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Jun 15, 2007

On-The-Air (15/06/2007)

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

Now the fact that South African timber grows ten times faster than timber in the northern hemisphere is poised to boost paper giant Mondi, which is planning a duel listing, I understand, on the London and Johannesburg stock exchanges, July 3, I think, just around the corner.

Creamer: July 3, yes, and costs are a very big thing at the moment. South African trees grow ten times faster. We grow our timber in seven to ten years, whereas Sweden and Finland take 70 to a 100 years to do that. Fast growth brings down costs, which is important because pulp-and-paper producers are on a high-fibre diet, as humans should be, with a third of their operating costs from timber. So, fast southern hemisphere growth is a very important advantage for Mondi as it duel lists in a very interesting way in both London and Johannesburg. Both primary listings. I wish this had happened with Anglo in the first place, and also with BHP Billiton, which changed domicile when they listed in London, but this is going to be primary in Joburg and also primary in London, and the Mondi headquarters will be in Johannesburg. So that’s good news that we keeping our asset bases here, although 75 % of Mondi’s business is outside of South Africa and it will report in Euro. Mondi also has very big interests in Eastern Europe, and access to cheap timber in Russia, which is another important cost reducer and the fact that Mondi has a surplus of electricity capacity in Russia, is going to be a big thing, because it will be able to sell electricity into the Russian grid, which is an attractive business.

Maggs: Let me extend the metaphor slightly, I guess you also need a high-fibre diet if you want to go gold mining in South Africa. Two powerful initiatives under way to ensure that every last drop of the precious metal is recovered from the world’s biggest remaining gold deposit. We’re talking about South Deep on the doorstep of the Golden City, Johannesburg.

Creamer: Yes, we have this gold treasure and it’s a very big treasure, and its one of the last big gold treasures in the world, and its right on our doorstep, less than an hour from Johannesburg, and the good news is that we will probably be able to mine it in a proper way for the first time. We’ve got a legacy in South Africa of a whole lot of different mining companies coming down into the same ore body, very inefficiently and often sterilising a lot of gold in the ground, because of their rivalry and wanting to do things separately. But the good news out of South Deep now is that Gold Fields owns all the assets in the region, not only South Deep, but also the old Western Areas, Kloof and a lot of mineral rights in between, and they are going to look at this holistically. So, on the basis of the whole being greater than some of the parts, we are hoping to get a lot more gold out of that region, which would be a good thing because South Africa’s gold production is down to 1922 levels, so the more we can pull up, the better. They’ve got two very big initiatives under way, the one is to unlock the synergies and to integrate infrastructure, but an even more important second initiative is to look at the area holistically, including the areas where they don’t yet have mining permits, and to bring the entire region into focus, so that South Africa is able to benefit from a very good holistic solution.

Maggs: And in conclusion, I’m sensing this is important, you’ll tell us why: a new chair of clean coal has been established at Wits University, here in Johannesburg. Obviously this implicates, ramifications, as far as climate change is concerned.

Creamer: Yes, climate change is a driver of many things at the moment and one of them is clean-coal technology. Those three words, clean, coal, technology, are starting to manifest themselves and we see that the government, through its South African National Energy Research Institute, is going to give Wits R2-million a year for this chair of clean coal technology to start preparing South Africa’s skills for this new era of making sure that the country does not contribute further to climate change, which is an imperative all around the world. All the way from the G8 down to the coal face, people are talking about making sure that the world does not put more carbon emissions into the atmosphere and another three buzz words, which I’m sure the students will come across when they get into this university activity, are the words carbon, capture, and storage, those three coming up all the time. The idea is to capture the CO2 before it goes into the atmosphere and then to pipe it into cavities and Saneri, that is the South African National Energy Research Institute, is already identifying some of the sites into which we could possibly pipe the CO2. We don’t have some of the opportunities that the Australians have in its regard. They are looking at the Bass Strait, a depleting oil reserve. In order to lift the level of the oil there, they are thinking of piping this CO2 into the depleting oil wells, so that the oil rises to a higher level to make it cheaper to extract that oil. So, all sorts of thinking around the world on this clean-coal technology and carbon, capture and storage and we see it right here at Wits in Johannesburg, where our skills will be upped through the establishment of a chair of clean-coal technology, to be headed by Professor Rosemary Falcon.

Maggs: Martin Creamer publishing editor of Engineering News and Mining Weekly back At the Coalface at the same time next Friday here on AM Live.

Edited by: Creamer Media Reporter
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