04/10/2013 (On-The-Air)

4th October 2013

By: Martin Creamer

Creamer Media Editor

  

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

Phaahla: A top economist this week pleaded for South Africans save their crumbling gold-mining industry.

Creamer: Yes, that was Chris Hart and he was speaking at the Tenova Mining Conference. He was saying that the gold industry is just fading before our eyes. 

There is a danger that it will lose its critical mass and then it is like Humpty Dumpty when it falls off the wall, it is very hard to put it together again. So, he is pleading to South Africans against the background of the fact that we have still got an abundance of gold, we are just not mining it. 

He is saying that if we do it the right way we can have another 100 years of support from gold. We are only sitting here in the studio because of gold.

This is our foundation, but it is diminishing before our eyes. We are now down to 1905 production levels, we are producing at the same levels we did in 1905, which is 167 tons.

We have fallen from the number one position to sixth, we are below Peru, which is really a negligible supply. China has gone into the top spot. We can see that although the gold price is not performing the way it should because the investment community is hammering it, consumption is growing.

We see Chinese will hit a record 1 000 tons of gold. Even in these terrible times, last year gold earned us R72-billion, that was the highest in any commodity in foreign exchange and it employed 142 000 people. If the trend continues we will go down in five years to 60 000 and we won’t even do 100 tons.

There are alarm bells ringing, yet we have the resources and it is the same as chrome.  We have got the world’s largest supply of resources but we are seeing our ferrochrome industry just collapse before our eyes, because of the lack of energy. 

Manganese, we have got 80% of the world supply and only 15% of the market. So, we are punching way below our weight across so many commodities.

Phaahla: South Africa is pressing ahead with clean-coal technology despite global headwinds.

Creamer: I think South Africa is doing the right thing. Minister Ben Martins, as we just heard him, is reiterating that we must go ahead with carbon capture and storage, which is not an easy technology.

We see the great protagonists of it, Norway, are not going ahead with their Mongstad project. Now that is a real surprise because there has been a change in government in Norway.

We see them saying that you’ve got cost overruns, you haven’t performed well, the timeline is gone and they have stopped Mongstad, which is a big blow. We are still going ahead with our carbon and capture programme, we still want that demonstration plant in the next four years.

We have still got our centre for carbon capture and storage. Fortunately the Norwegians are giving us a bit of money. The Norwegian Ambassador was there yesterday committing that R28-million and we heard Ben Martins say the government has got R197-million for it over the next four years.

What else can we do? We are a coal-based economy, we have got these electric lights on because of coal. We drive with coal fuel, even the aircraft at OR Tambo take off with fuel that is made from coal. So, we are really a country that is deeply involved in coal.

It makes sense for us to continue with this commitment that we gave at Copenhagen, with the with the addendum that developed countries will help us, which we have seen Norway still doing.

The Centre of Carbon Capture and Storage in Johannesburg is backed by a lot of companies, like Eskom, Sasol, Anglo American and all the coal companies are backing it and rightly so, because they are the ones that are putting the carbon into the air.

What they want to do is capture this and then inject it into the ground as they do in the oil industry. Unfortunately we haven’t got a big oil industry so we haven’t got these cavities, but we hear the Minister saying that they are looking for sites. It is something that the International Energy Agency is saying we should continue to pursue.

Phaahla: Two highly successful South Africans are investing heavily in mining at a time when the rest of the world is running for cover.

Creamer: This is a turn up for the books. They always say invest when things are down. Well, two of our top South Africans are putting their money where their mouth is. Both of them are global people, they live outside the country.

The one is Ivan Glasenberg of GlencoreXstrata, who is saying that he is going to list in Johannesburg before year-end. That is great, because it is showing some sort of confidence in this continent and this country at a time when other people are fleeing it.

The other is Mick Davis, now heading X2 Resources. He created Xstrata, took it from zero to hero, to a company that was worth $500-billion in eight years. Now he is saying that it is time to look at the opportunities and he is correct, because everyone else is running out they are leaving behind bargains.

So, he has now got $1-billion backing this week and is starting with X2 Resources.

We can look at them not just coming back to their home region for sentimental reasons, Ivan Glasenberg came from Melrose in Johannesburg and we know Mick Davis was down in Port Elizabeth and also was involved with Eskom, but for business reasons coming in at a time where there are opportunities in the mining space.

Phaahla: So it makes business sense and it is not about sentiment.

Creamer: That is correct.

Phaahla:  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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