Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: Good news is that Indian company Vedanta is considering a R9-billion investment in a zinc refinery in South Africa’s Northern Cape province.
Creamer: Yes, this in an incredible company started by Anil Argawal. He left school at the age of 15 and he collected scrap around Bombay and has built himself into a very big company called Vedanta which is listing in London and is big around the world now. One of the places that he really likes is South Africa and Africa.
He has already invested R50-billion into Africa, R21-billion of which has come into Southern Africa. Now he is looking to more investments and he is looking to putting up refinery, which could involve an investment of about R9-billion. When we say refinery it reflects the model that suits South Africa.
We have always said we wanted beneficiation. He is mining zinc in the Northern Cape near Aggeneys and he is now building another zinc mine, which is going to be an opencast mine called Gamsberg. What he is contemplating now is not only concentrating that particular range of metals but also smelting it and refining it. He says that this is nothing new, this is what is demanded in India, you have got to add value, you don’t export undervalued goods.
That really suits us. So, good work there and it is turning into a very big promising area, because it also includes Namibia. When he built those assets from Anglo American he also acquired the Scorpion Zinc operation in Namibia, which has also go refining facilities. People are saying this could become one of the world’s biggest zinc hubs if the investments go ahead.
Kamwendo: Bad news is that gold mining company Pan African is closing an underground mine in Mpumalanga, resulting in the retrenchment of 1 700 workers.
Creamer: It just shows you the task that is now when you are mining in deep gold situations, how the costs have lifted very high. What has knocked us back is the stronger rand. The moment the rand strengthened all sorts of pressures built up to a point where there has been intense negotiations with workers.
The Evander 8 is going to close, which will mean 1 700 jobs lost. The payout on that retrenchment is going to be something like R160-million, so we are talking about each worker getting about R90 000 on retrenchment. They are also hunting around for jobs for these people, because where they are doing well, Pan African is, in the dump retreatment situation.
They are doing surface operations where we have got dumps on surface they are turning that into gold at very low cost. We can see their costs sometimes extremely low at about $400 an ounce. Even the gold price where it is, some people are saying it is not high enough, they are heading towards $1400 they are doing exceptionally well.
A third of their operation is in the recycling of the dump material, but where they are running into trouble is in the deep and the dark and often dangerous mines. This particular Evander 8 they have decided that they have to close this, because it has just got no chance of making money. It also reflects what is happening on surface.
We see that the fantastic initiative the Mandela Mining Precinct, they are researching very intensely at the moment, because they see gold operations like Pan African and some of the platinum operations as being a burning bridge that one has to try and bring full term solutions to. Hopefully they will succeed in doing that.
A lot of activity going on in the technological front to try and research and develop better ways of doing mining particularly in situations where you have got deep underground gold and platinum mines. Hopefully we will come up with strong solutions, which will make sure that we can ride out the storm.
Certainly the currency situation puts huge pressure on this particular mine, but it will continue with its surface operations and some of the underground operations in Barberton, where they are doing quite well and part of the Evander, which is still doing well. But, this Evander 8 is heading for closure.
Kamwendo: The South African Mint is rolling out a series of coins to mark the centenary of our late, great iconic stateman, Nelson Mandela.
Creamer: We are looking at these coins thinking wow. There are going to be four coins minted, all related to the centenary of Nelson Mandela. The one that we will all come across is the coin that will go into the general use and that will be a R5 coin with a fantastic image of Nelson Mandela and never used before bronze aluminium is going to be the metal there.
Then they have got three very special Mandela coins that are into the more exotic metals. This all comes about against the background of a lot of minting capabilities in South Africa. We have been calling for platinum coins for some time, we saw that we were beaten overseas by the Royal Mint.
There is potential to make a lot of revenue in this area as we see with the Krugerrand. There has been 1 600 tonnes of gold used to produce Krugerrands and we still see a new Krugerrand now coming onto the scene, two ounces of gold. The Germans just buys these Krugerrands in large numbers, because it is a way of the private sector getting their hands on gold and they note that they get a good return on this. There is never a problem when they have to exchange them for cash.
The coin area can be a wonderful sight of wealth creation for South Africa, because we have got all these precious metals and now with the centenary it is emphasised again how you can get a lot of attention from the coin collecting world and particularly with an image like Nelson Mandela. This is going to come and be very emphasised as we hit July, which is the centenary month of Nelson Mandela and reflecting the 1918 – 2018, 100 years of memory of our great leader Nelson Mandela.
Also, coming down to the ordinary people with the R5 coin. Again, apparently a very interesting image that we will begin seeing from July.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.