Extracting value from overlooked mines (Vuslat Bayoglu Interview)

Righto money. Mine is another in Darva special from the lats. Now you JD, you're telling me this fellow is he's bought coal assets in South Africa? I'm thinking coal. I'm thinking South Africa. That just reminds me of CRE insurance coal experts and African experts in the one building. It's the logical connection, isn't it?

Adam Batista is the coal expert. Tari is the African expert and when they're thinking they're not an expert, Dave Harrison walks around and says you're a fucking expert. That's the that is the office morale. So. That's the thing. They're experts in every geography, in every commodity, aren't they? And construction and construction. Did I just hear a website slogan? Good work JD, thanks, looking forward to seeing him. The savvy now. JD who have we got for this Indaba episode?

So this is our lucky last interview from Indaba Maddie. We are sharing a chat that we did with a guy called Wusslat Bao Glue. He, he runs a private business. So you probably have never heard of them called Mina in South Africa. And there's, there's a couple reasons why we wanted to, to chat to him. Obviously we were in South Africa. We'd been in the country for over a week at that point and we were very curious in how mining is done.

You know, there's a huge mining history in the country across lots of commodities. So, you know, you hear lots about S com, the power utilities about, you know, permits, rights, all these kind of things, ownership and how it's sort of structured and the sort of challenges the industry has

faced over the past few decades. So we thought why not speak with someone who actually operates there, who runs mining companies, who has bought significant assets from the likes of Rio Tinto, coal assets you mentioned in the intro there, Maddie. So that plus a whole host of other reasons running a private business versus running a public

company. We thought for all these kind of reasons why not just get someone that's done it and is continuing to to do it in that, in that geography, in that part of the world and how it sort of differentiates from operating in Australia. And yeah, this is the the result of that and came to share it with the money miners. JD, you can't make the intros too good 'cause now I want to go past this. That was sensational.

Not too sure about that, but yeah, let's let's share the chat with this let and hopefully the money miners pick up a a thing or two about operating in a different part of the world like Trev and I did from the the conversation. Right, let's repeat. JD, we're at in Darba and we're,

we're sitting down with Wuslat, who runs a, a mining investment and, and mining company that I think our audience would probably be unfamiliar with. But that's not, that's not because you don't have a, you know, a decent sized footprint. It's just that you're private and you focus in South Africa and you also focus on commodities that people, people are shy to talk about too in other ways. But thank you so much for, for sitting down.

We're keen to talk about Minar. We're keen to talk about, you know, how you're seeing the investment landscape in South Africa and especially from, from your specific Yeah point in the world. Yeah, thank you, Travis. Look, South Africa is action a great jurisdiction for mining.

If you look at what we are rich in South Africa, especially PGMS, Chrome, manganese, coal, anthracite, iron ore, obviously it's not as sizable as as Australia in terms of iron ore, but we got a, we got some big assets, especially Kumba is, is massive like they do. Again, it's relevant in terms of Chrome, in terms of iron ore. But when it comes to manganese and Chrome, we are the largest, We got the largest ores deposits in the, in the world and we are the largest producers in the

world. We are competing with Australia in terms of in terms of manganese. But I believe Australian mines are, are coming to an end at some point. And Sarav Castle has got massive manganese deposits. We've got Site 32 invested in South Africa heavily in terms of manganese. And we also have Asmang. It's a big company. They, they, they've got large operations, but it's a very vibrant industry in terms of producing manganese. PGM is obviously we are the again, largest producer in the

world. So all these, if you look at the companies that are playing the investment business in South Africa, they, they invest in South Africa, that shows that this country is actually something good, which is attracting people. And the one of the most important that we have here, we got rule of law. So we got democracy, we got rule of law, we got freedom of speech. So we got security of tenure.

So people come and invest and, and because investors don't like noise and we don't have noise inside Africa, people are focusing on the investments. You know, the people are focusing on like optimization and their priorities. Yes, we got certain rules like like economic employment, which is good to address the past like imbalance. And as long as you comply, government is very friendly, minister is very friendly and minister of minor resources.

