The mine of the future has arrived

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Most mines would be happy to shave 2% or 3% off production costs, but automated mining will make the once dormant Syama mine sold by Randgold to Australia-based Resolute Mining 20% to 30% more efficient. Picture: Supplied

This would’ve been the stuff of wild imaginings just a few years ago: a fully automated mine with not a soul in sight, except in a control room located on the surface.

Operating at more than a kilometre underground at the Syama mine in Mali, driverless laser-guided vehicles make their way from the surface along decline ramps to rendezvous with driverless loaders to collect ore and return to the surface where it is crushed, milled and processed.

“This is a world first for automated mining,” says John Welborn, CEO of Australia-based Resolute Mining, which expects to produce 300 000 ounces of gold a year once underground production kicks off at Syama in June this year. Speaking at the Mining Indaba in Cape Town this week, Welborn outlined how technology in mining has finally entered the digital age. Syama, with a projected 14-year life span, expects to produce gold for an all-in cost of US$746 an ounce. That’s a fabulous price for an underground mine in today’s market.

A single operator sitting in a control room on the surface can supervise up to eight trucks remotely, ensuring there is minimal truck downtime.

Resolute acquired the dormant Syama mine from Randgold Resources in 2004 at a time when the gold price was US$350/oz, a fraction of its current level. This has turned out to be a sweet deal for Resolute, which subsequently discovered vast underground resources that became payable as the gold price improved.

Envy

Though drilling and blasting can also be fully automated, this is the one area where Syama will continue to employ humans, says Tal Zarum, head of programmes automation at Sandvik, which is partnering with Resolute to develop autonomous mining solutions. While most mines are happy to shave 2% or 3% off production costs, Syama will be 20% to 30% more efficient than conventional mining methods. Gold miners around the world must be watching this with envy.

One major efficiency at Syama is the virtual elimination of ‘smoke hours’ after blasting, where dust is required to settle before miners can return to the newly blasted area. Driverless trucks are guided by lasers rather than visual cues, so the presence of dust does not interrupt their progress. On the mine surface they are guided by GPS.

Is this the future of small town South Africa?

Written by Ciaran Ryan. Posted in Journalism

When the taps run dry and the lights go out.

This article first appeared in Moneyweb

Increasing municipal debt is being identified as a key strategic risk. Picture: Naashon Zalk, Bloomberg

The residents of Bethal, a small farming town in Mpumalanga, know what it is like to live without water. Rand Water reduced the water pressure by 40% in December when the Govan Mbeki Municipality missed payment on its arrears bill of R88 million.

When the taps run dry, schools and businesses close down. Parts of the town still have access to water, but most do not. On Saturday the municipality turned the water back on, but no one knows how long this will last. Local businesses and farmers have come together to solve the problem, trucking in water from surrounding boreholes to supply the town. Local residents have resorted to hauling buckets of water to their homes for washing and cooking. The town’s abattoir was shut down because it could not get water.

A week ago residents marched on the municipal headquarters demanding to know why the water bill has not been paid and when the taps would be turned on again. “We are expecting the lights to go out soon,” says Michelle Rademeyer, a local resident planning to campaign in the upcoming elections for Freedom Front Plus (FF+). There’s a good chance she will clean up in the election, given the level of disaffection with the current municipal leadership. Many residents suspect corruption as the cause of their dry taps. “We may be able to do without lights, but we cannot do without water,” says Rademeyer.

Local government an ‘irrelevance’

The local government has ceased to function, adds local town councillor Aranda Nel-Buitdendag. When that happens, residents take it upon themselves to provide basic services such as water supply and emergency services. The local government has become an irrelevance, or worse, an obstruction to daily life.

Residents know who to blame, and the ruling ANC can expect a thrashing in Bethal come election time. Smaller parties such as FF+ and the Economic Freedom fighters (EFF) are expected to gorge themselves on this mess.

Rand Water supplies bulk portable water to 17 municipalities in Gauteng, Mpumalanga, North West and the Free State. As of January 23, it was owed R708 million in arrears. Bushbuckridge Municipality, also in Mpumalanga, has had its water flow reduced by 20%. Worst affected is Victor Khanye Municipality, also in Mpumalanga, where water flow has been reduced 60%, impacting the surrounding areas of Delmas, Botleng, Eloff and Sundra. It owes Rand Water about R86 million in arrears.

