Eskom Acting Chairman, Mpho Makwana, explains: “The agreement, effective 31 March 2010, removes the impact of embedded derivatives on Eskom’s balance sheet, as well as all onerous conditions.  This amended agreement is also an important step in ensuring that both Eskom and BHP Billiton continue advancing the growth and development of southern Africa. We commend BHP Billiton for this unprecedented step on signing the amended Mozal contract, which shows their commitment to South Africa and the SADC region.”

Whilst discussions relating to the South African smelters are continuing over the coming months, the BHP Billiton smelter contracts at Hillside and Bayside in Richards Bay will remain firm and binding. Eskom will maintain its interruptibility at the smelters in line with the provisions of the contract.

Xolani Mkhwanazi, BHP Billiton Chairman, said: “BHP Billiton remains acutely conscious of the electricity supply challenges facing South Africa and the region and has been exploring innovative and sustainable solutions to these challenges. With the announcement of the amended Mozal agreement, Eskom and BHP Billiton remain confident that, given the necessary time and commitment, innovative and mutually beneficial solutions will be found for the South African smelters. The smelters continue to make an important contribution to the South African economy and at present continue to fulfil a commitment to a 10% power reduction. Eskom’s success is our success and we will continue to work with Eskom to address issues of common concern.”

The new pricing agreement will be submitted to the National Energy Regulator of South Africa for approval.

Peter Leon law firm Webber Wentzel and chairman of the mining law committee of the  International Bar Association comments:

The latest Fraser Institute’s Annual Survey of Mining Companies, which aims to establish how mineral endowment and public policy factors such as taxation and regulation affect exploration investment, shows South Africa has fallen 12 ranking positions in the  2009/2010 year to 61st out of 72 jurisdictions.

The Canadian based institute sends its survey to approximately 3 000 exploration, development and other mining companies around the world.

South Africa is now hovering just outside the ten worst ranked jurisdictions for mining investment globally and is the third worst ranked country in Africa, ahead of only the Democratic Republic of Congo and Zimbabwe.
Over the past decade South Africa has steadily fallen in the Survey’s policy potential index rankings from a position of 27 out of 47 ranked jurisdictions in the 2002/2003 survey to 61/72 in the 2009/2010 survey.  In the 2008/2009 survey, SA ranked 49/71.

It is no coincidence that South Africa’s ongoing fall in the Fraser rankings has coincided with the reform of South Africa’s minerals ‘  legislation with the introduction of the Mineral and Petroleum Resources Development Act (MPRDA) in 2004, as much as how the Act has been implemented.

The main factors causing the fall in South Africa’s rankings between this and last is uncertainty concerning “native land claims” and the overall security situation. Other factors which have contributed to the fall, albeit less significant, include the taxation regime, political stability, and availability of labour and skills.

The ongoing debate about mine nationalisation has also been a factor.  The uncertainty surrounding the MPRDA Amendment Act 2008, which, after being signed by then President Kgalema Motlanthe on 21 April 2009 still awaits the proclamation of a date upon which it will enter into force may well be another factor.

However, the outlook for the future is brighter.

The Department of Mineral Resources, under the leadership of Minister Susan Shabangu, has this year, shown a real commitment to turn around South Africa’s mining sector through a tripartite consultation process.  This consultation has primarily taken place through the Mining Industry Growth, Development and Employment Task Team (MIGDETT), comprising mining companies, labour and government.

MIGDETT has met since December 2008 and recently made recommendations on how to create sustainable growth in, as well as transform, the mining sector at the Mining Summit organised by the DMR on 30 and 31 March 2010.  A draft document entitled the “Strategy for the Sustainable Growth and Meaningful Transformation of South Africa’s Mining Industry” was adopted at the Summit and aims to provide the basis upon which the South African mining sector’s global competitiveness can be enhanced through, among other things, infrastructural development and regulatory reform.

