Paul Jourdan, MSC Conference , Nasrec, May 2019

The AMV: Realisation of the Mineral Linkages

REGIONAL ECONOMY

socio-enviro-political context

Consumption (induced) Linkages

Knowledge Linkages

HRD• Engineers &

scientists• Technicians• Operators, etc

RDI• Universities• R&D entities• Firm RDI, et al

Geo-knowledge

Systematic geo-survey & target development

RMCs

Fiscal Linkages• Levies, ground rents, • Duties/tariffs/excise• Royalties, dividends (equity)• CIT, RRT, WHT, PAYE, et al • SWFs, Stabilisation Funds, etc.

Jobs/wages (also in backward, forward, knowledge and infrastructure linkages)

EXPORTS to world economy (into GMVCs)

Intermediates

ManufactureRefiningSmelting

Mineral

ProcessingMINING

Mine

Developm’tExploration

Backward/upstream Linkages: Inputs into local/regional/global minerals sector

Capital Goods• Machinery• Equipment• Plant• Vehicles, • et al

Consumables• Explosives/caps• Grinding media• Wear parts, spares• Chemicals/reagents• Fuels & lubes, et al

Services• Drilling/exploration• Finance, ICT• Labour/skilling• Engineering/Analytical• Logistics, catering, et al

Other Inputs• Construction,• Utilities,• et al

Infrastructure Linkages (spatial) into regional economy

• Transport: roads/rail, ports, et al

• Power & transmission• Water & reticulation• ICT, other

Forward/ Downstream Linkages: Key

feedstocks into regional/local

economyManufacturing

(Fe/steels, polymers, Cu/Al, et al)

Agriculture(NPK, conditioners)

Construction(Fe/steels, cement, Cu/Al, aggregate)

Power(fossil fuels: coal,

oil & gas)

Other Sectors

Lateral Linkages: products into other sectors of the local/regional/global economy

© P.JOURDAN

The AMV: Realisation of the Mineral Linkages

REGIONAL ECONOMY

socio-enviro-political context

Consumption (induced) Linkages

Knowledge Linkages

HRD• Engineers &

scientists• Technicians• Operators, etc

RDI• Universities• R&D entities• Firm RDI, et al

Geo-knowledge

Systematic geo-survey & target development

RMCs

Fiscal Linkages• Levies, ground rents, • Duties/tariffs/excise• Royalties, dividends (equity)• CIT, RRT, WHT, PAYE, et al • SWFs, Stabilisation Funds, etc.

Jobs/wages (also in backward, forward, knowledge and infrastructure linkages)

EXPORTS to world economy (into GMVCs)

Intermediates

ManufactureRefiningSmelting

Mineral

ProcessingMINING

Mine

Developm’tExploration

Infrastructure Linkages (spatial) into regional economy

• Transport: roads/rail, ports, et al

• Power & transmission• Water & reticulation• ICT, other

Forward/ Downstream Linkages: Key

feedstocks into regional/local

economyManufacturing

(Fe/steels, polymers, Cu/Al, et al)

Agriculture(NPK, conditioners)

Construction(Fe/steels, cement, Cu/Al, aggregate)

Power(fossil fuels: coal,

oil & gas)

Other Sectors

Lateral Linkages: products into other sectors of the local/regional/global economy

© P.JOURDAN

The backward (procurement) linkages are crucial and are dependent on skilling & RDI

Backward/upstream Linkages: Inputs into local/regional/global minerals sector

Capital Goods• Machinery• Equipment• Plant• Vehicles, • et al

Consumables• Explosives/caps• Grinding media• Wear parts, spares• Chemicals/reagents• Fuels & lubes, et al

Services• Drilling/exploration• Finance, ICT• Labour/skilling• Engineering/Analytical• Logistics, catering, et al

Other Inputs• Construction,• Utilities,• et al

Generic mining supply-chain

Services to OEMs and Tiers 1-4:Drilling/exploration, Finance, ICT, Labour/skilling, Engineering (EPCMs), Analytical, Logistics, catering, et al

OEMs

http://www.informit.com/articles/article.aspx?p=2359420&seqNum=2

assembly

Local, exports

E.g. The supply chain network for yellow

metal equipment cab seats

https://www.slideshare.net/kenjisuzuki397/car-electronization-trend-in-automotive-industry-44007679?next_slideshow=1

MINES

▪ Mines > outsourcing (contract

mining)

Set specs for their OEM inputs

Mining Procurement Chain - Southern Africa (AMDC/BGR)

Source: BGR Federal Institute for Geosciences and Natural Resources (2016).

