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Beneficiation seen as the best way

South Africa is endowed with vast mineral resources and should play a bigger role in global mineral pricing in order to grow its mining beneficiation industry.

"South Africa should not be a price-taker, but should be a major player in the minerals market," said Joel Netshitenzhe, the executive director and board vice-chairperson at the Mapungubwe Institute for Strategic Reflection (Mistra). "It's a country with plenty of minerals, like chrome, manganese and the platinum group metals. South Africa should, if it wants to be in the forefront of the global mining industry, interrogate the global issue of pricing of commodities."

Netshitenzhe was speaking at the two-day Mining Lekgotla, held on 13 and 14 August at Gallagher Estate in Midrand. Addressing delegates at a session themed "Industrialisation – Towards Enhancing Beneficiation", which was chaired by the minister of small business development, Lindiwe Zulu, Netshitenzhe said South Africa should be able to affect the market price of commodities in order to drive its emergent beneficiation industry. "The industry should also consider vertical integration. Joint ventures across the value chain, for example, in extraction, refining and beneficiation, should be formed," he said.

Umeesha Naidoo, the director of primary minerals processing at the Department of Trade and Industry (the dti), said South Africa faced challenges of diversifying from mining and resource extraction towards manufacturing value-adding and job creation. The country had the potential to be an industrial power, taking into account the experiences of countries like China, South Korea, Brazil and Mexico, which emerged from economies based in the primary sector.

"However, South Africa has a competitive advantage in developing and expanding mineral linkages, and has the potential technological advantage to grow its beneficiation industry," Naidoo said.

To advance the beneficiation industry in South Africa, the department had set up special economic zones and a beneficiation promotion programme. The latter focused on beneficiating the platinum group metals, polymers and titanium, among others. The dti had also put several policy interventions in place to encourage mining beneficiation in South Africa, according to Naidoo. These included the Mining Charter, the Industrial Policy Action Plan (IPAP), and the Minerals and Petroleum Resources Development Act (MPRDA).

"We also have interventions where we encourage new players to enter the beneficiation industry. The Industrial Development Corporation is playing a leading role in this regard," she said.

One crucial element for the success of the beneficiation industry would be to ensure benefits were passed on to the local economy, said Mosa Mabuza, the deputy director-general of mineral policy at the Department of Mineral Resources. "There are certain commitments that the mining industry has made. For example, they have committed to spend 5% of their profits on skills development and spend more on community development, which is a social licence to operate."

In summing up the presentations, struggle stalwart and current editor of New Agenda Professor Ben Turok said the beneficiation discussion was taking place "right across Africa". Development banks like the African Development Bank were producing reports on how African countries could handle mining beneficiation. One important detail that should be taken into consideration before deciding to beneficiate locally was that most countries – including South Africa – acknowledge that minerals belong to "the people".

"But then there are sources that say beneficiation is not a good model for emerging countries. My advice to developing countries is 'Go back to common sense.' If a country has natural resources, it must use those natural resources to develop skills, create employment and so on," Turok said.

The quick fix for most countries in Africa, however, was to extract minerals and ship overseas, something which may not bring the necessary result to develop local economies and communities. South Africa and the rest of Africa needed a beneficiation model that would bring a win-win solution, a solution that would benefit all parties involved in the exploitation of natural resources. These included the state, the people and the people with technological knowhow, he added.

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