap. They are saying that the study they are doing on this mines extension now is quite mouthwatering, because they are looking to invest something like R13-billion.
That is the plan as it is, the study will go on and it will report on the first half next year. But, they are looking to invest something like R13-billion and don't want to frighten shareholders by saying that they are actually going to spend it at a rate of just over R1-billion a year over ten years.
That is going to be very good for that mine and the economy. The idea is to get a more comprehensive way of extracting there and do a twin reef extraction, because there are two reefs there and nearby are also their mines Savuka and TauTona. So, they want to do an integrated extension that will eventuate in Mponeng mine producing 450 000 ounces for 20 years at a good cost.
They are talking about $750 per ounce, not just a cash cost it is an all in sustaining cost. That is the new formula the World Bank insists on that when you talk about cash costs you talk about real costs so that you don’t give shareholders the wrong impression. $750 per ounce still gives you a good margin even on the current gold price and hopefully at some stage over that period the gold price will raise even further.
They are still bullish and upbeat on their new technology and they reported that the reef boring technology that mines the gold and only the gold 24 hours a day, is progressing well. They are going to the government now and they are going to ask permission for 24-hour mining, rock around the clock, because that is the way to make this viable. If you are going to use this new technology you need to be continuous, because the way they do mining at the moment drilling and blasting is a stop-start arrangement.
You get very little time to actually mine, because you have got to be in there, drill, set it up, go out and then the explosion takes place, then you get people down to clean. So, you can’t do this continuous mining, because you have all this up and down. If the government does agree to that it will be a big breakthrough for mining. We have never had continuous mining like they have elsewhere in the world.
We know that we have got more gold elsewhere in the ground in South Africa that has been mined over the 100 years, so it is a way of getting it out now economically. If you can use this reef boring technology, it is almost like having gold on tap. You can just have that gold flowing out and your continuous operations supply that in a very positive way.
Kamwendo: Discussions are under way between Germany and South Africa for the introduction of fuel cell buses.
Creamer: Fuel cells are really suited to the bigger vehicles. We heard about Tesla and their investment earlier, Tesla has got small little vehicles that is why he was talking about the price, it is a low-price. We are looking at vehicles not just smaller cars that we go and pick eggs up with down the road, we are looking at normal cars for fuel cells, the ones we drive, and also buses, trucks, trams and trains.
The Germans were in South Africa this week to discuss with the South Africans the idea of let’s go into fuel cell buses, because this is what they are planning in Germany. They have already set it up in Berlin, Stuttgart and Hamburg. They are saying that you have got an interest in this because you supply the platinum, we have got an interest in this because we have decided that the hydrogen economy is the way they are going for their transport.
This doesn’t pollute the atmosphere, this gives us a carbon free environment by 2050, we are going with it. Come with us, we can show you what to do on the bus side and you can give us the platinum. The platinum, of course, is mined in South Africa and is needing that marketing boost at the moment. Another step along the road here saying let’s work together to produce fuel-cell buses. We know that the Department of Trade and Industry is very keen on this, as well as the Department of Science and Technology.
They want mass green transport in Germany and also want that sort of transport in Japan, perhaps we can have it in South Africa at the same time and boost our mining economy that is so important to us. There are certain steps being taken by South African government, they have got a blueprint coming up, a study that will be presented to them in the not too distant future.
There are all sorts of activities going around not only around fuel cell and in South Africa, but we saw at Davos that Hydrogen Council that was decided upon with some of the biggest names imaginable, along with our Anglo American, as well, because they know that they can supply the platinum. Indicative of the world now going along with this new hydrogen age, which will help platinum mining.
Kamwendo: A new national rail strategy is being drafted to give direction to the underperforming rail sector.
Creamer: It is crazy, they talk about decolonisation. We have some of our political peripheral elements saying decolonise. Well we have never decolonised our rail. We have still got this narrow-gauge rail that was the penny-pinching standard of the colonialists, because we go back 100 years with it.
It was all settled more than 100 years ago. Now there is a draft white paper to go to the standard-gauge. To go to the gauge that the world uses, because you need that high speed and high haulage, because we are totally out of kilter with economics particularly for freight. It is often joked that to get your goods from inland in South Africa to a port in South Africa costs you more then to get it from the port to Outer Hebrides, because our costs are out of kilter.
There has also been a much bigger emphasis on roads, R2.3-trillion investment in our road network, but only R229-billion in rail. The other thing that is being said now is that Transnet can’t do this on its own and it looks to more involvement from government, but also talking about private sector involvement as part of this new draft white paper, which is being drawn up and is going to be presented to change the face of rail in South Africa and take us at last in to the 21st Century.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.