On-The-Air (08/07/2016)

8th July 2016

By: Martin Creamer

Creamer Media Editor

  

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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: South Africa has hit the global high spots with the opening of the world’s most modern coal lab in KwaZulu-Natal.

Creamer: Users are saying this is the best lab in the world and this is a great source of pride for South Africa, because our reputation in coal has got to be good. It is no good samples of coal going out into the export world and people saying that this is not the coal that they bought.

The reputation of South Africa is great and coal is important for us at the moment, because this is the mineral that is creating the most revenue and foreign exchange for South Africa at the moment. It is not platinum like it used to be or gold, it is coal. Since 1976 they have had a lab at the Richards Bay Coal Terminal (RBCT), but now it is a brand new one. It is done with SGS South Africa, the Swiss-based SGS.

This is a very high-level of quality that they demand around the world. They have co-built this in partnership with the RBCT. This really impresses me, because I call it a public-private-public partnership, because you get Transnet bringing all this coal in and people are saying they are doing a very good job at the moment with capacity to bring in more. The private sector then running the coal-terminal in a very efficient way and spending R1.34-billion on replacing old equipment and also now spending R49-million on this new coal sampling laboratory with people saying it is the best in the world.

The they pass it on to the port authority, which also does a good job in exporting. A lot of people are saying that Richards Bay are one of the showcases on how to do things with coal. Hopefully we will be able to hit our record that we hit last year, South Africa exported 75-million tons of coal, a record in difficult circumstances in the world. People are saying how does South Africa do it? They were saying this is Madiba magic that we can get this coal out. They are looking at hopefully another 75-million tons this year.

Kamwendo: Wits University this week undertook to take South African mining to the peak of high technology with the unveiling of the new Wits Mining Institute.

Creamer: We see a lot of determination in South Africa at the moment to get back to those high peaks in research and development. Wits now is taking a stride forward with a long awaited unveiling of the Wits Mining Institute. It is a new institution within that university that has a lot of mining expertise already.

The former School of Mining Engineering head Prof Fred Cawood is now going to run this Wits Mining Institute holistically. They are not just talking about graduates, they are talking about all skills, artisan skills, technician skills, because this is what is needed as mining moves into the 21st century. If it doesn’t, it is going to end, because we are getting deeper and you need to be able to mine at depths safely.

They are looking at a sort of an automated tunnel, a tunnel in mining that will be totally automated where humans can’t go or where it is not viable to go. They will have this automation and already if you go to Wits you will see a mock mine in the School of Mining, you will see the shaft that goes down the stairwell.

The tunnel has some of the materials from an actual mine. You will see the use of drones there. You make sure that you get a safe as possible mine and at the same time link up with satellites and be able to link up with the internet underground, which we haven’t done.

You can see even at Comro now, the old Chamber of Mines Research Organisation, being resuscitated. Again this determination to get back into the highest spots of research and development in South Africa, where we used to lead and where the world and jurisdictions Canada and Australia are using our know-how. We have fallen behind and this is a problem and we are going to catch up.

Kamwendo: Brexit is providing a “staggering” opportunity for South Africa’s gold mines to take full advantage of the increased dollar gold price.

Creamer: That staggering opportunity is introduced by the World Gold Council, which is normally quite understated in whatever it says. They say with the Brexit there is a staggering prolonged opportunity for gold miners. It is just a pity in South Africa we are now the fifth largest gold mining country, we used to be the top. We are now below Peru. We should play catch up because it is opportunities like this where we could really exploit if we were still in the same position.

You can see that even several of our mines now in this situation with the weak rand and the dollar price of gold rising there is a tremendous opportunity to generate hundreds of millions of rands in free cash flow coming in to this, which is such a good opportunity. Moving quickly away from debt, you can see some of the companies already liquidating their debt ready to move forward.

There is a lot of mergers and acquisitions also coming around, which wasn’t in this situation before. A flurry of that particularly in West Africa mine wanting to do that. We see a lot of people looking also at our own gold that South Africa holds. We, as South Africa Inc, hold 4.4-million ounces. Where are those ounces? People are starting to ask where is South Africa holding its gold? Should it be holding more? Should it be doing more with this gold?

Parliament has been asked to answer questions where this gold is. We find a lot of that gold is sitting outside of South Africa, very little inside South Africa. They won’t give exact details of where it is, but they say the Bank of England holds a lot of it. The reason why they are holding it, is because they say it is efficient when you have got to operate. We should learn a lot more about our gold and how we can make far more use of it.

Those 4.4-million ounces are worth R75-billion at the moment. Perhaps that will shoot up with the gold price moving higher.

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

 

Edited by Creamer Media Reporter

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