JOHANNESBURG (miningweekly.com) – The key to the development of South Africa lay in mineral beneficiation and industrialisation in joint development with its regional neighbours, South Africa’s new Finance Minister Nhlanhla Nene told the Centre for Education In Economics and Finance (CEEF).
Speaking at a CEEF dinner in Johannesburg on Thursday evening, Nene said value addition, industrialisation and regional integration were linked to rapid, sustained economic growth in modern economic development, which was a critical reason why the South African government was placing greater emphasis on them.
Resource-endowed countries that had failed to move up the value chain had registered short bursts of growth, but never the kind of relentless growth that had persisted over decades and resulted in intergenerational wealth creation and the reduction of poverty, inequality and unemployment.
He suggested that South Africa’s vast $2.5-trillion nonenergy mineral endowment could be more adequately leveraged within South Africa’s Cabinet-approved beneficiation strategy, which targeted adding value to the country’s gold, platinum, diamonds, iron-ore, chromium, manganese, vanadium, nickel and titanium, energy coal and uranium endowments.
Five pilot value chains had been identified as energy, steel and stainless steel, pigment production, auto catalyst and diesel-particulate filters, diamond processing and jewellery, and Section 26 of the Mineral and Petroleum Resources Development Act Amendment Bill would require a proportion of mineral output being reserved for use in local value-adding activities and sold locally at a developmental price.
In addition, special economic zones, research and development incentives, tax inducements and international trade agreements were in place to encourage downstream value addition and investment.
Government had also committed to providing transport, electricity and water infrastructure to enable greater beneficiation growth.
When formulating policy, government would continue to be cognisant of mining’s valuable existing contribution to the South African economy, which included an 18% indirect contribution to gross domestic product (GDP), the employment of 514 000 workers, the supply of 50% of exports, its inducement of large stock exchange capitalisation and its attraction of foreign inflows that helped to finance the current account.
Government thus needed to have a balanced approach to downstream development, with due consideration being given to electricity availability, levels of investor confidence, national limitations and the need for South Africa to remain a premium mining investment destination.
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