On-The-Air (21/11/2014)

21st November 2014

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: It’s all stations go again for Canadian company Ivanhoe’s R17-billion platinum investment in Limpopo. Tell us more about that.

Creamer: This is close to the richest platinum mine on the planet, which is Mogalakwena. Now we have a second development with the Canadians leading the show here, Ivanhoe, listed in Toronto, but with 10% Japanese support invest. Also, the local community is cut in.  The 26% BEE partnership involves the local community, plus employees, plus entrepreneurs.

The mining licence was held up for a while and that is why they left site with their equipment, but they are preparing to go back to site now, because all the legislative side of it is in place. This is a potentially mouth-watering development spending more then R17-billion on this in the first phase. It has got a long horizon with the first phase going 30 years. It is different to the normal platinum mine that we are used to in South Africa where the platinum only reaches as high as this table.

The stacks of platinum there go beyond the ceiling. They can have not only mechanised mining but large-scale mechanised mining. What they have said is that they will tick all the boxes when it comes to paying salaries they are prepared to pay very qualitative salaries plus train the people. They are adamant that are going to be very safe.

It is going to be an underground mine and they say that they are going to represent a new era in South Africa’s mining, which has been discovered and developed for the last 300 years. They say they are entering this new era against the background of all the angst we have had in the platinum sector and also the low price of platinum at the moment is not putting them off, because they know this is a cyclical industry.

By the time they begin producing in a couple of years time the cycle is likely to have changed. It is only Europe really that is down and is not buying the platinum that it should do. When urbanisation really materialises in many other places we know that the demand for platinum is going to be strong.

Kamwendo: The strife-torn Central African Republic has become Africa’s new “blood diamonds” state.

Creamer: This is a sad story, the ungoverned Central African Republic is going from bad to worse. We saw skirmishes between the UN Peacekeeping force and rebel groups just this month.

What is being stated now by the International Crisis Group is that this is the new blood diamond capital. That is really bad news for diamonds, because out of all the commodities at the moment, perhaps diamonds are doing best, because they don't have that oversupply. Now you have a leak in the system and although the Kimberley process has suspended all diamonds coming out of the Central African Republic and we find that there was even confiscation in Belgium on suspicion that some of the diamonds where coming from Central African Republic, we know that diamonds are such that they are easily smuggled.

What you need to do is to stop the artisanal mining now. The International Crisis Group reports that it is visible that this artisanal mining is taking place. What is happening is that the diamond traders go in and they pursue the various factions to give them protection. So if they need protection from the rebels or the militia they get it.

What has to happen now is that they have to ring-fence these operations to make sure that mining does not take place. Already millions of dollars worth of diamonds are leaking through the system. The UN has estimated that $24-million worth is not huge at the moment, but this could develop into something.

I think one of the ironies is that one of the great big adverts you see all over the world for diamonds and many of them are flighted over the weekend, show this great picture of diamonds being a commodity of love, but here you can see that some of the people involved won’t even have a finger to put a diamond ring on, because some of their arms get chopped off, as we know from the blood diamond story.

Kamwendo: Low commodity prices are causing widespread job uncertainty, even in the world’s strongest mining countries.

Creamer: Even in the world’s strongest mining countries, you will find job uncertainty now. In Australia, which was one of the last to be hit by the downturn, people with qualifications are walking the streets. Geologists, they say, are worst hit, 15% of them unemployed. This whole era of low prices for the commodities is causing a lot of job uncertainty and even production cessation, even in the strong mining jurisdictions.

Kamwendo: 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.

 

Edited by Creamer Media Reporter

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