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On-The-Air (31/01/2014)

safm31jan2014

31st January 2014

By: Martin Creamer

Creamer Media Editor

  

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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: Let’s talk about South Africa’s coal industry it was once South Africa’s big enterprise, we were making lots of money from this industry, it is platinum and gold now, but we going back to coal.

Creamer: Eskom and Transnet are rolling out the red carpet for the emerging black junior coal miner. The junior coal miner dominated the coal conference in Cape Town. You saw the reaching out from these State-owned enterprises. It started off with Eskom saying that they want a significant percentage of their coal to come from black junior miners.

When they say black they mean controlled in a way that it is 50% plus one share. This led to a scramble for coal assets and now Transnet coming in saying they will give them some port facilities.

There are three different port offerings on the table for these guys. You have got Richards Bay Coal Terminal saying they would also like to accommodate them and they can give them 19-million tons allocation.

Transnet is saying that perhaps they should build a new port at about 32-million tons. Then along came a newcomer now, the black led RBT-Grindrod, led by CEO Bongani Biyela and he then came to the conference and said that he has a tailor-made offering that they shouldn’t refuse because he knows exactly what the juniors need and he will have inland ports where the processing of the coal can take place, which is going to streamline this effort that can be risky from a lot of different suppliers. Everyone putting their heads together for these juniors who are really in the pound seats at the moment.

Moodley: Why are they scrambling all over themselves to get to these black junior coal miners? Is it just because they want to help them develop or is there something in for them as well?

Creamer: There are two things. Eskom has said a significant quantity of coal has got to come from these people, so therefore you’ve got the driver. You’ve got very eager people ready to take over existing assets that they see stressed and they see bargains. So they are coming in to snap them up.

Moodley: Is this going to be a new opportunity to return as to a leadership in the coal market?

Creamer:  South Africa has a new opportunity to return to a leadership position in the global coal market. That was told to us by foreigners this week who came to Cape Town and said why are you slipping up here, because you used to be the reference point. Now all of a sudden you are no longer the reference point.

Richards Bay Coal Terminal was the model in the world. Why don’t you try and get back to that pre-eminent position? We see a slippage from Indonesia, there are coal and export restraints coming through. We see demand lifting in India and also in other parts of Asia. South Africa is best placed, why don’t we set ourselves up to do this?

We have been used to four big companies supplying all that coal. Now we have got those companies still continuing, but not with the same intensity, but we have got a whole lot of aspirations for transformational reasons for these black juniors coming in. One company, Thebe Resources Incubator, has even set-up an incubator to incubate these guys and train them up.

They are trying to get all boats floated and certainly the red carport is out for the black junior coal miners.

Moodley: Do you know if this is high quality coal, low-quality coal? Because that is important in the market as well.

Creamer:  Extremely important and when you look at RBCT they accommodate 38 different grades. This is quite a nightmare. We just see coal as coal, but it is very different. Now you get new comers coming in wanting to actually introduce the non-specified coal as well. So that is going to be another ball game.

Moodley: Let’s talk more about energy, shale-gas, a controversial one in the Karoo fracking, as people call it. An Australian company is now also in the bid to look at fracking.

Creamer: An Australian company is preparing to get drilling and exploration rights for shale-gas in the Karoo. They put their hand up this week and they did it at quite a crucial time, because you can also see the Minister of Minerals Resources talking very much about shale gas. We are expecting some sort of announcement before the elections, and so are these Australians.

Challenger Energy, which is listed on the ASX, very small company at the moment, but it shows you that South Africa is also lacking in actually funding these small companies. We should be there. What they have done is that have taken 95% of the Bundu licence and Bundu was the first in. 

The gas kick from the drilling there, which took place in the sixties, was so powerful that they had to get blowout preventers. These Aussies are positioning themselves very much like juniors do. They find the best spot and, of course, you’ve got the big Chevron linked with Falcon and Shell in there. What we need to know is how much of this gas is there?

Now we have got foreigners coming in and trying to help us to show what we should be doing. This could be a massive game changer for South Africa.

Moodley: Perhaps even trillions of rands worth of investment can come from this. Your personal view on fracking, is it not a controversy around it at the same time?

Creamer:  Fracking has caused such a controversy that the environmental lobby has done such a good job that you will have a win-win situation now. Regulations that have come in from South Africa are stringent. All the people are saying that they will conform to these if not better if they think there is a good show for the shalegas potential, which could be a very big energy provider for South Africa.

Moodley: I am sure that it is not going to silence those green peace activist and other NGO’s out there.

Creamer: It mustn’t silence them, they must do their job and make sure that it is a win-win situation. They mustn’t stop the game.

Moodley: This is what democracy is about, a collective voice and you must make your input. 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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