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: South Africa’s biggest mining company this week leapt headlong into using only solar power at its copper mines in Chile.

Creamer: This is Anglo American and this is a fantastic leap that they have taken into sun power. The beautiful thing about that is that they would like to replicate this in South Africa. The important aspect is that you need the fairy dust and the fairy dust in all this is platinum group metals, because you take that sun power and you convert it into hydrogen.

To do that you need platinum and iridium. You then install the hydrogen and you put it through a fuel cell. And you produce electricity from the fuel cell and again you need platinum and ruthenium. It is very important for South Africa to consider this. We know that we are entering a new integrated resource plan. We also have new leadership in energy, it is now the Minister Gwede Mantashe, who is heading the Department of Mineral Resources and Energy. Obviously the mining orientation brings us close to coal mining, which we have been using to providing the energy.

We are going to have to continue to do that, of course, for decades ahead of us. At the same time, we can see how fast the world is moving into the new generation demanded by the climate change lobby that wants to mitigate this whole weather change in the world. The big instruments that you can use are sun and platinum group metals and we got this offer now from Anglo saying that they want to partner South Africa long term in this.

Kamwendo: The World Bank’s finance arm this week agreed to fund a major study into natural gas energy for South Africa.

Creamer: This gas aspect of this is also linked to the renewable energy, because the sun does not shine at night and the wind does not blow all the time. So, you need something that can replace that gap and that is gas.

We see now coming into South Africa with help was the International Finance Corporation that is linked to the World Bank. They are prepared to put R28-million initially into a study, which is going to be done to bring in liquified natural gas (LNG) to Richards Bay, have a terminal there and also send this gas up to Gauteng. There is an existing pipeline that can be used and, of course, we know in Coega they are also thinking about LNG and in the zone in Saldanha Bay, also gas. So, gas and the sun and renewable energy can become a completely new aspect for us.

You can see that the World Bank is prepared to come behind Transnet on this. Transnet is not going to be the main shareholder in the eventual special company that runs this. They want the private sector to be heavily involved and they will do this study and then have a quest for information and interested parties to come through and bid to be part of this process in a public private partnership (PPP). Now these PPP’s are becoming very important. We saw Transnet last month set up a PPP with the black-controlled Southern Palace to have an inland port in southern Gauteng. It is a R2,5-billion transaction.

Again, the Transnet will not be the main shareholder it will be the private sector and this is the trend now to have these PPP’s coming in. Very important for South Africa.

Kamwendo: The new value proposition for local coal producers is to focus on the South African market rather than the export market. 

Creamer: This is unusual, because our coal mining has always been predicated on good coal going out from the Richards Bay Coal Terminal into the export world and the poor quality coal staying inside and going to Eskom mainly, but also to the cement, steel making and chemicals industry. Now, in this big meeting that was held in Johannesburg this week, the Industry Coal Day, we had people who really study this saying to South Africans look inward with your coal now, because your prices are good inward.

We can see that Eskom is paying an average of R349 per tonne for coal and then the steelmakers pay much more then that. This is a fairly good local market if we have to turn inward, because we see that China and India are saying that they are going to import less coal. The whole world is cold shouldering coal, it will never have that same allure. The big companies are marching out of coal. We have seen internationally BHP and Rio Tinto are saying that they want nothing to do with coal. In South Africa, South32 is exiting coal and we know that Anglo is marking time, because it needs to support Eskom on this and we need to be very close to the coal to make sure our lights stay on.

Glencore itself has actually put a cap on coal. So the major miners are putting restriction on coal and the local smaller and medium sized miners are coming into coal mining and the message to them is that they could have a good value proposition by supplying the domestic market and not focussing so much on exports.

Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.