And I think it's a, it's a really good jurisdiction and it's something, it's very important jurisdiction for the mining companies because like I said, certain commodities, certain minerals, we're really, we're really big and we're really, we've got really large deposits. For a second, we just double click on that point you just mentioned with the the black empowerment groups. I think it's really important for the Aussie listeners to understand and a sort of 32nd recap.

You see these companies, you know, listed here that might be at an asset level, at a company level, but there'll be a 26% interest. Can you just quickly highlight that? And then I think the the follow

on will be the other look. We looked at also different jurisdictions to, to sort of like to, to invest in opportunities in different jurisdictions and Latin America have got similar, similar rules in you can find the same thing in in Middle East. Like if you invest, you want to invest in Saudi Arabia, you find certain rules like that you need to get a partner, a Saudi local partner in, in South Africa.

This has been ongoing for for a long time like they to be able to get a license in mining, mining, right, especially you need to get a 26% B partner, which is owned by a company which is owned and controlled by historically disadvantaged S Africans. So I look at from from this perspective, like for instance, if you look at my business, I mean, I managed to be successful because of the B rules, B laws, because I grew my business with my partners, with my, with my

local South African partners. So some people can or might see it is a burden, but I actually see it as an opportunity. For listed companies, obviously it's a different story, but for listed companies, there are a lot of actually ease that government creates. For instance, if you want to sell your company, you don't need to get the company's shares, You don't need to get menaces approved.

So it's not like something that's an obstacle to do business in South Africa. Yes, 26% shareholding will be given to a local business, but that local business or local entrepreneurs, they add value to your business. They help you to grow your business. They help you to, to get like to get certain things for the Transnet, our, our railway lines, our ports, you know, wherever state is involved, they go and unlock the opportunity.

So it's not all doom and gloom. It depends on from where you're looking at. Like your angle, I am looking at it as a positive thing, but some people might be looking at it as a different. But I mean, the reality is companies with the right local partners, they actually prosper and they, they, they have a good growth trajectory. So from my perspective, it's a positive thing.

It's not a negative thing. What's the thinking supporting, you know, Menard's strategy where you you're ultimately looking to take controlling shareholdings in, in, in, in these mining companies? And it's, it's a largely

operatorship model, but not quite as well. There's, there's this sort of like, yeah, this, this interesting kind of philosophy of investment which we don't see heaps of in, in the private mining investment landscape. So we, we, we got two, we are doing two things. One is we apply for prospecting, right and and we go and drill and if you find a deposit, then we developed the the mine. That's what we did in coal successfully four or five times.

And some of them we are rehabilitating already that we depleted. And then the other one is like we buy assets that are unwanted by the majors or by other mining companies. Like an example is we bought a mine from Rio Tinto, it's called Zuland Enter site colouring and we successfully mined it for 9 years. It's an underground enter site mine. It's important for for the local industry and for the also job

creation. We bought a mine from a Spanish company called Kangra Operational and they it has been in operation since 1957. We successfully carried on operating and we started new edit shafts to to go underground to increase the life of mine. I think where we add the value is more about like being agile and then like reducing the overheads, making it efficient and optimizing it quickly. So that like we, we really save the cost and we make the mine as the low cost operator, low cost mine.

Because when the commodity prices go down, whatever commodity is that it doesn't matter. Let's say it's, if it's coal and the coal price goes down, then we don't close the mine. We just carry on as long as the mine doesn't lose money. And if we can, let's say we break even, then we carry on. And you can only do that if you're the lowest cost producer. If you're the lowest cost, you're going to be shutting down last.

So with the majors, this is more difficult because I mean running a major mining company like VHP Billiton or Rio Tinto, I mean it, it is not that easy. It's like almost like running a country. I mean, if you, if you look at their revenue, if you look at their, their responsibilities operating in different jurisdictions. So these are like things that you can't actually undermine.

But as a smaller mining company, let's say mid tier mining company, we are easily being agile and we're easily making decisions. And we actually finished the red date 78 million drill made so that like we, we make decisions. Did I just hear a random in the background? JD say 17,000,000 drill meters I think. It's a bit of an echo. I think I heard that. Who was? Who was you were there? Who was someone who was talking Swick at in Darba?

