NRC VISITS ANGLOGOLD ASHANTI GOLD AND URANIUM MINE

UNCLAS SECTION 01 OF 02 PRETORIA 000228 SIPDIS SENSITIVE STATE PLEASE PASS USAID STATE PLEASE PASS USGS DEPT FOR AF/S, ISN, EEB/ESC AND CBA DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER E.O. 12958: N/A TAGS: ENRG EMIN EPET SENV EINV EIND KNNP SF SUBJECT: NRC VISITS ANGLOGOLD ASHANTI GOLD AND URANIUM MINE REF: A) PRETORIA 179 B) PRETORIA 173 C) 08 PRETORIA 656 D) 08 PRETORIA 168 E) PRETORIA 215 Sensitive but Unclassified. Not for Internet. ¶1. (SBU) SUMMARY: NRC Commissioner Peter Lyons visited AngloGold Ashanti's Moab Khotsong gold and uranium mine west of Johannesburg on January 22. The mine boasts the world's deepest single-lift shaft at 3,106 meters. Moab Khotsong has been mining deep-level, moderate-grade gold and uranium deposits and has appropriately managed power and safety issues vexing the industry in 2008(Ref C). Commissioner Lyons was on a January 18-24 nuclear familiarization trip to South Africa (Ref E). Ref A provided an update on Eskom and Koeberg nuclear power station. Ref B provided an update on the 2007 Pelindaba nuclear security incident. End Summary. -------------- World's Deepest Gold Mine Shaft -------------- ¶2. (SBU) AngloGold Ashanti Moab Khotsong acting General Manager Barend Swanepoel hosted NRC Commissioner Peter Lyons, his colleague, Minerals/Energy Officer, and Specialist on January 22, bringing together a substantial team to brief the delegation before visiting the mine. Moab Khotsong, which translates to "fertile ground" and "place of peace," possesses the world's deepest single-lift shaft (carrying both men and materials) at 3,106 meters. The Embassy's team descended to a deeper level of 4,000 meters at AngloGold Ashanti's Mponeng mine in January 2008 on the eve of the power crisis, but utilized two lesser shafts to reach that sultry depth (Ref D). Moab Khotsong is situated in the Vaal River area where AngloGold Ashanti and Harmony Gold operate a number of mines, so the area is dotted with shaft head gear towers. ¶3. (SBU) Moab Khotsong - like other mines in the AngloGold Ashanti portfolio - struggles with challenges of deep geology, power shortages, and safety. At depths over 3,000 meters, the ambient rock temperature exceeds 50 degrees centigrade, so a significant portion of power consumption goes to energy-intensive cooling. All mines have back-up capacity to be able to evacuate personnel in an emergency, especially after Eskom shut down power to miners for four days early last year (Ref C). Eskom provides gold mines with about 96.5 percent of historical power consumption and mines have implemented programs to sustain production at this level of power. The SAG Department of Mines and Energy recently released a national mine safety audit, which identified gaps on gold and other miners' performance. Although overall mining fatalities were reduced from 220 in 2007 to 168 in 2008, the issue remains highly contentious with unions and government. Moab Khotsong prioritizes safety - with highly visible campaigns, but its strong safety record was hurt by a December 2008 fatality related to a locomotive accident. ¶4. (SBU) Swanepoel said Moab Knotsong started development in 1991 and production in 2003. Given the depth of the ore-body, it has taken a long time to finally begin producing profits at the end of Qtaken a long time to finally begin producing profits at the end of ¶2008. Because the mine is also producing uranium, management employs measures to monitor radon and radiation to assure that employees are safe. The mine back-fills 70 percent of mined areas and limits recirculation of ventilation air. Recovered gold increased from 174 kilograms in 2007 to 497 kilograms in 2008. ¶5. (SBU) Commissioner Lyons and the delegation were impressed with the tour of the mine, including using the deep shaft "man cage" elevator, two personnel rail movers, and a chair lift to reach the cramped mine-face and 1.5 meter thick ore-bearing stratum. Minerals/Energy Officer tried the new Hilti electric drill (Hilti is a European company which also manufactures in the U.S.),which uses less power and produces less noise than the pneumatic or air-powered older models. -------------- DOUBLE DOUBLE TOIL AND TROUBLE - BUBBLING URANIUM CAULDRON PRETORIA 00000228 002 OF 002 -------------- ¶6. (SBU) Moab Khotsong is one of three AngloGold Ashanti mines in the Vaal area, which produce uranium ore as a by-product of primary gold production (Great Noligwa and Kopanang are the other two.) Uranium makes a small but valuable contribution to AngloGold Ashanti's bottom line. Moab Khotsong produced 37,000 pounds of recovered uranium in 2008, far exceeding budget. Commissioner Lyons toured the adjacent South Uranium Plant that carries out a complicated chemical process for extraction of "yellow-cake" uranium oxide concentrate (U3O8) which is shipped to AngloGold Ashanti's wholly-owned subsidiary, Nuclear Fuels Corporation of South Africa (Nufcor),for further concentration. The operation hosts a variety of bubbling cauldrons for leaching, thickening, adsorption, elution, extracting, stripping, and thickening again to reach the final product. The visitors were cautioned to remove hard hats to avoid accidentally dropping one into a thickener or pregnant solution tank and ruining an expensive batch. Gold ore-bearing material separated during the uranium extraction process is sent to the gold plant for gold extraction. ¶7. (SBU) COMMENT: South Africa's gold miners have been faring a little better than some other struggling miners. The gold price has stayed relatively strong in the global financial crisis, compared to other weak and battered commodity prices, like platinum and copper, for example. The rand has depreciated about 28 percent against the dollar over the last year, so the rand price for gold is even stronger, thus propping up rand earnings. South Africa faces a long-term decline in its gold production because of its mature geology, aggravated by power and safety challenges (Ref C),so even as its global rank slips, South Africa will remain a substantial producer of gold and gold will be a substantial contributor to South Africa's exports, tax revenues, and employment. ¶8. (U) Commissioner Lyons has cleared this cable. BALL