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

Kamwendo: A new junior mining fund is opening the way for small mining companies to enter the fray. I am going to sit up straight, because I’m sure many of our listeners also want to know more about this.

Creamer: We have been looking for a long time to try and promote junior mining and now we have the launch of JSS. It is also going to be at the Mining Indaba where it will be putting up a competitive juice with other juniors. I note a lot of them are juniors that are coming in from Canada and Australia.

This JSS wants to promote junior mining in South Africa. It comes in at the bankable feasibility stage. In other words, if you have passed banking muster, they will then bring you into this fund, which qualifies for 100% deduction from taxable income in the first year, which is very generous. Also, it has 70% of the spend qualifying towards broad-based black economic empowerment scorecards every year. So, it has got that empowerment and incentives.

I still think that we need to go much further, because this particular part of the Income Tax Act, the 12J, was designed for exploration. That is before you get bankable feasibility stage, at the high-risk area. That bit of income tax legislation is still not covering that exploration ground.

Coming in at this level after it has been approved bankable this is going to be a wonderful incentive and opportunity; a 100% deduction from tax on your income plus all your BEE scorecards. But, I don’t think it is going to really do what should be done in South Africa. We said over and over follow the Canadians flow-through scheme.

For some reason there was an announcement in the budget - this flow-through scheme is going to come through. The next year they said they have got something much better, which is the 12J. But, no one in the exploration area followed that or found it as an incentive, because it is high-risk at exploration level. Now, we see some have found this as a wonderful opportunity beyond the bankable stage and it will do a lot to stimulate our junior mining.

I think we should go the whole hog and get to what has been proven in other countries and helped to develop that economy. You have had people pleading with the Treasury to introduce flow-through, because it works. Australians are following it, Canadians are doing it. We are really stumbling along when it comes to exploration.

If you don't have exploration, you finally grind to a halt and mining is not industry we should let grind to a halt, because as Trevor Manuel the former Minister of Finance, mentioned at the launch of this new fund, mining remains core to defining the South African economy. It has influenced us over 150 years. Our interactions in business have reflected this and we need to make sure that we boost it. We need to make sure that we go all of the way. We need to really bite the full flow-through bullet.

Kamwendo: It is going to be interesting to hear what comes out of Sona and then a couple of weeks later what comes out of the Budget Speech, because our economy has flatlined and what exactly are the more granular details to kick-start this economy. So, I will definitely be putting this at the back of my mind to pull up later.

Richards Bay Coal Terminal (RBCT) is going all out to set a new South African coal export record.

Creamer: Every time I go to RBCT I am convinced that the private sector and the public sector can work together seamlessly and very well for the good of South Africa. Here you have got a terminal that is private-sector owned, but it is sandwiched between two State-owned entities. On the one side is the rail, Transnet Rail. On the other side it the port, Transnet Port. The way they work is seamless.

This perhaps is a model for us for public-sector companies that are having trouble. Perhaps they should get a good private-sector partner and we see this working and always wanting to go for new records. Now their new target is 77-million tons. It is not optimal but you see them moving gradually ahead in a seamless way, which is encouraging. You also see them wanting to spend a lot of money to develop and modernise their equipment. They are spending R1.4-billion now to make sure that this 40-year-old equipment gets replaced.

I am just looking at a picture of a shiploader in China here. You can see the Chinese are building this new shiploader for us and apparently excellently. This is due to be delivered by May and they are on target and on budget to actually operate this from January 2018. You might say that surely there is going to be an interruption, if you are bringing in new equipment you have got to push the old equipment aside. But no, they have got berth space there and there will be no interruption.

That is very important because we earn a lot of foreign exchange from this coal. Foreign exchange is vital to this country. We have got to promote foreign exchange and this commodity – coal – generates more income for South Africa than any other commodity. You can see that port can actually export 91-million tons. Rail can give 81-million tons and South Africa should be pushing towards that, particularly as the coal price is getting better.

Those headwinds are starting to subside. When I went to RBCT in mid-year last year the coal price was down to $48 a ton, when I went there this time, $86 a ton. So, we can see it moving up and that then could allow them to hit the 77-million target, because in November they did brilliantly, they hit 8-million tons, they have never done that before. A total of 868 trains were sent by Transnet in October to make sure that they could fill 95 ships in November, the all-time record month.

We see our coal going in to Asia, Europe and Africa, but still moving ahead particularly with this target. They did fall back a little bit last year because of the price of coal, they went down to 72.5-million tons, but are now aspiring to 77-million tons.

Kamwendo: Digitisation is the new buzzword that is promising to change the face of South African industry.

Creamer: We have heard the word mechanisation in mining repeated over and over again. Then they said don’t talk about that, let’s talk about modernisation, which was a far better word. But, now they are saying that modernisation really has three main parts; one is the mechanisation, the other one is the digitisation and the third is programmes for behavioural change and that will really modernise our mining industry.

But, the one that a lot of focus is going into at the moment is digitisation, because that converts data into decision-making. It is like putting a quilt over the SABC and everything inside it works in a seamless way because you have got them all interconnected and the intelligence is flowing through and it speeds things up tremendously.

You can do this in mining as well where you can link the orebody to the boardroom and you know what’s going through. You also link it to your customers in the supply chain and this is what they are very keen on doing now. We see that it is not only in mining but other industries. Last week we saw at the Gordon Institute of Business Science how General Electric of United States of America and South Africa’s Transnet, a State-owned enterprise, are working hand-in-glove on digitisation.

Just down the road they have built an innovation centre where there are software engineers interfacing with the engineers working in transport and energy. They are creating this seamless approach that saves a lot of money. But, the big target is that they want productivity, and digitisation can give you productivity.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.