SELECTED VALUE CHAINS

Coal manufacturing processes

Coal manufacturing processes

This section indicates the advancement of selected mineral commodities through various stages of beneficiation, creating specific value chain(s). five of which have been selected to demonstrate the inherent value for South Africa in embracing beneficiation for all mineral commodities. The substantial increase in third-stage beneficiation achieved in the chemicals and metals industries is a direct result of policy orientation in the 1990’s that partly targeted these value chains, supported by other institutions and incentives. However, these measures did not directly create sustainable employment and did not stimulate downstream fabrication, in part because of the prevalence of anti-competitive import-parity pricing and in part because of the lack of longstanding economic relationships and infrastructure to support it. The challenge for these value chains therefore, is largely to identify where greater final stage beneficiation (fabrication) can be initiated.

ENERGY COMMODITIES

Projections of energy demand growth in South Africa, the region and the world indicate aggregated annual growth rate of 3.2 percent to 2030 (BP Statistical Review. 2005). This demand growth challenge is compounded by climate change implication, as fossil fuels consumed in the generation of power are targeted as well as the important role of coal in power generation. Demand for low grade coal is also principally driven by the resurgence of the Asian economic players, viz. China and India as well as other developing economies.

According to the World Coal Institute (2007), this energy demand growth is likely to introduce additional price pressure on the prices and accessibility of coal in South Africa. The forecast growth in demand will not alleviate the major concerns around energy poverty. In 2000, only one in six people worldwide had access to energy required to provide the high living standards enjoyed in the developed world. These one billion people consumed over 50 percent of the world’s energy supply, while the one billion poorest used only 4 percent [WBCSD 2004]. As the UN-Energy stated: “This situation entrenches poverty, constrains delivery of social services, limits opportunities for women and erodes environmental sustainability at the local, national and global levels”.

The PGM fuel cells technology represents an opportunity for new energy generation sources, as the extent and scope for further growth in traditional sources of energy generation are limited.

COAL

Energy is essential to poverty alleviation. All fuel sources will be needed, but as the most abundant and affordable of all the fossil fuels, the role of coal will be vital. Coal will continue to play a significant role in meeting energy demand worldwide. The world currently relies on coal for 40 percent of its electricity and 66 percent of steel production is dependent on coal. Many countries rely on coal for much greater proportions of their electricity – South Africa, China, and India; for example, use their large, indigenous supplies of coal to generate most of their electricity. In the future, coal conversion technologies will make synthetic gas and liquid transportation fuels derived from coal an attractive alternative. Coal also plays an important role in cement manufacturing and other industrial processes.

The bulk of the South African electricity is generated from coal power stations, which emit significant proportions of carbon dioxide and other gasses. Given environmental pressures it might be necessary to capture harmful gases at source and have them sequestrated in rocks (geological formations) at depths, in an attempt to mitigate their contribution to global warming.

The possible implementation of carbon emission reduction measures (either a carbon tax or market mechanism) may contribute to an increase in the cost of electricity.

Opportunities exist for research and development to be directed at finding an alternative approach, such as potential of recycling the use of captured gases in the process of energy generation for re-generation of electricity as well as other uses (beneficiation). for the benefit of South Africans, in order to comply to environmental protocol, derive a low/no carbon emission growth, while also contributing to increasing our energy basket.

Interventions for optimal value creation (beneficiation) of coal:

  • Policy support for clean and efficient use of coal in power generation can encourage the take-up of existing advanced technologies for low emissions coal-fired electricity production – providing secure and clean energy
  • Policy support for technology transfer, through mechanisms such as the Clean Development Mechanism, bilateral and multilateral funds such as the Global Environment Facility and the Prototype Carbon Fund must be further explored.
  • Investment into research, development and demonstration of new technologies such as clean coal technologies and carbon capture and storage. These could provide a very significant opportunity for the major reductions in emissions.
  • Investment in R&D to find innovative means for beneficiation (recycling) of gases emitted in the generation electricity.
  • Investment in technology to optimise use of coal bed methane (CBM).
  • Investment in research for metallurgical research to disentangle uranium and coal in the Springbok flats coalfield, which will increase the country’s reserve base of coal and uranium.
  • Exploration of options for further final-stage fabrication of coal through production of chemicals as feedstock for plastics and fertilisers

URANIUM AND THORIUM

Uranium is mainly used to fuel commercial nuclear power plants. South Africa is currently exporting uranium in its oxide form (UaOe). the first stage of beneficiation and imports the enriched uranium from the northern hemisphere for power generation purpose. This is due to the closure for uranium beneficiation operations due to the obligations of the Non Proliferation Treaty (NPT) signed by South Africa in 1991.