Asked whether the delinquent municipalities were managing to catch up on the arrears, Rand Water cryptically replied: “Some municipalities have been improving and adhering to the repayment arrangements [more] than others.”

Other towns in Mpumalanga dependent on coal mining have been devastated, but for different reasons. Blinkpan, which abuts the Koornfontein Coal Mine, has been in virtual shutdown since workers stopped getting paid in October last year. Koornfontein, like its sister mine Optimum, forms part of the Tegeta group, once owned by the Guptas. Both mines were placed in business rescue in February 2018.

The witch trials of Megawatt Park

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Matshela Koko, the former acting CEO of Eskom once described as ‘the face of corruption’, recently tweeted out a chart showing operational performance under different Eskom management teams.

The chart shows power generation performance, which has been in steady decline since 2000 but improved sharply once Koko and then-chair Brian Molefe took over. Load shedding also stopped during their tenure between 2015 and 2017.

Performance has just as abruptly taken a turn for the worse since Jabu Mabuza and Phakamani Hadebe have taken control of the electricity company. The chart is extremely flattering to Koko and Molefe.

Source: Matshela Koko (via Twitter)

Koko and Molefe were maligned in the press and by political parties as ‘Gupta stooges’. The deal that sank their careers at Eskom was a coal supply agreement concluded with Gupta-owned Tegeta (now in business rescue), which was presumed to be corrupt. Glencore, the former owner of Optimum Coal Mine, became a forced seller when it was slapped by Eskom with a R2.1 billion fine for the supply of sub-standard coal to Hendrina Power Station. In stepped the Guptas, who, with no money of their own, managed to pick up Optimum with a R1.6 billion guarantee from Eskom and a coal pre-payment of R658 million.

On the face of it, it looked dirty as all hell. Eskom had acted as an enabler in what amounted to the theft of a key Glencore asset.

Reality is somewhat more nuanced. Firstly, the Eskom fine has not gone away but may end up being substantially less than R2.1 billion, as Optimum – now also in business rescue – hunts for a new buyer who will want to make peace with Eskom. Secondly, Eskom’s coal costs had been escalating at 17% a year since 2008 and Koko made it a priority to bring this under control. He contacted Eskom’s mining suppliers and laid down the law: the average delivered cost was to be no more than R437 per ton, which was the average cost of good quality coal for Eskom at the time.

Joburg prisoners claim officials are violating court order to feed them properly

Written by Ciaran Ryan. Posted in Journalism

This article first appeared at GroundUp.

Inmates at Johannesburg “Sun City” Medium B prison say prison authorities are violating a court order issued by Acting Judge SM Wentzel in June 2018 that ordered the Department of Correctional Services (DCS) to serve three meals properly spaced throughout the day.

In January 2018 inmates complained to Acting Judge Wentzel in the South Gauteng High Court that they were going 20 hours between meals because of lack of staff. They were being served lunch and supper (consisting of bread and jam for the most part) at 1pm each day. This was expected to last until breakfast the following morning.

In a damning judgment Wentzel ordered DCS to ensure prisoners were served three meals a day, properly spaced throughout the day. She also stated that “it is high time” that inmates were served a hot meal of meat and vegetables in the evening “to sustain them”.

While the inmates are now receiving three evenly-spaced meals a day, they say that instead of a hot meal of meat and vegetables they are served bread and a sachet of juice powder.

Inmates say the refusal of prison authorities to honour Wentzel’s court order violates their human rights and the Correctional Services Act. The Act requires food to “be well prepared” and to be “served at intervals of not less than four and a half hours and not more than 14 hours between the evening meal and breakfast during each 24-hour period.”

The DCS has a completely different interpretation of Wentzel’s judgment. “The department was never ordered to serve a specific kind of meal for dinner. In terms of the court order, the department was ordered to serve three meals and also comply with the Correctional Services Act in terms of intervals between meals. The order has since been implemented effective from 6 September 2018. Inmates are served three meals which are spaced accordingly as per the court order,” says the DCS.

While Wentzel does make specific reference to a hot meal of meat and vegetables in her judgment, she did not include it within the order.

The Participative Management Committee (PMC), representing the inmates, last week attempted to bring an urgent application before the South Gauteng High Court to force prison authorities to honour Wentzel’s court order.

However, they say their efforts were sabotaged when the prison failed to arrange transport to the court. Judge President Dunstan Mlambo saw no urgency in the matter, which has now been set down on the normal roll.