People from high above mate. Well well it has to be probably someone from Swick cause Swick are the only people that know what 17,000,000 drill meters looks. Like on the way to 18? Well Can you imagine how quick they're going to get there with deep X punch in 2000m plus holes? Could have passed it already. Oh mate, Parenti knows what's going on 'cause Swick are part of Parenti now. So it's true. You want the historical skills of Swick passed down to you?

Go become a Swick driller. You want to say the Swick drilling skills on showcase? Get Swick to drill your diamond holes underground. You go to underground driller back to. It.

The opportunity to buy the assets from the majors only comes about because of, you know, their strategy on mass to like divest their South African assets by and large. Like is that is that a is some of the the philosophy behind the investment kind of capitalizing on having, you know, the local wheel and capability to actually operate in South Africa on, on mines that you actually think are lower cost?

Look, it depends. Like in the case of Rio Tinto, for instance, Rio sold that mine because it was too small for them, OK, it was nothing and they had a fatality in that year and the CEO said what is this? And then they said, look, this is Andrew that mine, why do we have it? And they said because it came through the transaction that they made in Mozambique and he wanted that to be divested. So that was a. Bad memories there. Exactly. Lots of money to be lost in that

asset. But but I agree with you. Like for instance, in the case of BHP, they made a decision not to do much in, in Africa, right. Maybe they got the luxury to to do that because they've got really great assets in the Tier 1 assets in the right and good jurisdictions, like let's say first of all jurisdictions, but Rio Tinto carries on running richest Bayman rules, which is a great asset. Which I think they've tried to sell, though they did run a sale

process at some point. No, not, I don't know that maybe maybe they, they might have done it in the past, but they're, they're successful. Look, it's challenging. It's not easy. It's, it's again in a, in a difficult area because there are a lot of community challenges. But at the end of the day, Rio keeps that asset and they, they carry on running it successfully. They make money out of it. That's why they're running it.

They've got like local partners and they're happy to actually recently invested in opening new areas to mine that's called Zulti S to mine heavy descent mineral sands and then they will, they will smelt it in their operation. So I think different companies have got different reasons, different jurisdictions to operate in different jurisdictions. And also it's a it's linked to the leadership of the company as well, because some leaders are have a different view about certain jurisdictions.

Sometimes board doesn't doesn't stop them to, to, to go ahead. Sometimes board stop them. But at the end of the day, I mean, Anglo Americans still a big investor in South Africa. I think Anglo is the flagship company of South Africa in mining. Blanco is active in South Africa, big ferrochrome assets, Chrome assets, coal. They're very big in coal. They have a manganese mine.

So we got a lot of big platinum players like Impala Platinum know them all these guys like yeah, I don't think we are short of investment in South Africa, but but certain companies decided not to, not to do much in South Africa, yeah. You, you mentioned Richard, Richard's Bay and I think one of the, the hats you wear is on on the board of the, the, the coal export terminal is that. One of the directors of BCT.

One, one of the, you can't talk about investing in mining in South Africa without talking about the, the infrastructure constraints. And you know, it's something I think you, you probably have a lot of opinions on when it comes to just the interplay of power rail kind of kind of port, where, where, where is investment at? And what are the, you know, what are the, what are the real constraints in actually wanting to like grow the, the, the outcomes of the mining industry here?

Look, we, we had some challenges in terms of power. The previous administration, they decided not to focus on burning coal, but they rather heavily invested in renewable energy. And we saw that like it. Our base load needs to come from somewhere but not from renewable energy because renewable energy will never produce space, but the current technology that human beings or humanity has. So this administration has been running ESCOM successfully without having any load shedding.

