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: The current crisis in the mining sector is opening up huge new opportunities for black junior miners.

Creamer: The current crisis in the mining industry is definitely opening up huge new opportunities for black junior miners and particularly in the coal space.  We know that in the good years a lot of our assets were taken up by foreign companies. They were going to explore those and then turn them into mines.

South Africans are not good for giving money for exploration. Our stock exchange is risk averse as far as that is concerned. The Australian bourse, Canadian bourse and even the London AIM, they understand exploration, so they invested in these various assets in South Africa.

On the coal side these are now becoming available, not only because the thermal coal price is down, but because investors view South Africa as a risky area.  As a result emerging black juniors miners are just going out there and doing deals, because behind this is Eskom. 

Eskom want more then half of the coal to come, not just from black empowered companies, but they want the power to come from black-controlled companies. They want that 50% plus one share. This is giving opportunity to people now to go to Eskom and say here is an opportunity, Eskom on top of that are providing funding for these acquisitions.

They are also even getting involved with equity. A more important step once the drilling is done and they know what sort of coal is there, even before the mine is built, they are prepared to give these emerging black junior miners a contract, which says they will buy that coal. With that contract in hand they can go to the banks and they can get funding for these operations.

So it is really becoming a no brainer. You can see those that understand the situation particularly Robinson Ramaite, who is the non-executive chairperson from Wescoal, saying the deals are out there.

On top of it, the majors who have had long-term contracts with Eskom and Eskom buys that coal on a cost-plus basis, they are wanting to derisk and this is also giving opportunity to emerging black miners.

Makwetla: The Industrial Development Corporation is allocating nearly R3-billion to boost youth entrepreneurship.

Creamer: This was something that came out of the IDC presentation this week. We saw the IDC with lower profits of R1,9 billion with a big impairment R2,2 billion having to be written off to impairments because it means the clients they are giving to are suffering hardship. The IDC is undeterred and is backed by the State.

The Economic Development Minister Ebrahim Patel said that the IDC is not a normal company. Don’t just look at it simplistically at turnover and profit. We want them to go out and do a task.

You can see that their disbursements are up 90%, in other words they dished out money and it is cheaper money at a rate of R16-billion, which was well up from the R9-billion. They are being encouraged to do a lot more. So the IDC is going out and issuing bonds of up to R12-billion in the next 18 months.

Part of the exercise is to get youth entrepreneurship going. The Minister Ebrahim Patel is saying that this is absolutely critical to the future industrial goals of the country and also to allow people to get in to the space of small business activity.

So, R2,7-billion now available for youth-led entrepreneurship from a company which last year generated 19 000 jobs and saved a further 4 000, so that's 23 000, and is being stimulated by the State to really do more and to dish out funds to worthy youth entrepreneur who have been asked to come forward with ideas.

Makwetla: America is offering Sasol a billion dollars to implement its South African know-how in the US.

Creamer: This is incredible. The Americans are offering Sasol a billion dollars as an incentive to come in and do business there.

This is the State of Louisiana, headed by Governor Bobby Jindal, who has visited Sasol’s plants three times to see what it does. It comes against the background of fracking, because of this fracking in the United States there is low-cost gas, they see Sasol as an ideal partner to turn gas, which is low-cost, into expensive oil.

That is what Sasol can do they can turn that gas into diesel, for instance. This diesel is not just ordinary diesel it is low-sulphur diesel, environmentally friend diesel.  They are saying to them that they will give them a billion dollars but will watch their employment threshold because the Governor of Louisiana is looking for jobs as well.

They will also watch their investment and Sasol is looking to invest $21-billion in that. So that is a massive investment, it is about two thirds of their market capitalisation here and about R200-billion over years starting possibly 2014 not only in the gas-to-liquid side but also an ethane cracker, which they have already presented to the House of Representatives in the United States and a red carpet is being rolled out to our technology that we have got used to here, but which other places regard as quite magical.

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.