SADC Mineral Reserves as

% of global Reserves 2013

Average Mineral Exports

2007-2016 (MUS$)

Average Mineral Export Dependence

2007-2016

SADC 126579 66%

Angola 53125 97%

Botswana 5023 90%

DRC 5171 91%

Lesotho 291 34%

Madagascar 436 20%

Malawi 114 9%

Mauritius 174 7%

Mozambique 2358 55%

Namibia 2038 57%

Seychelles 17 3%

South Africa 49860 43%

Swaziland 135 7%

Tanzania 2139 49%

Zambia 4751 77%

Zimbabwe 947 41%

SADC average mineral exports and dependence (MUS$ & %)

Comoros excluded (new member 2017) *aluminium exports are based on imported alumina. Note: includes oil &gas; Mineral HS Codes: 25, 26, 2701-4, 2709/11/14, 28, 7701-6, 7108/10/12, 7201-6,

7218/24, 7401-7, 7501-5, 7601-3, 7801/2, 7901-3, 8001/2, 8101-12. Source Comtrade 2017

SADC mines/projectsCircles = ore resources;

>300, worth >$100 bnSource RMD 2015

The Mining Phakisa Journey to 2030 (IR 4.0)

2030 strategic vision

Short term Long Term

Intelligent mining

Continuous Mining

Autonomous Mining

Mechanised Mining (D&B)

Modernised Mining

X

Establish MEMSA & SAMPEC

Local to site program

Innovation Program

Export drive

Fun

din

g

TimeLaunch procurement leverage program

Localisation of Mining & Processing Equipment

Current MiningIteratively improve safety and productivity

Mining RDI Journey

MEMSA & SAMPEC Journey

LEGEND

Industrialisation and Sustainability• Localisation of Mining & Processing Equipment creates job opportunities in

manufacturing and services.

• Improved capabilities in mining equipment and services opens up opportunities for localisation in energy, rail, chemicals etc. etc. which means job creation.

• Exports of internationally competitive innovations means job creation.

Coal Mining Mechanisation: Socio-economic modelling results - Employment Impacts (capital intensive scenario with no imports)[1]

Note: The percentages quoted represent a change from the base scenario, which is continuation with the current status quo.

[1] Table 3.4.10 of “National and sector specific social and economic implications of selecting capital or labour intensive methods of coal production”, Task 7.14.1, 2002, by S G E Ashworth, N M H C MacNulty and A Adelzadeh (CSIR: Mining Technology and National Institute for Economic Policy)

MEMSA, SAMPEC & Tiers 1-3 Clusters

The aims are to:

•Enhance job creation/retention;

•Increase local content in current procurement (& jobs, state revenues, etc);

•Import displacement (+ve BoP impact);

•R&D investment for new systems;

•Incentivise to strengthen SA manufacturing capability;

•Develop Tier 1, 2 & 3 suppliers and BEE companies;

•Develop local OEMs for export of mining & processing goods and systems

Mechanisation of narrow reef hard rock mines allows for SA Mining & Processing Equipment Manufacturers to establish global leadership in narrow-reef, hard rock

mining & processing systems, in addition to other types of mining

Mining Manufacturing Development ProgrammeLocal development & manufacture of machinery and systems for Next

Generation Mining

Foreign spend

Local spend

SA OEMs &

suppliersMining &

Processing

Equipment Clusters (MEMSA-

SAMPEC, Tiers

1-3 Clusters)

The dti, & DST

Foreign OEMs

User Requirements Mine’s in-house R&D

NEXT GENERATION

MINING R&D

SADC JOBS

Foreign OEMs local manufacture

?Mining Charter?