Lately. We had some issues about 2-3 days ago, we started having some load shedding. But I think, I think they carry on like maintaining the power stations. So ESCOM is, is at least like in the right direction. The challenge with ESCOM is like they need to know next what they're going to do next. Because when the coal fleet is retired, are they going to burn gas? Where is the gas going to come from? Are are we going to build

nuclear capacity? Who's going to invest in nuclear capacity is going to be state or is it going to be private public participation? So or are they going to build new coal-fired power stations? Is that going to be done with the again partnership with private companies or are they are they going to build it? Can they get finance for building a coal-fired fire station? So they are discussing these these things and actually current administration are really competent and they know

what they're doing. They have generation background and I think we're on the right track in terms of escort Transnet is we look, we have the infrastructure, we've got railway lines as large as Germany as as long as Germany has to track. Yes, some of the track needs maintenance, we need that. But at least like you don't need to go and invest in rail track, you need to invest in rolling stock. So currently their challenge is they don't have enough rolling stock capacity.

They've got some signalling issues on the lines and they have got massive challenge with the cable theft. But the cable theft was always there like it's a, it's a social issue. So what they are doing currently, which is the right thing with the guidance from presidency, they are allowing third parties to be able to buy their own rolling stock and then create their own capacity. So there's actually a deadline on 7th of February.

We, we will as a company submit as well to create our own capacity to move coal, to move enter side to different ports and to also move manganese wooden South Africa to our new acquisition that we bought from Semenko, that's our 32 Anglo JV, the Ferra manganese asset. So that third party excess is critical for South Africa. If they can run that process successfully, I think that's going to unlock a lot of potential on the rail side. So on the ports, private ports

like RVCT works perfect I think. And I believe RVCT is one of the best call terminals in the world. 91,000,000 tonne per annum capacity, practically 81,000,000 tonne they can do easily. But the rail capacity is is 5055 million which is which is a disappointing thing. But then the trans that run ports which is there's a company called Transit Port Terminals, they have got some challenges and they started the process like for the container terminal

lost two years ago for instance. So I think transit administration understands what the challenges are and they are planning to put certain ports into the market to reach to have a private public partnership. I think they will still keep the control of the ports, but they will allow the third parties to invest and then to run the port on a on a long term contract.

So I think at least we have challenges, but at least there are solutions to that and Transnet and Escom and Presidency understand the challenges that they're trying to address them. Firstly, you spoke to the point

earlier of the, the rich mineral endowment in the country. And when you, you look across the spectrum and Trav and I were lucky enough to to get a view of that there. But PGMS and a few of the other medals in a bit of a tough spot.

And then you've also got this relatively commodity agnostic approach to what you look at what you invest what, what are the commodities that are sort of standing out where you think there's opportunities in. And you're, I mean to add to that, you have the the point of a lot of other participants not being interested in South Africa, which makes it better for a buyer too. Look, maybe let's let me do an analysis about like what's happening because things change

very fast. Like, I mean, if you look at the sentiment now in the world and if you look at the sentiment how it was about a year ago, it's completely different. But let's start with PGMS. So PG Ms. obviously very critical in catalytic converters for combustion engines. And for some reason, which I don't understand, and I mean, when I say this, they think that I'm criticizing them, but I am saying that and I, I couldn't get an answer.

So Angler, for instance, they went out and they said, no, I mean, green energy, this green energy that it's not when you say that like they, they offloaded, they call assets and then they, they said that they will focus on copper and they will focus on other, other assets, other outside copper. They have PGMS, which is very big for them, right?

And they've got diamonds. So when you say that like green energy, then you're saying that, OK, you're against combustion engines when you say that where is your PGMPGMS going to be consumed? I mean, I'm sure they had so many discussions about that and they decided, OK, we should go with this copper and green energy thing. And I guess one, that's one of the biggest reason BHP showed interest in angle to buy because they're interested in a copper

assets. But on the other hand, I think this all these green energy initiatives created a problem for PGM producers, OK, they tried to make a vehicle that could burn hydrogen. I think they're still working on it. But at the end of the day, that affected the whole demand. And, and the reality is like electric vehicle revolution is going to affect that demand. But there's also another reality.

If you look at what happened with all these auto manufacturers in the world, like they are delaying their programs. Mercedes, for instance, I know very closely they said they're not going to go to electric vehicles completely in a certain time. They're extending that deadline because there's not enough minerals to go there in the world. So and there are other challenges like you need to have an infrastructure on how do you charge the cars?

