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15/02/2013 (On-The-Air)

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15th February 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’s newest gold miner may share profits with employees and bus mineworkers home to allow them to spend more time with their families.

Creamer: This is Sibanye Gold, which was listed on Monday.  We can see it now committed to sharing profits with workers.  It is in the listing statement and is firmly entrenched now so the trend is here where more companies will be sharing, directly, their profits with workers.  It will be on a bonus basis and a performance basis. 

Interesting the performance side the actual dishing out of these shares will be benchmarked against peer groups, so they will look at how they are doing against AngloGold Ashanti and Harmony and all the other mines.  That will depend on how many shares go into issue.  Up to 5% of the shares can go towards the staff, 35-million of these. 

At the same time they are looking at this vexing issue of migrant labour and we know that we haven’t got global best practice here.  When you say to them in Australia it is fly-in fly-out, in Argentina people have been flown 2 500 km every 10 to 15 days from the south into Buenos Aires. They are saying that they will have to look at busing first.

This is the idea now trying to get towards global best practice.  They know they can’t do away with migrant labour system at the drop of a hat, they also feel loyalty to people who have been involved in this for so long and to the labour-sending areas, which would crash.  In the meantime, they are looking very much at housing, accommodation, converting the hostels and also making sure that people get home more frequently. 

Those places they call home they are hardly ever there and on this basis they go once a year, maybe twice, now they want to increase that frequency and they want to use a busing system to get them out to their homes.

Gwala: A black empowerment company has now received a R17-billion bonanza from South Africa’s rich iron-ore endowment in the Northern Cape.

Creamer: This is Kumba Iron-Ore and what they are giving out must be the largest collective social dividend in the history of the world.  They have now given out R17-billion since listing seven years ago. 

I can remember driving out to the old Iscor in December 2005, because all these assets were State-owned and Kumba, which was more then just iron-ore at that stage have been unbundled out and sitting in the desk there was Dr Con Fauconnier, nearby was Sipho Nkosi, and they were working out the architecture for what has turned out to be a brilliant proposition. 

I mean, if ever you had to go into the minds of government when they drew up the mining legislation and the Mining Charter, this would have been the model.  I think this exceeds their model, because not only is the black-empowerment company, which is the JSE-listed Exxaro getting 20% of this flow and they just got another R2,8-billion which is good for their company which is majority black-owned, but also 3% goes directly to the community. 

They have got this community trust, which now has received another R400-million on top of the R500-million of last year, for the education and the activities they do in health in that area.  Then the other 3% to make up the 26%, going into the workforce.  We saw in November 2011 that 6 000 of those workers became half millionaires pre-tax. 

Now they are in to the next 5 years where they can again collect, in four years’ time, more dividends.  On the housing front, Kumba is doing very well with the new Kolomela mine and the integrated housing system they have got there, you have the manager with the full spectrum of workers in an integrated system. 

They are really proud of that and they really want to get the world to have a look at it.  Then on the vexing issue of hostels they have converted all their hostels to family units.  So, way ahead of the charter and a great credit to South Africa.

Gwala: The world’s central banks are buying a record volume of gold, the highest official-sector level since 1964.

Creamer: In almost a half century, gold has never been purchased at this level by central banks.  Central banks are now buying gold again and its not the big core central banks, because they haven’t got any money. 

The European central banks haven’t got that sort of cash to dish out.  You have got the peripheral central banks of the world and in this particular quarter it was Brazil and Paraguay really topped up on gold, because they are sitting there on cash.  They feel they have got too much cash so they are converting it into gold. 

We saw for 2012 they bought 535 tons of gold, which is the biggest amount in 48 years; it was 17% up from last year.  But, even more important, if you look at the last quarter of that year, you see that the purchasing is accelerating and in that quarter it went up 29%.  The quarter was actually an indication of the future to come. 

If you looked at the whole year tonnage wise the whole world only bought 4 405 tons of gold.  Although in value terms, this was an all time record of gold purchase of R236-billion, but in tonnage, it was down.  If you look at the quarter, you will see that also tonnage is rising and at the same time recycling is falling. 

That is very good news the recycling of that gold is down 5%.  Production from the mines I think South Africa failed to score, because it didn’t produce enough.  It was one of the two countries in the world that didn’t come through with greater production, the other was Indonesia.  Really stepping into the breach on the production side was China and India. 

We see again central banks looking at gold and that means that as people lose faith in their currency and as there is more quantitative easing and asset purchasing and all the rest, people see that too much money is being put into the system, they go to gold.  The official buyers, the central banks, up higher, the highest since 1964.

Gwala:  So gold is becoming the good old safe haven again.

Creamer: Yes it is.

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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