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Harmony’s help appeal, aluminium smelter fall, forensic diamond review

18th January 2013

By: Martin Creamer

Creamer Media Editor

  

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Gold major Harmony took out a large advertisement at the weekend appealing for all-inclusive help at its troubled Kusasalethu gold mine. Read on page 7 of this edition of Mining Weekly of Kusasalethu being kept shut until its labour, safety and profitability problems are solved. “Let’s work together to save our mine,” Harmony CEO Graham Briggs said in the advertisement. The company last week delayed the post-festive-season reopening of the Carletonville-based mine to review its financial and operational status after a series of strikes. The mine became profitable in March 2011 but its good fortune was short-lived when employees chose to stage illegal underground sit-ins in October and December, compromising safety and halting production. Kusasalethu accounted for 14% of the group’s gold production and 18% of its profit last year, but has none of the labour peace of Harmony’s Free State mines and now faces permanent closure as labour politics takes hold. With a 7.1-million-ounce mineral reserve, the mine has the potential to produce between 260 000 oz/y and 300 000 oz/y of gold for 25 years.

Income of diversified miner BHP Billiton’s two aluminium smelters could fall in the half-year ending June, credit solutions provider Coface South Africa risk analyst George Marais tells Mining Weekly. Read on page 18 of this edition about South Africa’s only two primary smelters, showing successive losses despite the low rates at which BHP Billiton is buying electricity from State-owned power utility Eskom. Current aluminium prices could see $500-million lopped off income in the half-year to end-June,” he explains. The cost of producing locally is starting to weigh heavily. If the smelters were to close down, South Africa would have to import primary aluminium ingot at a time of current account deficit worries. The South African aluminium industry is finding it difficult to compete and the flood of aluminium imports is eroding the value of the R55-billion-a-year sector. Aluminium can be recycled repeatedly without loss of properties, which saves up to 95% of the energy required for primary aluminium production.

South Africa’s State-owned Industrial Development Corporation (IDC) reports that an independent forensic review is to be undertaken into the affairs of the failed diamond beneficiator, African Romance, headed by former Member of Parliament Mohseen Valli Moosa. A decision was taken last month to place the company, WakeGem, which traded under the name African Romance, in voluntary liquidation. Read on page 14 of this edition of Mining Weekly of the now-closed diamond beneficiation company receiving some R150-million in development finance from the IDC and the provincially run Gauteng Enterprise Propeller – R97-million from the IDC and more than R50-million from the Gauteng Enterprise Propeller. African Romance set out to add value to diamonds that would be sourced directly from local mines. When Mining Weekly featured African Romance on its cover in 2007, following its launch, Moosa expressed the view that the brand had the potential to, in time, stand alongside global giants like Gucci and Cartier.

TSX- and JSE-listed Rockwell Diamonds reports on page 15 of this edition of Mining Weekly of a slightly rising diamond price trend as we enter 2013. To watch a video on the comments of Rockwell CEO James Campbell on the outlook for diamond prices, go to www.miningweekly.com and click on ‘Multimedia’ and then on ‘Video Clips’.

Edited by Creamer Media Reporter

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