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: Gold miners expect the gold price to be lowered still further if the US Fed lifts interest rates next month.
Creamer: Gold eyes are on the Fed and they feel that they will be hammered even further. This was commented upon at a roundtable with journalists by Gold Fields CEO Nick Holland, who said that all the information he is getting from the US and a lot of researchers working on this, indicate that gold will probably be knocked down to $1 000 an ounce. Of course, the Feds movement has caused havoc with the gold price for weeks now, so that has actually been knocking the gold price down over a period of time.
The point that Holland wanted to make is that if you look at the long-term fundamentals of gold, they are extremely good because no exploration has been done for 20 years now. The grades are falling and nobody is building any new mines. Yet, the demand still seems like it will come through, because when the gold price is down like this, recycling is low, people don't bring new gold onto the market from a recycled point of view. Hopefully the central banks will continue to buy and India and China.
If that does happen, the long term look for gold is good, which is good for South Africa. But, he said how long is it going to take? One, two, three, four or five years? How long do we have to suffer this agony? That is the million dollar question that nobody can answer.
Kamwendo: This month’s deadly mine dump collapse in Brazil is raising a global storm around the storage of mine waste.
Creamer: The civil lawsuits are already coming through. On November 5, 600 families were displaced and 260 000 people cut off from water supply, 11 dead, 13 missing and the anger in Brazil is rising. This is at an iron-ore mine and it does touch South Africa, because half of this ownership is from BHP Billiton. BHP Billiton, of course, has got a secondary listing on the Johannesburg Stock Exchange.
They are coming under huge pressure in the first law-suit that is coming through. The initial one is something like a $3-billion claim. Environmental people are clambering for different ways of storing waste. They are saying that in dry countries that haven’t got water why are they using so much water in the slimes dams. Now, they are bursting and killing people, ruining the environment and polluting the water.
Only in Alaska do I know of dry stacking being used for this mine waste, which is ironic, because there is a lot of water in Alaska. We have seen quite a few slimes dams burst. We saw it in Papua New Guinea, Canada and we had our own one at Merriespruit in 1990s when people drowned in slime. A lot of emphasis is now going on to reviewing and having these slimes dams independently audited.
We saw South32 at its AGM this week its shareholders were coming at it about what it is doing about its tailings dams and that they want independent reviews all over. South32 have got 34 slimes dams in Africa, most of them in Southern Africa. They say that there is nothing like the size of Brazil. This iron-ore mine in Brazil had a huge slimes dam and we see the consequences are absolutely devastating of what it has done.
Nothing like that around here, but still they are getting independent reviews. Everyone is looking at the way they store more waste, because the consequences in todays age with the law suits are going to be monumental.
Kamwendo: The collaborative rebuilding of our troubled mining industry is now seen as a national imperative.
Creamer: We have reached a point now where we are at make or break with mining. We have suffered for 20 years of the wrongful assumption that mines have bottomless pockets to just pay for obligations plus their taxes. We know that we make things very difficult for mining in South Africa even though we have got this treasure chest of $2.5-trillion worth of metals and minerals in the ground.
We have got a lot of companies that are capitalised and ready to go. Those companies are just marking time because the investment climate has really deteriorated to a point where people don't want to spend anymore on new mines. It comes against the background of a tremendous regulatory burden and a productivity problem.
People are saying there is a model that we can work off. Business, labour and government have worked together on safety and look at a mine like Sibanye Gold with 40 000 people underground and now has a safety benchmark that one can compare with a North American mines which are very different and not as deep, dark and dangerous.
They are saying if you come together and you talk and converge, you can solve the problem. So, why don’t we come together when it comes to productivity? Why are there so many legislative implications that are stacked against productivity? Why are we not moving with the times and technology? South Africans mining in Australia are now saying that we are falling behind.
Australia is moving ahead technologically and even South African-owned mines in Australia are being modernised to a huge extent. They are talking about driverless trucks underground in three years in Australia in South African-owned mines. The warning coming through is that we better catch up, because this productivity issue is huge.
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.