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24/07/2009 (On-The-Air)
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24th July 2009
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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: Martin, a very good morning to you. You say South Africa's energy regulator
has been asked to approve the building of a R2,5 billion pipeline to bring gas to Cape Town's West Coast region. Of what benefit is that going to be?

Creamer: Yes, natural gas is clean burning so people around the world look for that. It's
also competitively priced and we've had this natural gas at Kudu for more than a decade.

Now it's been firmed up to more than a trillion cubic feet, but nothing's been done about it.

Now, a company, which is called Gigajoule Africa, has applied to Nersa to make sure that
we can do something with that gas as a compressed natural gas form. That is, bring it ashore.

The company has done their marketing surveys and people on the Cape West Coast, if they had an option for natural gas at a competitive price, they would take it.

Therefore, they're going along to the regulator and saying, let's bring it ashore and that's our option one. It'll involve an investment of about R2,5 billion, there'll need to be about 225 km of pipeline and that's just the first phase.

But, also, there can be an option two, where you can have liquefied natural gas brought in by ships so there is a potential for an ongoing gas feed into the West Coast and even an expansion down to Saldanha and that's the proposal they're putting through to Nersa.

Makwetla: Eskom is prepared to enter into public private partnerships to ensure that it's
massive power station construction programme, now under way, is not halted through a lack of funding.

Creamer: When you look at these power stations, I mean, you just take one power station.

One coal fired power station going up at Lephalale, the journalists went to look at it there this week.

The investment in that is four times the investment of Gautrain, six times the investment of 2010 and, if you take Kusile along with it, it goes to many more times.

So we're talking about an energy investment in South Africa of huge magnitude and the big Achilles heel is that still nobody quite knows where the funding is going to come from and we know that there mustn't be any halt to Medupi power station going up in Lephalale,

Kusile in Mpumalanga, we cannot afford it as a country because this is the very oxygen that the economy breathes on.

But we still have this uncertainty, we don't know what role the tariff is going to play, to what extent there's going to be borrowings, to what extent the government is going to provide equity, and this is just not on for an economy the size of South Africa.

It's 18 months since we had our blackouts and we still don't know, with any clarity, how these essential power stations are going to be funded to a point that Eskom is even saying now: “We will accept public private partnerships, we will look at all options.”

But what private ow, sector company is going to come in now with this sort of uncertainty? We already saw the Canadians, who went full out on the border in Botswana.

They tried to set up the Mmamabula power station at an accelerated rate and because of the pricing uncertainty, because of all this power price agreement uncertainty, they still don't really know where they are. And this is not good for South Africa, because you can see now demand is building, the ferrochrome smelters are starting to be re introduced. If the aluminium smelters go full steam, we're going to be short of electricity.

This country cannot afford to pussy foot around with funding and the new Minister of Energy must put her foot down and make sure that we sort out the funding for power stations.

Makwetla: And finally, mining icon Brian Gilbertson has ensured that 350 000 strong Bakgatla community have been included in South Africa's latest multibillion platinum mining deal.

Creamer: It's all very well these near mine communities walking around the rural areas with very valuable platinum under their feet, but having it turned to account and getting to become part of that deal is very important.

We see with the Bafokeng community, they've really generated a lot of wealth in that region from being part of the platinum mining. And now we see the Bakgatla community, at Pilanesberg, wanting to do the same thing.

And they're fast tracking it. In 18 months they've already created a mine which is producing. By the end of the year, you'll have through their big involvement in fact, they've put R500 million into this, it's been guaranteed by coshareholder Pallinghurst, headed by Brian Gilbertson, but they have not stood back because they have actually encouraged these investors to come in because they know this is a big benefit for them.

Already you see, of the 1 000 workers here, 30% are from the community and it's going to be lifted to 50% and it's going to be done through training.

These people are going to become artisans, they're being put through the skills. So you can see that even while this mine nationalisation debate is now buried very deep in the ANC procedures, near mine communities are not stopping, they're going forward, linking up with private sector mining companies, turning this Pilanesberg mine now to account, also listing on the Johannesburg Stock Exchange this week, as Platmin, which will give a lot of status to the Bakgatla.

Already this company Platmin is listed in Canada so money has come in at a rate of R1,8 billion already as an investment. They're also listed in London, so we see that there are many ways of involving near mine communities in the wealth below the ground and leveraging that for the benefit of the communities.

Makwetla: And that's your update on heavy industry with Martin Creamer, publishing editor of Engineering News and Mining Weekly. He's back again with us At the Coalface, at the same time next Friday.

Edited by: Creamer Media Reporter


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