Push for beneficiation will affect future of bulk exports

Open for discussion at the ANC national congress NGC 2015 is a range of issues which have the potential of affecting the future of bulk exports through South African ports. Included in the discussion document ahead of the Congress, which is held every 10 years, is the statement “it is crucial for South Africa to improve the competitiveness of the domestic environment – including moderating administered price increases, reducing the anomalous port and freight subsidies for commodity exporters, and better managing the level and volatility of the rand in order to grow the pool of industrialists exporting to their traditional markets.” It is argued in some quarters that Transnet is cross-subsidising bulk exports through its container tariffs. If bulk exporters were to pay the true cost of exports then the utility would be able to reduce its container rates, so making manufacturing more competitive. This statement will resonate with exporters of manufactured goods, such as motor vehicles, who have been complaining for some time about what the sector claims are among the highest port fees for container handling in the world. If it results in action there will be far-reaching implications for organisations such as Transnet Freight Rail, which will have to change its focus from the transportation of bulk materials to that of semi-processed and manufactured goods. Freight forwarding agents, as well as operators of bulk terminals within the ports, will also be affected. The more nimble will adapt and make the most of the new opportunities. Raising the cost of the colonial practice of exporting unbeneficiated raw materials supports the ruling party’s stated aim to revitalise the economy. The discussion document states: “An incisive and frank analysis of causes of the constant de-industrialisation and lack lustre progress on beneficiation and localisation drive is essential. “These are some of the strategic opportunities to turn around the economic strain and create the muchneeded jobs as well as opportunities to realise Broad-Based Black Economic Empowerment. “Manufacturing should leverage our comparative advantage in primary mineral extraction by focusing on up- and downstream beneficiation and diversification into faster growing markets, particularly Sub-Saharan Africa (SSA). “This will improve our trade balance more sustainably than by simply increasing exports of a depleting pool of unprocessed minerals,” states the discussion document. If the government responds it will be following the example of SADC neighbours Zambia, Botswana and Zimbabwe. Zambia has prohibited the export of unprocessed copper concentrate, which has resulted in the creation of a local smelting industry which now processes copper for the neighbouring Democratic Republic of Congo. Zimbabwe has been attempting to force platinum producers to process ore locally, but companies have been slow to invest for a number of reasons. Commodity exporters, and those involved in the logistics chain, will be watching with interest to see if there is more will to implement resolutions from the 54th ANC National Congress than those of the 53rd.