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23/08/2013 (On-The-Air)

safm23august2013

23rd August 2013

By: Creamer Media Reporter

  

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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: Let’s first start with loss-making mines. You say that they may be forced to close down?

Creamer: Yes, some of the loss-making mines may be forced to really curtail their activities, or even close, which will be a major blow for the South African economy. I say that because mining is the flywheel of the South African economy and most of our export revenue come from mining and it also brings the inflow of capital, which is so vital.

It develops skills, it’s the catalyst for other industries, it promotes the transfer of technology and infrastructure. So people are saying: “Look, mining can build the South African economy; you know R1 investment in mining means R2.60 investment elsewhere, because of the side-stream activities and the downstream activities.” 

So they are asking government to put its thinking cap on to ensure that mines don’t just close because the impact, and the knock-on effect on the economy, will be devastating.

Makwetla: Let’s talk about Gold Fields, you say it’s a shadow of its former self here in South Africa, but it’s big in Australia?

Creamer: Gold Fields – South Africa’s age old mining company, it’s been here forever, is now already only a shadow of its former self in South Africa and it is now bigger by far – as of yesterday – in Australia. It is now 42% Australian, only 11% South African.

It’s got six mines in Australia, only one stuttering mine in South Africa that they are warning will not reach the targets that has been set for itself. So this is another reflection of people voting with their feet. They are going for less risk and they are changing their sovereign risk patterns.

They are under pressure from investors saying they are too heavily involved in a risk area like South Africa where there is political uncertainty so what do they do even in these trying times they actually acquire new mines in Australia as they announced yesterday, now giving them six mines there talking very positively about what is happening in Australia – the productivity levels, the output levels, the future output levels and even putting more money into exploration, which is not happening around the place at the moment.

In South Africa, they are warning of trouble ahead: teething troubles with their only mine South Deep, labour troubles with their only mine, South Deep. They are even bigger in Peru than in South Africa now.  

Makwetla: Is that what’s happening with BHP Billiton – a company that’s benefitted quite a bit from being in South Africa?

Creamer: You know, BHP Billiton, the world’s largest mining company owes its very existence to South Africa and part of its success, no small part, to South Africa,. [But] it has all but removed South Africa from its radar screen.

Of the 21 projects it’s going ahead with not one of them in South Africa. You know the name of South Africa did not cross the lips of the new CEO Andrew McKinsey. And we know the history of BHP Billiton and that, in 2001, BHP people were mocking it and saying this doesn’t stand for Broken Hill Proprietary, which wasAustralia’s biggest company, it stands for ‘Broken Hearted People’ because it just wasn’t performing.

In South Africa at that time Gencor became Billiton and Billiton then merged with BHP Billiton to create the world’s biggest diversified company that has paid more dividends than all the other mining companies put together.

So we helped it lift its chin when it was downcast, but the favour is not going to be returned because this is how business works at the moment and you can see that they are looking elsewhere, even in places like Chile still getting money and in Saskatchewan where they haven’t been well received – a cost centre – you know that has received far more tender loving care than we will ever get, because suddenly these companies are deserting South Africa.

They are not seeing this as a growth area. Whatever they have got here, like in aluminium, coal, is just ticking along, the manganese also just ticking along. No investment so that inflow of capital we not getting and its so vital because one job in mining touches 27 people so it can dig deep into poverty alleviation and I think we need to think that carefully through

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.

Edited by Creamer Media Reporter

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