Download The Beneficiation Strategy for the Minerals Industry of South Africa

THE BENEFICIATION STRATEGY
FOR THE MINERALS INDUSTRY
OF SOUTH AFRICA
PRESENTATION TO THE SELECT COMMITTEE ON
ECONOMIC AFFAIRS
30 AUGUST 2011
PRESENTATION OUTLINE

Basis for Mineral Beneficiation

Broad Vision

Beneficiation Value Proposition

Strategy Development Path

Global Economic Perspective

South Africa’s Comparative Advantage

Strategy framework
PRESENTATION OUTLINE (Cont...)

Cross Cutting Constraints and Interventions

Pilot commodity value chains

Concluding remarks
BASIS FOR MINERAL BENEFICIATION
White Paper: The Reconstruction and Development
Programme (November 1994)
“Mining and minerals products contribute three-quarters of
our exports and the industry employs three-quarters of a
million workers, but this could be much higher if our raw
materials were processed into intermediate and finished
products before export. Our RDP must attempt to increase
the level of mineral beneficiation through appropriate
incentives and disincentives in order to increase
employment and add more value to our natural resources
before export. Moreover, this policy should provide more
appropriate inputs for manufacturing in South Africa.”
BASIS FOR MINERAL BENEFICIATION
White Paper: A Minerals and Mining Policy for South
Africa (October 1998)
“The aim of the policy will be to develop South Africa’s
mineral wealth to its full potential and to the maximum
benefit of the entire population. Government, therefore, will
promote the establishment of secondary and tertiary
mineral-based industries aimed at adding maximum value
to raw materials.”
Section 26, MPRDA, 2002
The Minister may initiate or prescribe
beneficiation of minerals in the Republic
levels
of
BASIS FOR MINERAL BENEFICIATION
THE NEW GROWTH PATH


Sets a target of creating 5 million jobs in 10 years
Identifies structural challenges that impede desired growth rates,
including





Logistics, energy infrastructure and skills, which raise costs
Economic concentration and price collusion in key parts of the
economy, which raise costs and limit innovation and new enterprise
development
An uncompetitive currency that limits employment growth in
manufacturing, mining, etc.
A persistent balance-of-trade deficit funded with short-term capital
flows attracted largely at high interest by international standards
Seeks to place the economy on a production-led trajectory with
growth targeted in 10 ‘job drivers’, including, inter alia:
 The mining value chain, with a particular emphasis on mineral
beneficiation as well as on increasing the rate of mineral
extraction
BROAD VISION
Increase
a ratio of beneficiation extent to mineral production
and increase export revenue
Facilitate
economic diversification
Expedite
progress towards a knowledge based economy
Create
opportunities for new enterprise development
Contribute
to creation of decent jobs and poverty alleviation
Source: DMR
St
ee
l
Pe
lle
ts
DR
I/H
BI
Si
ze
d
W
as
he
d
500
400
300
200
100
0
Ra
w
Prices ($/t)
BENEFICIATION VALUE PROPOSITION
BENEFICIATION VALUE PROPOSITION
(Cont...)
STRATEGY DEVELOPMENT PATH
 An
initial research study (DMR/MINTEK)

Selection of pilot commodity value-chains
informed by areas of greater opportunity
 A draft
beneficiation strategy
Dedicated task team (inter-departmental) – DMR,
DTI, DST, NT, DPE, Presidency


External stakeholder consultation
 Approval
of strategy by Cabinet
GLOBAL ECONOMIC PERSPECTIVE

The world has entered into a new growth phase led
by developing economies

This growth will result in increased demand of
mineral commodities such as iron ore for
infrastructure development, consumer products
etc.