The recent increase in energy demand in South Africa has prompted re-assessment of alternative primary source of energy, hence increasing the demand for uranium as the clean alternative mass power production. South Africa has gained expertise over many years in the beneficiation of uranium from the mining of the ore to producing uranium for power generation and beyond.

Meanwhile, researchers have been exploring the possibility of using thorium as an alternative fuel for nuclear reactors. Thorium is estimated to be approximately three times more abundant than uranium. However, present knowledge of distribution of thorium resources is poor due to relatively low key exploration efforts arising out of insignificant demand. Preliminary research indicates that the prospects of using thorium as an alternative fuel for reactors are positive but for the moment, the uranium boom still continues.

With the commitment of government to build nuclear power stations to compliment the fossil fuel based electricity, preparatory work for beneficiation of uranium/thorium and other minerals sought, such as fluorspar and others is critical.

Interventions for the successful implementation of nuclear power generation include:

    Quantification of uranium and/or thorium reserves and resources in the country

  • Ascertain the economic feasibility of re-establishing uranium enrichment
  • Plan for comprehensive waste treatment and mine rehabilitation
  • Finalisation of the uranium policy with all relevant stakeholders

IRON AND STEEL

Steel and stainless steel production are major consumers of iron ore. manganese, chromium etc. and South Africa is a major producer of these ferrous minerals. Access to these raw materials will therefore be essential to increase levels of local beneficiation of these minerals. Steel products are vital inputs into labour intensive manufacturing processes. However, current anticompetitive pricing practices in the steel industry are one of several constraints to the growth of manufacturing industries. Increasing competition in the local steel industry should be looked at as one of the interventions for countering anti-competitive pricing strategies.

Various government departments have combined efforts to create an enabling environment for the development of steel and stainless steel plants in South Africa. Access to competitively-priced iron ore, as well as manganese, chromium, nickel and vanadium, are essential for the projects identified through this process to be viable and to enable the new facilities to compete with existing players. The development of the plants would also assist in creating an environment for competitive pricing in the domestic market.

Interventions for iron and steel value chain development:

Address import-parity pricing of iron ore and steel for downstream users to support the final fabrication process. Measures to achieve this end could include taxes on exports and conditionalities linked to the provision of infrastructure.

Develop strategies to address other constraints on downstream steel fabrication, including identifying major opportunities for using steel for local products, for instance for elements of capital equipment and construction inputs. Where appropriate, the state should assist with industrial financing. These measures require close collaboration between the Dti, the DMR and EDD.

  • Invoke regulatory provisions to ensure sustainable and developmental^ priced input mineral commodities for new and existing steel manufacturers in South Africa
  • Investigate mechanisms to protect and support the competitiveness of existing intermediary plants, such as ferro-chrome smelters
  • Encourage investment into South African steel industry to break prevailing anti-competitive behaviour of current operators

It will be necessary, therefore, to ensure that the resources required for any new plants established are accessible.

PIGMENT AND TITANIUM METAL PRODUCTION

The development of the titanium value chain is a potential key growth area for South Africa. The titanium dioxide pigment industry consumes 95 percent of the titanium mineral concentrates production. Urbanisation and increasing personal consumption of titanium dioxide are expected to underpin growth in demand for titanium mineral concentrates. The development of a new low cost titanium metal production process would also enable titanium to displace other cheaper but lower performance metals. An inter-departmental task team has been formed to advance the beneficiation of titanium and the establishment of titanium industry in South Africa.

