It’s that time again on a Friday when AMLive presents another Update From The Coal-Face with Martin Cramer, publishing editor of Engineering News and Mining Weekly, and AMLive host Bongi Gwala
Gwala: Billions of rands are being earmarked for a big new coal expansion in Mpumalanga
Creamer: We haven’t been hearing a lot about coal expansions. In fact we are hearing about coal disposals, which wasn’t so pleasant, because our economy relies a lot on coal, ninety percent of our electricity comes from coal. You need to hear news about coal, and thankfully some came up yesterday from South32. South32 is listed in Johannesburg, it is listed in Sydney, it’s listed in London and it’s a spin-off of the old BHP Billiton, so it has some very good assets here and one of the assets is the Klipspruit Colliery. What they are taking about now, and they will take a decision by mid-year, by June, they will know if they are going ahead, but the economics look very robust. The plan is to spend more than R3-billion on a life extension at Klipspruit Colliery. They’ve got a location which is pretty close to the Kusile power station, which Eskom is building, but has not yet awarded the coal contract. Obviously, there is an eye on that market, so there’s an eye on the domestic market, but in the meantime their main intention is to go along the export route, which is also very good for South Africa. We see that South Africa is targeting 77-million tonnes exported from Richard’s Bay Coal Terminal in this year which will be an all time record, and this life extension is also aimed at putting coal down that line, so you get the benefit of the line already being there, all the infrastructure is there and South Africa can benefit from the foreign exchange coming in and from the taxes that these companies pay and also having a battery of coal that could go into the Kusile Power Station which is being built pretty fast now. People who fly over it says it’s really developed quite well
Gwala: Millions of rands were spent in the last six months to clean up old mine dump areas.
Creamer: We have been mining gold for 130 years, and it still has not ended in this Golden City where we are now. The whole economy was built around gold, but even though a new economy has emerged, beautifully, sustainably taken over from mining, you’ve still got mining contributing and doing clean-ups. The big clean up that’s being done now is by DRD Gold, which has been mining here for 122 years, that was before we had radio, they started in 1895 and so what they have just spent in six months, they spent R26-billion cleaning up on the Western side of Johannesburg, the Crown area which has been the veteran contributor of material from mine dumps that contains valuable gold, and they’ve been piping that dump material along from Johannesburg all the way through to Brakpan and extracting the gold from that, at a rate of about a 140 000 oz to 150 000 oz a year. That provides the money for the cleanup, so although they pay their shareholders big dividends, and shareholders love this share, because the “R” in DRD stands for Roodepoort, and they used to call it the “Roodepoort Rocket” , because everytime the gold price just peeps up, this rocket takes off. We saw last year, just in the matter of months, the market capitalisation of this share went from R700-million to R3.7-billion, so it put on R3-billion in a matter of months. That’s why you also find that the Americans watch this share. It is also listed in New York as well as Johannesburg, DRD, and you find that the Americans are also intellectual about this share, because they know they can score big if the gold price peeps up. But DRD are not looking at only paying financial dividends to their shareholders, they are also keen on paying this natural dividend, and they have declared 66% more reserves which means they are going to take more mine dumps down and this time in the south-east of Johannesburg. They will start working two more reclamation areas, dumps we call slime dams. They start removing that material which has got a lot of gold in it, but they’ve got sulphuric acid and uranium, and the other people are doing that as well. They use a network of pipes to pump this down. You can also see that they don’t use a lot of electricity by lining these pipes. They save 18% of electricity by lining the pipes so that this material can go flying through to Brakpan where it is processed. Beside that natural dividend that they are paying and the natural dividend, they are keen on paying social dividends. The believe that they must pay back to the people that live around these areas, and they’ve developed some incredible vegetable growing schemes, and it’s remarkable how people are taking to this. They help people to grow their own vegetables in their little homesteads around the mine on areas as big as a garage door and that is enough to feed their families. But some of them have gone beyond that, they’ve become entrepreneurs, because they know they can go into the creche’s and they can supply to the various activities around there. They were going to get 250 people growing vegetables for themselves, that was the target. They have already got 600 people doing this, growing vegetables for themselves, many of them now sprouting out as entrepreneurs, which is incredible, and they also believe in an educational dividend, because they employ different types of people, higher skilled people, 2 000 people, but those people move this material and it’s a lot of material to move, there’s a lot of pipelines. They’ve got higher skills, higher pay, but they also need a higher-education background, so what they are doing for the local community, they’ve brought in extra maths and science lessons, and a lot of young people are taking advantage of this, but one character, actually scored 100% in maths and 100% in science, he is one of the people who took advantage of this.
Gwala: Enormous global demand is on the way for South Africa’s platinum, the Mining Indaba has been told.
Creamer: The Mining Indaba gets some good imput from Robert Friedland who is from Ivanhoe and who is planning to mine platinum in Africa. He is doing a lot of work on this new mine that he is developing near Mogalakwena mine in Limpopo, but he gave an incredible account of the potential for platinum. We look at the platinum price every day and we are not happy, because this price does not go up. With the stronger rand, these mines are going to be squeezed now, because they don’t even have their cushion of the weaker rand, but Robert said, just look at the potential demand for platinum, and where are we going to get it? Only South Africa, only Southern Africa. e’s saying the He’s saying this big rollout of the fuel cell is just being adopted as the way of future locomotion and also electricity generation and particularly he says in Europe and in Japan. They are rolling out super-fast electric car fuelling stations. They are really planning across Europe for the fuel cell which is platinum catalysed and therefore coming from our mines. The fuel cells are driving the cars of the future. A lot of people look at Tesla and they say, well, they’ve got this electric car, it’s going to compete with our platinum-catalysed fuel cell cars. It will, but in a smaller niche. That is for smaller cars, there is a lot of copper, but it’s not going to be the long range cars. The long range, heavy vehicles that we know, and how we use them now and we can continue doing that, and the quick refilling of the fuel, it’s going to be through the fuel cell, and that was heard at the Mining Indaba. Professors came in there in the sidelines and confirmed this. A lot of people spoke about the stationary fuel cell where you can have almost a power station in your house, because you are using that gas-driven fuel cell, but the big thing is that it will boost our platinum, because platinum cannot be consumed. That is one of the problems why we have this low price at the moment, because the stockpiles develop. We must also take in account the recycling of this platinum, but the big thing is to create bigger and bigger markets and the fuel cell and the new hydrogen economy will grow and boost South Africa’s platinum mines.
Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coal-Face at the same time next Friday