Lucas Mokholo, head of the PMC, says inmates have been victimised for daring to take prison authorities to court. They have been subjected to indiscriminate cell raids that tried to humiliate them and “physically molest them in the cruellest way possible.”

The prisoners also claim to have been uprooted in the middle of the night and transferred to other prisons, without following due process or the requirements of the Correctional Services Act.

The PMC’s court application states that prison officials “proudly informed all and sundry that no judge will come and tell them how to run and/or execute laws” within the prison.

When PMC members attempted to bring the matter to court in November 2018, they arrived too late to argue their case. In papers filed before the court, they argue that one of the paroled PMC members managed to make it to court in time, only to hear that the other PMC members would not be in court as they had been transferred to other prisons. This was a lie, they argue.

Furthermore, the PMC’s court file had inexplicably disappeared from the court. Inmates say this was orchestrated by prison officials to frustrate its attempt to seek justice.

Responding to the claim that prisoners were prevented from travelling to court to have their matter heard, the DCS says according to its records, no requisition was made for the inmates to travel to court.

“In terms of departmental policies, whenever inmates intend to approach the courts on their own initiative, they are required to do so through their lawyers or family members. It is only when the courts request their appearance in court that the department has a duty to transport them. The department prides itself with its efforts towards ensuring that the rights of inmates are respected and upheld at all times. The allegation that the department is deliberately sabotaging the case and their rights is untrue.”

In response to questions from GroundUp, the DCS in Gauteng says it notes with great concern the allegations of harassment of inmates involved in litigation against the prison. “So far, we have no knowledge of any harassment in that regard because no complaint has been lodged regarding the allegation. However, we will look into the matter.

“General and surprise searches are part of the Correctional Services routine which is done to enhance security and to minimise criminal activities which may take place within correctional centres. It is done to ensure a safe and secure environment for officials, offenders and the public at large.”

Ironically, facilities company Bosasa (now called African Global) – which has been the subject of damning corruption allegations at the Zondo commission of inquiry into state capture – is the company responsible for providing meals at the prison. Mokholo says the PMC will apply to the Zondo Commission to provide testimony on behalf of prisoners relating to African Global.

Auction for Gupta mining assets hots up

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Project Halo is the preferred bidder but two late entrants have thrown their hats in the ring.

The auction for the Gupta mining assets, including Optimum and Koornfontein coal mines in Mpumalanga and a stake in the Richards Bay Coal Terminal, just got a whole lot more interesting.

Eight Gupta companies, including the mining assets, were placed in business rescue a year ago after commercial banks distanced themselves from the Guptas and cut off transactional banking facilities. The business rescue practitioners have been racing to wrap up the sale of the key mining assets so that the mines can return to full production and pay their workers – who stopped receiving salaries in October last year.

In December last year, a group called Project Halo was announced as the preferred bidder with an offer of R3.6 billion for the assets, which includes R600 million of post-commencement funding that will be used to return the rapidly deteriorating mines to operational efficiency.

The other two bidders are the state-owned Central Energy Fund (CEF), which manages SA’s oil and gas assets, and the Phakamisa consortium, headed up by mining stalwart, Bernard Swanepoel.

Business rescue practitioner Louis Klopper says the bids are competitive in terms of price, and differ primarily in their funding structure. “We are hopeful that by February this year the creditors will decide which deal is the most attractive and vote on it. We don’t want to delay the process, and so we have engaged frantically with the key stakeholders in securing meaningful feedback on bids so that the revised business plans can be published with haste. Our priority is to get the workers paid and back on the job.”

Optimum, in particular, has been the victim of looting and sabotage, with electricity cables and equipment stolen and destroyed. The underground Koornfontein mine is in better shape, and will likely be in production before Optimum.

Project Halo is 40% owned by four directors, Mbongiseni Duma, Paul Buckley, Julian Kidd and Nkanyiso Buthelezi. A further 20% is held by an A-rated financial institution, which provided initial funding, and 12% by an established mining house. The names of these shareholders have been withheld until the creditors have voted on the proposed acquisition. A further 8% of the shareholding has been allocated to each of the workers, a women’s consortium and the community.

Some criticism

There has been some criticism that creditors will be asked to consider a bid without being privy to the identity of all Project Halo shareholders. Questions are also likely to be asked about the source of the CEF funds, and whether National Treasury is guaranteeing or fronting funds for its bid.

Coal mining community shows the beautiful side of SA

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Groundup.

