Elements of the

SADC Regional Action Plan

IMPROVING INDUSTRIAL PERFORMANCE AND

PROMOTING EMPLOYMENT

IN THE

MINERALS PROCESSING INDUSTRY

Seth Akweshie

Overview• Southern African region produces significant

quantities of major metals and minerals• Contributes to world production

- about 53% of vanadium

- 49% of platinum

- 40% of chromite

- 36% of gold

- 50.1% of diamonds

- 20% of cobalt

• Other minerals:- Steel (carbon and stainless)- Aluminium- Brass- Copper- Lead- Tin- Zinc- Salt- Sandstones- Precious stonesetcAlso, scrap metals

Value chainValue-added processing, or beneficiation, involvesthe transformation of the raw material using localfactors (labour and capital) into a more finishedproduct that has a higher value than the sale of theraw material.Stage 1 – Mining and producing ore or concentrateStage 2 – Converting concentrate into intermediate

product (ie metal or alloy)Stage 3 – Transforming intermediate good into

refined, semi-fabricated productStage 4 – Further transformation into finished product

Employment opportunities

• Stage 1 - High

• Stage 2 - Low

• Stage 3 - Very high

• Stage 4 - Very high

Benefits of value addition

• Increased revenues; higher GDP

• Additional employment creation

• Reduced exposure to fluctuations in world primary commodity prices

• Improved sustainability• Possibilities for further downstream

manufacturing industries (eg machinery; motor vehicles; construction, etc)

Result: • Underdeveloped downstream mineral products

industries• Poor employment from minerals processing• Low competitiveness • Vulnerable to cyclical trends & price fluctuations• Relatively low contribution to revenues & GDP• Increasing imports of finished products• Ever worsening Balance of Trade situation

SWOT Analysis

Strengths• Rich endowment with various minerals deposits• Conditions for its production• Strong capabilities in upstream industries• Support at all Governmental levels• Primary production being done• Limited production at downstream levels• Existing processing plants/capacity

Weaknesses• Unintegrated industrial development structures (ie

weak linkages)• Limited value addition in downstream industries• Poor quality of products• General lack of QC & QA => no common quality

standards• Slow speed of delivery due to poor/indequate,

unitegrated transport infrastructure (ports, rail, road)

• Low investment in minerals processing• Shortage of skills – artisan, technical, engineering,

managerial levels => low production capabilities in downstream industries

Weaknesses continued

• Lack of technology support structures• Low R&D (infrastructure and spend)• Inadequate marketing and export market access• Lack of external trade strategy (strategic

protection, promotion, market intelligence, etc)

• Lack of credit facilities

Opportunities• Growing global demand for finished mineral

products• Growing global trade in scrap & recycling• Growing African market• Labour-intensive production processes• Under-developed downstream industries

(electronics, industrial machinery and equipment, transportation, construction, automotives, etc)

• Growth opportunities in Asian market (esp. China and India)

Threats• Import-parity pricing of basic metals by upstream

minerals processing companies who are very few, but have significant price-setting power

• Interventionist policies (e.g. subsidies) in scrap importing countries

• Increasing emphasis on environmental, health and safety standards => higher costs

• Differential pricing of inputs (e.g. electricity: pre-negotiated prices for upstream companies; municipal rates for downstream companies)

• High transportation costs• Aging workforce

Threats continued• Existence of TBTs, NTBs• HIV/AIDS

CHALLENGES (based on SWOT Analysis)

• Enhanced and broadened skills base• Increased importation of manufactured goods• Improved production capabilities and

benchmarking• Improved manufacturing and technological

capabilities• Improved competitiveness and industry upgrading

STRATEGIES• Skills development and training• Improving logistics to reduce cost of

manufacturing• Facilitating import replacement

- Enhancing production capabilities

- Encouraging advanced manufacturing and technologies

- Building a competitive foundry industry

- Provide information/data on imports to industry (Early Warning System)

ACTIONS1. Enhance and broaden the skills base

- Regional collaboration in HRD (esp: technicians & engineers

- Tackle the HRD pipeline bottlenecks (esp. maths & science)

- Harmonize HRD accreditation systems

- Assess regional HRD capacity to produce requisite skills for value-addition

- Address the HIV and AIDS pandemics to minimise impact on skills availability

2. Promote beneficiation of minerals & scrap metals

3. Increase investment in and coordination of R&D

ACTIONS continued4. Forster innovation (i.e. promote and reward

innovation)5. Develop vibrant and competitive downstream

manufacturing industries (mostly SMEs)* Develop strong foundry industry (1st Stage in beneficiation chain)* Develop of industrial clusters; promote networking & collaboration* Subsidize electricity cost to downstream producers * Provide coordinated technical support services* Improve technological capabilities of downstream industries (- fundamental to increasing competitiveness)

* Assist firms to upgrade equipment/Invest in new technologies

ACTIONS continued

6. Translate existing linkages into joint growth and development

7. Precious Metals and Minerals - Establish requisite refining capacity- Establish semis production capacity- Assess regional design and marketing collaboration

8. Market Access (Trade Barriers; NTBs)9. Marketing (Pricing; Margins; Promotions)10. Involve Sector Associations and Trade Unions

in decision-making

ACTIONS continued11. Centres of Excellence

- Regional Centres of Excellence * Mintek* CSIR

- National Centres of Excellence* Assess capacities and capabilities to play roles* Improve capacities and capabilities

12. Enhance collaboration between Regional and/or National Centres of Excellence & Industry players(e.g. Project AuTek bet. Mintek &

AngloGold)

ACTIONS continued

13. Establish Agency for Registering Patent Rights

14. Regulatory Environment & Cost of doing business

15. HIV / Aids

16. Promote positive media reporting about Africa

17. Infrastructure development: If the infrastructure is not in place, we can forget about becoming competitive

 

Superiorquality

CompetitiveAdvantage

 

 Low cost Differentiation

 

Superiorefficiency

Superiorcustomer

responsiveness

Superiorinnovation

   

An example

Financing• SADC Development Fund• SADC Governments

- 2%-4% of all donor funds- 10% of annual budget for R&D

• Public-Private Partnerships (PPPs)• Private Sector

- Industry Sector Associations- Sector Development Funds (?)- Development Finance Institutions (DBSA, etc- Investment Banks- Stock Markets- Other financial institutions (e.g. Pension Funds, Insurance companies, Venture Capitalists, etc)

• The Diaspora • Donors

(UNIDO, EU, UNCTAD, USAID, GTZ, CDE, Philantropists, etc)