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22/02/2013 (On-The-Air)

22nd February 2013

By: Martin Creamer

Creamer Media Editor

  

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Every Friday morning, SAfm’s AMLive’s radio anchor Xolani Gwala speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly.  Reported here is this Friday’s At the Coalface transcript:

Gwala: South Africa needs to keep on encouraging large companies like De Beers, which is prepared to invest R20-billion in the country during trying times.

Creamer: Most companies are cutting back on capital investment.  The gross capital formation of the country is in a parlous state. We need far more investment.  That is why it is such an encouraging sign that a company like De Beers has decided to invest R20-billion in South Africa, in a new mine at Venetia.  It has been a fantastic diamond mine for the last 21 years as an open-pit and now going underground, where this capital expenditure will be. 

But, it is important for the beneficiation aspect of diamonds as well because that will give certainty to the so-called sightholders of De Beers that need these large diamonds for cutting and polishing.  That was a point made by the French-born De Beers CEO Philippe Mellier when he made that announcement. 

We know that the black economic-empowerment element of De Beers has been sorted out a long time ago, way ahead of the legislation, so you have got Ponahalo with 26% of the South African De Beers Consolidated Mines, which actually runs Venetia mine in Limpopo. 

It is interesting to note now that at top-level, De Beers is no longer owned by the Oppenheimer family, but it is 85 % owned by Anglo American and 15 % by the Republic of Botswana.  The Republic of Botswana has got a link now in our South African operations through that shareholding at the top. 

We should also encourage other people who are now willing to invest in South Africa.  One of them is Robert Friedland, with Ivanplats, wanting to do everything that the government wants in terms of beneficiation, partnering with the State mining company and making sure mines are safe. He is prepared to invest, again in platinum in Limpopo.  Limpopo province the focus of capital investment at the moment.

Gwala: The African Union’s ambitious $360-billion cross-border infrastructure plan is lacking project preparation and regional cooperation.

Creamer: This lack of project preparation and regional cooperation for Pida, as we call it, the Programme and Infrastructure Development in Africa – which is driven by the African Union, African Development Bank and Nepad – if there is not proper project preparation, regional cooperation and regulatory certainty, then you are not going to get the funding gaps associated with this, as they say in the industry, closed. There is not going to be any closure. 

Particularly with the energy components of this big programme at the moment, we see that they are not coming up to speed.  There are nine hydropower schemes, which it fantastic for Africa because only 7% of Africa’s energy comes from hydropower and that is electricity that we get from running water, so it is fantastically clean.  There are nine of those projects and some of them are reaching financial closure, which is good, but the majority are not. 

Then you have also got the big transmission corridors, which they are planning for to link up north, south, east and west.  The idea is to get 60 % more energy access by 2040 and it doesn't look like that is going to be reached.  Only 30 % of Africa’s people have access to Africa’s electricity at the moment.  You can say that there is an electricity poverty on the continent.

One of the disturbing aspects is the wastage of potential energy material. Now, if anyone flies over Nigeria at night sometimes they think its day in Nigeria because of all that flaring going on.  That is gas from the oil and gas plants and its known as flaring gas and is part of the process.  That represents 12 times Africa’s current energy consumption and it is lost to flaring.

Gwala:  The Australian government is planning to embed public servants inside private companies to enforce greater local manufacture and more local content.

Creamer: Talk about interference in government, here the Australians are prepared to embed officials inside companies to force local content, that is how desperate they are coming toward the election now. 

They have got this $1-billion jobs plan and the idea is that for every project that is over $500-million there has to be, what they call, an Australian industry participation.  Any project worth $2-billion or more will be enhanced by a new by-law and it will mean that they can actually bring Australian industry officials into a private-sector company. 

This has created a hue and cry, particularly from the mining companies, and we see a slight backtrack from one of the spokespeople, saying it will be an employee of the company.  Then there was absolute laughter because they said how can an employee of the company tell the board what to do.  So, it looks like the strong Australian dollar is forcing them to do extraordinary things to make sure they get local manufacturing and jobs going. 

This is one of the plans, there is this AIP plan and also the idea to embed government officials inside companies to force local manufacture.

Gwala: 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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