Interventions for the pigment and titanium metal production development:

  • The funding of fundamental research into the production of titanium from the Bushveld titano-magnetites. Such a facility would also be a major iron producer which could facilitate competitive pricing of steel
  • The development of a more cost effective and proprietary primary titanium metal production process is seen as a key enablerforthe establishment of a South African titanium industry.
  • The continued development and commercialisation of technologies to compete cost effectively in the international market
  • The development of an infant titanium industry. This includes the required infrastructure to support South Africa’s entry into the titanium market, commercialisation of existing technologies and the development of human capital to sustain a future large-scale industry.
  • The development and demonstration of an advanced investment casting capability for titanium alloys. Further projects are proposed to develop key technology platforms and establish local competence and capacity in areas like powder metallurgy of titanium, machining etc.
  • Commitment by the mining companies with respect to ensuring access to minerals is critical for growth. Continued discussion with the major pigment producers around the world to ensure that government (the Dti. DMR, DST and other stakeholders) know what all of their requirements are to set up a plant in South Africa
  • It is also worth investigating the viability of establishing a new chlorine plant in conjunction with a pigment plant. A second stage would be to establish titanium metal production on the back of titanium tetrachloride for pigment production, followed by titanium metal fabrication fortheaerosoace. automotive, leisure and medical sectors
  • Continued R&D with respect to mineral beneficiation, the preparation of intermediate metal salts, purification thereof and metal manufacturing itself.

AUTOCATALYTIC CONVERTERS AND DIESEL PARTICULATE FILTERS

South Africa is a major producer of platinum group metals, and it has the largest reserves of these metals. The increasing levels of platinum consumption as well as other PGMs represent the advances made in industrial technology with respect to the use and importance of PGMs within the high tech sectors of the economy. The over-riding increase in local PGM off-take over the past decade has been the auto-catalyst, or more correctly Catalytic Convenors for Vehicular Emission Control, which, as the name suggests, limits the emission of carbon oxide (CO) and Nitrogen oxide (NO} gases in line with ever-stricter international controls on the emission of particulate matter and greenhouse gases.

Interventions for the autocatalytic converters and diesel particulate filters:

  • Invoke relevant provisions of the law to ensure security of PGM supply. The major mining companies have so far demonstrated their readiness to advance beneficiation in the country by initiating and fully participating in the PBC.
  • Develop the modalities for the development of local metal access mechanism through an agreed approach between government and mining houses
  • Unlocking intrinsic value within PGM sector through research programmes. This could be done through industry sharing forums, and formation of international partnerships. In addition, technology upgrades (recapitalisation) for R&D Centres of Competence, as indicated in the Advanced Metals Strategy, would be supported
  • The alignment of existing initiatives on skills development as well as promotion of careers in related fields
  • The promotion of investment in the automotive industry and the continuation of the sector incentive, such as the Automotive Production and Development Program (APDP).

JEWELLERY FABRICATION

The beneficiation of gold and diamonds requires the establishment of Integrated Jewellery Hubs throughout the country (Figure 3). Although the fabrication of platinum jewellery is not a priority area for platinum group metals (PGM) beneficiation. the integration of specialised platinum jewellery facilities into any of the jewellery hubs would be well received.

The high value and low bulk of gold, platinum and diamond jewellery lends itself to export markets such as the United States of America (USA), Japan and Europe. The African Growth and Opportunity Act (AGOA), which provides access to markets in the USA gives an opportunity for local beneficiators to grow their markets internationally.

Interventions for jewellery include:

  • Consider the establishment of an applicable and effective metal advance scheme aimed at ensuring local metal/mineral access for local value addition. The feasibility of this mechanism has been proven internationally and is being applied successfully on a small scale in the PGM sector. Government would need to investigate the reasons for less than adequate access in the gold sector in South Africa and identify issues that should be addressed to implement the scheme successfully
  • A structured training programme which takes into consideration current specific demands and the expansion of the jewellery industry could be developed in collaboration with the Mining Qualifications Authority (MQA) and relevant SETA’S
  • Jewellery investment promotion, including the promotion of existing incentives in the jewellery sector ,An analysis of a new capital redemption legislation to encourage investment into the industry should also be conducted and instrument specific incentives considered
  • Interventions such as the Kgabane Jewellery project, the Olifantsfontein Jewellery Training and Manufacturing facility, the Small Enterprise Development Agency (SEDA) Platinum Incubator, as well as all private sector initiatives could contribute significantly towards furthering the objectives of this Strategy in relation to diamond and jewellery manufacturing. These initiatives must be prioritised and provided with necessary support for further development.

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