Industry News by Nemesis

South Africa Mining’s Rebirth Under way – Ritchken

June 11, 2016

New joint action is being brought to bear to arrest the devastating decline of the South African mining industry, which will involve the Mining Phakisa policy intervention seeking to boost the sector by positioning it as the centrepiece within a new, cohesive mining cluster that requires across-the-board competitiveness.

 

“We’ve now got to take the bull by the horns,” Mining Phakisa strategist Edwin Ritchken urged at the Southern African Institute of Mining and Metallurgy minerals industry colloquium on Thursday, where he outlined how 120 people from a multitude of government departments, mining companies, labour unions and nongovernmental organisations had spent five weeks working together to position mining as a collaborative engine for economic growth. 

 

At the same time, Ritchken, of the Department of Planning, Monitoring and Evaluation, cautioned that mining’s rebirth would have to take place in a modern, twenty-first-century manner that decried the evil of cheap migrant labour, would not be able to benefit from low-cost energy as was the case in the distant past and would no longer have the advantage of easily accessible resources.

 

As part of Operation Phakisa, or Hurry Up, he reported that a core engine had been created to link mining to across-the-board industrial development, including agricultural development in rural areas. (Also watch attached Creamer Media video).

 

At the colloquium attended by Mining Weekly Online, he outlined how Mining Phakisa had resolved to galvanise growth, transformation, investment and employment creation along the full length of the mining value chain.

 

The collaborative changes had been arrived at through a bottom-up process that had put projects in place and backed them with institutional mechanisms to entrench the collaboration.  

 

On beneficiation, he said the strategy would centre on adding value in instances where mining saw value in differentiating or avoiding head-on competition in difficult global markets.

 

Needed were sustainable jobs and all-embracing high-technology that even took in agriculture around rural mine communities.

 

Ritchken sketched the decline of the role of the mining industry since 1994. He noted that the private-sector Chamber of Mines Research Organisation had been been badly under funded after being transferred to the public-sector Council for Scientific and Industrial Research (CSIR).

 

At the same time, South African mining companies had downsized, listed outside of the country and sold their research and development facilities.

 

The former State-owned steel company Iscor and the former State-owned fuel-from-coal company Sasol were taken over by foreign investors in a privatisation process that in many respects pushed the country back to the 1950s as a result of continuing with monopoly pricing after privatisation.

 

The offshore listed mining companies turned away from domestic expansion towards often misguided global expansion and, at the same time, over-leveraged their boom-boosted balance sheets, “something that Oppenheimer, for example, would never have allowed”.

 

Mining houses unbundled their assets both within the mining chain and outside of the mining chain and opted to become mining companies alone. Similarly, within the cluster, processing facilities and manufacturing assets had been sold off.

 

Regulatory compliance began to take up a surfeit of mine management time and highly leveraged empowerment deals, often with limited broad-based benefit, shrunk balance sheets.

 

South African mining shrunk at a rate of 1% a year in the boom years from 2000 to 2008, while the rest of the mining world grew at 5% a year. Then the end of the commodities boom laid bare just how weak mining had become. With some global competitors now producing some commodities extremely cheaply from highly capitalised infrastructures, South Africa had to put on its thinking cap to cope with a new ultra-low-cost commodity era.

 

Industrial relations remained fraught and relations with near-mine communities were often conflictual.

 

Technology capacity both in design and manufacture had been degraded and the State’s capacity to revitalise the mining cluster remained questionable.

 

But the big plus point was that a foundation remained intact, which was sufficiently strong to form the basis of the new mining cluster. The bottom line was that the mining industry had the breadth to play an absolutely critical role in driving industrialisation and rural development in twenty-first century South Africa, even though there was little chance of it becoming the industrial cornerstone that it was in the twentieth century.

 

The key cluster challenge was to increase the level of industrialisation in mining and nullify the resource curse of minerals creating distortions to the detriment of the rest of the economy.

 

The notion that industrialisation was about manufacture alone needed to be dispelled. The reality was that building the technological capabilities for mining in an endogenous manner would simultaneously build national industrial capability.

 

The key step of Mining Phakisa would be to optimise the linkages between the core mining requirements and the broader cluster to make every business more competitive and to drive economic growth.

 

Needing to be driven were the development of digitally controlled electromechanical mining equipment and new mining systems to boost the value of the national resource base to a point where maximum value could be extracted and mines that were currently not possible to mine became mineable.

 

Also identified for stimulation were intermediate and advanced manufacturing capabilities through the involvement of South Africa-based manufacturers. (Also watch attached Creamer Media video).

 

CREATION OF MEMSA

 

Earlier this year, Mining Weekly Online reported the establishment of a new government-backed local manufacturing body that would have access to a State-owned developmental cluster location, where joint development initiatives would take place.

 

The new organisation – Mining Equipment Manufacturing of South Africa, or Memsa – would run parallel to the recommendations of the Mining Phakisa as a Section 21 company against the background of Mining Phakisa placing emphasis on extending South Africa’s mining horizons through the introduction of advanced mining equipment.

 

The CSIR site in Johannesburg will be made available to Memsa members, who currently number 20, for joint development initiatives.

 

The Department of Trade and Industry-funded initiative will create a platform for local original-equipment manufacturers (OEMs) to work together on the development of specific equipment that will give mines the horizons that current methodology is unable to do.

 

Memsa members cover the wide range of equipment used in underground mines, ranging from trackless and rail-bound equipment to pump-driven equipment and battery-driven equipment.

 

Memsa chairperson Anton Wheeler, who is also MD of mining equipment manufacturing company Aard, told Mining Weekly Online at the time that the current period of commodity price slump should be viewed as the ideal time for local mining OEMs to collaborate in the development of innovative local mining equipment for South Africa’s hard-rock narrow reef mines.

 

It was envisaged that Memsa members would work with global OEMs on the localisation of global products into remotely controlled equipment.

Source: Mining Weekly

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