Every Friday morning, SAfm’s AMLive’s radio anchor Bongi Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Gwala: The major steps that South Africa is taking to boost its rail engineering capacity could win us billions of rands worth of export business in Africa.
Creamer: It was great this week when they rolled out new coaches for Botswana. We saw them designed and made in South Africa and then bought by our neighbours. This is the sort of intra-Africa trade we have been trying to promote for so long. We see from discussion that Transnet Engineering they are eyeing R3-billion worth of business at the moment in Africa.
We have this infrastructure where we can build coaches that appeal to the President Ian Khama, who went in one of them and we know that it will go between Lobatse in Francistown. The first of 37 coaches that have been ordered and 20 have been part of the first delivery. It is an indication of potential to come in Africa rail. It is not only Transnet Engineering, the State-owned entity, but it is also Gibela out at Dunnottar, you see them spending R1-billion on a new rail factory there.
They are going to turn that into a rail hub. There is a training centre where they are looking at training 19 000 people over the next period. We see there the partner is the big Alstom. They have already started with their first 600 coaches, the first lot are being made in a factory in Brazil. Even in that factory in Brazil we see South African seating, cabling and roof racks going in.
We note that the coaches that went into Botswana where nice modern coaches, they are WiFi enable with air conditioning. We can see that it is quite a long journey 500 km that they will be doing so. It is a modern coach which you can actually stay in overnight.
Gwala: This is quite big for Transnet isn’t it?
Creamer: It is quite big for Transnet Engineering, they have always been vigorous. You can see they are turning over about R11-billion a year. We know that they have a nice partnership with General Electric of the United States, which is very enthusiastic about the locomotives that they are building there. We have got a big locomotive programme ourselves, but we know that Africa is also needing this sort of input in rail.
Gwala: Australians are continuing to beat South Africans in the pursuit of new metals and minerals on our very own continent.
Creamer: This always upsets me when the Australians and the Canadians steal a march from us. We find they do it regularly, because they have got this culture in Australia of a lot of young geologists coming through who link up with accountants, list on a stock exchange, go on to the ASX. They won’t get an enormous amount of money, but it will be enough to come through to Africa.
We notice that their diplomatic core in Africa is very active. They are able to do economic things for their people in Australia. They have the red carpet rolled out when these Australians come in. They do their drilling and now we see with graphite, we might say resources is down, but you have got certain minerals and metals that are suddenly getting a new spurt of demand.
We know that with lithium batteries, we have now also focused on graphite. We know there is graphite in Mozambique and Tanzania, but who is getting it? It is the Australians, they have come there first. We also note that they get a lot of information coming through from their government on statistics that allow them to see opportunities.
We need to do something similar. The Canadians as well we notice there is a new mining Minister there. He is working very closely with the new Prime Minister who is a youngster, Justin Trudoux. We see vigour again coming through and we need to match that, because we compare ourselves to Australia and Canada, because we are also a mining destination. We really are somnambulating at the moment and we need a wake-up call.
Gwala: We need to put money on science and technology and geology as well.
Creamer: That is true, because of our big orebodies here, we have the massive Witwatersrand ore bodies and platinum ore bodies in the Bushveld Complex. We have put more emphasis on engineering, because we said the engineers will turn this to account, sinking the shafts, whereas the smaller orebodies elsewhere in the world have had more of a geological focus.
We know that some of our geologists that have gone into Africa have done brilliantly. You can remember with Randgold Resources just developed down the road here on the London Stock Exchange the best performing gold company on the stock exchange have changed the lives of West Africans. When I go there they ululate for Randgold.
When you ask them why they are so enthusiastic they say before Randgold came there they were lucky if they earned $100 a year, now they are earning $1 000 a month. That sort of change takes place through activity that is brought in by people with expertise in geology in particularly. We know that resources are down now, but this is the time to actually get in and prepare.
It is a pity that the Australians and Canadians generally knock us into a cocked hat. When you go into Botswana, you find a lot of activity by Australians and we feel we are right on that doorstep, but we don't seem to be able to get in there easily.
Gwala: Platinum miners are heading for new pay talks in an extremely difficult market environment.
Creamer: This is the sort of thing, we throw our minds back to that five month platinum strike in the Rustenburg platinum belt, which is too ghastly to contemplate a repeat of that, because that really was devastating.
The longest strike we have had in our history. But, now we are entering new pay talks in the platinum miners field and we are doing it under terribly difficult circumstances, because we see that the price of platinum is just not lifting. It is not coming up at all. With gold we see the price at least moving ahead in dollars and then soaring in rands, because you have got that leverage.
Not so in platinum, because the dollar price is so bad, your rand price is just sort of at the level it was last year. Nothing to write home about. Now we are going into these wage talks, I am sure the workers are going to say they are really looking for something better, but hopefully there will be a more sober attitude this time round. If you look at those platinum prices they are $50 below what they were last year in dollar terms. They were bad last year. But, then if you look at palladium, the drop has been even worse.
The drop has been about $250 an ounce. If you take the whole basket of metals, the platinum-group metals as they are called, plus the buy-products of nickel and copper, that price is down about $1 600 an ounce, whereas even in the bad times it was nearly over $2 000. Very difficult times coming up in the pay talks
Gwala: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.