<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JIMMY MOYAHA: There was a conversation I had at some point with a gentleman named Peter Major [director of mining at Modern Corporate Solutions]\u00a0on the mining landscape in South Africa and on the African continent. We discussed matters around beneficiation and the importance of beneficiation.<\/p>\n
Following on from those conversations, I suppose these conversations have been happening at a broader level as well. The government of South Africa, particularly the Department of Mineral Resources, is exploring the idea that mining rights should be conditional on beneficiation.<\/p>\n
Now, this simple condition in the simple rule has the potential to fundamentally reshape the mining landscape, and it has been met with some concerns \u2013 and valid concerns \u2013 by the Minerals Council South Africa [MCSA].<\/p>\n
We\u2019re going to be taking a look at this in a bit more detail with the chief executive officer of the MCSA. Mzila Mthenjane joins me on the line now to see what we make of this. Tata Mthenjane, lovely having you on our show, as always.<\/p>\n
You and I have spoken about the beneficiation aspects of the mining sector and the latest potential rule around the conditions to mining rights.\u00a0One would think it would be positive, but the conditions do come with some area of concern.<\/p>\n
MZILA MTHENJANE: Good evening, and thanks very much for having me. Maybe just a point of correction \u2013 it\u2019s actually not the DMPR [Department of Mineral and Petroleum Resources] that placed that as a policy intention. It\u2019s the dtic [Department of Trade, Industry and Competition] in the Industrial Development Strategy.<\/p>\n
This is where I had gone, to at least defend for the mining industry, at a parliamentary colloquium yesterday of the dtic. There was an invitation to a whole lot of stakeholders who could potentially be positively and negatively affected by the strategy.<\/p>\n
You\u2019re absolutely right that one would think that a proposition for the beneficiation of our minerals should be a positive one, and in all accounts it is, and it should be.<\/p>\n
However, our argument is really the manner in which this proposition is being approached. We don\u2019t believe that there should be a condition on the granting of mining rights \u2013 that this should be attached to it, the need to then beneficiate those minerals further.<\/p>\n
Our argument is that mining is a very specific industry and sector-distinct from beneficiation, which essentially is manufacturing. And interestingly beneficiation, at least in the debates I\u2019ve been involved with, doesn\u2019t seem to be seen in the same category as manufacturing.<\/p>\n
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But in actual fact, that\u2019s what it is.<\/p>\n
You\u2019re translating a raw material into something of a higher value and getting it closer to an end-use product.<\/p>\n
In this case, it\u2019s minerals and it\u2019s no different if you take an orange and make orange juice.<\/p>\n
That is the essence of our argument \u2013 that manufacturing needs to be looked at distinctively as a different sector, given its nuances and the incentives that it provides.<\/p>\n
Mining in itself also requires a very nuanced approach in order to ensure that you secure the exploration of minerals, the extraction of those minerals. The two are very related and manufacturing actually requires security of supply of these minerals.<\/p>\n
We believe that the current approach that the dtic is taking could actually jeopardise that whole value chain.<\/p>\n
JIMMY MOYAHA: Speaking of the approach, Mzila, I want to take a look at some of the other aspects that have been proposed by the dtic \u2013 as you rightly corrected there \u2013 around a potential taxation and the restriction of exports. This is something that would also have quite an impact on areas like the chrome sector.<\/p>\n
We are a country that is known globally for its minerals, for its mining capabilities and capacities \u2013 and that potentially is a strong point that we could be using to continue to drive investment into our mining sector.<\/p>\n
How do we do that carefully without kind of missing some of these areas that could detract from there?<\/p>\n
MZILA MTHENJANE: It\u2019s a different conversation. While we haven\u2019t done so in the past, maybe for the past 150 years that we\u2019ve been mining gold and several other commodities, we have taken advantage of the value that we\u2019ve obtained from these minerals, particularly gold.<\/p>\n
We can talk to the City of Gold, Joburg, not so much in its current form. It\u2019s another conversation.<\/p>\n
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But I want to take you back to when Eskom was established.<\/p>\n
Eskom was established under very difficult global economic conditions for South Africa, and it was established in order to enable industrialisation in South Africa. It was established such that it could provide the cheapest electricity \u2013 and it achieved that goal.<\/p>\n
