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Rip up charter, provide tax incentives, back junior miners – Maimane

Mining Charter Three should be ripped up, proper tax incentives introduced and junior mining enterprises supported to restore investment in the mining industry, which is a stimulator of the South African economy as a whole, Opposition Democratic Alliance leader Mmusi Maimane said on Wednesday.

Delivering a keynote address on the first day of the fifth Joburg Indaba conference, Maimane said it is an indictment against South Africa and the mining industry that the country’s last significant diamond discovery was at Venetia 40 years ago.

He noted that Canada and Australia had far more listed mining companies than South Africa and the vast majority of these were relatively small mining companies.

He said Johannesburg should be the big mining capital and not Perth, but it was not, because South Africa had shut the door on new mining development through discouraging policy.

New mining developments were virtually non-existent despite thousands of mining rights having been issued to people with no interest or expertise.

“This is how we kill an industry,” he said, adding that in countries other than South Africa investors are able to gain mining right information online.

Ninety per cent of mining students are black and they should be the mining entrants of the future.

In the early eighties, mining contributed 21% to South Africa’s gross domestic product (GDP) but currently both mining and manufacturing have dropped out of the top three, with mining contributing only 5% of GDP.

 

Source: mining weekly

Lonmin to sell excess processing capacity, implement other measures to ensure sustainability

Despite “pleasing” third-quarter production results, which showed an improved mining performance, reduced unit costs and increased net cash in July, platinum mining major Lonmin remains concerned by the persistent adverse macroeconomic conditions, as well as the inflationary cost pressures confronting the platinum mining industry.

The company, which is headed up by CEO and COO Ben Magara, will, therefore, implement further measures to ensure that its operations generate sufficient cash to support a sustainable business, it noted in a statement on Monday.

This follows the initial conclusion of an ongoing review of Lonmin’s operations, which has the primary objective of preserving value for shareholders and safeguarding the long-term interests of employees and all key stakeholders.

The operational review is focused on enhancing the cash produced by the business – from its operations and through releasing capital from those activities where the company is currently bearing the cost of excess capacity and unrealised development potential.

“The review is also designed to position the company to benefit from any future improvement in the platinum-group metals (PGM) pricing environment,” Lonmin stated.

The immediate results of the operational review include initiatives to generate cash through the monetisation of select Lonmin assets and to preserve cash by reducing fixed costs.

Lonmin plans to implement several measures, which will be subject to receiving the necessary consents and approvals.

The measures include pursuing all options to maximise cash from Lonmin’s high-quality downstream processing operations. Lonmin plans to achieve this through the sale of excess processing capacity of up to 500 000 oz/y of platinum.

“This would have the benefit not only of releasing capital for Lonmin, but would also allow other South African PGM producers who currently operate on a sale of concentrate basis to access the profit margin benefits of an integrated beneficiation model,” the company stated.

Lonmin will further implement a review of the company’s major development capital requirements over the next few years. In this regard, Lonmin will consider selling for cash or introducing joint venture partners into Limpopo and Akanani, together with exploring options to introduce funding partners into K4.

Meanwhile, despite a consistent strong performance from the Rowland shaft, Lonmin notes that its current capital position makes it challenging to fund the MK2 project, which is necessary to extend Rowland’s economic life.

While Lonmin believes that the MK2 project will be value-accretive, the company will explore options to introduce funding partners and preserve about 5 000 jobs.

Lonmin also aims to implement a reduction in yearly overhead costs by a minimum of R500-million by the end of the 2018 financial year. The substantial majority of overhead reductions will come from nonproduction central functions as the company seeks to right-size its overheads to its operations.

Lonmin will also continue to identify further overhead and cost savings.

While it is too early to define the ultimate effect of the operational review on the company, the overall aim remains for the business to be cash positive after capital investment.

Lonmin noted that further announcements will be made “as and when appropriate”.

 

Source: Mining Weekly

Having stemmed flow of conflict diamonds, new WDC acting president to stay course

The World Diamond Council (WDC) will stay its course, focused on its primary mission of curbing the trade in conflict diamonds, under new acting president Stephane Fischler, who took the helm on July 1 from Andrey Polyakov, who has resigned.

“We have succeeded to almost totally eradicate conflict diamonds from the global market. But, we have to continually remain vigilant, especially in places such as the Central African Republic (CAR), to stop new supplies of conflict diamonds from entering the market,” Fischler tells MiningWeekly Online in a telephone interview from Antwerp, Belgium.

He says the WDC is in the midst of a three-year review of its Kimberley Process (KP) rules, in an effort to expand the programme.

On July 19, 2000, the World Diamond Congress at Antwerp adopted a resolution to strengthen the diamond industry’s ability to block sales of conflict diamonds. The resolution called for an international certification system on the exportand import of diamonds, legislation in all countries to accept only officially sealed packages of diamonds, for countries to impose criminal charges on anyone trafficking in conflict diamonds, and the institution of a ban on any individual found trading in conflict diamonds on the diamond bourses of the World Federation of Diamond Bourses.

