Every Friday morning, SAfm’s AMLive’s radio anchor Tsepiso Makwetla speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly.  Reported here is this Friday’s At the Coalface transcript:

Makwetla: Encouraging news on the electricity front is the offer of two top private sector companies to build a power station – outside of the usual Eskom framework.

Creamer: Yes, it is encouraging because the private sector is becoming involved. We saw this week that two top sector private companies are coming forward to build a coal mine and a power station and outside, of the usual Eskom framework.  This is what the Department of Energy has been encouraging and been saying come forward with proposals. 

They gave 2 400 MW to coal-fired power stations.  Coal-fired, although people are sometimes against it, it is the most economic, so it is fantastic that Exxaro, which is a black-controlled company listed on the Johannesburg Stock Exchange, has teamed up with a very big French player GDF SUEZ and they are planning to bring in 600 MW.

You might say it is quite moderate as the initial idea was that they were going to do 1 200 MW, in fact it is expandable to 1 200 MW depending on the transmission capacity and water, because they are doing it in the Waterberg. Although this ‘Thabametsi’ is the name of the coal mine that will come through which has been on the cards for a long time, means ‘mountain’ and ‘water’ there is not a lot of water there. 

So, water is a constraint and they want to make sure before they come through with grandiose megawattage they first see to these essential things of transmission and capacity.  We see that this is the coal-fired option coming through, which I think is important.

Makwetla: A major Gauteng steelmaker plans to spend a billion rand to build its own electricity plant, which will make use of the co-generation method of power generation.

Creamer: This is Scaw Metals and if we look at Scaw these days it is no longer owned by Anglo American, but it is owned 74% by the State, in the form of the Industrial Development Corporation.  It is 21% black-owned through the BEEs and the remaining 5% is worker shareholding. It is a very interesting shareholding. 

This has just come through in Germiston and they are saying that they are thinking of spending R1-billion on producing electricity from waste heat and waste gas.  This is another thing that the Department of Energy is encouraging people to come forward with proposals on what they call cogeneration.

You cogenerate electricity and you use as much of it as you can and what you don’t use you then arrange with Eskom to put into the grid again.  This is Scaw Metals in Germiston doing this and hoping as part of another big expansion totalling R3,4-billion they will also look to cogenerating some electricity and in this case about 68 MW worth.

Makwetla: Thanks to South Africa’s brand new business rescue laws, a gold mine that was closed last year when it ran into a cash crunch, is being given a new lease of life.

Creamer: We have seen the liquidation process being very harsh. We saw it with Pamodzi Gold last year where it ended up with a few devastingly destructive consequences. What they have written in the laws now, in the Companies Act, is this business rescue plan idea.

If you have got someone interested in the business fairly early on, as is the case with the Burnstone gold project out in Mpumalanga, they then put a proposal to the business, creditors and shareholders that in this case has been accepted.  It has been a win-win because the banks are sitting there and they are still owed about $177-million.

The banks are being very wise and patient and will give it a three-year holiday to allow this business, which is the Burnstone gold mine, a project really, that was employing 2 500 people, to come back into operation. Taking up the challenge is Wits Gold, listed on the Johannesburg Stock Exchange, and they will make sure and believe that this mine comes back in a better state.

Burnstone was listed on the Johannesburg Stock Exchange through the Great Basin Gold group and also in Toronto. It just shows you how difficult these projects are.

This has been in the air since 2007 they started building this mine and you can just see with the gold price down and with some faulting that they found unexpectedly, they came into a cash crunch and the whole place had to close. Thanks to this new legislation, the business rescue plan, there is now great hope that this will be put back on its feet by Wits Gold.

Makwetla: 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.