Minister Shabangu has called for the country’s mining laws to be amended by early 2011, and if this process proceeds as envisaged, there is no reason to think that South Africa cannot improve substantially on its Fraser Institute score in 2011.
The Fraser Institutes Annual Survey of Mining Companies for 2009/2010 is available at: http://www.fraserinstitute.org/commerce.web/product_files/miningsurvey2009-2010.pdf.

At this laboratory refractories and ceramics can be tested and characterised to international standards. The CSIR and Cermalab each ran independent laboratories of this nature for many years and decided to join forces, obtain international accreditation and pool their resources.

“There are now a great many opportunities opening up for this kind of laboratory. For instance, the emerging national strategy in the nuclear energy arena creates possible applications for a high-temperature materials laboratory, while its ability to be used in tertiary education and research is also opening doors. Of course, its current use for the testing and characterisation of refractories used in the primary aluminium production industry, ceramics and heavy clays will continue and most likely even expand,” says Dr Willie du Preez, manager of metals and metals processes research at the CSIR.

According to Bruce Berger, operations manager of Cermalab, the fact that this laboratory has achieved international accreditation means that local companies that currently send their refractories overseas for testing would no longer have to do so. “We can do all the tests and development work needed locally, which will bring down costs considerably,”he says.

Background
The CSIR’s high-temperature materials laboratory was established in October 2005 due to a need expressed by BHP Billiton Aluminium. This company became the CSIR’s primary client for the testing and characterisation of refractory materials used in the primary aluminium production process. The company also assisted the CSIR in obtaining the relevant laboratory equipment from a redundant facility in Europe.

Cermalab has been operating as a private laboratory since 2002, its focus being on the testing and characterisation of ceramics, heavy clays, refractories and other materials. It also provides certified training courses in the field.

“These two were the only laboratories of their kind in South Africa. The constraints and challenges in terms of sustainability placed on them by the limited local market gave us reason to explore the option of collaboration. This happened in 2008, with the two laboratories starting to operate jointly in April last year,” explains Du Preez. “We have now had a number of months to work together and the progress made supports the intent to continue to do so. This formal collaboration agreement is aimed at strengthening our future together.”

Says Berger: “The collaboration agreement gives us more credibility, especially as the laboratory achieved ISO/IEC 17025:2005 accreditation in November 2008.”

The South African National Accreditation System (SANAS) accreditation was obtained for compliance with the requirements for the competence of testing and calibration laboratories. It is also the accreditation standard mainly used in Europe.

Going forward
The collaboration will be managed by a CSIR-Cermalab steering committee, consisting of two representatives from each entity. Cermalab is responsible for the operational management of the laboratory and it will be marketed under the Cermalab brand. The laboratory is housed on the CSIR¿s Scientia campus in Pretoria.

The collaboration agreement will be reviewed in April 2010 to decide whether or not it should be strengthened, “says Du Preez. “I am positive about the future of the laboratory and the collaboration with Cermalab. Together we have more muscle to serve the needs of our pooled clients,” he concludes.

Read the analyst comments below:

In its results announcement this morning, Xstrata reiterated what it believes is the compelling strategic rationale for a merger with Anglo American Corporation, but without offering any new terms or conditions. Frost & Sullivan’s opinion continues to be that the Xstrata proposal is unlikely to find approval.

Anglo already has the scale and capacity to withstand the downturn in commodity prices. The recent upside potential shown by copper and iron ore prices will make up for the turmoil in diamond and platinum markets. Anglo has declined to formally open up discussions with Xstrata on the envisaged synergies and cost reductions of approximately $1 billion (as determined by Xstrata).

The envisaged synergies and savings are primarily unattractive to Anglo when the company has stated its own plans of trimming its cost base by $2 billion by 2010.

These gains in worker efficiency are critical at a time when the sector is experiencing an array of challenges. The method has been used successfully at Kopanang and is being piloted at other mines. Rob Dersley, CEO of Edutouch who pioneered the method after long research with Unisa’s computer science department said, “what makes our method unique is that it is in whatever language the participant chooses, so they can learn in their own language.

