“The one area of manufacturing which has a high technology content, high-end manufacturing and high-end services, where we are internationally competitive, is in mining equipment and specialist services. Not in every area but in a number of areas, we are at the international front,” said David Kaplan, business government relations professor at the University of Cape Town.
“We have technological competencies, very good firms. We’ve got expansion abroad. This is the area where we’re doing extremely well, where we are already competitive. The question is can we do better and what does the future hold? That’s what we need to address.”
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Kaplan, speaking at the Manufacturing Indaba in Johannesburg, South Africa, also indicated his view on beneficiation, a somewhat contentious issue in the minerals sector.
According to South Africa’s Department of Mineral Resources, beneficiation, or value-added processing, is the transformation of a primary material to a more finished product.
It involves everything from large scale, capital-intensive activities to labour-intensive processes and Kaplan believes that it is not something South Africa should be prioritising at the moment.
“We have the chrome, we have the platinum – should we be beneficiating? The capabilities required to mine chrome, as an example, may be very different from the capabilities required to make knives, forks and spoons,” he said.
“This is not an argument against beneficiation, it’s an argument against prioritising it. Just because you have the raw material, don’t make the assumption that you should do the next phase – you might or might not and you only will when there’s a considerable cost advantage. In most minerals, there’s not.”
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Deven Govender, mining leader for corporate finance at Deloitte Southern Africa, and a panel member on the mining and manufacturing interface said, “Currently, almost 80 per cent of what one procures from the mining industry comes from outsources. The output from mining generally goes out in ore – the raw material, processed in a foreign country which we then import.”
“If I just look at chrome as an example, we probably get in revenue terms about 16,000 rand per ton of chrome but per ton of ferrochrome, which is the next phase of the process, you could get in excess of 9,000 rand. That’s a very simplistic example to highlight and demonstrate why it’s so important to keep manufacturing global,” he added.