Is local beneficiation essential?
It may be viewed as strange to talk about the sustainability of the South African mining industry when it is in a state of extreme distress and, some may say, actually fighting for survival.
The current state of the South African mining industry - while predominantly viewed in a negative light also - nonetheless provides various opportunities. It is within the context of these opportunities that it is appropriate to consider the role of beneficiation in the survival, growth, development and sustainability of the South African mining industry.
Consideration of the role of beneficiation must, of course, take place within the context of reality: the various challenges that are currently facing the industry, and global economic demand and prices. These challenges generally also apply to beneficiation due to the mostly integrated nature of extraction and beneficiation. These include regulatory, financial, employment and currency volatility and the availability of infrastructure (power, roads, water and ports).
However, beneficiation faces certain unique challenges, such as accessibility to raw materials at sustainable pricing, limited innovation, research, development and access to the necessary required skills. This is underpinned by the availability of funding which, in turn, is dependent on the local and global demand for the minerals – the so called "vicious circle".
Beneficiation or, as it is commonly understood, the "value add", remains a potential significant contributor to the survival and sustainability of the country’s mining industry, even within the current environment. It has had a long and proud tradition of rising to new challenges through revolutionary and innovative thinking.
For instance, beneficiation made significant strides in the 1990s when South Africa transformed from a primary (raw material) commodity exporter to becoming a significant exporter of processed minerals. This could only be achieved through the commitment to and the implementation of major beneficiation projects and facilities. There are still significant potential benefits to be extracted from the beneficiation process with its various stages. Beneficiation is often incorrectly regarded as a single concept, and the various stages that are normally regarded as being part of the beneficiation process are not considered.
The primary mining legislation, the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA), defines beneficiation to include four stages: the primary, secondary, tertiary and final stage. Generally, beneficiation is regarded as the transformation of a mineral (or a combination of minerals) to a higher value product, which can either be consumed locally or exported. Each of the four stages may, therefore, provide an opportunity to beneficiate to greater value, for domestic or export use. It is perhaps appropriate for the key stakeholders in the mining industry to take a critical view on current beneficiation programmes to identify potential value that can be unlocked in a sustainable manner, and to do things differently.
The mining legislation creates a strong framework that encourages and may, in certain instances, compel local beneficiation in support of compliance with the objects of the MPRDA, and the Mining Charter. The legislative imperative to beneficiate is primarily set out in section 26 of the MPRDA, which vests the Minister with extensive authority, to "encourage" local beneficiation. Section 26 of the MPRDA is supported by the provisions of the Mining Charter. Element 2.3 specifically addresses beneficiation and requires mining companies to facilitate local beneficiation of mineral commodities by adhering to the provisions of section 26 of the MPRDA and the mineral beneficiation strategy. The Mining Charter attempts to encourage beneficiation by providing an incentive to mining companies – they may offset the value of the level of beneficiation achieved by the company against a portion of its historical disadvantaged South African ownership requirements not exceeding 11%. Commodity-specific legislation applicable to diamonds and precious metals also address beneficiation in relation to these commodities.
Rather than focusing on the 10 strategic mineral commodities that have been identified in the Beneficiation Strategy for the Minerals Industry of South Africa (Department of Mineral Resources, June 2011), it may be appropriate to review all available minerals, to identify opportunities for beneficiation in the various stages and to consider whether beneficiation can, separately from extraction, provide opportunities for sustainable operations in the current environment. The potential importance of beneficiation cannot be overlooked. The implementation of any identified revised beneficiation programmes will, of course, require the fullest commitment from all relevant stakeholders, including the mining companies, government and the employees. Historically, government has identified the potential positives, which may arise from beneficiation, and it is time for this commitment to be put into action.
The criticality of beneficiation was, in my view, best captured by Trade and Industry Minister Rob Davies over a year ago when he said, "However, if we fail to decisively pursue beneficiation, we will relegate the SA economy to a place at the bottom end of the globalisation of labour, with serious consequences for our ability to generate income and employment. We do not have the luxury of debating whether to beneficiate our mineral wealth. We must harness the collective industrial capabilities of SA firms to map how to beneficiate and what enabling policies or support measures are required to ensure this happens successfully and for the benefit of all South Africans".
As published in Without Prejudice in February 2016.