It has been tested and proven that our technology speeds up learning four times. “The employee is able to work from either a portable touchscreen or a computer. In a group situation a handheld wireless control similar to that used on TV game shows allows each person to record their answers. It immediately informs the facilitator which section of the module the learner does not understand. The student can relearn that part only instead of sitting through the whole course again. It is inhouse so can be done during idle time and can be done in short three to five minute modules.” Gerrie Swanepoel, a trainer at Kopanang mine near Klerksdorp said: “We’ve found that workers enjoy Edutouch and become competitive with their peers. They also develop a sense of pride. Instead of being crushed, as some learners are when they pluck up the confidence to ask a question in a classroom setting and perhaps get laughed at. This system encourages the learner to learn at his or her own pace and to build confidence. We find that workers become more assertive in group settings and leadership skills readily come to the fore.”

Kopanang mine in the lucrative Vaal gold mining area has 5 500 workers. Five years ago Kopanang began using touchscreen training for workers. Training manager, Andre Oberholzer who introduced Edutouch says, “Initially I wanted something in place to assess all our workers fast.” Edutouch sends each workers grades immediately he or she has completed a module, allowing management to assess shortfalls with individuals and in teams.” It’s critical because everyone who works on a mine has to receive retraining after even brief vacations. Oberholzer said: “In the past AngloGoldAshanti Training and Development Services would do one on one questions but with medical exams and retraining it could take six days before a worker was back on the job. Using Edutouch it takes three days with 80% pass rates and far better knowledge retention than in the past. Before, if a facilitator stood in front of a class and did training, we did not know how much individuals remembered.”

Cornelius Tsotsotso (46), a miner since 1987 says, “I can understand better if I do it myself.” More productive workers and fewer accidents are critical to keep the gold sector as an important contributor to the Gross Domestic Product. Gold contributed 23% to the health of the economy in 2005 with exports of R101 906m according to Mose Mabuza of the Department of Mineral and Energy. In 2007, gold mining contributed 7,7% to GDP. But in the first quarter of this year mining revenue dropped R9bn or 12,8% to earn R21bn in March and gold contributed around R5bn to that, StatsSA noted. Although the gold price is close to record highs the industry has been bedevilled by poor management seeing some mines close – last week it was announced that 3 300 more jobs will be lost when Harmony Gold takes over Pamodzi Gold’s President Steyn mine in Welkom. But too, mine closures for brief periods to implement safety or better working standards by the Department of Minerals and Energy also takes a toll on earnings and the capacity of mines to employ more. It is essential therefore that training is effective.

More employment and retraining before retrenchment is what President Jacob Zuma has appealed for. Mines like Kopanang are keeping employment sound through persistent training and improving skills with EduTouch. As an example, in a group training session led by Alex Phakasi (32) a former rock engineering assistant; three men are discussing whether the answer to their question is: a bobbejaan spanner or a T-spanner? One mimes the actions of each on a bolt. They slowly consider and hit the handheld electronic buttons similar to those used on television game shows. They can’t move on to the next question until a row of green lights shows that each has answered. Phakasi said the discussions help improve knowledge and engender leadership skills and peer competition among the miners.

Edutouch has cut training costs dramatically – Kopanang now has six facilitators instead of 17 a few years ago (trainers earn around R6 500 a month) and the facilitators have learned new skills too for the electronic devices – they write and film new inserts as safety and training standards rise and do their own voice over’s. The two kilometre deep goldmine is seeing consistent gains in safety and production. Kopanang mine training manager, Andre Oberholzer says: “Ninety-six percent of accidents are human error, only four percent are geological. We can control accidents with the right mindset and the sort of training Edutouch gives us. Last year the general manager challenged us to achieve 15 white flag (accident free) days a month. We achieved five of six months with 15 or more white flag days. Last year we improved safety 25%, this year we will improve that record by a further 20%.”

