Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Gwala: South Africa has no option but to do more with its metals and minerals than simply ‘dig dirt’, says a top Government strategist.
Creamer: That government strategist is Dr Paul Jourdan and he is working with the Department of Trade and Industry, the Department of Mineral Resources (DMR), the Department of Science and Technology and also the Industrial Development Corporation (IDC), besides regional governments.
He has worked for Mozambique and Zimbabwe. He is saying that we cannot do what the Australians are doing, just digging it out, putting it on trains and getting it to the ports to get it to China as fast as we can. That is simply out, that dirt digging is simply out for South Africa and we have got to follow the German model. We have got to get more out of this.
How do we do it? There are certain buttons that can be pushed. When people go along with just dirt to Transnet they now at this point get the lowest price, because they are transporting something of such a low value, we will only charge you a limited amount. They have got to reverse that and they have agreed to reverse it that now if there is a beneficiated product that gets the low price to be transported the dirt gets the high price.
At the same, if they go along to the IDC and say they are looking for a loan, the IDC says to them that they are only digging dirt, they have to give them a high interest rate. If you are beneficiating, we can give you a much better rate if you are adding value. And, of course, going to the DMR, they are going to say that what they are presenting to them as a prospecting area, the Geoscience already knows its there, so what are you going to do?
You are not discovering anything. Lets see what you are looking at there, it's a very valuable piece of real estate, we can’t do it the old colonial way of first come, first served, we have got to say, let’s transparently put this out to bids and see what bids come in, but not on a monetary value, but on a what you are going to do to add value with those minerals and metals.
Because it is jobs we need and jobs that can be created through our leverage of our metals and minerals, particularly in manufacturing. As was emphasised, manufacturing is where the jobs are created. In the last ten years, 800-million global jobs came from manufacturing.
Gwala: So incentivising those who are adding value.
Gwala: A new approach to the granting of mineral rights is on the cards, to put an end to old mineral discoveries being dressed up as brand new mineral finds.
Creamer: Governments are being hoodwinked. There was a situation recently in Mozambique where the area that was actually just sold off by Australians for $4-billion, R40-billion we are talking about, was an area that had been largely delineated with funds from Sweden in the 70’s.
Clever people are coming in they are dressing up areas that they are saying they made a discovery, it is not a discovery it is just a re-delineation of areas. As we saw in this Mozambique case they really hyped it up and they ended up selling it before they did anything, for $4-billion.
These guys became billion dollar people. What did the Mozambique country get? Now they have decided that they have got to slam that door and they have introduced a 32% capital gains tax so that it doesn’t happen again.
What people want to do now is work with particular geoscience institutions who know really most of what is in the ground and making sure that they can’t be hoodwinked, going forward.
Gwala: Mine project developers are taking such a market beating that they are taking steps to collaborate and cluster, in order to shield their badly bashed balance sheets.
Creamer: It is not in the natural instincts of mining companies to collaborate and cluster. We have seen in Australia that they pull each others hair out to get on the railway lines etc. But, because of the state of the market, we are finding new project developers in Africa and in South Africa saying we have got to think out of the box.
We have got to cluster and collaborate particularly when it comes to infrastructure. We see now great chats between Exxaro in the Republic of Congo and the Australian listed Equatorial Resources. Brian van Rooyen of Exxaro is talking to the ex-Wallaby lock John Welborn and saying that they really have to bring in all the other companies and make sure that when they upgrade the rail line, they do it collectively and manage it so that they can all use it.
When they upgrade the port, they do it collectively. So, that is the new thinking that even in South Africa one of the speakers at this particular Iron Conference in Cape Town this week, we can even have a commune approach, we can do things collectively and emerging junior miners can work together so that they end up with maybe steel coil rather then just the ore.
So, thinking is now going around and we are working particularly in a sub $100 a ton iron-ore business. Prices are down and they have got to think differently of how they go about their business.
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.