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18/01/2013 (On-The-Air)

safm180113

18th January 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: The world is recycling four times more platinum than in the past, which is slashing demand for mined platinum.

Creamer: The world is now collecting as scrap recycled platinum at the surface level, virtually as we mine.  In the year 2000, you would be lucky if you could get a recycled volume of about 500 000 ounces.  The level is now 2-million ounces, it has quadrupled, it actually level-pegs with Anglo Platinum’s mining contribution and they are the big leader. 

So you can see that the supply dynamics have changed radically and the mines are coming under huge pressure, being competed against by their own recycled metal.  The thing about this metal is that when you use it it is not consumed. You can use it again and again.  Technically that is very good, it serves as a catalyst, but in the marketing sense it is very bad, because it doesn't get consumed, it comes back on the market. 

It is a relatively new metal and now it is being used a lot and that comes back to haunt you.  At the same time you are hit by the perfect storm, Europe not buying diesel vehicles, so therefore not using the same volume of platinum for the autocatalysis market, which is the biggest market, really. 

That goes down 9%, which is a big drop.  Then you rush to the jewellery, because you think that when the price drops they also say low-priced jewellery will save the day.  China, the only real big buyer of jewellery at the moment, you watch them, as the price drops they buy platinum for jewellery manufacture and as soon as it rises, they stop.  So, they keep the price in a very narrow band. The prospect of the price of platinum rising now is not good. 

When you looked at the platinum mining industry in the 1980s to the year 2000 it was growing like Topsy.  I mean, it was 5% a year compounded over that period.  When it came to 2006 and the mines decided that now they are going to project their growth still further, were also boom times.  So they thought the good days were going to continue as they projected their growth and they were hit by a downturn plus all these new anomalies. 

Anglo Platinum, the leader takes the biggest decision of its 58-year history and it closes two mines, mothballs four shafts, plans to sell one mine and says 14 000 of its jobs are on the line. We will keep 45 000 but we need to look at 14 000 jobs.  This sets off a political furore like we’ve never seen before. So we are almost back to where we started as the consultation process begins.

Gwala: Difficult times in the platinum sector. Anglo American Platinum is putting its head on the block – it is offering to upskill and provide a new non-mining job to each and every mineworker that it retrenches.

Creamer: Have you heard of this in the world?  Here they are saying you can take your retrenchment package and the unions are already demanding substantial retrenchment package that not only contain the severance pay, they also contain housing consideration, medical consideration, pension consideration. 

So they are pushing for a substantial retrenchment.  Anglo American Platinum is saying that they don’t think they will be able to place more then a third of these 14 000 in other Anglo American jobs and general mining jobs. We do mine as Anglo America, we mine coal, iron-ore and we think that we will be able to place about 4 600 of you out of the 14 000. 

We will also call in Teba, the recruitment agency, allow them to be on site, whichever mines are needing people, we will allow them to recruit on our properties.  But we think about two-thirds of you are not going to be able to get a mining job.  The third will go from a mining job to another mining job, but two-thirds will have to go into a non-mining opportunity. 

But, we’ve got a social plan of R800-million to upskill you and to prepare you to go into a non-mining job.  We ourselves are spending R300-million just on 15 000 houses being built.  We will like to skill you for housing, which could take 6 000, so already we are beyond the 10 000 mark. 

There are also a lot of other projects because Rustenburg is a shanty town and they need new infrastructure and holes to be dug for reticulation and pipelines.  We will upskill you and prepare you for those jobs if you are prepared to take them and get those jobs for you. 

Even further, we have got Zimele which creates entrepreneurs.  We are prepared to also double the amount of money that it cost them to create a job in order to incentivise them to take on some of you.  We will do this both at the Rustenburg area and the labour sending areas.  So, it’s a very magnanimous gesture. 

I understand the unions are now looking at it, because you can hear from their comments that they are starting to look at this possibility of finance to enter non-mining space, as well as take their retrenchment package.

Gwala: A State-backed diamond beneficiation company – which has received more than R150-million in State and Provincial funding in the last five years – closed its doors over the Christmas period and is heading for voluntary liquidation.

Creamer: We hear the word beneficiation, minerals beneficiation and people say this is what we have got to enter. We can’t just be diggers anymore we have got to add value.  One of the most enthusiastic protagonists of this I’ve ever met is Mohseen Valli Moosa. He was a member of the South African Parliament.

He said in Parliament that we should be beneficiating and then he said that he will go out and prove this.  He is the bother of the Cabinet Minister Mohammed Valli Moosa. He raised development capital and got R97-million from the Industrial Development Corporation and more then R50-miliion from the Gauteng Enterprise Propeller and he set up premises in Sandton.  I went to see them in the 2007 and I was very impressed. 

You had 120 people being mediated by the highest technology I’ve ever seen.  He was saying that they can be another form of African Gucci and he has got links to diamond mines, getting good gems coming through.  I think the first blow was when Etruscan, the Canadians, sold their mines in Ventersdorp and the new owners didn’t produce. 

Moosa was also the lead BEE partner in 82 diamond exploration endeavours, so he was thinking that he was going to get the diamonds.  He was then hit by the global downturn.  I can remember at the opening we even had the former director general of the Department of Mineral Resources Sandile Nogxina, who is now the ambassador for South Africa in Mexico, saying this is the great African dream, people must follow. 

There was great enthusiasm but if you speak to Mohseen Valli Moosa now about African Romance, which was the brand he was using and the company WakeGem, there is a lot more to this that meets the eye.  He is saying that mineral beneficiation will only succeed if South Africa is supported by a pipeline of guaranteed raw materials, long-term funding that allows for marketing and retailing. 

He had these very attractive premises in Sandton and he also put up some very attractive stores, one at OR Tambo International, which was doing quite well. As things worsened, he ended up in far more moderate premises in Wynberg and then the company’s board decided that they were going to close the doors on December 14, which they did. But a day before they were also held up by robbers. 

Now, I understand that the IDC, which is the biggest lender here, is going to appoint an independent forensic audit, because they want to see exactly what happened because it is their funds and I’m sure that the Gauteng Enterprise Propeller will have to do the same. 

It just shows you that you can get development funds you can have a great dream and even have sources of gems and diamonds, but those can dry up.  He didn’t get from the State Diamond Trader what he was expecting and so now he has thrown in the towel.

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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