Dersley said: “We are proud that Edutouch is giving a sense of pride to South African workforces and improving skills capacity at a time when the country desperately needs to boost employment and revenues.”

Contact information:
Rob Dersley,
Edutouch
011 602 7940
www.edutouch.co.za

Scheduled to take place in the heart of the Royal Bafokeng nation, Phokeng, on Saturday 15^th August 2009, the awards are also expected to play a significant role in boosting Vision 2020, a programme which aims to foster sustainable development for the Bafokeng through the effective use of resources.

A total of 1 500 people are expected to attend the awards ceremony which will be graced by His Majesty, Kgosi Leruo Molotlegi, and various other dignitaries. Entertainment for the event will be provided by the versatile, Big John from Phokeng and Culture Spears.

The event will see a total of 14 people from 10 different categories walking away with the ultimate accolade for excellence bestowed upon members of the Royal Bafokeng nation. The awards recognise those who have excelled in their vocation and or community service, and stand out as embodiments of the tenets espoused in the nation’s Vision 2020.

The nomination process opened on the 4^th of May 2009 and will close on the 10th July 2009. The judging panel is expected to deliberate from the 27^th – 31^st July 2009. The judges will be on the lookout for individuals, organizations and projects that have displayed good citizenship, have exhibited an appreciation & aptitude for quality performance in their respective profession and areas of service, and have stood out as resourceful, innovative and enterprising people.

The categories for the awards include Community Builder of the Year; Educational Institution of the Year (Primary, Middle & High School; Learner of the Year (Primary, Middle & High School); Sports Person of the Year; People living with disabilities – Achiever of the Year; Mofokeng Cultural icon of the Year; Senior Citizen of the Year; Best Lekgotla Award; Businessperson of the Year; and Non-Mofokeng Award.

 The judges for this year’s awards are:

·         Leemang Eva Mahlangu – Deputy Director responsible for Mainstreaming and Capacity Building in the Office on the Status of Disabled Persons in the Presidency.

• Lot Ntjipa Mahlangu – Managing Director of Tirhani Auctioneers (Pty) Ltd and a Managing Member of Mtungwa Investments.
• BONOLO BLOSSSOM BLANCHE NAMANE (nee MAKGOTHI) – Community Builder

·         Kingsley Mmatshwene Duba – Founder and Chief Executive of Mokoena Holdings

·         THAPELO MOLAIOA - Training & OD Specialist at Siyakhula Trust

 In the build up to the Awards, the Royal Bafokeng Excellence Awards Committee has organized a Media Tour of the Royal Bafokeng Nation scheduled for the 21^st of July 2009. The tour is expected to provide members of the media with the opportunity to interface directly with some of the nation’s community projects, as well as highlight Vision 2020 projects which have been celebrated at previous Excellence Awards. 

RBN spokesperson, Mr. Mpueleng Pooe said the Excellence Awards had brought about a sense of achievement and accomplishment among the Royal Bafokeng. 

“We are seeing admirable efforts being made by our people to ensure that the goal of self-sustainability becomes a reality. We are seeing people venturing out and coming up with creative business ideas in their quest to become empowered.   

“Our King, through Vision 2020 and vehicles like the Excellence Awards, has taken a personal stance to shift the mindset of the Bafokeng away from being just work-seeking employees towards becoming job-creating employers thereby transforming the economy from a resource-based economy to one that is knowledge based”, he said.  

He added that with the right attitude, the right frame of mind, and the right vehicles, Vision 2020 is destined to positively influence the people of the Royal Bafokeng Nation.

“Without delving much into the synergies that are likely to be realised from the complimentary businesses, such as coal and iron ore, my feeling is that it looks very unlikely that this proposed merger between Xstrata and Anglo American Corporation will be consummated. Anglo American Corporation has divested from gold to principally focus on platinum, diamonds and industrial metals. The group would want to grow the company in these sectors and maintain its unique identity and world class assets.

