[miningmx.com] — ALTHOUGH the agenda for the mining summit, planned for March, appears vague, the event nonetheless carries watershed potential. That’s because regulatory change and industry competitiveness are being discussed as a single conversation.
That might represent a real step forward. Not since the framing of the mining charter in 2002 have government, unions and industry publicly put their heads together in this fashion.
According to industry sources, the Chamber of Mines of SA’s Roger Baxter, will lead the discussion on competitiveness at the Mining Summit, including issues around bottlenecks at Transnet and the prospect of soaring costs at Eskom. He will also attempt to understand how skills constraints, the exchange rate of the rand and health and safety issues affects competitiveness.
The discussion on transformation, however, will be lead by Nchaka Moloi, who used to be a DME official but since went into business. That seems a savvy choice and contrasts with the ideologically driven Jacinto Rocha who left the mineral resources department last month. Perhaps it reflects the growing entente between industry and government.
The fact of the matter is that all sides realise how South African mining has lost its place.
Over the last eight years, investment in the South African mining industry has fallen by one percent, while investment has increased eight percent internationally.
Let’s hope the country, only technically post recession, is in recovery mode. Let’s hope too the mining industry doesn’t miss the next commodity wave.
The summit also represents a bit of a recovery for the Chamber’s relationship with government which I believe was badly damaged during the release of the Codes for Good Practice for the South African Mining Industry. The whole codes discussion was poorly managed. I think government failed to communicate itself well while the chamber appeared to be asleep.
That was unfortunate. There was much in the codes to worry the industry and it’s yet to be decided whether any of the clauses in the codes will make themselves into the Mining Charter review.
According to a source, the DMR has promised not to implement the codes. But there’s a lurking worry that a requirement calling for highly prejudicial financing arrangements may yet be on the agenda.
This is the clause in the codes that says if an empowerment party is indebted after two-years, it should be awarded a free carry into the business.
“The codes were a bit of a dead letter,’ says the source who will be attending the mining summit. “But there’s talk that the question of dilution and indebtedness after two years might find itself back on the agenda.’
Uranium woes
The situation looks precarious for First Uranium Corporation. This is the company that has developed the Ezulwini gold and uranium mine as well as Mine Waste Solutions, also producing the two minerals. At heart of the problem is production delays, the kind of situation that so badly damaged Uranium One and its South African mine Dominion.
Eventually, Uranium One lost heart with Dominion and decided to ditch it. First Uranium’s operations are operational but failing to meet targets has triggered a penalty with its North American partner, Wheaton Gold and there’s debt in First Uranium too that needs repaying.
If First Uranium is on the brink, it makes a mockery of the comments several years ago that it was a matter of simply flicking the switch on South African uranium.
The argument was that as a past major producer of uranium South African would find it relatively easy to en-enter the market. The culture was there, and more importantly, the technology was sitting idle and just needed a bit of political will and financial muscle to start up.
How wrong they were.
The question now is whether the country’s only other major standalone uranium player, Rand Uranium, is going to go the same way: long on promises, short on delivery.
Gerard Kemp, who heads of Pamodzi Resource Fund 1, declares: “We’re building a mine, not a share price.
“Rand Uranium will be on the top 10 uranium miners in the world. But we’re not listed so we can take our time building quality assets using quality management. We’ve also learned from others’ mistakes.’
It’ll also be interesting whether Rand Uranium would consider a corporate deal with its distressed neighbour First Uranium. Some of their assets are neighbouring.
“What is going on at First Uranium is not a concern for us at this time,’ says Kemp. “We are building our own plant. The First Uranium plant is too small for us to use.’
