Economic growth depends on beneficiation

Beneficiation of raw materials holds value for all stakeholders in the mining sector. According to Samaila Zubairu, president and CEO of Africa Finance Corporation (AFC), when work started on the Lobito Corridor, financing plans had to account for how manufactured materials would be delivered. “The big question was how to get the steel to these sites to build these railways. What do we need to import and how does our logistics system hold up to get it all to the right places on time?” He said by the time the Lobito contracts had been signed, the biggest challenge was construction risk and the long lead times for importing steel and other required products over long distances in difficult terrain. “The cost overrun chance is very high and central to the ecosystem for your supply chain.” He said moving the bulk of the supply chain to Africa would change the picture completely. “What happens if we don’t export the iron ore in its raw format but rather add value locally and manufacture the steel right here? Now we don’t need to import the steel but just move it to the construction sites – the distances are shorter, the lead times are shorter, meaning the cost and the risk become less.” He said most of the materials were already on the continent. “We also already have a lot of the energy needed to do this in Africa. We simply need to connect the dots. Execution, however, will not happen magically. We have to take deliberate steps to get things done. But there is no reason why these projects cannot be done with African- manufactured goods.” According to Bongani Motsa, chief economist of the Minerals Council South Africa, beneficiation is necessary for economic growth. Taking the most recent figures into consideration, he said the country only beneficiated around 3% of platinum, or the equivalent of 4 tons, while iron ore was 11% (7 million tons of total production). Coal is almost 70% or the equivalent of 163 million tons of total production due to the high domestic use of coal for power generation, chemicals and synthetic fuels. “It is important that South Africa looks at beneficiation as a viable way forward, adding value to its minerals in the country and only exporting the excess of raw materials,” he told Freight News. “That is the only way we will solve our domestic problems. For example, we’ve been struggling with the issue of energy security, both in terms of the electrons as well as the cost. So at present there is no benefit to our iron ore, chrome or manganese to manufacture the alloys we need to actually construct what we lack in the transmission infrastructure. There is also inadequate infrastructure when it comes to roads, bridges and dams. We don’t have the steel and products locally made to build that infrastructure. We have to import it all and that drives up cost.” He said there were challenges to introducing beneficiation, with the high cost of electricity at the forefront. While load-shedding has been reduced and the lack of electricity has to some extent been addressed, energy supply remains a constraint. “We also don’t have sufficient capital,” he said. According to Motsa, South Africa also needs to address the issue of costing. “If we look at the critical minerals strategy – or even across our policies – they are not costed. We only have pockets of areas where some cost element has been attached. It is a weakness because if you don’t know the cost, you don’t know how much is needed, and you will simply not have the appetite to execute.” LV