Trade and Industry Minister Dr Rob Davies has described minerals beneficiation as the “first pillar” on which South Africa’s reindustrialisation should be built and has reported that his department is working with the Department of Mineral Resources (DMR) and others to integrate beneficiation-supporting regulatory instruments into the amended Mineral and Petroleum Resources Development Act (MPRDA).
Speaking at the launch of the fifth iteration of South Africa’s Industrial Policy Action Plan (Ipap), Davies said the aim was to ensure that more value was added to domestic mineral products ahead of export, so as to extract greater economic value and employment from the country's remaining mineral resources, estimated to be worth $2.5-trillion.
But he also saw the potential to create access to industrial minerals as South Africa’s “new long-term competitive advantage” for a domestic manufacturing sector that no longer benefited from access to the world’s cheapest electricity.
“By access to industrial minerals, we don’t mean that you can buy it at the London Metal Exchange price, or at an import-parity price. We mean that it must be available in the form that is required for downstream manufacturing and also at a price which is competitive,” he explained.
“I know from engagement across the world that if we can score this, we score many, many more industrial investments in this country.”
During the Ipap horizon, which covers the three-year period from April 1, 2013, through to March 31, 2016, a study would be undertaken to develop a “strategy and action plan” designed to advanced backward and forward beneficiation across five resource subsectors.
The study is being undertaken by the Industrial Development Corporation, with guidance from the Department of Trade and Industry, the National Treasury, the DMR and the Department of Science and Technology, and covers the following subsectors: ferrous minerals and metals, platinum-group metals, titanium and pigments, polymers, and mining inputs.
MINERAL VALUE-CHAINS STRATEGY
It is understood that Dr Paul Jourdan, who was one of the coauthors of the African National Congress’ (ANC's) State Intervention in the Minerals Sector (Sims) policy document, has been commissioned to conduct the Mineral Value-Chains Strategy (MVS) research.
The MVS research would develop proposals on the following:
• Strategies to increase forward value-addition of the four mineral groups selected, including the development of action plans for the value chains.
• Strategies to increase backward value-addition, or local content, in the supply of technologies and inputs used in the exploration, development and mining of domestic resources.
• The identification of mining-related capital goods that could take advantage of procurement undertaken by the mining and mineral-processing sectors.
• Designing regulatory provisions that could be incorporated into the amended MPRDA and the Mining Charter to promote access to raw material, which would assist in unlocking downstream industrial projects and facilitating higher levels of local content in the resources sector.
• And determining instances were producer power could be exploited to facilitate industrial linkages.
“Basically, what we need to do [through this research] is to identify the opportunities, as well as the regulatory requirements to realise those opportunities in particular value chains,” Davies elaborated.
He could not be drawn on the nature of the regulatory interventions being proposed, nor on whether it would result in certain minerals being declared “strategic”, as was proposed in the Sims document, which was adopted at the ANC’s December 2012 elective conference.
But he stressed that the MVS would be “closely calibrated” with the amendments the DMR was considering for the MPRDA, which could allow the Mineral Resources Minister to “make designations”, stipulating a set-aside of a mineral product to support domestic beneficiation.
The study would offer guidance to the DMR on the support that would be required for the development of downstream prospects identified by the MVS.
The DMR is believed to be well advanced with its deliberations on possible amendments to the MPRDA and has also begun consultations with stakeholders inside and outside of government.
Chamber of Mines (CoM) senior executive: transformation and stakeholder relations Vusi Mabena reports that it has already participated in two sessions hosted by the DMR.
However, he said it would be premature for the CoM to comment on the contents of that engagement, or to raise areas of concern.
Mabena said that industry was supportive of government’s beneficiation aspirations, but was concerned about the prevailing lack of skills and capacity that would be required to establish competitive minerals value-addition facilities.
He was less concerned about South Africa’s immediate electricity constraints, which many saw as a major impediment to an acceleration in plans to add value to domestically produced minerals.
Mabena noted that there were plans to address the current power imbalances and it should, thus, not be held up as the main impediment to future beneficiation. The chamber would offer detailed comments on the beneficiation plan as well as the draft MPRDA amendments in due course.
The latest Ipap document has indicated the five MVS reports, including a Mineral Beneficiation Concept Report, would be delivered between the first and the third quarters of government’s 2013/14 fiscal year.
“We think that the first pillar on which we need to build industrial development . . . is on realising the benefits and opportunities that arise from the fact that we are an industrial-mineral-producing country, through beneficiation,” Davies concluded.