And out of that \u2013 and this was at the time a government-owned entity [came into being] \u2013 Iscor, which was a conglomerate of mining, firstly across different commodities. Coal, iron ore, zinc and some of those companies are individual companies today, like ArcelorMittal, Exxaro in coal, and Kumba Iron Ore and so forth.<\/p>\n
We had IDC [Industrial Development Corporation] from a financing perspective.<\/p>\n
I think the key message here is that for effective industrialisation and beneficiation, if we stick to that word, electricity is absolutely critical.<\/p>\n
Firstly, in terms of reliability of supply of electricity, and secondly and equally important, the cost of electricity.<\/p>\n
And so beneficiation then becomes not a topic related only to chrome or ferro alloys, but across any other raw material that the country may produce from its natural endowment.<\/p>\n
This was the primary argument that we made when we were engaging with the Department of Electricity and Energy and dtic, which finally led to the granting of a very favourable tax tariff, electricity tariff, for some of our ferrochrome producers, and we are hopefully going to see that extending to other energy-intensive users.<\/p>\n
So I think it\u2019s about making sure that we focus on the right issue, and not think of beneficiation for its own sake without a consideration for market and what makes beneficiation happen cost effectively. It is about electricity and cheap electricity.<\/p>\n
JIMMY MOYAHA: Mzila, before I let you go, I want to take a look at how it is that we can push the beneficiation conversation forward. It has been a conversation we\u2019ve been debating and having quietly \u2013 and I suppose more loudly more recently.<\/p>\n
But there are alternative ways that we can advance our beneficiation agenda, especially from a mining perspective.<\/p>\n
How then do we start to position that beneficiation conversation such that it does still benefit the mining industry and other industries in South Africa, without the need for putting undue pressure on perhaps legislation and some of the other mechanisms that we have?<\/p>\n
MZILA MTHENJANE: That\u2019s a fantastic question, and it\u2019s one that I spend a lot of time thinking about.<\/p>\n
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Part of my response to that very question for me is that I think we need, as a country firstly \u2013 and this is a question a lot of African countries are asking themselves in this new scramble for minerals \u2013 how do we get the most benefit out of our minerals?<\/p>\n
If you think of the things that we need to build in our country in terms of infrastructure, public services, housing and so on and so forth, all of these materials come from mining.<\/p>\n
And so my first response to that question is that I think a long-term and clear economic plan from government in terms of what are the things that people need to live and work and to play, and how do we build a country such that it demonstrates advancement and prosperity in terms of the way that people travel, where people live, and so on and so forth \u2013 that infrastructure.<\/p>\n
I think what that does, it immediately creates a demand for mining, for exploration, for minerals.<\/p>\n
And I think in the context of that long-term plan, and a sizeable market, it then attracts the investment that is required across that whole value chain to ensure that we\u2019re able to build the things that are going to make people live better.<\/p>\n
And so that for me is one thing that is still missing in terms of a long-term South African economic socioeconomic development plan that will create the necessary demand for not only minerals, but will be across other key natural resources \u2013 food, for instance.<\/p>\n
As people become more prosperous, they\u2019re able to buy more. So agriculture will face exactly the same thing or will have the same opportunities \u2013 technology, innovation.<\/p>\n
And so we\u2019ll begin to see pretty much the whole nation being brought into this growth path, which will then lead to prosperity.<\/p>\n
I think the important thing is that we shouldn\u2019t have a conversation about beneficiation in a very closed-up, isolated way absent of consideration of everything else that I\u2019ve mentioned in terms of an economic plan and how we can change people\u2019s lives going forward.<\/p>\n
JIMMY MOYAHA: A plan for prosperity and economic plan for advancing South Africa and moving us forward as a nation. Beneficiation is a part of that conversation, but it isn\u2019t the only part of the conversation.<\/p>\n
We\u2019ll leave this one on that note.\u00a0Mzila Mthenjane, chief executive officer of Minerals Council South Africa, joined us to take a look at beneficiation and some of the potential unintended consequences if it is not implemented correctly.<\/p>\n
#Beneficiation #rule #goal #wrong #approach<\/p>\n","protected":false},"excerpt":{"rendered":"
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