Every Friday morning, SAfm’s AMLive’s radio anchor Elvis Preslin speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Preslin: Gold Fields is spending R200-million a year on training at its big mechanised gold mine in Gauteng.
Creamer: We have got a fantastic asset in Gauteng, the city of gold. Normally when we mine this gold, you have to go to orebodies that are lower than this table. You have got to crawl on your belly. But, when you go to South Deep it is a different story.
The orebodies are so huge you can drive your car into the place, you can have a double decker bus in there and still have room for a roof rack. These are massive orebodies like we don’t know in this country, but they need to be mined in a different fashion. You can’t have your drill and blast and hand-held situation, you have got to have massive big vehicles to do bulk mining. This South Africans don’t seem to know how to do. It seems to be such a hard nut to crack, not only do the mineworkers stand to earn much more and some of them that I have been speaking to there, smile so broadly that I know they are earning a lot of money, but it is not profitable.
Our foray into the mechanised mining, we have got to crack that nut. So, what Gold Fields are doing they are now almost spending a tenth of their payroll on training. They are spending R200-million a year to get this done, because it is almost national pride. South Africans are supposed to be able to mine. The Aussies can do this and the Canadians can do this. South Deep is three kilometers underground, but we have got to put this out of the red. That is a massive effort at the moment. The Gold Fields CEO, Nick Holland, believes that they can get this through proper leadership.
He stuck some good leaders in there and it is no longer a technical issue, it is a people issue. He is doing all sorts of training, hard training, soft training, supervisory training and at his presentation results he also pointed to possible transformation. He bought in from West Africa Alfred Baku, a man who was a mineworker with the people who is now leading the whole of West Africa.
He is saying this is what South Deep has got to do in transformation. It has such a long life, 70 years. When all the mines lights have turned off, this mine will still be going in Gauteng and can have career paths second to none. He is saying to the unions, his employees, government, the Chamber and himself, we have got to do this and it is terribly embarrassing that they come to the table quarter after quarter and half year after half year saying we’re still running at a loss, we have got to push it into the black. That is why they are putting so much money into this.
Preslin: Is it not a fear perhaps that mechanisation can lead to unemployment?
Creamer: It is a different type of employment, a better type of employment. You don’t want to be down on your belly and subject to all the seismicity there, this is safer. Although, crazily they had two fatalities from two unbelievably freak accidents.
Preslin: So, the strong rand is hitting underground mining hard it seems like.
Creamer: The strong rand: you’ve got to watch out what you hope for. We have had Cyril Ramaphosa come in and people have just been watching this rand go so strong. What has happened is that they are not ready for that yet. For years you have had a situation where they wanted a high dollar price and a weak rand and that gave them the answer, because their costs are in rands and their income is in dollars.
So they sat very pretty. Now, when you look at them they’re getting ashen-faced. In all sorts of mining activities, they’re ashen -aced, because they know this is a massive challenge and when the gold price goes below R500 000 per kilogram, they start shivering and shaking, because they know this can mean some closure. What is so important there is when we look at what has been happening in gold mining.
They have also been co-mining the dumps. Now, we have got dumps out here and there is gold in those dumps. Our people have not only been doing the underground, but they are doing the surface and that can be the savior. If you look at Pan African Resources as they reported this week, they have gone hell for leather into tailings development. That has become a tailwind because they are almost getting the gold out of there at $700 per ounce all in cost.
Preslin: That is the future for artisanal mining?
Creamer: If you go for artisanal mining at that point you have got to watch out, because we see artisanal mining now in Kimberley where we are going back. The mining industry is going back there big time, they want to fly the flags, because they have got prospecting licence now with the winds of change coming in.
They believe Kimberley will be resurrected, but what is happening is that the illegal mining there is quite serious. The locals go in and take the diamonds off the dumps and they pass them on to foreigners. The foreigners give them nothing, we get no tax, we just get a destroyed environment and we sit there saying to ourselves, what is this all about? Are we going to let our national asset just walk away to foreigners who give us a pittance, get it through the border and off they go with our assets and we get zero.
Preslin: That could mean the legalisation of those illegal miners in order to bring back that money.
Northam yesterday switched on R900-million worth of extra platinum power on in Limpopo.
Creamer: Now look at that. Even though platinum is down – you were talking about a higher price earlier, but it is not good enough with the rand the way it is. It is also very tough on the platinum people, but going in they took journalists and celebrities, flew them in to Zondereinde yesterday.
They told us about this R900-million investment and showed us this new furnace that they have just put in there that will be making sure collectivity with the original furnace that they can put through one million ounces. So, there is optimism. Here you see a platinum mining company, Northam Platinum, listed on the Johannesburg Stock Exchange, growing at a time when things are down, because they believe strongly that things will come up and they have got to be ready.
One of the beautiful things about that is that they also took us along to the housing and the way they are housing their employees is exemplary. There we spoke to some of the people and the German partners, Heraeus, were there handing over the keys to the people getting these houses at R500 000 and the banks love to give the bonds on this, because the way it is structured they pay off of the bond with their living-out allowance.
But now have got fantastic houses of their own and the company even sells to non-employees. We can see the huge benefit of mining, this can be the flywheel of our economy, but we have got to get it going and have to throw away that dreaded Mining Charter Three.
Preslin: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.