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08/06/2012 (On-The-Air)
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8th June 2012
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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: Diamond giant De Beers will decide in two months whether or not to spend R17-billion on expanding its Venetia mine in Limpopo province.

Creamer: Yes, we have got a new CEO of the De Beers giant, Philippe Mellier the first non-South African. He is a Frenchman, of course, and he is having to confront the complexities of the diamond industry.

He is very quick, during his visit to Johannesburg, to say that he is going to open at least five more jewellery stores in China. He is a little bit slower when it comes to a decision on whether or not to spend R17-billion to expand the Venetia mine.

That is De Beers flagship mine and the biggest producer of diamonds in South Africa. In order to keep its life going to 2046, of course, these mines also look long, they need to take a decision now on whether or not to go underground. That will mean a kilometre depth.

The existing mine is opencast and a lot of these diamond mines the pipe extends underground and they have to take there expensive decisions. Melliers biggest wish is to find another big diamond discovery. De Beers have been searching for 15-years for another big diamond mine, something like Venetia or Jwaneng, you just don’t find them anymore.

He is saying that the future is going to be a lot of smaller mines, scattered. In the meantime, they’ve got this opportunity, but it is at a time when the resources environment is down. So, of course, it is going to be a very interesting decision, because two boards will have to take this decision. Not only De Beers now but also the Anglo American board because we know that the Oppenheimer family are selling their 40% out of De Beers to Anglo.

This is going to be an indication of how committed the new owners are to investing in South Africa in an industry which is worth $70-billion a year and De Beers with their turnover at $7-billion. It only has 10% of that, so you can see it is a very changed industry where De Beers used to have such huge dominance, now it is like a normalised competitor.

Gwala: Well staying with diamonds and investing in South Africa, a small black-run diamond-cutting operation is proving that local diamond beneficiation is profitable.

Creamer: There is always this argument the diamond miners say beneficiating, cutting and polishing diamonds in South Africa, is not really competitive with what goes on in India and China.

This particular company, which is Trans Hex Diamond Cutting Works in Johannesburg, part of the Johannesburg Stock Exchange listed Trans Hex, a diamond mining company, they have got 75% of it and the entrepreneur running it Prince Mbetse has the other 25%.

He is saying that this is viable, but the big advantage is when you are part of a mining house that you don’t have to go to the table and beg for the sort of diamonds your clients want, you know the sort of diamonds your clients want, you get those from the mine and you supply them into that market.

So, this particular diamond cutting works has already opened a Belgium sales office and they say that this business is profitable. It also comes against the background, of course, of legislation.

In South Africa you have to sell 10% of your diamonds to the State Diamond Trader, by law. Then if you don’t sell another 15% to local cutters and polishers, you have to pay a 5% export tax.

Trans Hex is saying that they can save the 5% and do the beneficiation themselves. Trans Hex CEO Llewellyn Delport says this is profitable.

Gwala: A South African biotechnology firm has obtained special Ministerial permission to list on a foreign stock exchange to fund a new method of treating cancer.

Creamer: The South Africans have had a breakthrough in cancer. They have gone along to the Minister of Finance Pravin Gordhan and also the South African Reserve Bank and said that they have this company Genius Biotherapeutics of Cape Town.

They can not raise the $30-million on the local Johannesburg Stock Exchange, because the investors haven’t got analysts that are tuned to this sort of biotech investing.

So, give us permission to list on a foreign stock exchange. We haven’t had that since the year 2000, when the big mining companies went out. Gencor went our and is now BHP Billiton and Anglo American went out and listed on the London Stock Exchange.

Now we’ve got this smaller biotechnology company that wants to seek a foreign listing in order to raise $30-million because it has got to put this breakthrough in cancer, it has got to trial it and in order to do that it is going to have to have investors behind it.

We already see on the Nasdaq in New York Dendreon company has got a similar sort of breakthrough with the use of vaccines to treat prostate cancer. It would possibly be an exchange to go to, Nasdaq, to raise this capital, but the big thing is that we have 100 000 people just in South Africa alone diagnosed with cancer every year.

Yet the cures are very slow and sparce, because cancer is a sort of class of disease, so there is not just one cure. But we know that chemotherapy is the big thing, but it does have its side effects and it does interfere with the quality of life of certain people.

They are saying that their new vaccine, dendritic cell vaccine, uses one’s own immune cells to attack that cancer and they feel that it is a superior offering in this cancer cure race and they want to now try and list on a foreign exchange and they’ve got the permission to do so from the Minister of Finance Pravin Gordhan and also the South African Reserve Bank.

Gwala: It will be interesting to see if they will be able to raise $30-million.

Creamer: And virtually half the company is owned by the Johannesburg Stock Exchange-listed, Sekunjalo.

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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