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10/05/2013 (On-The-Air)

safm10may2013

10th May 2013

By: Martin Creamer

Creamer Media Editor

  

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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 and Botswana are collaborating to boost the export of coal from Southern Africa.

Creamer: It is great to hear this collaboration between Southern Africa countries and African countries.  That is one of the themes of the World Economic Forum.  It is all because of Mother Nature and needs in South Africa. 

Of course, if you go up to our northern belt, there in the Waterberg, you will see that the coalfield really straddles the border of Botswana.  On our side we call it the Waterberg and on their side we call it Mmamabula coalfield.  Now we are deciding to get together and combine our logistics for this. 

Transnet has now let it be known that it will be linking the Richards Bay Coal line to Botswana.  Obviously that will take some time, seven years, to do that, but they hope to do it by 2020. 

In the meantime, they are bringing moderate amounts down and exporting through Durban.  The big story here is that Botswana wants to diversify away from its diamonds.  It has put a lot of emphasis on coal and has got a coal development unit. 

It was looking west at one stage for an outlet and was thinking of building the Trans Kalahari rail and exiting at Windhoek into the markets of Europe.  Now, we can see that there is far more logic to actually look east, looking towards South Africa where there is existing infrastructure that needs to be built up. 

There is going to have to be an investment in the Waterberg but we can’t do without the Waterberg, so that investment in rail has to come anyway.

Gwala: South Africa’s new Coal Roadmap process under way places a massive “urgent” sign over securing future coal supplies for Eskom. 

Creamer: This Roadmap has been drawn and has taken quite a lot of time, but still hasn’t reached a climax. That will come about in June/July.  In the meantime, it is quite clear that the number one priority and growing more and more urgent at the moment is to make sure that future coal supplies get to Eskom. 

The Roadmap deals with all stakeholders’ interests, they are represented by business, government and all the technical parts of government, including the Council of Geoscience.  They are saying that in the next few years Eskom is going to need about 60-million tons of new mined coal coming from new sources and by 2020, 120-million tons. 

We have to start putting our foot on the accelerator here, because 61% of Eskom’s coal currently comes from eight big coal mines.  The old idea was that you put the power station where the coal was. That is the most efficient way to do it.  If you look at Eskom looking forward they are fairly well contracted till 2018.  There is a 20% gap there, I think 80% coverage supply has already been contracted.  They have stretched some of their contracts. 

Looking forward Eskom would want to get about 1-billion tons of coal from new entrants, emerging miners, particularly black controlled mines.  That could be a different sort of scenario that we get because there will be smaller operations coming in. 

The exploration needs to be done and it needs to be done urgently and they need to firm up those sources and this is what is being said now coming out from the Coal Roadmap, which is reaching the final stages of its report.

Gwala: The Chamber of Mines this week made an impassioned plea to government to cut ‘red tape’ and replace it with ‘smart tape’ to lure investors.

Creamer: Red tape is just out, all over the world.  The world is going through an economic shock and red tape just retards everything. People take so much time and they lose so much money.  What they are looking for, now that we are in the smart era, we have got smart technology, smart management and now we also need smart government. 

They are looking for red tape to be replaced by smart tape, so that we can have something innovative that actually floats all boats and is also a win-win-win situation for all the participants.  Chamber of Mines again emphasising that we need to attract investment.  Like in the coal scenario, if you are going to have to attract investment to make sure that we get this coal, you can’t have people being tied up with red tape. 

I spoke to an investor the other day who just put R12-billion into a South American country.  I asked him why he went into Chile? He said that in Chile, they roll out the red carpet, when I come to South Africa, they roll out the red tape.  So, that is the sort of attitude that some have towards investing in South Africa, were we are now looking for smart leadership. 

That is the cry at the moment. It is urgent, for the sake of South Africa.  The mining industry, which underpins the employment of 1.3 million South Africans and generates a lot of wealth, is not growing.  It hasn’t been growing for the last two decades. Unless we do something to attract investment, we are going to end up being a country that is mineral rich but mining poor.

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.

 

Edited by Creamer Media Reporter

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