AMLive anchor Sakina Kamwendo on Friday presented another Update From The Coalface with Martin Creamer, publishing editor of Engineering News and Mining Weekly.

Kamwendo:Two Australian companies have come forward to help Eskom meet its primary energy needs.

Creamer: You can always expect something from the Australians, they are always quick off the mark.  Two offers of help in primary energy and one quite exotic that we are not used to, and that’s gas, and of course it’s Sunbird, listed on the ASX.  They have bought the asset which is off the West Coast and they want to supply that gas to Ankerlig, in the first instance, which is, of course, like what an alcoholic does with alcohol, this Ankerlig is doing with diesel, and you know, we spent something like R10-billion on diesel last year, because these are really being over used.  These OCGT’s, which is the Open Cycle Gas Turbines.  Now people are saying “let’s give you gas, let’s use gas”, and it’s interesting that the South African’s aren’t gas-orientated, because the Australians bought that gas from Forest Oil, and we haven’t been able to get in on that spot, except through a portfolio investment with PetroSA, which owns 24% of Ibubesi, which wants to pipe that gas in. There’s still a long way to go, just the terms sheet has been agreed, really, with Eskom, and then the second Australian company, which is South32, this is a new spin-off out of BHP Billiton, and it’s saying,  “look, if this deal goes through and it’s approved by the shareholders, we’ve still got a lot of coal, and we’ve got a lot of coal resources, we want to continue to work with Eskom on the primary energy front.”  Along with South32, they are also saying, if this deal goes through, we are going to have 200 top jobs in Cape Town, doing service, just as BHP Billiton gets service done out of Kuala Lumpur, we’ll have their service side done from Cape Town. So, some sweeteners coming through if South32, which will be based in Australia, but also listed in South Africa, if that is approved by BHP shareholders as a spin-off demerger.

Kamwendo:Black-controlled African Rainbow Minerals is closing its Machadodorp plant and opening a new one in Malaysia, because of Eskom’s high prices.

Creamer: This is sad for South Africa, you know, Machadodorp losing out, Malaysia gaining.  This has been on the cards for some time, they produce ferromanganese alloy at Machadodorp, and, of course, they use a lot of electricity and the uncompetitive nature of electricity from South Africa versus electricity from Malaysia, has just been compelling for them to move to Malaysia and they are on track with their project there and on budget.  What do we do about this? Well, it’s very difficult, because you see down the road, BHP Billiton’s Metalloys, which also produces ferromanganese alloy, still going on, and that will be part of the South32, if that comes through, and they said in an international conference call this week, they are going to keep their beneficiation efforts.  You get the one closing in Machadodorp, you get another one in Meyerton and the spin-off Australian company saying, no, no, we’ve got to keep this going.  If you look at the two, you’ll see that BHP Billiton was actually very far seeing in generating its own on-site electricity, and it uses the offgas, so, the gasses that come off, that are wasted.  BHP Billiton in Meyerton has pulled that gas into a system where it generates electricity, and it makes itself 20% free of Eskom, and this has been the big difference, so if you had been very foresighted, and got your own energy going, you would probably have Machadodorp still going.

Kamwendo: Mining giant Glencore this week took the unprecedented step of signing a major human rights deal in a bid to keep its activities squeaky clean.

Creamer: Human Rights day is tomorrow, and you see a very big mining company, and the most hugely diversified mining company, which is also listed here in Johannesburg and headed by the South African born Ivan Glasenberg. He has taken this wonderful step of putting human rights right up there, and he re-affirmed the company’s commitment to the United Nations Declaration of Human Rights and the UN’s Guiding Principles on Business and Human Rights and the company has signed these high principles that business must follow now on human rights, of course he is operating right around the world in some of the most challenging frontiers.  This is going to be an important thing for South Africa to have that dignity put right on top in mining is becoming very important and this is one of many steps that have been taken by Glencore, I think they are taking the lead now to make sure that they are beyond reproach when it comes to the issues of human rights and they are moving strongly on safety as well.  We saw they hosted a massive conference here last week and they’ve also joined some of the big bodies like the International Council of Mining and Metals which maximises the contribution of mining, minerals & metals to sustainable development, so I think it’s far seeing, it’s getting ahead of its peers, and it’s doing so quite symbolically on the eve of our Human Rights Day tomorrow.

Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coalface at the same time next Friday.