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SOUTH AFRICA
BUSINESS ENVIRONMENT
&
OPPORTUNITIES IN THE MINING
SECTOR
MAY 2015
LIMA, PERU
South Africa in the world
Korea
SADC and South Africa
• SADC FTA signed in August 2008 –
market of 200 million consumers
• Future FTA with SADC, COMESA &
EAC with a market of 700 million
consumers
South Africa Economy at a Glance
South Africa’s leading Export Partners (2014)
Leading export partners 2014 (%)
INDIA
9%
UNITED
KINGDOM
8%
Export Country
CHINA
21%
NAMIBIA
11%
UNITED
STATES
16%
GERMANY
11%
BOTSWANA
12%
Source: Quantec
JAPAN
12%
US$
(billions)
1. China
8.96
2. United States
6.67
3. Japan
5.05
4.Botswana
4.95
5. Germany
4.72
6. Namibia
4.70
7. India
3.92
8. United Kingdom
3.58
South Africa’s leading Import Partners (2014)
UNITED
KINGDOM
6%
Leading import partners 2014 (%)
JAPAN
7%
Import Country
CHINA
27%
INDIA
8%
NIGERIA
9%
UNITED STATES
12%
SAUDI ARABIA
13%
GERMANY
18%
US$
(billions)
1. CHINA
16.01
2. GERMANY
10.37
3. SAUDI ARABIA
7.35
4. UNITED STATES
6.81
5. NIGERIA
5.34
6. INDIA
4.71
7. JAPAN
3.91
8. UNITED KINGDOM
3.40
South Africa Trade: Major Export
Products
Iron Ores
Platinum
Gold
Motor Vehicles and Components
Coal
Ferro Alloys
Diamonds
Catalytic Converters
Chrome
Manganese
South Africa Trade: Major Import
Products
Crude Oil
Motor Vehicles and Components
Telephone sets
Computing Equipment
Pharmaceuticals
Earth Moving Equipment
Electric Generators
Industrial Machinery
Printing Machinery
Rubber Tyres
Bilateral Trade
• Peruvian Exports to South Africa (2013):
USD 12 097 000
• South African Exports to Peru (2013):
USD 57 767 000
Important Peruvian Exports to South
Africa
•
•
•
•
•
•
•
•
Zinc and zinc products
Fish and sea food
Inorganic Chemicals
Synthetic Fibres
Cereals
Non-woven Fabrics
Coffee
Mining and other Equipment
Important South African Exports to Peru
• Steel and Articles of Steel
• Mining Equipment and other
Machinery
• Agricultural Chemicals
• Explosives, Fuses and Detonators
• Preserved Fruit
• Plastics and Articles
• Ferro Alloys
STRATEGIC CONTEXT
SA’s vision for inclusive growth & development – decent jobs and
equity;
NDP, NGP and IPAP - promoting a globally competitive economy
that produces and trades with the rest of the world in innovative &
value added products & services;
Create 5 million jobs by 2020;
Beneficiate of own minerals and natural resources;
Improve physical industrial infrastructure;
Regionally spread industrial development.
Integrated into the mainstream economy, in terms of value
chains and localisation initiatives including skills, technology,
tooling and supplier development initiatives
The South African Business Environment
• Sound Economic Policies
• High level of macro economic
stability
• Reduced taxes and import duties
• Central Bank independent from
Government
• Inflation targeting
South Africa- global perspective
• South Africa is one of the most sophisticated and promising
emerging markets, offering a unique combination of highly
developed first world economic infrastructure with a vibrant
emerging market economy.
• South Africa is one of the world’s 26 industrialised nations &
27th largest economy
• The country is also regarded as the gateway to Africa.
• South Africa has the 2nd largest economy on the African
continent, accounting for approximately 25% of the
continent’s GDP.
• According to the World Bank, South Africa ranked 41st out of
189 in the world for the Ease of Doing Business in 2014.
• The JSE Securities Exchange is Africa’s largest and most
developed Securities Exchange and one of the world’s top 20
exchanges.
South Africa - global perspective
• South Africa is ranked #1 for the regulation of securities
exchange, strength of auditing & reporting standards,
legal rights & efficacy of corporate boards by WEF’s
Global Competitiveness Report 2013/14.
• South Africa scored well in various categories according
to the 2013/14 WEF’s World Competitiveness Report
(149 countries ranked) with overall competitiveness we
ranked 53 in place.
• South Africa remains the world’s top producer of
minerals such as gold, platinum, rhodium, chrome,
manganese and vanadium.