Like for instance, if you use a electric vehicle in South Africa, where would you where would you charge your car at home? Maybe with coal-fired power coming from a coal-fired power station of Escom. So I mean, so when the auto manufacturers delay their their plans, that would mean actually more product for PGM mines to be sold, but PGM prices are depressed. So now if you think about it like if somebody brings me a PGM project, would I look at it maybe if it's underground?

No, I can tell you now underground PGM project is going to be very expensive to develop and it's going to be expensive to operate as well. So I wouldn't look at the PGM project because first of all, South Africa doesn't have many open class PGM mines, Anglo as Mohala Kwane, but maybe Zimbabwe, which comes with with other challenges because I mean, it's not an easy country to operate, but PGMS is difficult to invest at the moment. OK, Chrome ferrochrome is used in stainless steel. OK.

So you can't make stainless steel without ferrochrome. But if you look at the steel industry in the world, like China last year produced over a billion tonne of steel and it is actually 60% of the world's steel produced by 1 country. So they need all the manganese and all the ferrochrome or all the Chrome that's made in South Africa so that they make ferromanganese and ferrochrome and use it in steel

manufacturing. So now when you look at manganese and Chrome, then you need to look at what is happening in China. And steel doesn't look good at the moment because there's not enough consumption in China. They actually flooded the Indian market and Indians are famous with being a low cost reducer. So now Indian companies are asking the government to put tariffs on Chinese product because they can't compete with China's at discounted steel.

So China is considering cutting their steel production. I heard and read about 20% and 20% will mean the second biggest producers whole production like 200 million tons and that's India. OK so now if you look at the picture then it doesn't look good for manganese and Chrome because it depends heavily on China and Chrome is actually even worse because it depends on heavily on stainless steel and stainless steel production is not as big as steel production.

So but then let's open apprentices and say if there's any disruption, look at what happened with Jemco right when they had a problem with the logistics, then manganese prices shut up. Very briefly, it was amazing. It was like a a three-week price spike and then all of a sudden prices come back down. Exactly. So now actually prices are a little up now, but they're waiting for the market is waiting for China and Saturday to understand like what's going to happen with the with the

manganese. Manganese and Chrome are heavily linked to steel. Then if you if you look at coal, coal is like it's linked to everything. Obviously. I mean, it peaked, the coal consumption peaked last year and I mean. Doesn't doesn't it peak every year? Just keeps it's. Picking up yeah, agreed, agreed.

And I mean, look, it's, it's a lot of it's a, it's a very big industry for Australia because Australia is close to China and, and Japan. These are like massive consumers of coal and especially Japan, good quality coal and not only steam coal, but also cooking coal. So it's a massive industry for Australia and it's a massive industry for South Africa because I mean, coal mining industry is the second biggest employer in the in the mining

industry. So PG Ms. employ about 185,000 people and coal is employing about 9595 thousand people. So it's it's a massive industry for South Africa. But if you look at the global things like what's happening in Europe, what's happening in, in in the east. So China carries on building coal-fired power stations. India carries on being coal-fired power, building coal-fired power sessions. And Europe says no to call.

I mean, I was I, I learned from my German colleagues in October, I was in Vienna at a conference, but they closed German government closed a coal-fired power session, which is 1 year old in Hamburg, OK with the latest clean called technologies. And they say it's all political reasons. So now and if the government is doing that, I don't understand the logic now. I gave this example in, in, in one of the conferences.

So we got the same sky, right? So if you emit in England or if you emit in China, it goes to the same sky. So then what is the purpose of like deferring the the emission or taking the emission from UK and then everything in China, it's the same. It doesn't matter.

So I don't understand the logic of this, like shutting down coal-fired power sessions and then pushing the manufacturing and pushing the production to China, and then you end up like buying everything from China. So coal to me looks very interesting. OK. And if there's any disruption, we saw what happened between Ukraine and Russia and it went to $400.00 a tonne, which is like unimaginable, but it happened. So the energy commodities cannot absorb any disruption.

