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21/10/2011 (On-The-Air)
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21st October 2011
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Every Friday morning, SAfm’s AMLive’s radio anchor Gillian De Gouveia speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

De Gouveia: We have been talking gemstones just before we came into studio, some interesting developments happening in Zambia. Tell us a bit about that.

Creamer: Zambia’s coloured gemstones have really returned to world markets in a blaze of lucrative African glory. Taking them into the markets again and also mining them are the South Africans who, of course, have understood the diamond industry very well. If you look at the value of these coloured gemstones like emeralds, rubies and sapphire, carat-for-carat these coloured gemstones are frequently worth more then the finest diamonds.

That is something that startles people, because there has been a consistent supply of diamonds and that’s why diamonds have done so well in the world, with De Beers being behind it. But, there has been a very inconsistent supply of these coloured gemstones and they have largely been seen of sort of holes-in-the-wall in very small operations.

Now, Pallinghurst, which is listed on our Johannesburg Stock Exchange and led by Brian Gilbertson, has got a big interest in Gemfields, which is the London AIM-listed company. Gemfields has got this Kagem mine in Zambia which is really applying modern techniques and making sure that there is a lot of consistent flow of these radiant greens of emeralds and the princely purples coming through with the amethysts. They are looking at an ruby mine now in Mozambique.

They are changing the face of this coloured gemstones business. A fantastic auction has just taken place, the emerald auction in India. They are now going to have an auction per quarter and they are looking at really trying to create in the coloured gemstones business what De Beers has created with diamonds.

De Gouveia: Has Zambia been known as a country for its gemstones?

Creamer: This emerald mine, which they acquired is now 25 % owned by the government. It has been there, but, as I say, the modern techniques and the right way of mining hasn’t been applied on a global scale to coloured gemstones and now Gemfields and their big shareholder Pallinghurst, which also has a big interest in Faberge jewellery, is wanting to bring new order to this so that can reinstate the value of these coloured gemstones.

De Gouveia: We move from gemstones to tin and we see South Africa talking the lead as far as tin is concerned in Rwanda. That sounds quite interesting.

Creamer: Tin is the new money spinner in Rwanda and a South African is leading Rwanda’s latest tin-mining boom and that is Brian Menell. We know the name Menell here. They created the very big mining house, Anglovaal, it is now morphed into African Rainbow Mineral with Patrice Motsepe, but of course that family has still got a big shareholding there.

Brian Menell has been noted for diamonds, but he has turned to tin and he has turned to Rwanda. He has done so because tin is shinning again after a very dull period where it lost its value in the mid-80’s. It is coming back because it is being seen for its low toxicity. People want to get rid of the lead in the solder and they want to put the tin in to the solder, both for consumer electronics, printed circuit boards, medical and automotive electronics.

There is a huge new demand and it is also in tin-plate and is regarded for food packaging because of its low toxicity. We see the price rocket and it peaked at about $33 000 a ton two months ago and then fell back. It is now at about $23 000 a ton, which is twice what it was 18-months ago.

We can see that there is a supply constraint, which is lifting the price, but a demand very robust and that is always very good for mining. This will be good for Rwanda, because the Belgians created these mines in the Colonial days and then they were nationalised and, of course, we know the ‘n’ word here and we are experiencing it now.

As a result of that nationalisation these mines were run into the ground and closed. Now, a South African, Brian Menell has come back and re-opened them. He’s got 100 ton a month going into Malaysia and plans to expand and we see how this can add to the Rwanda economy.

De Gouveia: Wonderful news coming through in terms of Zambia and Rwanda, but a bit of bad news coming through for South Africa in terms of our roads and that involves bitumen. Tell us a bit about that.

Creamer: South Africa has run into yet another serious shortage of bitumen. We had one last year and it is losing the country potentially billions of rands. This is really a strategic commodity. It is black and oily and smelly and no one really cares about it, it goes on the roads as asphalt and we just call it tarred road.

We expect it to just be there when we need it, but it is no longer the case, because we have relied a lot on the oil refineries to produce this and they are ageing. They shutdown every so often and when they do at the wrong time for their maintenance, it affects this bitumen market and we see it with the Gauteng Highway Improvement Programme being slowed down very badly.

A lot of other programmes and roads also being slowed down. Of course, the smaller roads right at the end with all those pot-holes, they are just going to remain there and get bigger, because of this shortage. A serious shortage this time, because there has been a fire at the Engen refinery so they haven’t been coming forward with the expectation of bitumen.

There is also a depletion factor in the Cape at Chevron. Sapref in KwaZulu-Natal also come in late. So there is just a very serious long-term shortage now of bitumen, which is going to impact heavily on our road-building programme, which impacts on our economy because we can’t get the volume vehicles through and goods and services through. Some people are saying that bitumen should be declared a strategic mineral.

The Department of Energy is a little bit reluctant to do that. It wants to make sure that the industry tries to sort this out, but there doesn’t seem to be much on the horizon which will indicate that this could be the case. These refineries are now also importing a lighter crude which hasn’t got as much bitumen. The normal sources of 400 000 tons a year are just not there anymore and one wonders where they are going to come from.

De Gouveia: If the alarm bells are ringing at this stage ideally what is the way forward?

Creamer: They have got to try and import and that is not easy. We saw with the closure now that they are talking about our one and only zinc refinery going to close out at Springs, Zincor, which means that we will have to import zinc. That hits your balance of payments and all sorts of things.

With bitumen, importation is difficult, this is not the sort of ideal type of commodity to import. It’s black, oily and smelly. It is also seasonal you cant just put this down at anytime depending on the temperature. So it is a problem, we might have to think of concrete roads like we’ve had in the past, but that is going to be very expensive although in the long-term perhaps it could be the way to go.

De Gouveia: 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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