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

Moodley: An exciting new technology uses only a tenth of the electricity to produce platinum.

Creamer: This is a massive breakthrough, called the Kell process in Rustenburg and it is being done by the Pallinghurst’s Sedibelo mine. Pallinghurst, of course, is listed on the Johannesburg Stock Exchange. They are virtually ready to push the button on this, because they have been working on it so incessantly.

It goes from ore to metal in a week using a tenth of the electricity. So, you are saving 90% of the electricity and you can also put recycled metal into this process. It is tailor made for what we are looking for in that area, which we call a Silicon Valley-type Platinum Valley. This is the great ambition of the Department of Trade and Industry that we get an added value close to where the mining takes place. If you look at the Sedibelo mine the ownership is incredible.

South Africa’s community, the Bakgatla, have got 27% of the shares and it is owned by a trust and not an individual. So you have got 350 000 people already. The Bakgatla have been working on a regional plan, which includes this whole Platinum Valley idea. They are working on the skills that are going to be needed when this comes through. At the same time you have got the Dutch government, who is a fairly big shareholder in the Sedibelo, because the national pension fund is in there and the Singaporean government through the sovereign fund Tamasek.

So, you have got some very blue-chip shareholders including South Africa’s own State-owned Industrial Development Corporation. These are long-term shareholders that have been working on this incessantly. Keith Liddell, who worked at Mintek as a researcher, has been doing this for a decade and a half. They have now reached a point where they say if they were just doing it for themselves they could just push the button.

Now, people are saying that they want to be in on it, so they want to make it three times bigger and that is the delay at the moment. What a fantastic thing to come through and save you 90% of the power you normally use and get rid of smelting, which uses so much power.

Moodley: This innovation comes just at the right time. This was there long before Eskom had its challenges, we were investigating this.

Creamer: Yes, and Liddell has been working incessantly on it, but they want to really perfect it. You can see the elevation of their shareholding. They don’t want to make any wrong move here and they found that the demand is such now that they can also apply to other commodities and people are saying build a much better plant so we can also put our concentrate through here.

Moodley: Calls are being renewed for South Africa to adopt the Canadian flow-through tax model.

Creamer: The Davis committee on tax is about to report, so a lot of minds have been put together on what we should have on mining taxations. At the presentation this week there was also a lot of lamentation, because they say the tax situation for the junior miners got worse.

From 01 January there was a new introduction of a 3% add back that nobody was really anticipating, because they thought they got over that. This really hurts juniors coming in particularly with foreign funding, because there is a real tax payback now that is being enforced by the government. So, a lot of lamentation ahead of this Davis commission. People are saying put your minds together and let’s do something proper.

Why don’t we follow the Canadian model? It has worked so well. When you go to Toronto and you look at those huge skyscrapers and you ask people where all the wealth comes from, they will tell you it is from the Canadian flow-through share scheme into junior mining activity. We were supposed to introduce this in South Africa, the former Finance Minister Trevor Manual worked on it and he came up with the idea that it was too complex. He then introduced an alternative, which has failed dismally.

No one has actually taken it up, because it is parsimonious in the extreme, it is really mingy. What is tried and trusted is the Canadian flow-through scheme. Again, at this meeting, KPMG was saying let’s go for this, this is the way you promote junior mining. We have got $2.3-trillion worth of metals and minerals in the ground, more then anyone else in the world. We are the leaders when it comes to metals and minerals and we have been mining for 100 years.

You are not going to get those if you don’t get prospecting done. You don’t get the actual value of that firmed up beyond doubts. This is were the junior miners come in and they have just got no incentive at the moment to come forward. In fact, they’re disincentivised and we hope the Davis committee will do something about that.

Moodley: Speaking about debt, when they tried to estimate Eskom’s cash-flow debt, its gap in cash-flow is about R200-billion. Eskom’s cash flow problem is endangering the renewal of important power purchasing agreements.

Creamer: There is a whole lot of purchase power agreements that should be renewed in the next four days, before the 31^st of March. Eskom said early this week through Steve Lennon, the outgoing executive, that they don’t have the cash-flow to renew it.

I don’t know what the situation is now as we hit Friday, but he is saying that 704 MW might not come into play in an already stressed grid if they can not renew these power purchase agreements. These come in from industry, agriculture, from generators in the private sector. So, you have got to actually reach a decision by Tuesday whether you are going go to roll these over.

Eskom is saying we need the cash to do it and they know that they are going to go Nersa and reopen this later, but what do you do for the next four days. This is the sort of critical situation that we have got at Eskom that really the country can do without these sort of dangers in the most critical contribution to the economy, electricity. You need certainty there and we haven’t got it.

Hopefully they will come to some conclusion on that. Also coal, because there is a lot of uncertainty around coal and that is still our backbone. If that fuel is not brought forward in proper quantities soon, we could have another crisis. Hopefully they will reach some settlements in Eskom soon and make sure we have certainty in power.

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.