• South Africa holds 80% of global manganese reserves,
72% of chrome, 88% of platinum-group metals (PGMs),
40% of gold and 27% of vanadium.
ROLE OF SA IN WORLD MINERAL
PRODUCTION,
ROLE OF SA IN WORLD MINERAL RESERVES
ranked as the world’s richest country in terms of its mineral
reserves. (est. largest in situ non energy mineral resource base in
the world, valued at US $2, 5 trillion) Citibank,
Zirconium # 2
Titanium minerals #4
Alumino-silicates #1
Gold #2
Vermiculite #2
Vanadium #2
PGMs #1
Chromium #1
Manganese #2
0
20
40
60
80
Percentage of World Total
100
South African Mining Sector
Information
Mining Sector Information
Overview
• Mining remains a critical sector that supports
and impacts indirectly on range of related
sectors.
• South Africa’s total mineral reserves are
estimated at US$4.71 trillion, with PGMs
contributing 49% of the value.
• South Africa is home to 80% of the world’s
reserves of Platinum Group Metals positioning
our mineral deposits as one of the most
valuable in the world.
HOW MINING IS STRUCTURED in RSA
• Department of Mineral Resources-regulator
• Chamber of Mines (CoM)
• South African Mining Development Association
(SAMDA)
• Organized Labour
• Mining
Industry’s
Growth,
Development
and
Employment Task Team (MIGDETT)
• Department
of
industrialization.
Trade
and
Industry
on
Legal Framework
•
Minerals and Petroleum Resources Development Act of 2002 (as amended), which
came into effect in 2004 and vested custodianship of all minerals to the State on behalf of the
nation. Currently under review
•
Mine Health and Safety Act 29 0f 1996 (as amended), came into operation on the 1st of
May 2009. Currently, under review to strengthen enforcement provisions; to simplify the
administrative system for the issuing of fines; to reinforce offences and penalties
•
Minerals Beneficiation Policy -adopted by Cabinet in the 2012 is part of a broader
strategy by Government to create a diversified and sustainable economy which is not overly
reliant on the exploitation of RSA abundant but finite mineral resources but is manufacturing
led and labour intensive to overcome the triple developmental challenges of unemployment,
poverty and income inequality
•
Geoscience Amendment Act 16 of 2010 - to mandate the Council for Geoscience to be
the custodian of geotechnical information, to be the national advisory authority in respect of
geohazards related to infrastructure and development, and to undertake reconnaissance
operations, prospecting, research and other related activities in the mining sector.
South Africa needs to beneficiate more of its minerals
SELECTED
VALUE CHAINS
In 2010, South Africa as a
resource economy was
estimated
to
posses
approximately
US$2.5
trillion in non-energy in
situated mineral wealth,
making it one of the
wealthiest
mining
jurisdictions in the world.
Despite this, South Africa
continues to export most
of its minerals as ores or
semi-processed minerals
rather than high value
intermediate to finished
products. South Africa has
developed a beneficiation
strategy based on five
identified value chains to
create jobs and drive
enhanced
revenue
creation.
SELECTED COMMODITIES
(SOUTH AFRICA SHARE OF WORLD
PRODUCTION (2005))
ENERGY
STEEL/STAINLESS STEEL
PIGMENT AND
TITANIUM METAL
PRODUCTION
AUTOCATALYST AND
DIESEL
PARTICULATE
DIAMOND
PROCESSING AND
JEWELLERY
Mineral beneficiation has been identified as one of six key sectors in Government’s
New Growth Path (NGP) strategy for creating five million new jobs by 2020
23
Mineral Beneficiation - Exploration of the Partnership Potential between China and South Africa
Mining Sector Information
Mining industry performance
• The mining sector contributes 19% of GDP (9% Direct,
10% indirect and induced).
• The industry is a critical earner of foreign exchange,
approximately 50%.
• Mining accounts for 12% of total investment in the South
African economy.
• When indirect multipliers are considered, the total
fixed investment in the SA economy flowing from mining
activity reaches a significant 25% of total investment.
Mining Sector Information
Mining industry performance
• Foreign Direct Investment in the mining industry
grew considerably from R112 billion to R389
billion, from 2004 to 2010.
• Gross fixed capital formation (GFCF) increased
from R40 billion in 2007 to R75 billion in 2012 .
• Employment in the mining industry grew from
approximately 495 150 in 2007 to 524 632 in 2012.
• Number of women employed increased from 24
659 in 2007 to 48 420 in 2012.
