JOHANNESBURG (miningweekly.com) - According to research by American banking group Citigroup, South Africa is the world’s richest country in terms of its mineral reserves, which are worth about $2.5-billion. This leaves the country with significant potential to capitalise on the mineral reserves through mining and beneficiation – or does it?
Although it may seem that beneficiation is the clear route to take to further enhance the potential that South Africa holds with its extensive mineral wealth, there are major demands that must still be met before entrepreneurs will so much as utter the word ‘beneficiation’.
Firstly, there must be a business case for beneficiation; trying to force-feed it is utter folly.
Where there are sound business cases, there is then the need for entrepreneurs to step up to the plate, which they will only do if South Africa’s political environment improves.
From government’s side, there has to be adequate electricity capacity and that elec- tricity has to be affordable.
The next need is for the availability of the required skills, regrettably within a South African education and training environment that is currently poor. Also required are high-level marketing capability and logistics capacity.
It must also be acknowledged that while the country is paying lip service to beneficiation, the reality on the ground is that established beneficiation is in the process of being destroyed.
For example, South Africa already has been adding substantial value to chrome by turning it into ferrochrome, but this beneficiation is already being unravelled by uncompetitive electricity prices that remain on the rise.
It is paradoxical that, on the one hand, the country pleads for beneficiation and, on the other, it watches beneficiation go down the drain.
Yet it continues to be upheld as a priority.
“Mineral beneficiation is a priority for the governments of resource-rich countries that would like to leverage the potential of mineral beneficiation to create local employment and drive economic growth, and many governments are developing strategies for domestic mineral beneficiation,” says Deloitte consulting executive Ebrahim Takolia.
Minerals Processing and Beneficiation Industries Association of Southern Africa (MPBIASA) president Phineas Mohlala adds: “It is out of the origination and initiation of such postmining mineral processing and beneficiation-network plant infrastructure envisioned that absorptive employment opportunities will be created to include and benefit the targeted empowerment-beneficiary groups, particularly those who are historically disadvantaged.”
The difficulties that South Africa faces in the beneficiation of its minerals are relatively substantial and are not unknown challenges for industry and government.
“The aim of the beneficiation strategy is to provide a framework to convert the country’s inherited comparative advantage, in the form of its mineral wealth, into a national competi-tive advantage. To attain this competitive advantage, the challenges and benefits need to be considered,” says Takolia.
The June 2011 beneficiation strategy for South Africa’s minerals industry lists the following as the current inhibitive factors to effective implementation and development of its beneficiation programmes: limited access to raw materials for local beneficiation, inade- quate infrastructure research and development, a lack of skills to expedite local beneficiation and limited access to international markets to distribute beneficiated products.
South Africa needs to overcome its challenges to find ways of adding value to its mineral resources.
“Beneficiation can help significantly in terms of the diversification of the economy and job creation,” notes Mohlala.
The challenge of insufficient energy and skills remain the core focus in terms of pushing forward with beneficiation. The MPBIASA acknowledges the initiatives that have been set in place at various university institutions to develop the skills that will contribute to mineral beneficiation.
The June 2011 beneficiation strategy for the mineral industry of South Africa addresses the concern over the energy situation: “Currently, new forms of beneficiation opportunities are sought to complement the conventional electricity generation in the country, which will underpin the much- needed economic growth.
“For instance, alternative forms of energy sources, such as platinum-group metal (PGM) fuel cells, present an opportunity for South Africa to become a prominent player in the global manufacturing and distribution of fuel cell components.”
An example of the country’s progress, in terms of PGM fuel cells, was evident when Science and Technology Minister at that time, Naledi Pandor, announced that “a fledgling company had already sold 18 platinum-using fuel cells to South Africa’s mobile phone sector and that mineral beneficiation efforts under way were aimed at the country giving birth to new and fully fledged industries as progressions of South Africa’s leading position in plati- num and titanium.”
Minerals processing and metallurgical engineering products and services provider Mintek is collaborating with the Department of Science and Technology and is looking at nanotechnology and various applications in nanotechnology, which will include platinum fuel cells, the improvement of the commercial use of platinum and efforts to stimulate demand.
Although significant milestones are being reached, there are some areas that still require a lot of attention in order for beneficiation to progress steadily and reach its full potential.
