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Mining has major role to play to grow SA's economy – Xstrata
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28th September 2010
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JOHANNESBURG ( – Mining has a major role to play to grow South Africa's economy, says Xstrata Alloys executive director Mike Rossouw.

"I also believe that mining has a major role to play in nation-building," Rossouw adds

He says that it is important that mining management focuses beyond the bottom line, on everything needed for a sustainable mining industry.

Rossouw made these points in a presentation to the CFA South Africa-GIBS conference in Johannesburg on future strategies.

If the South African mining industry had grown by the world average of 5% instead of shrinking by 1% during the pre-meltdown boom, it would, he says, have added 45 000 direct permanent jobs and injected $8-billion into the South African economy.

Now the world, he believes, is heading for another mining boom, as a result of the fundamentals that caused the last bubble still remainin, namely continuous demand growth for metals and static mining capacity.

"That fundamental suggests to us that, all things being equal, we are heading for more massive growth. Surely, South Africa needs to exploit it to the full this time around," Rossouw adds.

Citibank calculates the value of South Africa's metals and minerals at a world leading $2,5-trillion, which reinforces the country's ongoing potential as a major mining participant and the obligation on the country to derive full benefit from its valuable endowment.

Rossouw says that the lobby that is saying that the future of the South African economy lies outside of mining and beneficiation, make no sense.

"Can you believe that there are some who want to leave our valuable metals and minerals buried in the ground and for South Africa to move on the so-called value-add approach of Singapore. It's just doesn't make sense," Rossouw says.

He cites as one of the saddest of South African mining stories as the manganese story.

"We've got 80% of the manganese reserves and resources in the world, but we only produced about 15% of the world's manganese, compared to China which produced more than 35% of the world's manganese with less than 5% of the world's manganese reserves and resources," he points out.

The Chinese are exhausting their resources, maximising revenue and using the boosted economy to achieve social transformation.

South Africa's economic model, by contrast, is at best minimalist and at worst allowing the assets to lie fallow and by pass mining and beneficiation altogether.

"We've got to change this picture around, and we can do that with beneficiation, and taking a sustainable approach.

"Surely, it makes sense to conclude that we've got to exploit our natural wealth to the maximum benefit of all the people of this country," Rossouw adds.

Holding the country's mining industry back, however, are the lack of infrastructure, skills and institutional capacity.


"The beauty of the South African story to date is that we have undergone revolutionary change by evolutionary means.

"I can't think of many countries that have undergone the kind of change that we've undergone in an evolutionary manner, with legislative change.

But there is, he says, an aspect that is unfortunate, namely that the legislative engine currently is "somewhat out of petrol", compared with the time when the government came into power in 1994, with an extremely deep cadre of highly experienced individuals who had spent time overseas in many destinations, learning about governments and legislation.

Ways now had to be devised to restore the legislative capacity.

"We have to grow this economy and we have to keep it efficient," he adds.

He reiterates that it is only on a strong economic base that a country can be socially transformed, and emphasises that South Africa is still some way off its social transformation, which is imperative for the country.

He subscribes to the latest definition of risk as being "the uncertainty of objectives".

If South Africa's objectives are social, economic and environmental transformation, it is not standing up to the likes of countries with similar objectives, for example China.

"We've been focusing on the same pie, but cutting it differently, and not making bigger," he says.


Beneficiation is topical in that the Revised Mining Charter allows a beneficiation 11% offset on the required 26% black economic empowerment equity; the proposed industrial policy uses it as a fulcrum; and the upcoming national resource plan that is being developed for electricity takes it into account.

"When it comes to mining, and when I say mining I do mean mining and beneficiation, in other words, taking the ores and putting value to them, this has a major role to play in the South African economy," he says.

Although beneficiation can add the value to South Africa's metals and minerals that is so desperately needed, it cannot do so without infrastructure, particularly energy and transport, both of which are currently the responsibility of the State.





Edited by: Creamer Media Reporter


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Xstrata Alloys executive director Mike Rossouw tells Mining Weekly Online’s Martin Creamer that mining growth and beneficiation are a must for South African growth.
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