Metals group casting eyes at stellar future

"Though the transaction was concluded three years ago, our operation is still confronted with challenges. The due diligence investigation could not cover all the potential problems," Gao said. "What was promised may not come true, which will significantly affect the progress of project construction, just like the delay in local power supplies increased our cost during the project's construction."

He added that the key move for the operation of the restructured company is to become familiar with the basics, especially the laws and regulations.

"Cultural integration and communications, if not smooth, will also bring about difficulties. Each year we arrange for two senior executives of the platinum mine to visit the parent company for management training, and we send experts from the parent company to the South African projects," Gao said.

"The significance of Chinese enterprises' acquisition of local companies lies in technology integration as well as the advancement of our management priorities to enhance efficiency and generate bigger value," he said.

The biggest challenge for the current operation comes from labor issues, given that strikes are "now much broader and more severe than years ago and directly affect our project's progress through hitting different industries", Gao said.

"Once the mine's construction is finished, our employment will dramatically increase. We have to devote more to employment management, which is a big challenge," Gao said.

Rising costs also present a concern.

"The cost of platinum mining in South Africa has kept rising in recent years, about 10 or 12 percent annually for the mining industry, higher than the average for general industries of about 7 or 8 percent. Cost increases mainly come from inflation, production costs and human resources costs. As the mine goes deeper, the costs keep increasing. Labor costs even outrun production costs here, unlike at home," Gao said.

Power costs have increased for three straight years, 25 percent annually, and "it's hard to predict whether the rise will stop", he added.

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