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MODERN QUARRYING
January - February 2016
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
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,
Sir Rupert and Lady Cilla Bromley
photographed at their beautiful home
in Glencairn, in the Cape.
HISTORICAL
FEATURE