AMLive anchor Sakina Kamwendo on Friday presented another Update From The Coalface with Martin Creamer, publishing editor of Engineering News and Mining Weekly.
Kamwendo: South Africa stands to lose one trillion dollars worth of gold because it has no way of mining it.
Creamer: Since 1886 we’ve been mining here, so 128 years of mining, and we’ve mined out 1.7-billion ounces which is a phenomenal amount, but there are only 200 million more ounces that we can mine conventionally and then we hit a problem. So, 1.1-billion ounces, there’s no way that we can mine that using the conventional methods that we are using now. If we look at the way we mine now, we lose about 40%, because with the drill and blast situation so much gold is lost along the way, it gets in the crevices from the rock that’s shattered and also in the transport we are losing. So, in order to actually get deeper as well we’ve got to have an absolutely changed programme, because, there’s also the safety issue. Now we know that safety is reaching a plateau, and the reason it’s reached that plateau, and we can’t fall behind like 90 people, 93 people dying a year, is because of the way we mine, the seismicity that we create, the snarl-up we create with the blasting, and there’s only one company that is going all out now to try and make sure that we can hit these trillion dollars worth of gold. We know that we are here because of gold. It means that we will leave so much behind if we can’t progress, so, AngloGold Ashanti is going all out, but it has reached the point where it can mine the pillars, but it hasn’t quite cracked the code completely, and there is a lot of gold in those pillars. We need a major collaborative effort in order to get to the billion ounces out there, because we need it from a balance of payments point of view.
Kamwendo: The recycling of platinum scrap is bludgeoning South Africa’s already strike-ravaged platinum business.
Creamer: The insecurity of supply through the strikes has set up a booming recycling business, because people thought, well, there’s not going to be enough mine supply, they’ve come in with recycling the scrap platinum and scrap palladium. So, we have a situation now that 1.2 million ounces of scrap recycled platinum is coming onto the market, which means the price gets affected at a time when we need the price to be higher, because we need to pay bigger salaries and we need to do more. You have the price subdued. In fact, the price of platinum has fallen a bit and it’s because of these massive above-ground stocks that are knocking the price. Fortunately, with palladium, even though there is a massive amount of recycling, 2-million ounces coming on, we still see that the price went up because of the huge demand, because that is used in the gasoline vehicles whereas the diesel-driven vehicles use the platinum. So, we have a situation where the scrap dealers are competing with the miners and the miners are coming off second best. We saw even Impala giving it’s results yesterday, it only produced 700 000 ounces of palladium, which means the recycled amount is really big. They are having to go into a mode of becoming more competitive, becoming more productive and going down the cost curve and that is also difficult in the circumstances where demands are high at the moment, so, platinum in quite a tough position at the moment and that’s not good for our balance of payments.
Kamwendo: An exciting new R9-billion copper investment is on the cards in Limpopo province.
Creamer: That’s Palabora Copper, and this is our only major copper producer in South Africa and it has been in a bit of a slumbering mode for some time, because both Anglo American and Rio Tinto sold off the shareholding to a new South African/Chinese consortium and they’ve been marking time on this expansion. That should have gone ahead there, the decision should have been taken several years ago, because the open-pit ceased to function ten years ago, and they went underground. It’s now at least coming to the fore and the decision will be taken in September whether to spend 9.3-billion additional rand on going deeper in the mine at Palabora and making sure we can turn the copper to account there. It seems like it’s a thumbs up, because a lot of the work has been progressing slowly, the peripheral work, the long lead item work, so it seems that the board is likely to give the thumbs up in September to a major 9-billion rand expansion and investment in progressing our only major copper mine which is in Limpopo and that’s Palabora Copper!
Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coalface at the same time next Friday.