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: It is good to see you having a smile on your face this morning.
Creamer: It is not really a morning to smile. I must say I am very disappointed with the Cabinet reshuffle, I don’t think it is in the best interests of South Africa, particularly our economy. I think clear-minded people need to stand firm and make sure that the values of our economy are not eroded.
Kamwendo: Platinum received a massive boost this week when the mayors of the world’s biggest cities launched a huge programme to tackle urban air pollution.
Creamer: You know, it is fantastic that the mayors of Paris, London and many other big cities of the world, have got together and said we have got to have clean air above our cities. Now, the metal that can give you clean energy comes from South Africa. It is called platinum.
It is a fantastic boost for us. We see the World Platinum Investment Council immediately reacted and said that they are ready to give all the information that is needed and all those technical details that we have been building up over the years. We know that at the recent Mining Indaba, the Ivanhoe executive chairman, Robert Friedland, flashed up the details onto a screen on how people’s health have really been deteriorating through the emissions out of these cars that go into the atmosphere above urban cities in huge quantities.
They get into people’s lungs and blood streams, they break the blood barrier into the brain and start affecting you. Now, at last, the mayors of the world cities have come together and said they will form an organisation. Former New York mayor Bloomberg has also played a major role.
Because, there have been actions in Europe like the Europe Six stopping all that emission control, but they have realised that the real place is above the cities. These mayors should be working at it and at last they are. That could mean that people eventually say that not only do we need these catalytic converters, which are platinum catalised, but we also need to go the full hog and get the fuel cell into those vehicles, which are so important, because it is zero emission.
The only thing that comes out of that is water. The brilliant part of it is that South Africa is the major supplier of platinum, which is not really doing that well at the moment. We can see from the price that it is over-supplied. This is hitting back at us.
The price is so bad that it is starting to damage the industry, because the industry has not been able to react properly. This action, by the group called C40 Cities, they represent 90 of the world’s greatest cities. They represent something like 650-million people and a quarter of the global economy.
As I said it is the Paris and London mayors this week going for it. If you look at all the names, you will see that it includes our Cape Town mayor Patricia de Lille. She has managed to be a signatory to this. The Los Angeles mayor, Copenhagen mayor and Milan mayor, just about all around the world people are signing this because they know this is a heck of a problem. It has even been associated with dementia all this bad emission getting into people and cancer and all the rest of it. At last health has been upheld.
How can we do this? We can use the platinum that comes from South Africa and the automotive industry must take a note of this and realise that their cars have to be such that they do not emit health damaging particles into the air all over the world.
Hopefully our Joburg mayor will also sign this. I think all of the South African mayors should really contribute and our economy and leadership in South Africa should also say our cars here should also conform to Euro Six. It might help us, because our petrol is pretty dirty at the moment and there are not big steps to fix that. So, maybe we can do a leapfrog.
Kamwendo: Beijing comes to mind, have they signed?
Creamer: They have not signed.
Kamwendo: Mining doyen Brian Gilbertson this week blamed the collapse of the platinum price on producers.
Creamer: It is interesting when Brian Gilbertson speaks, because this is really a voice that was huge in South Africa at one stage. We know that he was the Gencor head that went to London and became Billiton. He did the deal which created BHP Billion, which is the biggest mining company in the world.
Of course, that is the South African role. When he wanted to do another deal to take over Rio Tinto, and I think it would have been perfect, the Australians disagreed with him because of the big Australian influence in BHP Billiton and he then quit. He is now with Pallinghurst and he also mines platinum in our North West province. He also mines manganese, of course, in the Northern Province. He has got a good global view of what how these metal companies operate is able to comment on their leadership, because he has got an insight into them.
He is saying how good the leadership in the manganese sector was, because it actually made sure that it cut its supply to ensure that the price did not fall to badly. That made the price recover. We saw a very good price recovery in manganese. He is saying that you don’t see any of that leadership in platinum.
People are beginning to call for that and they are beginning to say why are you people oversupplying? You are shooting yourselves in the foot. We know that at the Prospectors and Developers Association of Canada convention this year, Bank of America Merrill Lynch spoke from a public platform said the platinum price could rally if platinum producers took supply out of the market. They spoke about 300 000 to 400 000 ounces.
They said that the oversupplied situation is because of a lack of production discipline, especially in South Africa. They were pointing at the South Africans saying we are damaging ourselves by oversupplying. There is an issue that Brian Gilbertson raised and we don’t want to cut jobs obviously, jobs are absolute paramount.
Therefore, I think we should take a cue from what happened in chrome in 2009, the chrome people also had the situation of over supply. They took drastic measures and cut back at one stage some of the furnaces by about 80%. They did not retrench one permanent worker. During that period when they cut back and they weren’t producing they put their workforce back into the class and studying.
So, you can use that opportunity to train your workforce while you cut back and that really serves you well when you restart again. We see how well chrome is doing now and we can see the ferrochrome business has recovered very strongly. It is because of actions taken like that, bold actions.
They also stop the cash burn, because when you continue to produce at such a high-level like this you are also burning a lot of cash because you are giving away your product at a price that is not good enough. Obviously, the chrome people had a stockpile.
One hopes that there will be some sort of a stockpiling in platinum if you do take that strategy of stopping production for a while, putting your people back into training, so that you don’t retrench anybody, and then you are still getting a revenue stream, because you are selling off your stockpile. Hopefully that could be considered in platinum, because it is a very important metal in this part of the world.
Kamwendo: A black-led minerals company has secured finance for a new vanadium thrust in the Limpopo province.
Creamer: This vanadium thrust has been coming for sometime. Bushveld Minerals is led by astute CEO Fortune Mojapelo. They operate close by here in Johannesburg and have been doing a lot of development work in the Bushveld Complex.
One of the metals that they are very keen on now is vanadium and a big opportunity arose because we saw Highveld Steel and Vanadium, former Anglo American company, was bought by the Russians and became Evraz. We know Roman Abramovich, who heads the Chelsea Football Club, is involved in Evraz.
It went into business rescue and was not doing very well and this has given an opportunity now to Bushveld Minerals, who this week actually completed the financial close for the acquisition of Vametco, which is the mine and processing plant that is part of the old Evraz.
They got the funds together now to buy that and they are planning a massive big platform with their own project as well, which is linked to their vanadium project in Brits.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.