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On-The-Air (19/09/2014)
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19th September 2014
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AMLive anchor Sakina Kamwendo on Friday presented another Update From The Coalface with Martin Creamer, publishing editor of Engineering News and Mining Weekly.

Kamwendo: Gold producers are suffering dangerous electricity blackouts in deep power-critical mines.

Creamer: This was revealed by Pan African, this is listed in London and Johannesburg, but of course it’s got mines in South Africa and it’s said it has suffered 11 planned and unplanned outages of electricity in the last 12 months to June 30 and it’s saying what is so scary is the unplanned portion of that, because we are talking about deep, dark and dangerous mines.  They run Evander, which goes down 2 300 metres.  To have a blackout down there which is unscheduled, and there were four of them in the first 2 months of the year that were completely unplanned and took them by surprise, he says it’s actually a threat to labour relations, because when people get stuck down there, they don’t blame Eskom, they blame management, Pan African saying this is huge pressure on them and CEO Ron Holding is scared of more of them arising.  We see that Eskom is saying 32 of its 87 units require major surgery.  Four of them should be put into the critical category, they are warning that there are going to be more unplanned outages coming forward and this presents a massive threat for gold mining.  We know what happened in January 2008 with the blackouts in the gold mines, the cellphones were actually burning, because investors from overseas were just saying, “we’ve got to get our money out of here.” If there is more of this, and we notice it’s coming up at other presentations of results like the Petra Diamond results yesterday,  London analyst was saying, “are you going to have electricity? Will there be unplanned outages?” One of them you could see was discounting the share on the basis of that. It has tremendous damage, we know that we are only the sixth biggest producer of gold, we used to be the biggest.  We have now fallen below Peru.  If we have more of these outages, there is less investment in gold, there is more fear about investment. Although mining companies have cut back on electricity, they all report on using much less electricity, they are paying so much more for it and having the threat of the outages. 

Kamwendo: The Public Enterprises Minister has called on State diamond miner Alexkor to comply with audits and to avoid a cash crunch.

Creamer: This is Lynne Brown putting out at the annual general meeting a media Statement saying that there are issues around auditing with the only State diamond miner we have, we have the State mining coal as well, but the diamond mining is done by Alexkor.  It’s been done for decades.  One wonders why the State has to bother with this when you think of Lynne Brown having to deal with Eskom and these major issues and then having to devote time to something that only produces 46 000 carats. In the scheme of things, this is nothing and also having concerns around it, and saying, “why are you not complying with the audit? Why are you needing cash? Where are you going to get this cash from? You better mitigate against this risk.”  Having that sort of problem now is ridiculous and one would imagine that they need to dispose of this asset.  The government did try to dispose of the asset many years ago, invited tenders, the tenders came in, the private sector was ready to take this over through very good miners who have proved themselves going forward.  The government then decided no, we would keep this asset. One wonders whether it is benefiting the people of the Northern Cape, because the Minister said yesterday she needs to be informed how Alexkor was ensuring the inclusion of local contractors and community involvement. We don’t even know whether that is happening which is basic Mining Charter adherence.  One wonders whether the State is actually doing what it forces other companies to do at a time when private-sector diamond mines are really doing well.  We looked at the Petra results, they had outstanding results.  They are talking about fast forwarding their maiden dividend.  Putting out a lot more cash in the future.  Why should the State be performing so badly at Alexkor?

Kamwendo: Technology champions are dismissing failure as an option in reaching a trillion dollars worth of gold.

Creamer: It’s a fantastic technology thrust that we are having and it’s really moving forward faster than I would have imagined and this is to actually make sure that we get that trillion dollars worth of gold that is under there, but if we don’t change our system we can’t mine it.  Also, it gives us the opportunity to go back to ghost towns, because we leave 40% of the gold behind in the pillars and then we lose a lot of it in the current mining methods.  If you go to a mechanised way of cutting the gold as they’re doing now through reef boring, there is a chance of resurrecting old ghost towns and reviving old mines and also getting to those ultra depths where there is a trillion dollars worth of gold.

Martin Creamer is publishing editor of Engineering News and Mining Weekly. He’ll be back At The Coalface at the same time next Friday.

Edited by: Creamer Media Reporter


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