JOHANNESBURG (Reuters) - South Africa's Minerals and Energy Minister, Buyelwa Sonjica said on Tuesday the global financial crisis that had led to a decline in metal prices would negatively impact the country's mining sector.
"It (Financial crisis) is affecting all economies and South Africa is no exception," she said.
"I see it impacting on the producers. Of course also on the exports. I would think that it will impact on the negative. I'm very concerned because then it would have other negative consequences on employment."
Mining companies in South Africa have in recent weeks said they are taking a fresh look at their prospects and projects due to the credit squeeze that has led to fears of a global economic slowdown and resulted in weak metal prices.
Lonmin Plc, the world's No. 3 platinum producer, has advised trade unions of possible lay offs due to the big drop in demand for the metal from car makers, unions said on Monday.
Platinum has lost more than half its value in the last quarter on slow auto sales data and the outlook for demand from carmakers, who consume more than half of the annual platinum output to make catalysts to clean exhaust fumes.
Some other big players have said they too would review their projects owing to the credit crisis.
South Africa AngloGold Ashanti, the world's No. 3 gold producer, has said it plans to review capital expenditures of $400 million for next year by stopping some projects.
Sonjica, who spoke to reporters after the South African Chamber of Mines annual general meeting, said the country's drive to embrace blacks into the mainstream economy after years of exclusion under apartheid had also been adversely affected by the credit crunch, falling metal and stock prices.
Under the government-driven Black Economic Empowerment (BEE), miners are required to sell 15 percent of their assets to black investors by 2009 and 26 percent by 2014.
BLACK-OWNED
Black-owned companies seeking to buy the assets have relied on fast-fizzling credit, and some have become takeover targets.
"BEE performance has unfortunately been impacted severely by the financial meltdown," Sonjica said.
Sonjica added that the mining industry would meet early next year to review the progress of BEE in the sector.
South Africa's Impala Platinum Ltd (Implats) has make a friendly takeover bid of mostly shartes and cash to buy black-owned Mvelaphanda Resources (Mvela) and Mvela's unit Northam Platinum, in a bid to boost its output.
The deal highlights a trend where black-owned firms that do not have finances to develop projects are being seen as takeover targets by established producers.
Sipho Nkosi said, the Chamber of Mines President, said South African mining companies lost some 12 billion rand this year because of power shortages.
He said the mining sector wanted the government to introduce protocols to handle the nation's electricity crisis, among other issues to ensure that power customers are ranked in terms of their contribution to the economy.
The mining sector has long complained that it has had to bear the brunt of the power cuts, compared to other sectors of the economy. Mining firms are receiving some 90 percent of their normal power requirements.
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The city of Cape Town is planning to shift its pilot project site for a water desalination plant from the V&A Waterfront to Silwerstroom after the new owners of the Waterfront company showed no interest in pursuing the project.
The city was finalising an agreement with the former Waterfront company two years ago for the location of the plant, after a study in 2005 identified the V&A Waterfront as the most suitable location for a pilot desalination plant.
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In the most recent progress report on the project, due to be discussed by the mayoral committee tomorrow, the city says it has abandoned negotiations with the V&A Waterfront.
Paul Rhode of the city's water and sanitation department says the pilot plant will be set up at Silwerstroom instead, with a view to investigating desalination technologies and learning from the construction and operation of the plant in advance of full-scale desalination being implemented.
Desalination is being considered as a viable future water resource for Cape Town and is also being investigated as part of the Western Cape Water Supply System Reconciliation Strategy - a joint programme by the department of water affairs and the city of Cape Town focusing on long-term water resource planning to ensure future supply can meet demand.
One of the recommendations of the strategy is a pilot desalination plant.
Bid documentation is being compiled to appoint a professional service provider to establish a sea-monitoring programme and confirm the suitability of the location selected, obtain environmental authorisation for the construction of the pilot plant and associated infrastructure.
The programme would also involve identifying suitable land on the West Coast for siting a full-scale desalination plant.
The city's water and sanitation department investigated siting the pilot plant at either Koeberg power station or Silwerstroom, which were alternatives identified in the study.
Silwerstroom does, however, present technical difficulties which centre on the ability of the existing infrastructure to convey desalinated water into the distribution system.
The city's progress report notes there are technical advantages to operating a desalination plant at Koeberg, such as utilising existing infrastructure and waste heat from the power station which would save costs in the desalination process.
But because of access restrictions and the approvals that would be required for construction and operation at a nuclear power station, it has been decided not to implement the pilot project there.
Rhode says the city will consider a possible future agreement with Eskom to establish a desalination plant at Koeberg.
The city says advances in desalination technology in the past decade has meant the cost has decreased significantly.
"The decreasing costs, together with the fact that desalination could prove to be a more environmentally acceptable solution, could result in it being implemented prior to some of the conventional resources schemes that have been identified in water resource planning for Cape Town and surrounding areas," said the report.
