12/07/2013 (On-The-Air)

12th July 2013 By: Martin Creamer - Creamer Media Editor

12/07/2013 (On-The-Air)

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

Makwetla: A new breed of platinum mine developers are moving South Africa towards the potential of mechanised platinum mining.

Creamer: Platinum developers are moving South Africa towards the potential of mechanised platinum mining.  The latest to do this is the Platinum Group Metals Company, PTM, listed on the TSX.  They have pulled off some amazing tricks here. They have already got a global award for their exploration, because the head Mike Jones, who is the son of a geology professor, so geology is really his game. 

He has gone into an unmapped area of the bushveld where people didn't say there was platinum and he has discovered what he says is a brand new form of reef for South Africa.  It is not the normal Merensky Reef or the UG2 reef or the Platreef, although it is north of the Platreef.  

He is calling it T-reef after those who actually discovered it and F-reef.  So we are having a situation there where the big things in mining are the grade, the depth and the thickness.  When it comes to thickness these new discoveries have got a wide orebody, which means they lend themselves to mechanised mining. 

This is the second one that has come through.  We know Ivanplats, also listed on the Toronto Stock Exchange, has actually in the Platreef found a very tall reef, which means that mechanised mining is on the way.  It means that we are heading perhaps for a new era of mining platinum and we notice that both these initiatives, both on the Toronto Stock Exchange, both coming through from Canadians, both with Japanese partners. 

The Japanese government really in partnership with both through Jogmec indicating that the Japanese area getting a little concerned about platinum supplies.  They know that they are so important for the automotive industry and starting to secure offtake, so getting in early on the exploration activities. 

Some good news coming through when the PTM group found that there is such a promising orebody there they got the news in Vancouver fairly in the early hours of the morning and it was good to hear that they could get on to our Samrad cadastre system from Vancouver and actually apply for further extension there. 

It came through, because normally there is a lot of criticism of our automated system of actually applying for prospecting licences.

Makwetla: Eskom’s coal cliff’ could deal another blow to South Africa’s already worrying electricity outlook.

Creamer: Eskom’s coal cliff analysts are saying, and three of them came out fairly strongly this week, could deal another blow to South Africa’s already worrying electricity outlook.  Now, what is this coal cliff?  It is a gap in supply that Eskom is facing from coal.  I’m looking here at this particular graphic, which shows you that the uncontrolled contracted portion here is huge. 

So, Eskom is going down the slippery slope here on the contracted coal, but it hasn’t actually got the uncontracted coal sorted out.  We know that they want to introduce black-controlled juniors to the space. That is not going to be an easy thing to do particularly in this financially constrained environment. They need 60-million more tons, but they have got to come from new capacity, not existing capacity. 

So analysts are sitting down and saying if you don’t get moving very fast now, from 2015 you are going to go sliding down from this slippery slope and South Africa is going to be hard hit.  Eskom has got a little bit of a different date on it, they are talking about 2018, but still somewhere in between there we have got to get moving because, we know how difficult it can be.  The legislative environment isn’t so favourable, you can’t suddenly just go in and start mining.

You have got to get water-use licences, environmental backing and these are different departments, they are not the Department of Mineral Resources.  They are saying get down to some policy framework and encourage coal mining at the moment. 

Without that coal we are really going to be in a very bad way and although people think that they can go for wind and sun that is such a small percentage of what can be supplied that you have got to get into coal. For the next 30 years coal is going to be the planet’s main energy source for electricity and that needs to be acknowledged. 

So, they are looking for some sort of policy atmosphere because they say the coal is in the ground.  Get a better policy, get better certainty and don't go towards trying to secure coal in a forceful manner, because they feel that will push the prices down and already the prices aren’t conducive to investment and they want a climate for investment.

Makwetla: After being the world’s biggest gold producer for so long, South Africa has into an ignominious sixth place below Peru.

Creamer: South Africa falling into sixth position.  We were always top dog, only seven years ago we had this situation where we were the biggest producer in the world. Then we started slipping down the slope.  We have now got the tough wage talks going on, we have also got a low gold price, so heaven only knows where we are going to end up. 

Already we slipped below Peru, so ahead of us know are China by a long shot, followed by Australia, then the US, Russia, Peru and then South Africa.  If you look at recorded history, in the last 126 years South Africa produced more gold then anyone else in the history of humankind. 

t was something 51 000 tons of gold.  Now we really are not shaping up, even though there is still more gold in the ground than we’ve mined.  So it is just a question of getting down to it.  This industry employees 142 000 people, it pays R22-billion in salaries and wages even in this depressed state, so imagine what it can do if it actually got going. 

We know there are ways of doing this even beyond mechanised going into an automated state that people are talking about, but that is all theory at this stage.  The real practical is that the per capita earning of mining people are earning a year R155 000 a year.

This could be extended. Last year the mining industry paid R2,1-billion in corporate tax, so there is all these benefits if we can get gold moving again.  It is not just a pricing issue although the price is down now and the rand price is bad. We always look at the rand price because that normally gives us a bit of consolation. 

Below the R400 000 a kilogram mark now and it is just not giving any incentive for people to do more in gold.

Makwetla: 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.