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

Moodley: By generating its own electricity at low cost, BHP Billiton has been able to go ahead with a billion rand project to beneficiate locally mined manganese.

Creamer: It's a big issue. People aren’t spending money these days so you have to have a big company like BHP Billiton, the biggest in the world, R1-billion is not that much, but is very significant for South Africa, because what they are doing is adding value to manganese. 

This has been the call of the government for a long time.  There has been a degree of resistance from the mining company’s who say we need a business case.  We will hear you have a business case because this company has not only mining the manganese in the Northern Cape but employing 2 000 people to do it. 

But, it is also beneficiating nearly 30% of that which is a big percentage and, of course, the rest goes out to the world market.  This manganese gets converted into ferromanganese and it is put into the steel industry, so it is a very important ingredient in this.  We have always had this traditional industry ideas in the background because of low-cost electricity. 

We don’t have low-cost electricity anymore that is why you need a big company like BHP Billiton that can generate and co-generate its own power.  It is not only cogenerating, but it is cogenerating at ultralow costs, at 1c per kilowatt hour.  That makes all of this viable.  What are they taking to generate that?  They are taking waste heat, carbon monoxide and they are using that to generate the electricity. 

This is really what South Africa needs at the moment, it needs this initiative from the private sector to say we have got a shortage and high priced electricity, but we can create our own power plant, which will make sure that Susan Shabangu the Minerals Minister can say well-done when she opens this new plant. 

I think that we do have to take our hats off to some of the personalities there, BHP Billiton’s Manganese President Ravi Moodley, your namesake, and the Head of BHP in South Africa, Dr Xolani Mkhwanazi and then the BHP Billiton Global Manganese Head who had to get the money for it, Tom Schutte.

Moodley: This, of course, the issue of beneficiation is a big issue in the country, but you spoke about something important the carbon emissions that are produced in this industry.  We know that Pravin Gordhan last week talking about the carbon tax implementation date set for 2015.  So, perhaps is this an early effort to try and look at maybe stemming the costs of the carbon tax as it rises in our economy.

Creamer:  They are ticking all their boxes, looking at their own self-interests and they are making sure that their carbon footprint in the area comes down 8,3%.

Moodley: Acid mine drainage (AMD) another big issue at the mines. Work has begun on the construction of infrastructure to deal with South Africa’s AMD problem.

Creamer: In our Central Basin here, this is the most critical area and that is where they have started.  You can see again that it is not just talk anymore it is pouring of concrete into the new plants when you go down to the Boksburg-Germiston border. 

When you see the South Vertical Shaft, there you will see construction taking place and that is for a new treatment plant at R390-million contract given to the private sector company Group Five to put up this high-density treatment works, pump station and also monitoring shafts.  What have they got to do? 

They need to make sure that this AMD water that is polluted by the mining activities over a long period of time doesn’t rise to a critical level, so you pump it out.  But, there is a win-win here, because already the company, which has allowed them to build this plant on the mining site said they want to do a deal with them and take some of the water.  So, even if it is partially untreated, they want 30-million litres a day because they are DRDGold on the Johannesburg Stock Exchange and have shareholders who will want them to take the gold out of these dumps.  To take the gold out of the dumps they need some water, so please give me the water.  Already, you have got this curse of AMD being turned to positive account by helping DRDGold get gold out of the dumps, potentially uranium out of the dumps, sulphuric acid out of the dumps and valuable things out of the dumps and at the same time clear the dumps so that you then release that land in a urban area that becomes very valuable.  It is starting to float all boats and you needn’t be totally depressed about AMD, it is water after all and we know that down at the coast, people spend a fortune to get the salt out of the seawater.  We are getting these impurities out of this AMD and there is money in that muck as well, because we know that there are nitrates there and we know that we can get more out of it and perhaps sell the metals and minerals they get out of it.

Moodley: Water really a critical issue for the mining industry especially here in Johannesburg one of the largest cities in the world to be built without a water source.

Creamer:  Exactly, if you go to any other big city in the world you will find a river.  If you come to Joburg you say where is the river and you have to go down to Vereeniging to see your river and that is where the mining industry has played an incredible role because it has defied gravity, from 1902, to bring the water up here.  Now, of course, we have this other issue that other countries have suffered as well with AMD, but its water, you can use it.

Moodley: We are talking now about resource nationalism, it's a new term, I’ll admit I don’t know anything about it, but mining companies should be more transparent in their dealings with governments to lower the risk of resource nationalism.

Creamer: We nearly went into a nationalisation era. There was a call for the nationalisation of the mines for South Africa.  Fortunately, that was staved off because it is totally non-economic.  But, it doesn’t stop resource nationalism.  Resource nationalism is all over the world, but it is particularly relevant in Africa. 

We see Peter Leon now who is an expert on mining law talking in Canada this week at a very big convention, the PDAC, and saying that if you want to mine at a profit be more transparent, don’t let people get suspicious about your hidden profits.  Open up and this will mitigate the risk of resource nationalism, which is real. 

If you go to Southern Africa, you find even our own government now has got its State mining company that is part of resource nationalism.  Our own government has got royalties and that tax is being reviewed.  It is not only in South Africa, go to West Africa you see Ghana, Guinea, Ivory Coast and many other countries doing the same. 

In Central Africa the Democratic Republic of Congo, Tanzania and Kenya doing the same, but they also ask for free carries there, which means that you have to give the State mining company or the State a free shareholding.  Percentages vary from 15% to 35%.  A lot of the clauses say that you can’t dilute that, so you can’t just say that because you are expanding now your percentage drop below 15%. 

The government says you have got to top that up.  It is a new continent and the continent doesn’t want to be recolonized like it was in the past, it wants to share its wealth and that is going to benefit the world.  We know with urbanisations great demand for metals and minerals and then as the people get more wealth they buy more from the world so it floats all boats.

Moodley:  Martin, well I have you here I want to pick your brain on something.  This week platinum prices told a very interesting story when we look at it.  Platinum prices following in some ways what happened at Lonmin this week, where we saw a one-day strike called in the morning ended by the afternoon.  Really debilitating for a mining company that has been facing months of upheaval. Tell us a little bit about what you saw.

Creamer:  The platinum space is one of turmoil at the moment there is contestation by the unions to gain one-upmanship.  They have all signed an agreement and the idea is that they must now honour that agreement. 

It is no good signing peace accords if you are not going to honour them, because then they are not worth the paper they are written on and it is going to set us back. So, all those unions have sat down, the National Union of Mineworkers, Associated Mineworkers and Construction Union and Solidarity and they all agreed that that sort of issue that happened this week should not happen. 

They should be sitting down and say that they have taken note and they still haven’t got premises there, they are a recognised union and have become the top union, they want an office there.  They don’t have to go on strike to do that, but they are still wanting to posture.  They must get rid of the posturing for the good of South Africa. They have agreed to work together, now they must do it.

Moodley: 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.