• The number of operating mines has increased
from 1414 in 2007 to 1637 in 2012.
Mining Sector Information
Mining’s contribution to provincial economy:
•
•
•
•
•
•
•
•
•
Western Cape 0.4%
Eastern Cape 0.2%
Northern Cape 5.9%
Free State 7.6%
KwaZulu-Natal 3.3%
North West 26.1%
Gauteng 11.5%
Mpumalanga 21.5%
Limpopo 23.5%
Mining Investment Opportunities
Mining Investment opportunities
•South Africa has the world’s highest in situ mineral
resources
• A predictable mining regulatory framework, congruent
with global best practice, and is in sync with the dynamic
socio-economic and political landscape of our country
•The beneficiation framework presents mechanism to
leverage the country’s mineral endowment into a
competitive
advantage
for
downstream
mineral
beneficiation.
•The opportunities for companies in the manufacturing
space seeking to increase their productive capacity.
•Guarantee security of raw material supply
•Leveraging on the international market-leverage on biand multilateral agreements and partnership
SPECIAL ECONOMIC ZONES (SEZS)
• Government has identified Special Economic Zones as a
mechanism that will contribute towards the realisation of its
economic growth and development goals;
• And is committed to support and facilitate the designation,
regulation and development of Special Economic Zones in
South Africa;
• Special Economic Zones will be designated in areas to promote
targeted economic activities, supported through special
arrangements;
• 2 of the SEZs, in North West and Limpopo will be dedicated to
beneficiation of minerals.
Identification of Beneficiation Opportunities
Development of Action Plans – Detailed industry analysis
Applications
PGMs
How it works
Substitutes
Auto
catalysts
Mainly Pt,
and Pd
but also
Rh
Converts over 90% of hydrocarbons, carbon
monoxide, and oxides of nitrogen from gasoline
engines into less harmful carbon dioxide, nitrogen
and water vapours- over a PGM catalyst.
There are currently no substitutes for PGMs in the
manufacture of auto catalysts or hydrogen fuel
cells. Various combinations of PGMs have been
shown to be more efficient, but there are no
examples of non-PGM metals showing the same
level of performance.
Fuel cells
Mainly Pt
Fuel cells generate electric power, similarly to
batteries but , unlike batteries, can operate
permanently when supplied with fuel (hydrogen and
oxygen from air). The cells produce electricity by
combining hydrogen with air over a catalyst such as
Pt.
As for catalytic converters above, but research ongoing on base metal catalysts instead of platinum
and biofuel cells main use of the catalytic activity of
living cells and/or their enzymes.
Industrial
Pt
Manufacturing of specialty silicones - highly
durable materials with excellent resistance to
chemical corrosion, fire and extremes of
temperature; pliable, waterproof and electrically
insulating.; applied in variety of industries
Hard disks manufacturing - the disks are coated
with a cobalt based alloy which has magnetic
properties, adding platinum enhances the magnetic
qualities of the cobalt alloy, enabling data to be
stored at higher densities and improving access
times
Electronic components - Pd is widely used in
electronics applications on account of its electrical
conductivity and its durability
Crucibles - due to its high melting point and
resistance to chemical attack, iridium is the preferred
material for crucibles used in the production of high
purity single crystals of various metal oxides
Pt
Filter
Pd
Ir
PGMs example
South Africa’s investment environment
South Africa today is one of the most sophisticated and promising emerging
markets globally, mainly because of …
Abundant
natural
resources
Excellent
transport &
logistical
infrastructure
Political & economic
stability with sound
macro-economic
management
Competitive
sectors/industries
World class
financial
system
Skills
availability
Favourable cost of doing business
CONCLUSION
• Despite the current cyclical downturn in the
mining industry, South Africa by virtue of the
being a leading country with reserves in number
of key commodities remains an extremely
attractive mining investment destination.
• The mining industry is a well established and
resourceful sector of South Africa’s economy
and has a high degree of technical expertise.
• South Africa is ready to work with Peru in this
regard.
the dti’s Investment Services
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Sector Information
Finance to explore investment opportunities in SA
Facilitating direct Government support in the form of:
- information on investing in SA and the Business Environment
- detailed investment Incentives
- investment facilitation
- after care – ongoing contact
Contact Details
• Mrs Manone Madyo, Deputy Director: Investment Promotion
Email: MMadyo@thedti.gov.za
• Mr Paul Pieterse, Deputy Director: Export Promotion
Email: PPieterse@thedti.gov.za
THANK YOU
GRACIAS