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Patel warns of complacency in beneficiation

Sep 17 2017 14:10
Lameez Omarjee

Johannesburg – More can be done to ensure the successful implementation of beneficiation strategies, but progress is being made, said Economic Development Minister Ebrahim Patel.

Patel spoke to Fin24 on the side-lines of the Banking Summit 2017 held at the JSE on Friday, where he explained why beneficiation comes across as an “anamorphous” issue.

“We are doing a few things as government on beneficiation, it’s not enough but we are doing a few things.” Patel explained that when it comes to beneficiation, people cannot distinguish between what has happening, what government’s ambition is and the gap between the reality and ambition.

“There are a number of measures. Some of them are successful and we need to obviously do a lot more,” he said.

Patel said that it is important to share reports on progress of efforts being made in the beneficiation space, but government should not be complacent because there is always more to do.

There are currently three value chains or area where beneficiation is being rolled out. This includes coal, iron ore and platinum.

Particularly with platinum, which is currently used in catalytic converters, government is looking into more industrial uses of the metal such as fuel cell technologies. Government is also subsidising pilot plants that use platinum in energy generation. “These are still relatively small pilot plants. We need to break into the point where they can be commercially viable,” he said.

Pricing

“The big stimulus to beneficiation is price,” said Patel. Government and players in the mining industry have engaged on getting concessionary pricing in place for local producers, this would allow more of the local product to be beneficiated, he explained.

Mining houses often point out their responsibility to support the growth of local processing capability, or the fact that commodity prices are not as firm as they were during the height of the commodities boom. “Even if they are sympathetic to this, there isn’t as much space for them to put these kinds of prices in place. That part of the conversation has not been concluded,” said Patel.

Patel also unpacked beneficiation related to scrap metal. “Over the last 10 years we have been exporting more scrap metal. Scrap metal is also a very big feedstock for foundries and steel mini-mills and even some of the big steel mills themselves.”

He referred to the case where scrap metal dealers challenged the department’s trade directive related to scrap metal exports. This provided that before scrap metal could be exported, it should be compulsory to offer the metal to local producers first. Secondly a price preference was introduced to disincentivise exports, he explained.

Some steel mills in the industry had benefitted while some merchants challenged the matter up to the Supreme Court of Appeal. In August, the Constitutional Court rejected an application for leave to appeal.

Patel added that government had engaged with the auto sector for it to localise more of its components to provide opportunities for additional localisation.

Six years ago, most minibus taxis were imported, Patel highlighted in his address at the Summit. After engaging with local auto manufacturers like Toyota, as a result between 2014 and today 35 000 taxis have been assembled in South Africa.

Further, by partnering with investors on the Bus Rapid Transport system, 600 buses have been assembled locally and 80% of these buses are made locally, where previously buses were imported from Brazil, said Patel.  

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ebrahim patel  |  mining  |  beneficiation  |  sa economy
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