On-The-Air (24/10/2014)

24th October 2014

By: Martin Creamer

Creamer Media Editor

  

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AMLive anchor Sakina Kamwendo on Friday presented another Update From The Coalface with Martin Creamer, publishing editor of Engineering News and Mining Weekly.

Kamwendo: Diamond miner De Beers is putting R30-million a year behind its relentless search for the next big South African diamond mine.

Creamer: It’s great to see De Beers concentrating on exploration again.  When the crisis hit us in 2008 a lot of people pulled back on this, including De Beers.  The need for a new diamond mine is great throughout the world and South Africa is seen as possibly the third best place for diamonds, and De Beers has this hundred year plus history that it can fall back on, it’s got a lot of data and it’s deciding to really put its foot on the accelerator with exploration, and there’s no greater confidence any company can show in a country than by exploring, because the risk is high and the reward is sometimes zero, and they are putting R30-35 million a year behind this, they are working closely with the government and the Department of Mineral Resources and the momentum is growing.  They say they are even finding kimberlite, you know you can find a kimberlite, but it has got to be diamond-bearing and it’s got to have diamonds that are sufficiently significant to have a commercial operation going. There is a sort of cautious smile on their face, but certainly I think we could see something, particularly now when diamonds are in the news and prices are good.

Kamwendo: The latest figures of mining giant Anglo American show a downward South African production trend.

Creamer: If you look at the overall production in a global sense they’ve done fair, but if you analyse the South African part of it, you see there are a lot of negatives and a lot of unintended consequences, for instance, they mined less coal for Eskom and we know how dependant we are on coal for our lights and they did it why?  One of the reasons was a municipal protest in the area of the Kriel mine, we don’t often anticipate that that will end up stopping mining activities, but we see in the three months to 30 September that is what has happened, so Eskom’s getting less coal. They can’t be happy with that and then, at a time when the diamond price is doing well and a lot of people are focusing on diamonds, fewer diamonds were produced in South Africa as well by De Beers because of safety reasons. At the Voorspoed mine we had the instability of the open pit and they had to remove a lot of waste and concentrate on the safety side, rather than the production side and at Venetia mine as well because of an upgrade.  A less refined platinum, we were really anticipating that, but a big number of refined platinum down 31%, which means, when we look at our export situation, we need that revenue coming in and because of that five-month strike, the refined platinum down and then, iron-ore which has been such a big thing for Anglo, export sales down.  One of the reasons was Transnet, the rail provider, having to go through a maintenance program, but not coming back quick enough, and so, we lost out again, on foreign exchange coming in.  All these are not hugely consequential, because it’s only over 3 months, but hopefully it’s not a continuing trend, because we rely a lot on Anglo American as an iconic type of business, and we see it slowly diminishing its footprint here and diminishing its output, which is not a good sign at this time.

Kamwendo: An interesting public-private partnership is underpinning Northam Platinum’s latest black economic empowerment deal.

Creamer: It’s interesting that people say, “once empowered, always empowered”.  The mines would like a situation where once empowered to be always empowered, because you can see how BEE deals unravel and this is the third BEE attempt by Northam.  You know, when Mvelephanda came in there with Tokyo Sexwale, that unravelled in 2011 because Tokyo was wanting to go into politics and so he ring-fenced all his business activities, then Afripalm took over with another part of Mevelephanda, you had the crash of the shares, Northam shares crashed, and so they breached their covenant in terms of funding that, so now, third time lucky, we hope.  This time they seem to have ticked every box and they’ve come in with a public-private partnership.  They’ve pulled the State’s PIC, which is the Public Investment Corporation, into this and also a big fund manager in Cape Town, Coronation, and hopefully this will give it a lot of strength, because this pair of the PIC and the private Coronation have underpinned the initial funding guarantees for this.  They’ve insisted that those who come in stay there for ten years. They are locked in for ten years, and that they don’t do any other BEE’s with anyone else. So, I think people are learning from past experience.

Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coalface at the same time next Friday.

Edited by Creamer Media Reporter

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