It's like because it's our lives, like without power, we can't work, we can't operate. There's no Internet, there's no, there's no water, there's no electricity. So I think coal has got a good future. This is my personal view, cooking coal linked to steel, but we don't have a lot, a lot of cooking coal in South Africa. We, we got no production. Actually, it's some coming from critiquic that goes to Arcelor Mittal, that's all. And our north-south Africa is not a big player.

Obviously Australia is the biggest player and Brazil is the second biggest. So we are price takers in South Africa, but and our our resources are also depleting. So we got maybe another 10 years of life at Cumba, but not not beyond that unless they do new exploration. So currently all the commodities look challenging. But again, I mean, you know, every commodity has its cycle. So if you if you get an asset and then if you catch one or two cycles, then you really make good money.

So I think it's going to be difficult to actually say that like, OK, this is the right commodity to to invest. But I guess if you buy an asset at the right price and catch the right cycle, then you can make a serious amount of money.

That, that's a fascinating point. Just going deeper on, on coal transactions, we saw a number over the last three or four years on our sort of side of the world in, in Australia, the, the multiples that they traded on got sort of better and better over time. What, what sort of view did you have of those transactions? I'm not sure how much attention you paid to them, but again, it was the, the majors, what you spoke to earlier offloading, but

that price was getting higher. Do you reckon it sort of reached a a sort of ceiling on the multiples that they'll trade at? Look, I think majors were some of them were were happy like they, they, they sold their assets at a really good price. I think one of them is Saturday too. They sold one of their assets at a very at a very good price. They sold Illawarra. Illawarra sold their portfolio PHP. I think it's a success story for

for Saturday too. Look, you know, the the interesting part is like, I think this is part of the human beings. There is a cult mentality about coal at the moment. OK, yeah. It's like no matter what, we must get out no matter what. But they don't. I mean, and it's interesting like you, you, you find this in a boardroom with with highly educated people. They're not, it's not applying their minds. They just let go with the sentiment. And I don't know who creates the

sentiment. Maybe the banks, maybe the, the, the, the companies like BlackRock and them, I don't know. But I mean, I see that BlackRock has changed now. Maybe there's a new chief in town because of that. They, they have to change. But at the end of the day, the, the banks, insurance companies, they all have this kind of sentiment and that pushes mining companies, executives think, start thinking about, about in a

cult way. But the reality is like, I think there are certain companies that offloaded their assets and they made good money. And some companies are not really, they don't care about like making money or not making money because they just want to get out of that business. But in reality, I, I think, I mean a jurisdiction like Australia, think about it, it's the geology is there, infrastructure is there. I mean, you guys have got a company called Horizon Railway Line company.

I think new new QLD. Sorry. Which? Which which? Which province is that from like? They've got most of their infrastructure in Yeah in Queensland, but. What was it? Queensland's company. They've got rail all through the. Well, apparently they they privatize the company. I I read their story. It's a private company listed on the Australian stuff. Moving like 250, three, 100 million tons of or a year or a product a year, it's amazing like and the ports, yes, you've

got challenges with the ports. We always say see the queues and the ports, but at the end of the day, I mean Australia is actually moving out hundreds of millions of tons of iron ore and coal and all the other commodities that you guys are mining. So in a jurisdiction like Australia, I think there will always be a customer for a coal asset, there'll always be a customer for a coal asset, as long as the quality is right. It can be steam coal, it can be

cooking coal. And I think there's there's money to be made in coal. How do you think about the the

substitution of a in South Africa and then across the world, you know, with natural gas in, in some parts being very, very competitively priced, is that put a put a ceiling on on? Yeah, look, we're the global land. Handling LNG or natural gas is like not that easy because like if you're producing and if you've got your own pipeline that's yes, fine, fine, you can, you can do that, you can distribute it.

But South Africa, South Africa system is not designed according to that because we don't have gas here, even though some people are saying that they found gas, But I mean, finding gas and making it commercial viable is a different thing. What people don't understand is the following. They should go and read like look at United States journey.

