Bridgette Radebe at Brics

Building revenue with beneficiation

South Africa holds an estimated US$2.5-trillion (R23-trillion) of mineral resources
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Beneficiation was not an obstacle in Africa, but rather an opportunity, Bridgette Radebe, chair of the South African Mining Development Association, told delegates at the fifth Brics summit at Durban’s International Convention Centre recently.

Radebe said Africa was missing an opportunity when it exported minerals to other countries without first creating a finished product. “South Africa is a mining leader in terms of the life of mines as well as production but we are missing an opportunity to add value to our operations.”

Top-level delegations from all five Brics countries (Brazil, Russia, India, China, and South Africa) are in Durban for the summit to talk about co-operation, development and economic growth. South Africa has been a Brics member since 2010.

South Africa holds an estimated US$2.5-trillion (R23-trillion) of mineral resources, making it the world’s richest country in this regard, according to a 2010 report commissioned by US banking group Citigroup.

The country also has the world’s largest reported reserves of gold, platinum group metals, chrome ore and manganese ore, and the second-largest reserves of zirconium, vanadium and titanium.

Despite these assets, South Africa – along with other African countries – lags in mineral beneficiation, exporting its minerals as unprocessed ore rather than higher-value finished products.

“Many countries that are resource-rich seek to improve their revenue through taxation. They should consider that beneficiation may be a more effective option,” said Abiel Mngomezulu, the chief executive and president of Johannesburg-based mineral processing company Mintek, and moderator of the panel discussion on beneficiation.

According to Deloitte, the gross revenue from sales of all minerals in South Africa for the 2010 financial year amounted to $24.5-billion (R227-billion). But only $9-billion (R86-billion) was generated from processing base metals, precious metals and other minerals.

Job creation

South Africa’s government has named beneficiation as a priority for job creation and economic growth. In 2011 it released a strategy that identified policies, legislation and incentives that could be put in place to grow the industry and give the country a greater competitive edge. Beneficiation is one of six focus areas in the New Growth Path, which aims to create five-million new jobs by 2020.

Beneficiation lends itself to helping countries move ahead through job creation, technology advancement, skills transfer, and research and development, Sipho Nkosi, the chief executive of JSE-listed mining group Exxaro, said.

“Under colonialism or imperialism, Brics nations were not viewed as countries that should industrialise – instead the powers took what commodities they could and shipped them home. Now the world realises that we have to develop our own industries.”

To successfully meet the challenge of building a beneficiation industry, he said South Africa needed to invest in resources – capital, power, infrastructure, skills and education.

South-South co-operation

Co-operation between Brics countries could help this along. “Investment in Africa is one of our top priorities, and South-South co-operation will improve the African economy,” said Jiang Huicheng, the president of China’s First Investment Holding Group.

Huicheng said investment in mining would have the added effect of boosting crucial infrastructure such as rail networks. “We strongly support local industry,” he said.

Huicheng dismissed rumours that China planned to strip Africa of its mineral resources. “Our long-term target is to help African countries and also give small and medium enterprises a hand, and we are committed to this. We have been investing in Africa for over a decade.”

China’s African investment was around $15-billion (R139-billion) in 2011, he said. In 2010, the country had more than 10 projects with an investment of more than $100-million (R926-million).

Jiang cautioned that the environment for this kind of investment in Africa was not yet optimal. “Governments must show support for the mineral industry to attract more foreign investment.”

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