Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: Covid notwithstanding, a brand new R250-million manganese project went ahead in the Northern Cape this week.
Creamer: Yes, one doesn't expect this sort of investment during the pandemic period, but we see that some people are prepared to put their hands in their pockets. In this case it is Menar and its literally in their pockets. The banks are not too keen on funding mining projects, especially at this incipient stage, they find them too risky.
This company, Menar, is not listed on the stock exchange so it can’t go and raise equity capital on the exchange. So, it is using its own cash and it has done the studies and believes that this particular mine, East Manganese, will be profitable. They are prepared to plough R250-million of their own cash into the project. It is not a big project, but it is going to be a project that is a learning curve, because this company has been in coal and anthracite, and this is the first time it has gone into manganese.
It will see how this develops and it has done so well in the other commodities that it is sure that the many people that they have skilled up will do well at East Manganese. It is near a place called Hotazel and they don’t call it Hotazel for nothing. There is a lot of heat there. So, they are going to harness the sun. They will have solar energy there for all their infrastructure. The project will probably benefit 1 200 people directly and indirectly with jobs, small business development and all the other activities that these mines generate. It is good for the Northern Cape.
Kamwendo: The ANC is correct to insist that South Africa’s economic recovery includes a green component.
Creamer: I think the ANCs Economic Transformation Committee, which has put out this discussion document for Covid economic recovery, is very correct when it says that the economic recovery in South Africa must have a green component. We must start making use of our sunshine and our wind. This is not only to mitigate climate change, but it is competitive to do so at the moment, because the electricity price has gone so high with Eskom that people coming in with renewable energy can now compete.
They are saying that having a green component to economic recovery can do a lot for youth employment, because it is labour-intensive in many respects, particularly if you are going to convert all government buildings into solar-powered buildings. That is going to take a lot of employment. The whole solar power situation and wind power, if we generate that, it can generate jobs. The other big important thing is that you can raise capital for this. It is cheaper money that you can get your hands on, because the world is prepared to fund anything that is green at the moment. There are special green funds that are available. So, they are saying let this come through not only to have a positive impact on job creation, but also to get these green funds into our system that are available to the world.
We know that green funds are much cheaper than traditional funds. It is a very important document and is receiving quite a lot of positive response. It is also going across a broad spectrum of the economy. It wants to encourage exploration in mining. Exploration is so important. It is wanting to introduce a much more efficient use of water, because that is also part of being green and sustainable. So, just like the world is moving towards sustainability and towards greenness and making sure that climate change is mitigated, this document from the Economic Transformation Committee of the ANC is saying this must be part of the stimulus as we go forward from Covid in the situation in South Africa.
Kamwendo: The big Metalloys manganese plant in Meyerton has been shut temporarily by its Australian owners.
Creamer: The Australian owner is South32. Now this Metalloys smelter has got a long history. I used to go there 20 years ago. They had a fantastic edifice and was producing manganese alloys. This is just what South Africa needed, because this is beneficiation. South Africa hosts 80% of the manganese in the world and it is high quality manganese, better quality manganese then you get elsewhere in the world. It was taking this manganese and adding value to it and creating manganese alloys for export.
It was really everything that we want to happen. With the electricity price getting so high, I was there again 10 years ago and they were already complaining. By that stage, it had moved from the old Gencor to BHP Billiton and then into South32. So, South32 is still listed on the Australian Stock Exchange and also on the Johannesburg Stock Exchange. They announced this week that they are going to temporarily shut this Metalloys plant in Meyerton. Hopefully the word temporary means temporary, because when you look at it, you see that South32 also allocated $7-million for what they call restructuring costs. Then they say that this includes redundancies, retrenchment. So, if they start retrenching in this way, you wonder what sort of conditions will have to prevail to get them to open the plant up again.
Hopefully, at some stage this will reopen, because we also export these alloys to earn foreign exchange, although they have not been selling that easily of late. We see here that if you haven’t got competitive electricity, these sorts of value additions to our metals, smelters, will close. Not only in South Africa. We see in New Zealand now they have just closed the aluminium smelter there. Fortunately, our aluminium smelters down in Hillside in KwaZulu-Natal are still going strongly, but that is because of a deal done with Eskom a long time ago, to make sure that the electricity price remained low. It was a special contract agreement.
But, if you haven’t got that, like at Metalloys, here in Meyerton, even if it is part of the same group, they weren’t able to clinch a low-cost electricity deal with Eskom, and now they are having to close down. It is a terrible impact on the economy. We hope nothing like that happens in other sectors of value additions to our metals. We like to beneficiate and this is an example where you can’t because the electricity price is too high.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.