Mohlala says that South Africa is missing out on the emergence of industrialist entre- preneurs who are able to use the various technologies and research to build the economy.
“What is critical to note, though, is that the country is missing the emergence of industrial entrepreneurs who can use the different technologies to ensure that an initial effort has been taken that ensures that South Africa comes up with innovative ways to commercialise these technologies, thus building the economy,” explains Mohlala.
Takolia adds that commercialisation is the missing link. “Both government, through the Department of Science and Technology, and the Council for Scientific and Industrial Research, and the private sector, through, for example, the International Platinum Association, have invested in research and development. the main challenge has been to take the projects from research to commercialisation.”
“With the knowledge that the country is in possession of so much mineral wealth, South Africa continues to export most of its minerals as ores or semiprocessed minerals rather than high-value intermediate or finished products; the opportunity is there and we are in a good position to take it,” says Takolia.
Industry professionals have noted that there is a future for beneficiation in South Africa.
Mintek GM for technology Alan McKenzie says: “There is no doubt that there is enormous potential for beneficiation in South Africa by simply looking at the fact that mining commodities alone account for about 50% of our export earnings and much of that is raw material. If we invest in and commit to the beneficiation of these raw commodities and add value to them, we can earn more revenue in South Africa.”
South Africa stands to gain significantly from beneficiation and for beneficiation to become a significant part of the mineral value chain, it will need private-sector involvement and bilateral negotiations with countries and companies that import South Africa’s minerals.
Takolia further notes that general busi- nesses, particularly new and small businesses, and not just mining companies, can play a significant role in beneficiation.
“For beneficiation to reach its full potential, it should be driven not only by mining companies, but also by the private sector and government-facilitated investment. We need entrepreneurs to develop small and medium-sized businesses to really facilitate beneficiation.
“For the larger projects, government involvement will be required. Sasol, which is now a private company in which the South African government retains a shareholding, was incubated and developed to beneficiate South Africa’s coal. The company has, since then, diversified and globalised, and currently employs about 33 000 people,” says Takolia.
Mintek is always looking to redefine and improve technology to assist in the bene- ficiation process and, through extensive research and development, the company has made technological advancements that are currently being used in the various mining sectors.
“We have developed and improved tech- nology to refine rare-earth elements. The hope is that we are able to build a down- stream fabrication industry that uses rare-earth metals. If we can beneficiate, we are then creating an entirely new manufacturing industry where jobs are available,” says McKenzie.
Mintek has also developed a new smelting technology, called ConRoast, which can be applied in the platinum sector.
“The technology has technical advantages and is currently being commercialised by platinum-focused mining and exploration company Jubilee,” says McKenzie.
The technology is capable of recovering platinum-group elements from difficult-to-treat ores, smelter residues, chromite tailings and high-chrome platinum concentrates. Apart from the commercial potential that this affords, the reprocessing of old tailings dumps also contributes to significant environmental improvements in South Africa’s extensive platinum mining areas.
“These technologies are enabling and they are making the extraction and use of commodities more efficient and, in turn, are creating jobs and hopefully creating economic benefit for the country,” concludes McKenzie.
MINING INDUSTRY VIEW
Mining and beneficiation, after second-stage beneficiation, are different business activities requiring different business methods, says Takolia.
Mining is essentially the extraction of minerals, which requires a mining company strategy – the extraction of minerals as efficiently as possible to supply a market in which you are mostly a price-taker.
Beneficiation requires a manufacturing strategy, which is much more complex, as it includes other potential strategies like differentiation, specialisation and product development.
So, the real question is. Can a company simultaneously be a miner and a manufacturer? Mining companies would like to stick to their area of expertise – mineral extraction.
Takolia says: “Mining companies do invest in beneficiation research to help the demand in the industry to which they supply. New businesses and small businesses that partner with established international players, assisted by government, can spur beneficiation.”
“In order for beneficiation projects to become viable, there has to be some competitive advantage or comparative advantage to undertaking beneficiation in South Africa,” says Takolia.
Having manufacturing faci- lities closer to mines and beneficiation facilities could result in cheaper prices, which will benefit both mines and the manufacturing industry in South Africa, he concludes.