“It appears to me that Xstrata has long desired exposure in certain mineral groups like platinum and diamonds, where Anglo American Corporation has a strong presence. Xstrata’s hostile takeover bid for Lonmin in 2008 which would have provided exposure to platinum, fell through due to volatility in the commodities market and funding uncertainties. Their proposed merger is partly motivated by Xstrata’s desire to gain exposure to mineral groups such as platinum and diamonds, where they have little or no exposure at all.

“There will also be problems regarding valuation of assets, given the current uncertainties in global capital and commodities markets. Frost & Sullivan is also of the opinion that competition authorities, especially in South Africa, are unlikely to approve of the deal.”

Following its introduction in Europe in 2005, the new proprietary ‘low-temperature oxyfuel burner process (LTOF®)’ — also known as ‘flameless burner’ technology — is achieving an average 30-50% higher melt rate and in some cases, a 100% improvement in melt rate, compared with conventional airfuel processes. Fuel consumption is reduced by up to 50%, flue gas volumes by up to 80% and dross formation decreased as a result of more uniform heating and melting. Carbon dioxide and sulphur dioxide emissions are also cut by up to 50% and nitrogen oxide emissions are virtually eliminated. The new system requires low maintenance, eliminating the need for a recuperator, electrical air blower or regenerative solution.

The Linde Group has more than 130 conventional oxyfuel installations in the European aluminium sector and has used this expertise to take heating technology to the next level. Sapa Heat Transfer, Sweden, a secondary aluminium melter, converted its conventional oxyfuel burners to LTOF® in mid-2005. The new technology has shown further improvements over the previous conventional oxyfuel system, including a 10% further increase in productivity, a 10% further reduction in fuel requirements, 9% less dross and 90% reduction in NOx emissions.

In February 2009, Stena Aluminium in Sweden, part of the Stena Metal Group, became the latest company in Europe to introduce the new burner technology. Stena produces aluminium alloys used to manufacture cars, trains, aircraft and ships and as raw material for steel mills.

Afrox’s applications engineer, Metallurgical Processes, Michael Hill, says that as in European installations, the new low-temperature oxyfuel burner process, suitable for both rotary and reverberatory furnaces, is capable of delivering real capacity increases in the South African aluminium sector, boosting productivity, saving energy and greatly mitigating environmental impact. It is also suitable for both primary and secondary smelters.

“Increasing the throughput of existing melting furnaces poses a real challenge for the aluminium industry,” says Hill. “Producers must continuously increase process yields, control fuel consumption and reduce emissions of greenhouse gases. In South Africa, the primary drivers are expected to be potential cost savings associated with reduced energy consumption, and reduced dross.”

“In reverberatory furnaces, power must also be controlled so as not to overheat the refractory ‘roof’ — or exceed furnace temperature set point. The new low-temperature oxyfuel burner process makes it possible to run the furnace at full power for longer, without exceeding roof temperatures. This is quite a breakthrough compared to conventional heating which requires the power to be reduced as soon as the maximum set point is reached, to avoid overheating.

“Another key benefit is that the reduced melting, holding time and uniform furnace temperatures prevent hot spots, significantly cutting down the formation of dross, while the improved heating capacity improves energy per ton of heated aluminium.”

Combustion occurs under a diluted oxygen concentration, by mixing the furnace gases into the combustion zone. This slows down oxyfuel combustion reactions and results in lower flame temperatures, comparable to those of airfuel technology, which are below the point at which thermal nitrogen oxide is created. Mixing the furnace gases into the flame also disperses energy throughout the entire furnace for uniform heating and more efficient melting. The dispersed flame contains the same amount of energy, but with a far more effective distribution. The overall result is more homogenous heating and melting, allowing not only for a higher power input and consequent higher melt rates, but also for reduced formation of dross and nitrogen oxide emissions.

Afrox is able to supply a commissioning and support package on a rental basis (including a nominal technology fee) for South African companies who introduce the new process.