They started in 1974 and it took 30 years for them to commercialize it. They're, they're, they're mining, they're extracting the gas from the, from the rock, but it, it took a long time to, to drill horizontally and then get the, the, the, the trapped gas in the, in the rocks. So if you have an asset in South Africa, that doesn't mean that you're going to start like generating gas tomorrow. And then you can, you can burn gas in, in, in 12 months time.

It's, it doesn't work like that. People need to understand that that different dynamics of making gas fields work. And sometimes it doesn't work. So if you don't have the gas resource, then you rely on getting LNG like Germany. So Germany was relying on on Russian gas. And when there is a conflict and they're in trouble, like then they created the LNG receiving facilities.

Now they're in trouble again. Now Trump is actually telling them, listen, if you don't buy American gas, I'm going to, I'm going to put tariffs on you. So they are between Russia and US because they decided not to build nuclear and they decided to stop their coal-fired power sections. Under normal circumstances, they should have not done. They shouldn't. They should have not closed the coal-fired power sections and they should build nuclear power sections. So they were worried about the

safety. But France is full of nuclear power sections. If anything goes wrong, God forbid in France with any nuclear fired power sections, it's going to affect the whole Europe, right? Everywhere UK up to Greece, everybody's going to be affected. So again, I don't understand the logic. But in a country where you got gas, if you got the pipeline, I think it's no brainer. Or if you build gas fired power stations around the coast, you

bring gas in the form of LNG. But then you are dollarizing your your power price because you are relying on gas in in dollars. And then you are actually also relying on another country. If anything goes wrong, then you're in trouble. Yeah. Will we see nuclear in South Africa? Maybe it it, it, it's not a bad idea actually, because it's a good source. We, we got one here in Cape Town in it's called Danafontaine. It's in Danafontaine.

It's called Coburg and it has been run by a French company successfully for years, and it powers the city, powers the the area, which is critical. The the one interesting thing

about like South Africa's history with it's kind of, you know, down downstream production, so that ferrochrome smelters have kind of idled in a lot of cases. There's not much ferrochrome smelting anymore, except I think there might be two left. Then Glencore. Glencore has got three and some Anchor has got one.

Ferro manganese is, you know, the other one where I think you've recently acquired from South from Symancorp their met alloys business with a view of, you know, restarting or reestablishing with different technology the, you know, fair manganese production. But but I presume treating you the manganese or that you you you mind yourself.

How did how did South Africa get to the place where a lot of this smelting like kind of just just vanished or evaporated or, or was no longer commercial and like what would it actually take to to come back? So look, because we have the largest Chrome and manganese also in the world, it is logical to produce the ferromanganese and ferrochrome in South Africa. But what happened over the years? Some of the ferrochrome smelters were put in, put on care and

maintenance. Some of them are shut down completely. Currently Glencore and Samancor Chrome, they carry on producing ferrachrome and on the ferromang in each side, there's only one side that's called it's a Cato Ridge operation of S Meng. But they're apparently closing in three months time. So how did we come to this point is the following. First of all, ESCOM started

failing to give them power. When you don't have consistent power, you can't run this matter and an S com increase the prices in an in a high-priced environment, you become uncompetitive. OK. And also what happened is like over the years, China wanted to buy ore, raw ore and then they wanted to benefitiate in China because every Ferro Chrome or ferro manganese smelter means in

China means Chinese job. And South Africa unfortunately missed the train in this whole thing because of especially the unavailability of power and the high price of power. And obviously Transnet played a role because they didn't give the service to Chrome and Ferro Chrome and Ferro Manganese services properly and ended up like having a situation where producing Ferra manganese or Feracom in South Africa became

very, very expensive. So what we are trying to do at the moment is we have first of all SAT 32 was actually maintaining the asset Metalos and we made a deal with SAT 32 Anglo JB Samancorp Manganese to give them the credit like they really kept asset in in a good condition. So they have 4 furnaces and they had the care and maintenance team and I was not expecting less. But I can tell you now they started it too serious about

these kind of things. And when they do a deal they are for them they are they are offloading an asset. But for them the legacy is critical. So they don't want to leave something. That they harm the environment or they harm the community.