Main markets for South Africa’s beneficiated goods
will therefore come from these developing
economies
COMPARATIVE
SouthSOUTH
Africa, is notAFRICA’S
mature mining real
estate! The country still has
significant
geological potential
ADVANTAGE
South African reserves for key minerals, 2008
Global rank
0
10
20
30
40
50
60
% of global
70
80
PGM's
1
Manganese
1
Chromium
1
Gold
1
Alumino-Silicates
2
Vermiculite
2
Vanadium
2
Zirconium Minerals
2
Titanium minerals
2
Fluorspar
4
Antimony
4
Phosphate rock
5
Nickel
5
Uranium
6
Lead
8
Coal
8
Zinc
8
In-Situ
value conservatively
estimated at US$ 2.5 Trillion,
Silicon
9
Iron ore commodities (coal, uranium, thorium)
excluding
energy
1
90
100
STRATEGY FRAMEWORK
COMPETITIVE
ADVANTAGE
COMPARATIVE
ADVANTAGE
MINERAL
RESOURCES
RESERVOIR
[IN SITU
VALUATION OF
US$2.5 Trillion
(Non-energy)]
BENEFICIATION
STRATEGY
PROVIDES A
FRAMEWORK
TO TRANSLATE
COMPARATIVE
ADVANTAGE
(Strategy Pillars)
• Legislative Framework
(MPRDA, DAA etc.)
• Multi stakeholder forums
(e.g. Platinum
Beneficiation
Committee)
• International trade
agreements
• Beneficiation strategic
interventions
Cross Cutting
Constraint
Potential Instruments at Government’s disposal Action by Business
Limited access to raw
materials for local
beneficiation
 Leverage the state’s custodianship of the country’s minerals to
 Take advantage of the
facilitate downstream beneficiation
mineral value proposition
 The MPRDA is currently being amended to strengthen
to expand local demand
beneficiation provisions
for mineral ores
 Leverage on the beneficiation offset element of the Mining
 Comply with legislation
Charter
 Strengthen and leverage on existing pieces of legislation such as
Diamond export levy to promote reliable access to raw materials
Shortages of critical
Infrastructure
 Leverage on existing infrastructure planning mechanisms and
programmes such as the critical infrastructure programme to
properly consider infrastructure requirements for mineral
beneficiation
 Leverage on the NGP, which seeks to unlock infrastructure
bottlenecks through massive expansion of transport, energy,
water, and communications capacity.
 Utilise the state’s infrastructure (public good) as an effective
instrument to promote local beneficiation
 Align production plans
with national programs
 Embrace energy
efficiency
 Explore co-generation
prospects
Limited exposure to
Research and
Development
Inadequate skills
 Leverage on the ten year plan for science and technology
 Support and develop
competitive technologies
Access to international
markets
 Implementation of international trade agreements to enhance
mineral beneficiation in RSA (investment $ markets))
 Promote skills development and partner with the relevant SETA’s  Investment in Human
for training and labour development
Capital Development
 Leverage on and enhance the National Skills Development
 Co-operate with
Strategy and the Sector Skills Plans for required skills
government to leverage
and enhance the National
Skills Development
Strategy and the Sector
Skills Plans for required
skills
 Leverage on trade
agreements
PILOT COMMODITY VALUE CHAINS
10 minerals for 5 value chains

Energy commodities

Iron and steel

Pigment and titanium metal production

Autocatalytic converters and diesel particulate

Jewellery fabrication
PILOT COMMODITY VALUE CHAINS
(ENERGY)

Energy vital to any industrialisation process
security of energy supply is of the utmost
importance

Main energy commodities are Coal Uranium and
Thorium

Value chain interventions:

Quantification of the country’s uranium and thorium
reserves

Support for R&D into alternative and future energy
sources (e.g. Fuel cells)
PILOT COMMODITY VALUE CHAINS
(IRON AND STEEL)

Steel products are vital inputs into labour intensive
manufacturing processes but anti-competitive
pricing is a major constraint to growth

Value chain interventions:

Invoke regulatory provisions to ensure sustainable and
developmentally priced input commodities

Encourage investment into the South African steel
industry to break prevailing anti-competitive behaviour by
competitors
PILOT COMMODITY VALUE CHAINS
(PIGMENT AND TITANIUM METAL)

This value chain is a potential key growth area for
the country as increasing levels of urbanisation are
expected to underpin demand for Ti-mineral
concentrates for pigment and aerospace
component manufacture

Value chain interventions:

Investigation into the viability of establishing a chlorine
plant in conjunction with a pigment plant

The development of a more cost effective primary titanium
metal production
PILOT COMMODITY VALUE CHAINS
(AUTOCATALYTIC CONVETERS)

South Africa accounts for 1 in 10 autocats.
produced globally and tightening emissions
legislation will underpin future growth in this sector

Value chain interventions:

Invoke provisions of the law to ensure security of PGM
supply

Development of metal access mechanism

Unlock the intrinsic value within the PGM sector
PILOT COMMODITY VALUE CHAINS
(JEWELLERY FABRICATION)

South Africa is the land of gold, platinum and
diamonds and jewellery fabrication is another
labour intensive value chain that will beneficiate
these minerals

Value chain interventions:

Establishment of a metal advance scheme

Promotion of existing incentives in the jewellery sector
WAY FORWARD
 Development
of implementation plans for the five
pilot commodity chains
 Implementation
plans for other value chains to be
developed thereafter
CONCLUDING REMARKS

Strategy provides coordinated approach to beneficiation

Provides a leverage for RSA to become globally competitive and
optimise mineral resources rent

Fast tracks the country’s economic growth to tackle the challenges of
development

Compliments the NIPF (IPAP) and the NGP

Provides the basis to invoke provisions of s26 of MPRDA to enable
security mineral supply

The strategy is therefore, not a blueprint for individual commodity
value chains, but provides a framework within which value chain
specific interventions will be anchored.
ENDS.....
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