Shafted by the Guptas, the people of Blinkpan, Mpumalanga have transcended race and class barriers to help each other.

It was a dismal Christmas for thousands of coal miners in Mpumalanga when the formerly Gupta-owned coal mines of Optimum and Koornfontein, now under business rescue, stopped paying workers and contractors in October last year. It was the same story for workers at other nearby mines: Woestaleen, Boschmans, Klipbank, Setemba and Sandile.

In December a group of determined women, all of them employees of the nearby coal mines, decided to do something about it.

They set up a non-profit organisation called Feed the Miner and approached local businesses and farmers for donations. Six weeks later the organisation is providing food and grocery hampers to 650 families.

All of this is being run out of the Blinkpan home of Christo Mostert, a production foreman contractor at Koornfontein. Scores of miners and their families gather at his house twice a week to receive grocery hampers that should keep them going for a few days. Miners of every race join hands in prayer to give thanks for these modest blessings. They are surprisingly cheerful, given the miserable conditions they now find themselves in.

When the formerly Gupta-owned mines were placed under business rescue in February last year, staff never knew from one day to the next whether they would be paid. When the salaries stopped coming in October, so too did their pensions and medical aid. Many workers have had to borrow from family members to pay lights and water. There were no presents for the children at Christmas and no books or uniforms at the start of the 2019 school year.

There was jubilation in Blinkpan last week when a group called Project Halo was announced as the preferred buyer for the Optimum and Koornfontein mines, and the hope is that the R3.6 billion deal will be concluded within the next week or two.

“Project Halo was assessed as the best bid on the table, and of course we want to wrap things up as fast as possible so workers can get paid, but unfortunately there is a process that must be followed and certain legal steps must be taken first,” says Louis Klopper, business rescue practitioner for eight Gupta companies (including Optimum and Koornfontein) placed under administration when the major commercial banks distanced themselves from the Guptas.

In a statement issued this week, Project Halo said a priority is to “get the workers to keep their jobs, provide backpay and generally get their morale back again”.

Why do we keep on taking advice from the clueless?

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

One of the great economic questions of our age is what caused the Great Depression and can we avoid a repeat?

Steve Keen, self-proclaimed ‘anti-economist’ professor of economics at Kingston University in London, has applied himself to the question for four decades and believes he has the answer. Debunking Economics (Zed Books, 2001; revised and updated 2011) is the product of that exploration. It is also a frontal assault on mainstream economics for lacking the rigour demanded of other scientific disciplines.

Whether a great depression can happen again – or indeed is already underway – is important because the last such period was accompanied by genocide and fascism. The stakes are high and the current prescription of bailing out failed banks, rather than over-indebted consumers, is merely prolonging the day of reckoning.

Keen is merciless in his attack on neoclassical economists. They are not up to the task of steering the world economy and their intellectual ministrations are not only misguided, they are fatal, he says. Our current economic system is held up by matchsticks that will likely lead to two outcomes: starvation or emigration. Either we reform the current economic system, including its money, or we risk ending up in a Hunger Games hell.

There is an element of apocalypse fatigue surrounding our economic trajectory with so many depressing books exploring aspects of the subject, but to turn away from the signals is criminally negligent. The markers of economic catastrophe are all around us: the debt-to-GDP levels hit 300% of GDP in 2008 when the world’s biggest banks ran to their respective governments looking for bailouts. That was 1.7 times the levels reached in the 1930s. The Great Depression was deepened by the massive deleveraging that took place in the 1930s, as people raced to pay down debt. The result was deflation, falling economic output and massive job losses. Followed by war.

Eskom is sinking the economy in the name of greening it

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

Eskom’s renewable energy drive is a financial disaster for consumers and an economic disaster for the country, according to papers before the Pretoria High Court.

The Coal Transporters Forum is asking the court to have dozens of power purchase agreements (PPAs) signed with independent power producers (IPPs) set aside on the grounds that the National Energy Regulator of SA (Nersa) authorised them without proper public consultation.

Lack of public participation sank the proposed nuclear deal in 2017 when challenged in court by Earthlife and the South African Faith Communities Environment Institute. Coal transporters believe the Pretoria court should find in its favour on the same grounds.

The court papers provide a fascinating insight into the costs of alternative energy. Eskom is purchasing renewable energy for 214 cents per kilowatt hour (kWh) when coal can produce the same electricity for 32 cents.