Mandela Mining Precinct

Cluster Development

Technology Development

SAMERDIOther RDI:VA, et al

AOK

LoCM

MDB

NERB

RTIMS

SATCAP

MEMSA

Other Clusters

SAMPEC

MS-CSC?

PGM

Ferrous

MHSC

MQA

CGS

Mintek

CSIR

Supply-chain

manufacturing

firms

Supply-chain services firms

Wits

UP

UNW

US

UCT

UJ

Other HEI

Mining Companies

MC3

Industrial Incentiveschemes

Pvt R&D

Ex-mining job creation:

agro-projects

MCSADMRThe dti DSTS-C Clusters DPME

1. The AMV (Africa Mining Vision): 2009 and CMV (2014)2. SADC Protocol on Mining: 2000.3. SADC Mining Strategic Plan (MSP): 2001, 4. SADC Harmonisation of Mining Policies, Standards, Legislative

and Regulatory Framework in Southern Africa: 5. SADC Regional Indicative Strategic Development Plan (RISDP):

2003 Summit 6. SADC Industrial Development Policy Framework (IDPF): 2012 7. SADC Industrialisation Strategy and Roadmap: 20148. SADC Industrialisation Action Plan 2016:

9. The DRAFT

Regional InitiativesSADC Policy Documents Informing Regional Mining Procurement Strategies

1. The AMV (Africa Mining Vision): 2009 and CMV (2014)2. SADC Protocol on Mining: 2000.3. SADC Mining Strategic Plan (MSP): 2001, 4. SADC Harmonisation of Mining Policies, Standards, Legislative

and Regulatory Framework in Southern Africa: 5. SADC Regional Indicative Strategic Development Plan (RISDP):

2003 Summit 6. SADC Industrial Development Policy Framework (IDPF): 2012 7. SADC Industrialisation Strategy and Roadmap: 20148. SADC Industrialisation Action Plan 2016:

9. The DRAFT

Regional InitiativesSADC Policy Documents Informing Regional Mining Procurement Strategies

However, the SADC FTA

is probably the most

important regional MSC

development

instrument

• The SADC operating mines and projects provide a major opportunity (market) for the SADC mining and mineral processing inputs sector (upstream MVC).

• Using tonnage of ore produced (ex-coal) as a proxy for inputs demand, the SADC offers a larger mining inputs market (ex-coal) than the EU and China combined! Yet mining capital goods are dominated by imports, particularly from the EU.

• The backward mineral linkages are the most important to realise (particularly capital goods) as they have numerous multipliers, lateral migration (into other sectors) and can outlive the resources.

• However, they are critically dependent on RDI capacity and high level STEM skills.

SADC: Mining Projects

By Country (305 projects. Investment >$100bn, ~R1.2trillion)

(Source: RMD/SNL dbase 2014)

Conceptual Regional Mining Vision (RMV) RBI Strategy

RBI: Resources-based Industrialisation; RMC: Regional Member Country

Regional-Local Content SystemMining/processing Inputs (capital goods, consumables,

services). Recognition ∞ 1/GDP per capita

Key Regional Mineral-based Feedstocks Strategy (intermediates & semis)

• Iron/steel & semis (& coke)• Base metals (Cu, Al & semis)• Fertiliser Minerals (NPK) & formulations• Polymers• Cement, et al

Infant Industry Protection RMCs below SADC average GDP/capita (≤10% ≤7y)

Regional Mining & processing back-

& forward linkages

development strategy

Regional Minerals Sector Inputs & Key Feedstocks Investment Fund (VCF)

RMC benefit ∞ 1/GDP per capita

Regional Logistics Equalisation SchemeRMC benefit = cost/t-km above regional average

Regional STEM Skilling StrategyRegional Centres of Excellence with intra-regional twinning &

capacitation

Thank you, paulj1952@gmail.com