Modern Quarrying January-February 2016

HISTORICAL FEATURE

local government, the 15% was reduced to 10% in an effort to combat inflation. However, as double digit inflation became the norm, particularly in the capital cost of new plant, the allowance for replace- ment value became a significant factor in price increase applications. ‘Both the industry and the Department became more skilled in handling applica- tions, and by the time price control was lifted in 1981, there were mixed feelings in the industry as to whether it was a relief or a burden. In fact, some of the larger areas where marketing companies have been formed to sell stone on behalf of a num- ber of quarries, the price control system of evaluating return on investment has been maintained to prove to the Competitions Board that the quarries are not making excessive returns on their investment’. Inflation Dealing with inflation at that time, Sir Rupert says: ‘The extent of inflation, not only costs of consumables, but particu- larly of the capital costs of equipment, has been a major factor in every part of the mining industry. This is nothing new to all sectors of life in South Africa and else- where, but it is well to remind ourselves from time to time of the actual extent of capital equipment cost increases, par- ticularly of plant which still has to be imported with the rand in its present state of weakness against other currencies. ‘For instance, a Cat 980 front end loader which cost R55 800 in 1972,

costs R550 000 in 1986, and a Cat 769 dumper which cost R67 700 in 1970, costs R741 000 in 1986 – in each case a tenfold increase of which nearly half occurred in the last 18 months. ‘The escalation in cost of crushing plant, which is largely manufactured locally, was not nearly so great. A 25 x 36 jaw crusher which cost R27 800 in 1974, costs R91 100 in December 1985. A 36S gyratory moved from R23 300 to R86 600 over the same period; increases of between three and fourfold. These prices are, of course, for original equipment. The cost of spares for fixed and mobile equip- ment is an even greater source of com- plaint among quarrymen. This has meant that no longer is it easy for an entrepre- neur to open and operate a small quarry close to a particular market. ‘Quarrying has become an occupation for a company with substantial resources and sophisticated methods of control. In turn, this has led to a greater sharing of information across the industry both through the activities of the Institute of Quarrying and Agfed. It has also resulted in the substantial rationalisation of quar- ries referred to earlier where the industry is now dominated by four or five large groups. ‘Each developed market in the coun- try now has one or more large quarries of greater size and capacity than in previ- ous years. One thinks of such quarries as Eikenhof near Johannesburg, Coedmore in Durban, Moregrove in Port Elizabeth and Peak and Peninsula in Cape Town, Natal Crushers in Pietermaritzburg and Ferro in Pretoria’. Rehabilitation ‘With this emphasis on the larger oper- ations, another issue has arisen which has had a major impact on the quarry industry as a whole, as well as the rest of the mining industry – ecology and rehabilitation. Gone are the days when quarrymen or other miners could open up deposits more or less at will, develop them as they saw fit and close them again,

cement production, was price control. Price control was imposed on the quarry aggregate industry in December 1964 and only lifted in March 1981. ‘In the early days of price control, inflation rates were so low that prices were not frequently increased. Then, as cost inflation became a factor, nei- ther the quarries nor the Department of Commerce and Industry which admin- istered price control, were very sophisti- cated in their approach to applications for price increases. ‘The record-keeping systems in most quarries were not geared to producing the type of records which the Department required to justify a permission to increase selling prices, and a number of applica- tions were turned down in those early days. This caused a rapid re-evaluation by the quarries of their cost records, and a greater cooperation between the quarry owners in the various regional associa- tions of Agfed. Many discussions were held with the Department in Pretoria and a general system was developed which, in the fixing of increased selling prices, took account not only of actual increases in input costs but also of the replacement value of items of plant. ‘Nevertheless, many of the larger companies found the price control sys- tem restrictive in that with the percent- age return allowed on their investment of 15%, development and reinvestment was not an attractive proposition; espe- cially when in 1976, by a policy decree of

Sir Rupert and Lady Cilla Bromley photographed at their beautiful home in Glencairn, in the Cape.

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MODERN QUARRYING January - February 2016