Eskom is then on-selling this renewable energy to the consumer at 86 cents per kWh. This cost the economy R9 billion in 2016, a cost that will be repeated each year until 2021. It also reduces coal consumption by three million tons a year, rising to 10 million tons by 2021, the court documents state.

Massive risk

These IPP contracts expose Eskom to massive risk, says the Forum. Nersa’s 2.2% tariff increase for 2017/2018 effectively means Eskom is sinking deeper into liquidity problems, at the ultimate cost of consumers and taxpayers.

“This means government is providing guarantees to the IPPs to destroy jobs in the mining sector,” says the Forum, which tallies the economic cost of the renewable energy programme as follows: Eskom will be forced to shut down at least five coal-fired power stations, one million permanent jobs will be lost, and 17 towns in three provinces reliant on coal mining will become ghost towns. Many more thousands of workers involved in coal transportation will be retrenched.

In short, it threatens to sink swathes of the economy in the name of greening it.

How did we end up in this mess?

In its answering affidavit, Nersa concedes that it did not allow for a public participation process, but followed the then minister of energy’s decision to procure renewable energy. The type of energy to be produced by Eskom is the minister of energy’s decision, in consultation with the regulator. The then minister Tina Joemat-Pettersson pushed the renewable energy contracts even though Eskom had spare capacity of 23%, excluding imports, renewable energy and other power purchases, says the Forum.

Fight between energy minister and nuclear company board gets nasty

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

The three suspended board members of the South African Nuclear Energy Company (Necsa) will get their day in the Pretoria High Court next week, but are having to fund it themselves – to the tune of R1.5 million. They are bringing an urgent case before the court to overturn the minister’s dismissal.

The trio believed their court costs would be paid by their employer as funds had been set aside for just such an eventuality. Instead, they are having to fund their court application with borrowed funds.

Energy minister Jeff Radebe suspended chairman Kelvin Kemm, CEO Phumzile Tshelane and audit and risk director Pamela Bosman in November last year on the grounds of “defiance and ineptitude”.

Read:

South Africa axes state nuclear firm Necsa’s board

Axed Necsa board blames resistance of ‘privatisation by stealth’ for dismissal

The removed board members say more sinister motives lie behind their dismissal; that the minister is party to plans to sell NTP Radioisotopes, a 100% Necsa subsidiary and one of the few profitable state-owned companies, to an American customer.

Radebe has specifically accused the suspended board members of unauthorised foreign travel, dissemination of false information to the media, unauthorised increases in remuneration, the months-long shutdown of the NTP medical isotope production facility, and the “unlawful” signing of a memorandum of understanding with Russian nuclear healthcare company Rusatom.

South African men are worse off than women – study

Written by Ciaran Ryan. Posted in Journalism

This article first appeared in Moneyweb.

International study overturns a few cherished assumptions about gender.

It’s always dangerous to challenge someone’s cherished victimhood, but a new academic study does just that: men in South Africa are more disadvantaged than women.

This may upend a few certitudes about gender equality, where women are perceived as the natural victims of discrimination. That certainty has launched a thousand think tanks and academic studies and embedded itself into every aspect of our law.

Rather than conduct a straightforward headcount of women and men in all aspects of life, this study looks at quality of educational opportunities, healthy life expectancy, and overall life satisfaction – and coverts this into a numerical value, the Basic Index of Gender Inequality (BIGI).

These three factors were identified as the minimal ingredients of a good life. Gender parity does not mean everything in life is rosy, say the authors. Men and women can be equally miserable, which will not show up on the parity rankings.

The study was carried out by researchers from the University of Missouri in the US and the University of Essex in the UK. The survey covered 134 nations, representing 6.8 billion people.

The researchers preface their findings by highlighting the limitations of other attempts to rank gender inequality by failing to look at areas where men are disadvantaged, such as healthy lifespan.

Interestingly, Bahrain comes out as the top country in terms of gender equality. Life expectancies between men and women are equal, though men fall slightly behind in terms of basic education and life satisfaction.

Israel is the highest ranking country in which men have it better than women, though the difference is small.

China is another country where men have it better. Chinese girls fall behind considerably in basic education, but men have a lower life expectancy (66 years, compared to 69 years for women).

SA deviates from most African and developing countries in that women have it better. This is particularly evident in education, where men fall considerably behind women. “In this regard, South Africa deviates much from many other sub-Saharan nations (where often girls fall behind). Further, men have a shorter healthy life expectancy (48 years for men and 51 years for women in the 2012-2016 period),” says the study.