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On-The-Air (06/03/2015)

safm6march2015.mp3

6th March 2015

By: Martin Creamer

Creamer Media Editor

  

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

Kamwendo: State rail company Transnet is hitting the high spots with locomotive funding from US and Canada.

Creamer: I must say, Transnet is a stand-out State-owned enterprise. We have a lot of problems with our State-owned enterprises, but not Transnet. The way they go about their business, buying these 1 000 new locomotives, is exemplary. There is no exemplary reliance on the fiscus, no guarantees from government.

They lean on the right people, they lean on developmental agencies outside the country. We see this R13-billion coming in from the Canadian and American developmental agencies. That really assists when you are doing this and brings the local banks forward because these developmental agencies in the US and Canada provide the guarantees.

Then, of course, your Absa Barclays can come in and Standards, Old Mutuals and Investec to supply these funds for very important locomotives. One of the biggest investments in history, with 500 more coming in. We see that these are going to have a 60% local content. That is remarkable. You have got the overseas finance coming in, but they are being built in Koedoespoort and Durban. We still have to see the Chinese come in with the other 500. They are going to do a lot in Durban.

This is the way to go about things to get your finance right to get the funding coming in but also the local content where you are providing these jobs and transferring skills. This is an exemplary performance under the Transnet CEO Brian Molefe.

Kamwendo: Limpopo province is the beneficiary of a R9-billion copper expansion.

Creamer: This is again been for this for years now, because Rio Tinto and Anglo American owned the Palabora mine near the Kruger National Park. They were planning to do what they call Lift II, which was an expansion at the mine, but it took a long time now for this to go through, because there are new owners.

The combination of Chinese owners, a Chinese consortium and the State of South Africa through the Industrial Development Corporation. They have now taken the decision that we have been waiting for and will be spending R9.3-billion on expanding this copper mine at, I think, perfect timing. Although the copper price has gone down 12% this year, this mine will be coming through with the expansion of Lift II just at the time when people expect the upsurge again in copper. Also coming out of that mine, which nobody speaks about often, is the vermiculite side of it.

A big supply of vermiculite from Palabora. Vermiculite is a substance you can use for soilless growing, it is a growing medium. It has a multiple lot of uses like that little puffy white stuff that you sometimes see in pot plants that absorbs the water. That is just one of the uses for vermiculite. It is a big supplier in Limpopo and also magnetite, which is very important for steel.

There is a whole stockpile of magnetite there. So an important area and we see the funding coming through now.

Kamwendo: A Johannesburg company is building the entire plant for a new tungsten mine in neighbouring Zimbabwe.

Creamer: This is a sort of intra African trade that the IMF and all the investors say we should be having. Africa should be trading with itself on a much bigger scale, not always importing from outside. We see this new tungsten mine, which is also very interesting, going up in Zimbabwe.

The entire plant is being manufactured here in Johannesburg and for shipping on the 11th of May and for the first tungsten to come out of the mine in June. This is being funded by a London-listed company Premier Africa Minerals, is listed on the Alternative Exchange in London. They have already put R100-million into this. Looking to also cope with the 51% ownership from Zimbabwe. This normally frightens people away, the indigenisation.

They have calculated it in such a way where they sat down with the government and said you want half, let us work it in this way that we have got to spend a lot of money. You must acknowledge that as a loan and you must give us a premium when we come through. This is the way the London Stock Exchange has accepted this idea. The head of it George Roach is a South African from KwaZulu-Natal. He wanted to do the deal because the tungsten grade is so high. Having studied it so well he thought that even if he had to give half of it away to the people of Zimbabwe he is still going to go ahead with it, because tungsten is an important metal.

Of course, everytime we hear that Emirates has bought a new big A380 aircraft, we know there is a big chunk of tungsten coming in there. Tungsten used, of course, in light bulb filaments and all those sorts of things. Most of it coming out of China and now we see some action right on our border with Zimbabwe,s with Johannesburgs help.

Kamwendo: 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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