CROSS-CUTTING CONSTRAINTS AND ASSOCIATED INTERVENTIONS TO ENCOURAGE BENEFICIATION IN SOUTH AFRICA

beneficiation south africa

beneficiation south africa

Cross-Cutting Constraints to Beneficiation

Despite the comparative advantage in mineral resource endowment and more than a century of mining in South Africa, the levels of mineral beneficiation have been low and mostly concentrated in the high capital sectors of the mineral value chain. This demonstrates that having natural resource endowment does not automatically translate to downstream beneficiation, but requires dedicated interventions to address possible constraints to realise a competitive advantage for the mineral beneficiation industries. This chapter identifies current inhibitive factors to effective implementation and development of the beneficiation programs in the country, namely:

Limited access to raw material for local beneficiation – This constraint is resultant from the current structural arrangement of the mining industry, which remains geared towards export orientation of raw material, with the bulk of current producers bolted in long term contracts with their international clients. Pricing mechanisms used by some raw and intermediate material producers also hamper beneficiation to the final stages of the value chain. This is evident in the case of steel sector in which the use of IPP renders downstream beneficiation uncompetitive.

The international price determination for raw and intermediate materials, which do not discount proximity to production further compound the requisite access to input minerals for local value addition. An example of this would be the diamonds and precious metals industries where legislation has been created specifically to ensure availability of minerals for local beneficiation. However, the envisaged targets of downstream value addition of these minerals reached a catatonic state of development as a result of uncompetitive pricing mechanisms.

Infrastructure – Shortages of critical infrastructure such as rail, water, ports and electricity supply have a material impact on sustaining current beneficiation initiatives and a major threat to future prospects of growth in mineral value addition. For instance, the recent unprecedented levels of energy demand, compounded by lack of investment in energy generation as well as South Africa’s historical culture (business, public sector and individuals) of inefficient energy utilisation, resulted in deficit of energy supply in the first quarter of 2008. The bulk of early-stage beneficiation programs require large and uninterrupted supply of energy. Distal locality of mining operations to established manufacturing hubs and lack of infrastructure capacity linking the two also discourage growth of beneficiation activities.

Research and Development: South Africa’s limited exposure to break-through research and development programs thwarts the prospects of innovation in creating new products for beneficiation

Skills sought for expediting local beneficiation – While the challenge for skills is not limited to South Africa, the skills-supply pipeline for scientists and engineers requires specific attention.

Access to international markets for beneficiated products – the current trade barriers (both tariff and non-tariff) in some prospective recipients of South Africa’s beneficiated products limit access to these markets.

Interventions

Each of the idenlified cross-cutting constraints requires mitigating intervention(s) from all stakeholders. These interventions are intended to moderate such limitations, in order to implement the beneficiation strategy effectively. Table 1 summarises cross cutting strategic actions, responding to each of the constraints and proposes intervention by the two main stakeholders, viz. government and business.

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