It’s that time again on a Friday when Update At Noon presents another Update From The Coal-Face with Martin Creamer, publishing editor of Engineering News and Mining Weekly.

Sakina Kamwendo: Barberton, according to explorers, still has so much gold that it can put South Africa back on the gold map.

Martin Creamer: Yes, we haven’t been doing well in gold in South Africa in recent years. We used to produce 1 000 t a year in the Seventies, and we are now down to round about 120 t a year but there’s potential to keep it at that 120 t a year if we move into the Barberton area. Now, there has been gold mining in Barberton for more than 120 years but the beauty about Barberton is that if you go in there with geologists, you can keep exploring while you’re mining and that’s the most economical way of doing things. That’s the way you get your return the quickest, because exploration as Minister Gwede Mantashe is trying to encourage at the moment, can be very long term when done from scratch, if you’re doing greenfield exploration. But this is brownfield opportunity. Every area there is quite well mapped already.

The data is well-known. But you have got to go out and prove that the gold is there, and they believe that this can really give us a good turn if we concentrate on Barberton as a gold area with much greater intensity. Explorers say the model to be followed is that of the London-listed and Johannesburg Stock Exchange-listed Pan African Resources, which is really doing well in the Barberton area, doing its own exploration and constantly achieving mining growth. Exploration geologists feel that new areas that are coming back there, and the presence of gold mines coming out of problems, provide an opportunity to emulate the Pan African Resources model, particularly in the situation of the Lily Mine, which is having to be brought out of business rescue, and the Barbrook mine, and other operations, such as Princeton, that can really bring a lot more local gold to our high capacity Rand Refinery.

Sakina Kamwendo: South Africa’s exploration industry has until Monday to comment on flawed new exploration regulations.

Martin Creamer: Yes, a lot is going on in exploration at the moment. Minister Gwede Mantashe wants to increase investment in exploration and attract 3% of what is spent on exploration by the world.  So, you’re seeing all sorts of documents coming out and one of them contains new regulations that is calling for comment, with the window to comment closing on Monday. This has caused some consternation as the Council for Geoscience wants geological core material returned to it. When explorers drill, they generate exploration core, which gives you a lot of detail of what you are drilling, and what the Council of Geoscience wants now is for that exploration material to be brought to it and explorers have until Monday to comment on this proposed regulation. So far, they’re commenting very harshly and saying that this is going to be very difficult to achieve as there is so much of core around, and they are saying that to actually bring this about will present a lot of hardship to the exploration industry.

They want to sit down with the Council for Geoscience and the government and explain how this can be done without having to physically return tonnes of this material. They’re saying that if this does happen, the government will turn itself into sort of a crushing facility with the cores requiring large storage facilities. They’re also complaining that some of the terminology used in the draft regulations is incorrect. So, they really want to hold discussions, and the comments are going in as fast as possible.

Hopefully the early deadline will speed things up, but at the same time, explorers want the regulations corrected.

Sakina Kamwendo: Coal supply came under the spotlight again this week as big companies exit coal mining.

Martin Creamer: Yes, the big companies want out of coal and this is creating a lot change in the industry. Now, we saw the headlines in Australia last week that Anglo American and South32 are exiting South African coal. Well, we know that Anglo American has got a demerger. What South32, which is listed in Australia and Johannesburg, is trying to do is to dispose of their coal assets rather than spin them off in a separate stock exchange effort. South32 working with Seriti Resources, and what Seriti is finding is that if they endorse the long term contracts that are in place at very low coal prices, it will not be economic for them to take over the South32 coal operations.

In fact, Seriti has made it clear that they will walk away from the transaction unless Eskom is prepared to pay a lot more for coal – more than double the present contracted price, in fact. We see that in the case of Duvha power station, South32 is being paid R280 per ton of coal at the moment and Seriti wants Eskom to pay R550 per ton of coal, which will mean an extra R2.7-billion a year, if this is approved by National Treasury.

There’s a lot of discussion at the moment, and the ownership of coal is going into different companies, often considerably smaller companies, and it seems that a big rethink is needed. National Treasury has been asked what Eskom should be allowed to do, but it also emphasises the need for all the red tape around renewable sun and wind energy to be cut so that we don’t actually run into a problem of high-priced electricity in the way that this could happen if coal price uncertainties continue to arise.

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