Every Friday morning, SAfm’s AMLive’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: Mining sector stress is growing by the week with yet another South African mining company plunging into business rescue this week.

Creamer: The South African subsidiary of the London-listed International Ferro-Metals (IFM) announced that it was going into business rescue. This is a chrome mining operation, a small one in Rustenburg, but small and big does impact across the economy. We know that they also commented from London that the rest of IFM was fine, it was just the South African subsidiary. So they were questioned with why just the South African subsidiary?

They said that they have had militant labour activity, but also problems with Eskom, inconsistent supply and basically running at a loss there because their costs are up. Their prices that they are getting for their product are down. This is the second company to say the outside of South Africa are coping with these low prices, but we can not. That is something we should start asking ourselves, because we also had Optimum Coal go in a couple of weeks ago and Evraz Highveld Steel.

We noticed with statements put out this week that Optimum Coal business rescue is not really going that well. Are we going to see liquidations? Evraz as we noticed, there should be an announcement today with bidders. You can see that they have extended the bidding period. It is not an easy thing, the business rescue does not mean that companies are not going to be liquidated. If the are liquidated, the ripples across the economy are very severe.

Kamwendo: The current mining slump is bringing to the fore the indispensable need for mined products in today’s world.

Creamer: I’m holding this cellphone and look at the metals and minerals that go into this, they are all mine products, copper, silver, gold, palladium, platinum, ceramics, titanium dioxide and a whole lot of other tongue twisters. I’ve already used it several times this morning so it is something that is indispensable. Most of us by this stage have brushed our teeth, look at the mined minerals that go into that, silica, limestone, phosphate, fluoride and titanium.

Many of the women have put their make up on this morning, they put mica on, talc, it is all being mined. Even if we want to save electricity with a compact fluorescent light bulb we have got to look to bauxite, led, copper, limestone and nickel. If we jump into our cars there is more then a ton of iron and steel in there, 100 kg of aluminium, 19 kg of copper, 34 kg of copper if we think we are going to go green and if we have a Hybrid there is even more mined products. Then we say we want to be green and have wind turbines, which has 300 tons of steel in a wind turbine, 5 tons of copper, 3 tons of aluminium.

Just to compete with half of one of our power stations and you say you want green energy and wind turbines to compete with 3 000 MW and most of our big power stations are 6 000 MW you would have to have wind turbine with all that metal in, every 240 meters from Durban to Cape Town at 2 MW a time. We are really wedded to this mining and it goes back 4 500 years to the Egyptians, ancient Romans and ancient Chinese in many years gone by.

Kamwendo: A strong redirection of the economy upwards is what is desperately needed in South Africa right now.

Creamer: We have got to manage this slump and we need someone to tell us that we are managing the slump. We need that confidence because we are definitely in a downward path at the moment. I think that statements coming out from politicians and business men need to be coordinated.

Quite a good statement coming out in Japan this week from Cyril Ramaphosa where he said the economy is on a downward slope now. It will resurge, it will go up as things always have done in the past. That gives us some confidence and he is also saying that we will be able to come up with strategies to manage the slump. That is also something we need. How did we get into this at the moment?

We find that apparently on the commodity front, many of the investment funds and hedge funds were overextended in oil. Because the oil price tanked they had to rush out and sell off all the interests in metals and minerals and this has then had a major impact. That sort of activity by hedge funds can really hit everyone throughout the globe.

Kamwendo: 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.