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MINERAL BENEFICIATION IN SOUTH AFRICA PRESENTATION TO THE SELECT COMMITTEE ON ECONOMIC DEVELOPMENT 26 FEBRUARY 2013 PRESENTATION OUTLINE Basis for Mineral Beneficiation Mineral Beneficiation: The Current State Beneficiation Strategy Overview Strategy Implementation Framework Mineral Beneficiation: The Way Forward Concluding Remarks 2 BASIS FOR MINERAL BENEFICIATION White Paper: The Reconstruction Programme (November 1994) and Development “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.” 3 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 levels of beneficiation of minerals in the Republic 4 BASIS FOR MINERAL BENEFICIATION THE NATIONAL DEVELOPMENT PLAN Country’s long term plan to 2030 Seeks amongst other things to reduce unemployment by improving manufacturing The New Growth Path, which is a short term plan drawing from the NDP goes into detail with the work that has to be done THE NEW GROWTH PATH Sets a target of creating 5 million jobs in 10 years Identifies structural challenges that impede desired growth rates, 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 5 MINERAL BENEFICIATION: THE CURRENT STATE Ferrochrome Titanium Oxide Steel Coal to Liquids Auto catalysts MINERAL BENEFICIATION: THE CURRENT STATE Composition of South Africa’s exports in 2010 Source: SARS BENEFICIATION STRATEGY OVERVIEW 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 8 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 9 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 10 BENEFICIATION STRATEGY OVERVIEW 5 value chains selected to qualitatively demonstrate the value proposition of beneficiation Energy commodities Iron and steel Pigment and titanium metal production Autocatalytic converters and diesel particulate Jewellery fabrication 11 IMPLEMENTATION FRAMEWORK Two value chain specific implementation framework developed and approved RESEARCH AND DEVELOPMENT INFRASTRUCTURE SKILLS DEVELOPMENT ENERGY COMMODITIES VALUE CHAIN SUPPLY SIDE INTERVENTIONS 12 DEMAND SIDE INTERVENTIONS INFRASTRUCTURE DEVELOPMENT RESEARCH AND DEVELOPMENT SKILLS DEVELOPMENT INDUSTRIAL FINANCING SUPPLY SIDE INTERVENTIONS IMPLEMENTATION FRAMEWORK (CONT…) IRON AND STEEL VALUE CHAIN 13 IMPLEMENTATION FRAMEWORK (CONT…) Consolidated implementation framework currently under development with all constituent value chains as chapters The framework is intended to provide a comprehensive set of interventions that will create an enabling environment to prioritise and accelerate local mineral beneficiation development The framework is an elaboration of the beneficiation policy, as adopted in June 2011, with emphasis on synergies and integration of existing beneficiation interventions in order to maximise the development impact 14 MINERAL BENEFICIATION: THE WAY FORWARD The Beneficiation strategy implementation framework seeks to strengthen linkages between sections of the value chains Successful implementation will require: Coordination across all three spheres of Government to leverage on synergies between provinces Coordination is also intended to optimise beneficiation implementation spread across provinces, discerning from the national developmental priority 15 CONCLUDING REMARKS Beneficiation is not an event but a process with game changing economic opportunities for South Africa The strategy presents an ideal opportunity to contribute towards balanced spatial economic development paradigm Intensification of beneficiation represents win-win phenomenon for South Africa Inc. including participants across the various mineral value chains 16 ENDS..... 17