This Friday morning, SAfm’s AMLive’s radio anchor Ike Phaahla spoke to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Phaahla: Illegal mining is out of control. That’s the warning from top mining company Sibanye.
Creamer: Mining company Sibanye-Stillwater gave a stern warning this week when it presented its results and it said illegal mining regrettably is badly out of control. They appealled to the government to try and distinguish between the illegal mining in existing operating mines that are generating cash and employing a lot of people and then the abandoned mines.
They say that there is too much of a simplistic approach to this and the government seems to favor the idea that artisanal mining might come into these abandoned mines. They have got a going mine in Randfontein called Cooke and they have had to arrest 665 illegal miners. They need assistance of the police, because this is a big security arrangement. Also, 123 of their own employees have been suspended for aiding and abetting the illegal miners.
They are saying that unless something is done about this, it is going hit that particular mine very badly. We already see that it is going to go onto care and maintenance and we wonder how much this has contributed to it, because now it’s going to shed 7 400 jobs there in a Section 189 discussion at the moment around that. One could look at what has happened in Ghana and perhaps take a little bit of a leaf out of that book. Last year this time Ghana’s mines were besieged with illegal mining and we know that our own AngloGold Ashanti has the Obuasi mine there.
They were appealing to the government of Ghana saying please let’s do something about this and not much was done. After the election with the new government coming in in Ghana they have shown a model on how to then make sure that everybody benefits from the taxes and mines by moving the illegal miners out of the way and we know see Obuasi in its latest report has said that the Obuasi mine is clear of all illegal miners. It looks like a fantastic job has been done by the government of Ghana.
Perhaps we could take a leaf out of that book, because we are losing something like R20-billion a year now in lost materials from illegal mining. It is not only the activity of taking those materials, gold bearing normally, it is also that these illegal miners take all your copper cabling, they take your diesel and equipment and sometimes it becomes a big food issue. People are selling food down there and it is all sorts of bad safety things.
Safety is supposed to be our biggest priority in mining in South Africa; we hear that from government and the regulator, but when it comes to illegal mining that gets thrown right out of the window and we have seen how death comes stalking.
Phaahla: More money is being put into marketing to save the struggling platinum- and diamond-mining sectors.
Creamer: It is amazing how much money South Africa’s mining industry has put into marketing, we know that with diamonds the slogan, a diamond is forever, is the best known slogan in the United States as an advertising medium. We know that from the Advertising Age they have done a survey on it and that is all South African money going in there.
Now, when things change they pull back on that. When there is a downturn they pull back and you see how bad it is. We have seen them pull back in the platinum industry, our platinum mines also ploughed a lot of money through the Platinum Guild International (PGI) for 45 years they have been ploughing money.
They know the consumer, they know the platinum jewellery consumer, but the pull back has hurt. Now, even one of the more moderate companies Northam said at its latest presentation of results that they are going to plough 80% more funding into platinum jewellery marketing, because we know how important this is.
We hear from PGI that there are big opportunities in China in particular where they talk about saturation in the Beijings and Shanghai, but there are so many provincial cities that they have only gone into 15 of those. They reckon if they go into all of them they could then boost demand for platinum by another 3,5-million ounces.
Phaahla: A local mining company that has invested big in America is laughing all the way to the bank.
Creamer: That is again Sibanye, which is now called Sibanye-Stillwater, because its bought Stillwater in the United States that is a big palladium and platinum mining company. They have really done their homework, because since they started talking to Stillwater, the price of palladium has gone up 64%.
We know that with the platinum price gone down, palladium price has gone up and they are sitting in there saying that this palladium-propelled US buy is quickly paying its own way. They are talking about it is paying for its own capital and finance costs and even returning some cash to shareholders.
The other delight is that they say that the legislative framework in the United States is a pleasure and they are contrasting that with the situation in South Africa where we have Mining Charter Three which they describe as totally unworkable and totally ludicrous. They are hoping that they can also bring some of the safety measures that they have picked up in Stillwater in the US in Montana, because they say that the safety record there is so good and they already started to bring some of this back.
Of course, it is a mechanised mine and we see that it is the biggest palladium producer in the world and also the biggest recycler of platinum autocatalytic converters. That is another thing South Africans have got to learn about, urban mining, when you go out and you pick up the scrap and that scrap contains a lot of value. That is what they are also learning to do in the United States of America.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.