Among the many notable passages in Alan Paton’s 1948 novel, Cry the Beloved Country, are the comments of Mr Harrison about South Africa’s economy. The country’s mines – an important motif in the book – are the foundation on which everything is built, he remarks. It generates the wealth that provides jobs and wealth, and underwrites farming and industry. ‘I tell you, there wouldn’t be any South Africa at all if it weren’t for the mines.’
Decades later, do these words still hold true? Since 1980, the contribution of mining to GDP has fallen from around 20% of GDP to around 8% today. Over the same period, employment in mining declined, in round numbers, from 709 000 to 457 000 – or by over a third.
Yet, with our vast mineral endowments, mining remains an asset that we cannot afford to discard. A declining contributor to the economy, it remains an important one – if no longer the foundation, then still a pillar.
For South Africa, a key strategic consideration is how to leverage our mineral assets and mining industry for broader economic development. Tied to this, we need somehow to harness the linkages between mining and the broader economy to create the all-important employment opportunities.
Popular debate around the role of mining as an engine to fire up industrial development has tended to focus on beneficiation – processing our minerals once they are pulled from the earth. This has found its way into official thinking, featuring prominently in the country’s Industrial Policy Action Plans, and also in the Phakisa (‘big, fast results’) initiative.
There is an intuitive attraction to beneficiation – greater all-round value from our resources. And there is also a barely concealed element of national pride: If these resources are ours, what logic is there in letting other countries add the value? Are we to be content with the scraps and crumbs of the local economy?
As former Mineral Resources Minister, Susan Shabangu, once put it: ‘Beneficiation is the vehicle through which South Africa’s resource-based comparative advantage can be transformed into a national competitive advantage.’
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