JOHANNESBURG (miningweekly.com) – The current turbulence in the South African mining industry has its roots in the mining industry’s “enclave” mentality, which refuses to link mineral extraction to competitive fabrication, says African National Congress (ANC) Member of Parliament (MP), Professor Ben Turok.

The outspoken MP, who has published extensively on mining across Africa and who is a consultant to the United Nations Economic Commission for Africa, says that South Africa needs to dispense with the notion that mining is a generous-benefactor industry that has to be treated with kid gloves.

“On the contrary, mining exploits a country’s endowment, which is ephemeral,” warns Turok, who insists that mining’s potential multiplier effect has to be realised while it is still thriving and not when it is in decline.

He sees the granting of mining licences to foreign firms as being a potential problem and wants conditionalities – such as providing a portion of mineral assets for beneficiation by historically disadvantaged firms and their communities – to be prescribed, in view of minerals being public property under government control.

Mining licences should, he says, specify the quantities of raw ore allowed for export, along with prices for domestic users, environmental protection and all socioeconomic factors.

Above all, there must be full acceptance that minerals are a depleting resource, so that downstream considerations are taken seriously and industrial capabilities are built in to ensure a sustainable economic future.

He wants the “wall” between mining and manufacturing taken down through agreed pricing arrangements, limited government protectionist measures, cooperation in skills development, domestic-industry-favouring procurement and taxation policies that encourage localisation.

In his view, the most important aspect of the mining industry is the extent of its multipliers into the rest of the economy.

He notes that as recently as December 2012 the Cabinet provided for “the implementation of the approved beneficiation strategy through which minerals can be processed locally for a higher value”.

This, he says, gives effect to Section 24 of the Constitution, which lays down that mineral development must promote “justifiable social and economic development”.

“The case for an increased role for manufacturing in the beneficiation of minerals is therefore compelling,” says Turok, who adds that this role seems primarily suited to domestically based firms located within the mining value chain, which he sees as being more likely to cooperate with government requirements of producing for the domestic market, keeping economic rents under control, complying with tax rules, employing local rather than foreign personnel and taking account of the social impact of their activities.

He warns that developing countries need to be vigilant about protecting their national interest in view of minerals markets being skewed by cartel-dominated multinational monopolies.

He would like to see government-built energy, transport and water infrastructure favouring not only foreign raw-ore exporters, but also supporting domestic firms within the mining value chain.

“This has been neglected in South Africa in the past,” says Turok, who recommends that a hard look be taken at the potential for downstream processes to allow South Africa to benefit optimally from its enviable mineral resources, which Citibank recently valued at a world-beating $2.5-trillion.

South Africa has 88% of the world's platinum-group metals, 80% of its manganese, 72% of its chrome, 32% of its vanadium and 30% of its gold.