“The new low temperature oxyfuel burner process is one of a suite of Linde furnace technologies available through Afrox, which include Universal Rotary Tiltable Furnace (URTF) technology and the proprietary Wastox® oxygen lancing, Airox® — which combines oxygen and air combustion — and the Flexflame™ variable flame oxyfuel burner,” says Hill.

Under the agreement, African Eagle can earn an interest of up to 75% in Ngasamo by carrying out exploration and evaluation work, leading up to a feasibility study.  The licence area contains a nickel laterite which appears very similar to the Dutwa deposit.

Mark Parker, Managing Director of African Eagle Resources plc comments: “This is a very significant agreement for African Eagle, as Ngasamo has the potential to increase the global resource at Dutwa to 50 million tonnes, from the current 31 million tonnes at 1.1% nickel. Ngasamo Hill lies just 5km west of the Dutwa deposit and has very similar geology, with a thick laterite blanket overlying identical ultramafic rocks. Our geologists believe that the Ngasamo deposit is of the order of 15 to 20 million tonnes, but obviously, drilling and metallurgical tests will be needed to confirm the size, grade and compatibility
with the Dutwa ore.

“Our partner TPMRL is the Tanzanian subsidiary of SAFINA Group, a substantial metals and chemicals group from the Czech Republic.  SAFINA is keen to become a fully contributing partner in the nickel project, and could bring significant capabilities to the partnership.”

Agreement details

Under the agreement, African Eagle will complete an initial programme of surface surveys, including sampling of old prospectors` pits and trenches.  Subject to the results, African Eagle will commence a formal earn-in agreement, acquiring a 35% interest by managing and co-funding a drilling programme to define a JORC inferred resource, and then a 50% interest by advancing this to a JORC indicated resource. 

Thereafter, the Ngasamo laterite resource would be included in the Bankable Feasibility Study of the Dutwa nickel-cobalt project. If, subject to agreement, African Eagle solely funds the cost of this development, then its interest in Ngasamo would increase to 75%, whilst its existing 100% interest in Dutwa remains unchanged. Once the Feasibility Study of the combined Dutwa and Ngasamo Project has been completed, TPMRL will become a partner in the combined project, with the two parties` equity percentages calculated from the relative attributable values of the project held by each.

About SAFINA Group 

SAFINA`s history reaches back to 1860 when a company named G. A. Scheid`sche Affinerie Vienna was founded in Austria. In 1920, this company established a subsidiary in Prague, processing gold and silver scrap and selling semi-finished precious metals products for jewellery and dental purposes. After World War II, Sheid`s refinery was put under the control of Poibram Ore Mines, together with ten other refineries processing precious metal. This state company implemented production of platinum catalysts and laboratory instruments, electrical contacts, copper foils, electrolysis of silver and other technologies.         
A new independent state-owned company named SAFINA was established in 1950. The main activities of this company were refining, assaying and processing precious and noble metals, electroplating, production of metal powder, production of laboratory equipment and trading in precious metals. SAFINA was privatised in 1992 as SAFINA, a.s.

Today, SAFINA, a.s. has a dominant position in precious metals processing, not only in the Czech Republic, but within Europe. The company has become a business offering manufacturing and services across nine independent product lines.  In early 2007, the STENA SAFINA joint-venture was established with the Stena Metall Group, the Nordic leader in recycling and environmental services with operations at 230 locations in nine European countries, to recycle electronics waste according to the European WEEE directive (Waste of Electrical and Electronic Equipment).

In 2005, the SAFINA Group, together with her Tanzania partners, established Tanzania Precious Metals Refinery Limited (TPMRL), to provide gold refining services to the large and small-scale mines in Tanzania. SAFINA Group holds 51% of TPMRL, with Tanzanian partners holding the balance. TPMRL has acquired a site
in Mwanza to construct a gold refining operation. In June 2006, TPMRL acquired the mineral rights over the Ngasamo area for its gold potential.