The KP is led by the diamond-producing African countries and this system tracks diamonds from the mine to the market and regulates the policing surrounding the export, manufacture and sale of the products.

While the industry is an observer of the KP, only States can be members and they are tasked with implementing the KP rules.

However, according to Fischler, this process is being complicated by a lack of capacity in certain jurisdictions. To build capacity, the WDC has in recent months been hosting diamond evaluation training, for Africans in affected jurisdictions, in Antwerp.

“The real challenge,” he says, “is placing the trainees back in their target countries.”

AREA OF CONCERN
There is only one situation today that is potentially generating concern and that is the CAR, which accounts for less than 1% of global output, Fischler says.

While some zones in the west of the country have been cleared for exports, most of the country is, however, under a blanket ban to export diamonds, as a direct result of ongoing political instability in CAR. The country is under strict monitoring by a team comprising government, industry and civil society representatives tasked with upholding the strict guidelines put forward a year ago to prevent the trade of conflict diamonds, Fischler says.

“Diamonds from the CAR have been slowly returning to the legitimate diamond supply chain under strict supervision of the KP appointed monitoring team. The monitoring process that has been put in place has not come without specific challenges; there have been instances where issues related to the lack of documentation have arisen and as a result the monitoring team took swift and proper action to block shipments that were not meeting the established monitoring guidelines,” Fischler advises.

He adds that the WDC and the KP monitoring team recognise the challenging environment in which the CAR monitoring authorities operate, but nevertheless continues to press the CAR government to increase its efforts to guarantee the traceability of the diamond supply chain within the country and prevent the proliferation of the illicit diamond trade.

As part of this work, there are regular US security updates verifying that declared green zones, or sub-prefectures in CAR, where the export of diamonds has been allowed to resume, continue to remain safe and follow KP procedures.

“The KP continues to become more efficient in our common ability to monitor the exchange of diamonds in CAR, thanks to the more rigorous and efficient work by the local KP focal point. The WDC encourages continued dialogue to identify additional solutions to further strengthen our efforts, but there remains the need for the established guidelines to be strictly followed and local monitoring capacity enhanced. Diamond exports not conforming to the agreed procedures, will continue to be barred from being exported,” adds Fischler.

IMPROVING FRAMEWORK
The WDC relies on governments, United Nations (UN) observers and nongovernmental organisations and their respective reports to give it insight as to what is transpiring on the ground, and by which to gauge the efficacy of its work.

Regional cooperation remains the most critical challenge for the WDC and the KP. Many African nations have significant problems with corruption, porous borders, capacity constraints and loosely regulated alluvial operations.

For this reason, the WDC also supports the work of the Diamond Development Initiative (DDI), launched in 2005 at a meeting of representatives from the UN, national governments, US and UK international development aid agencies, NGOs and the diamond industry. The DDI works to effect systemic change within the artisanal and small-scale mining sector, which accounts for less than 10% of global output, by convening all interested parties in processes and projects that help turn precious stones and minerals into a source of sustainable community development, complementing the KP.

Fischler will serve as acting president from July 1 until May 1, 2018, when he will start his two-year term as WDC president.

 

Source: Mining Weekly

Unemployment rate rises to 14-year high of 27.7%

South Africa’s unemployment rate rose to 27.7% in the first quarter of this year, the highest level since September 2003.

Statistics South Africa’s latest Quarterly Labour Force Survey, released on Thursday, reveals that the growth in employment, of 144 000 people, was offset by the growth in the number of job seekers by 433 000.

Statistician general Dr Pali Lehohla said that employment was boosted by growth in the manufacturing sector, which added 62 000 jobs, and in the finance and other business services categories, which added 49 000 employees.

Mining added 26 000 jobs.

“Mining grew for the first time after declining for four successive quarters. Employment grew in all provinces quarter-on-quarter except in the Eastern Cape and Limpopo,” he noted.

All metros registered growth in employment except Nelson Mandela Bay, Manguang and Johannesburg, which remained unchanged.

“Of the 433 000 people who joined the ranks of the unemployed, approximately 58% were young people aged between 15 and 34, increasing the youth unemployment rate by 1.6 percentage points to 38.6%,” Lehola said.

He pointed out that the proportion of those in short-term unemployment increased by 2.4 percentage points to 34.2%, a further indication that these were young people who joined the work force at the beginning of the year.

Unemployment rates remained high among those with education levels of less than matric at 33.1%, which is 5.4 percentage points higher than the national average.

Unemployment rates among graduates remained at 7.3%.

The expanded unemployment rate, which includes those who have given up on finding a job, increased by 391 000 people, or 0.8 of a percentage point, to 36.4%.

“Until such time as meaningful structural reform initiatives are pushed through and political uncertainty subsides, we see little scope for improvement in South Africa’s labour market anytime soon,” commented BNP Paribas securities South Africa economist Jeffrey Schultz.

Source : Engineering News