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: South Africa’s energy is going green with the help of a R10-billion investment by our State-owned Industrial Development Corporation.

Creamer: Yes, that is the IDC wanting to put it investments into green and doing so by putting its money where its mouth is, R10-billion worth in the portfolio at the moment and planning to grow that.  It is, of course, going in to wind, sun and water.  That is the renewable side of the business, which is being promoted by the Department of Energy in a model way, a lot of people say outside the country. 

They have had 47 projects now worth R80-billion and financial close has been happening week after week in May and June.  These are boosting our economy.  The energy coming out of there is going to be expensive, particularly initially and that is why they have had two bids with another on the way and in each bid they expect the bidders to come with a better price. 

So hopefully this price will come down, because at the moment it is horrifically high.  Some of it above R2 per kilowatt per hour, where coal is coming in at 61 cents a kilowatt hour.  There will have to be a meeting of those prices, but in the meantime it is giving us a good fillip. 

We can see not only is IDC coming in as a State participant, but making sure that it funds the equity of the communities that get a stake in these operations, and also the black-economic empowerment partners. They also are trying to promote the manufacture of parts and this is crucial. 

We need to have the turbine blades built here. We need to have the thin-film solar done here and some of the work for the micro-hydro power plants done here.  So they are also putting R500-million into that and hoping to do more development along the component-manufacture line.

Moodle: There are big concerns around energy in South Africa and, of course, green energy environmentalist would love to hear that.

The ‘NEETs’ crisis – the acronym for the crisis of young people not in work, training or school – is emerging as South Africa’s most pressing problem.

Creamer: NEET, it sounds good, but it is a horrible word and it’s swinging through the world at the moment.  Not only South Africa where the World Bank said this week NEET, is a youth term.  It is for youth that have no current educational activity, no current employment activity and no current training activity. 

We have got 7,6-million of these in South Africa.  We have got an unemployment problem, but we really have got a youth unemployment problem.  You have to take some emergencies steps here and the World Bank, who outlined this this week, said that it is like a hemorrhage, when doctors have a bleeding hemorrhage they rush to stop that blood flow otherwise the patient dies. 

You see none of that urgency when it comes to NEET, which is this no unemployment, no nothing for youth going forward.  What they say you have got to do is, number one address the drop-out rate at school.  You have got to address that drop-out rate. 

Number two you have got to have second-chance education, you have got to allow people to go into FET colleges and further education training colleges and keep them going.  Then you have got to have public works programmes and put them into public works programmes.  But biggest of all, says the World Bank, especially for South Africa, is economic growth.

We are part of the Brics, which is Brazil, India, China and South Africa, and when they examine the statistics from 1995 to 2008, they see that 1% in economic growth, gross domestic product growth, in South Africa, translates into far more employment expansion then in any other Brics countries.  In fact, if you look at GDP of 1% in China, it is something like 0,06% employment expansion. 

Whereas if you look 1% economic growth in South Africa, the employment expansion is many times more at 0.43% expansion.  So this is where the big effort needs to go and, of course, there are problems with that in the moment.

Modley: I know we want to solve unemployment through mining, the gold price has been the story of the week, but coal is something we haven’t really noticed.

Eskom needs a mountain of coal and new junior coal miners are rising to the challenge.

Creamer: Coal, Eskom needs a mountain of coal.  We are sitting here courtesy of coal, we have got lights here and we drive courtesy of coal.  Our planes take off courtesy of coal, because that local air fuel is made from coal.  So, we are hugely coal dependent.  Eskom is very coal dependent. 

We produce 250-million tons of coal a year in South Africa, Eskom takes more than half of that.  Eskom take 130-million tons and what is it doing?  It is facing a supply cliff from 2015, says the SA Coal Roadmap, the supply situation is dire. 

Eskom sees it more as 2018, but be that as it may, between 2015 and 2018 is going to be a coal crunch. We cannot allow that to happen.  Junior coal miners are stepping into that space and we saw the JSE-listed Wescoal being cock-a-hoop about this opportunity. 

Wescoal is saying that they are going to be stepping into this even though Eskom is demanding that the coal is from black controlled juniors, in other words, they have to have 50% plus one share.  They have to control the situation.  When you put that to Wescoal they say that this is an opportunity not a threat and that they want to climb into it. 

But, at the same time they ask: how is Eskom going to get this 60-million tons from new supply?  They say that there will have to be 20 more Wescoals like themselves to actually achieve that goal.  So it is a huge opportunity, a huge threat, and we just hope that more junior now step in to the opportunity and there is going to be funding for that.

Gwala: 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.