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: Business leader Patrice Motsepe yesterday gave a stern warning to the mining industry to take mining communities extremely seriously. There is a charter, there have been amendments to that charter and now we need Motsepe to also come out and add his voice to that.

Creamer: You know, he is Mr Big in mining, because he is the founder of African Rainbow Minerals (ARM), the executive chairperson of ARM and he has tremendous insight into the industry. He was speaking in a way, which gave a lot of concern yesterday, because he had just returned from the Modikwa Platinum Mine.

This Modikwa Platinum Mine that he has a major share it with Anglo American Platinum is not doing well at all. He had to write off something like R700-million on this mine, that is why his results are so bad. If you look at his results the basic earnings were a loss of over R200-million. This is the second time he had to report a loss.

Now, he is saying that he spent a day at Modikwa and had mass meetings at Modikwa. The look on his face and his body language indicated to me that the community around there are asking for the impossible. You cannot deliver if you are going to meet their demands 100%. Motsepe is saying that a fight has to take place, you have to indicate to the business people around there. You can’t just dish out tenders and contracts willy-nilly.

You can’t also just pay dividends to shareholders when you are making a loss. He gave me the impression that he is giving a warning that if this sort of attitude continues, you can’t appease the people, you are going to lose global competitiveness. Your mining is going to lose global competitiveness, investors internationally are going to say they can’t invest because the demands are just to huge. He didn’t mention this, but people in the corridors are telling me that if you go to Modikwa, you can see the most unbelievable illegal mining going on all around the area.

The people are really digging up chrome outcrops. They are saying that this is a national patrimony, this belongs to everybody, but these people think it belongs to them. They dig it up and put it outside their house for collection. They have been following the trucks. These trucks are going to legitimate smelting houses. So, legitimate smelting houses are buying this stuff. It has become illegal into legal and it is very confusing there.

They are just saying that things are out of hand. Also, Patrice Motsepe was saying eventually under strong questioning from journalists, they said are these pressures of the community going to shut you down? He said no, he will shut them down. I think he meant that he is going to fight back, because some members of the community will be only to pleased if companies abandon mines there, of course, because the people get into the mines and start doing their own thing.

This is not good for South Africa. You have got all these illegal miners taking this national patrimony and selling it, no taxes paid. It is really getting back to the most rudimentary wrong way of actually exploiting the national treasure. Motsepe is saying that you have got to take this very seriously. Business has been useless, they haven’t presented their case and showed the world and government why they are so important. He is saying if it is a contest between the community and business, politicians will throw business under the bus, because they get their votes from the community.

They are not going to get that number of votes from business, which is perceived to be making an enormous amount of money, even at a time when they really are not. He is saying that we have got to take this very seriously. He is part of an international group of mining companies.  Being a member of this ICMM means mining companies have got to look after the community and stakeholders.

But, Motsepe cautions that you have got to educate them into understanding that some of their demands are absolutely impossible. Companies want to go along with the community and involve them and make sure they do well out of mining, but they are finding that they have got to draw a line somewhere.

Kamwendo: Good on you, Patrice Motsepe, but only if you can get people to walk the talk, because the one thing that comes to mind readily is the state of roads next to these mining towns with those heavy vehicles and what they do to the roads and they simply do not care.

The State-owned IDC is supporting a new low-cost, low-energy technology that could be a massive cost saver for struggling platinum mines.

Creamer: I am very excited about some of the technology that I think the IDC is wisely backing. They have gone early into backing some of these incipient technologies and now they are starting to look promising. Bankable feasibility study has just been completed on a new processing method for platinum.

That could absolutely slash the amount of electricity you need for this. It could lower your costs and is just a superior way of doing things. It can also bring beneficiation far closer to the mine. Why is beneficiation always so far away from the mine? Can’t you have a mine-to-market thing, which is much quicker?

This process that the IDC divisional executive mining and metals industry Abel Malinga is backing here, I think, is going to be very important for the country, because platinum needs to come down the cost curve. We can see the price is not rising the way it should do. But, this is fairy dust. We are talking about platinum, it is absolute wonder metal, fairy dust, it is not called fairy dust for nothing. It can do so many things.

Yet, we are getting further and further away from being able to use this for the benefit of South Africa, because the price is so low and our costs are so high. This is a way of getting costs down and I think that his move into this Kell technology is very important, because it has been well worked. It started in Mintek a long time ago and has been taken over by an individual who has been processing this. Instead of the using the pyrometalurgical route, where you have got to go up to 1 600 degrees Celsius to smelt this platinum, ridiculously high electricity use and charges.

Here you can go to a fifth of that using this hydrometallurgical method, and it can be ready for actually refining. If you do this properly, it can put you so close to the refining at the mining that you can also do manufacturing nearby and put it into fuel cells and catalytic converters. Why send it all around the world? Some of our platinum goes out of the country and comes back before we start using it for catalytic converters and this will stop that.

Kamwendo: The Canadians this week bought a big slice of Southern Africa’s zinc resources.

Creamer: People are starting to think zinc, because the price is doing well. We see that these Canadians are snapping up the opportunity in Namibia close by. They bought 80% of the Rosh Pinah mine, which was always associated with South African ownership, but it was in Glencore’s hands until the Canadian came along.

Then also a big interest in Burkina Faso, so obviously they are keen on zinc. It indicates that the people are prepared to invest so we should be creating a better investment climate in South Africa. We do have Vedanta, the big Indian company, also looking at zinc. They have been prepared to take over what Anglo American left in the Northern Cape.

That is going to be great. It is a very big zinc thing and we see them being far more interested in Anglo American as the reports have come out now. This Indian company is buying 13% of Anglo American, so it is the number two big shareholder. What is its intention? Is it wanting to take over? They say they don’t want to take over.

But, of course, we see in Vedanta the former CEO of Anglo American Cynthia Carroll. She is sitting in Vedanta now so she knows what Anglo is all about. A very interesting development that they bought such a big slice of Anglo, which could lead to the break up of this company in its 100^th year. It turns 100 this year and instead of having a big celebration, people are now eating into its shareholding. There is a lot of rumor about what its future will be.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.