I think that. They're on the hook for it if if it does right, even even post sales I. Mean we, we, we saw companies they don't care about these kind of things, but I mean my experience with S 32 and Rio Tinto was that they're really serious about these kind of matters after health and safety of their people, the second most important thing is that making sure that environmental issues

are at the like at their focus. So they have 4 furnaces, 50 MW each and like to run a furnace and it was the largest ferromanganese asset in the world when they put it on care and maintenance in 2020. And obviously when they put it on care and maintenance, that market went to to China. They they carried on producing ferromanganese and they also had and by the way like two of the furnaces was built in 2015 and they, they put it on care meters in 2020, quite quite young,

quite like new. They have A50 MW gas fired power station on site. And the idea is like initially we would like to start, start the furnaces with S compower and get the capacity if you can get from Transnet to take the ore to the plant and then to take the product to the port if you can't. And we would like to create our own capacity on the rail. But at some point we would like to start creating our own power from coal.

And it's going to be very controversial because people think that there'll be no funding for coal, coal-fired power stations in South Africa. Yes, maybe not local, but I believe that there will be money to be invested in coal-fired power capacity. We would like to create 600 megawatts and 200 will be used in the plant. And then we can, we can sell the rest to the to the grid.

But if I come back to you, what you asked, the main reason why they went into trouble all these ferro alloy smelters was because of power unavailability, power price, transit not performing, delivering. And also in some instances DTI didn't protect them with the tariffs. I mean, some people criticize that like because that's, that's protectionism. But at the end of the day, if you have to, you have to protect your industries. Otherwise you export the jobs to to China.

So you, you, you, you think that there should be greater, great, greater tariffs imposed on the export of of these products to China. No, not, not really.

Like when I say tariffs, it could have been more about like say for instance, local companies like Arcelor Mittal and they need to use ferrochrome or ferro manganese instead of like buying it from local companies, they might end up buying from India or China. So I'm talking about that, that that kind of tariff because I mean looking for tariff, for instance, for exporting your ore.

I think it's a bit like controversial because it will then it will defeat the purpose of like creating jobs because I mean, if you stop like moving less, if you stop, if you start moving less ore, that will mean that you're going to start losing jobs. So I'm, I'm not for it. I'm against it like, but but maybe protecting the imports coming from India and China in terms of Ferrer alloys could

have been important. But it's irrelevant now because Arcelor Mittal, which is the biggest steel manufacturing in South Africa, is in trouble. They already said that they're going to stop producing long steel and there's a big kind of discussion around that. But the reality is not they're not doing well because again, the steel price is not good. Steel industry in the world is not doing well at the moment.

In what sort of, you know, ballpark figures with the, you know, with the tariffs at that time being appropriate? I mean we've generally have a free market approach the way we've seen these things and it can be a bit of a slippery slope. How do you how do you kind of see an appropriate level? For me, are you, are you asking for now or for the for the past? Had you recommended at the time to put a a tariff on imports from India or what have you?

Look, the The thing is like it's, it's almost like like textiles. Think about it like if you produce textiles in Cape Town and if you still allow Chinese to to supply textile cheap because I mean, let's say a factory can produce 100,000 shirts here in China, they produce 100 million. How do you compete with it's impossible. So how do you create the capacity in South Africa to, to to do your own things like which

will result in creating jobs. So it's the same thing like if your local steel manufacturers steel produces by ferromanganese and ferrochrome from China or from India, then then you need to decide they maybe put like a 10% or 15% or 5%, whatever it is tariffs so that like your local guys become competitive, OK. Looks like thank you so much for for joining us. We've yeah, really appreciated your insights and. It was a good chat. Wicked thank. You. Thank you, mate.

Thank you. There we go, mate. What do you reckon? Loved it? No. I'm going to listen to it after. Fantastic. You know who I do love though? Maddie, I think you know this one. WA water Boys. WA. Water Boys, Gerard James and also I'll trick you there with the order mineral mining services MMS. Grounded. Samvik Ground Support. Derek, Kurt. CR insurance in the show. Top of the show. K Drill. Swig also in the show, 17 millimetres drilled. By Quattro Project Engineering Pace Plant gurus.

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