South Africa Mining Industry

Transcription

1 South Africa Mining Industry

2 South Africa Mining Industry - Outlook Contribution to South African Economy Share of World mineral production of South Africa: Metal Rank Production Percentage In 2014, the South African mining industry contributed: 7.6% to GDP Around 15% to FDI 20% of private investment 1.4 million jobs 25% of exports Global Position South Africa s total reserves remain some of the world s most valuable, $2.5-trillion. Overall, the country is estimated to have the world s fifthlargest mining sector in terms of GDP value. 11 th position in the world in terms of total mineral production, which stood at million metric tonne in th position in terms of value in USD which stood at $ billion in Industry Outlook With South Africa s economy built on gold and diamond mining, the sector is an important foreign exchange earner, with gold accounting for more than one-third of exports. In 2014, the country s diamond industry was the fourth largest in the world. South Africa is also a major producer of coal, manganese and chrome. It has the world s largest reserves of manganese and platinum group metals (PGMs), according to the US Geological Survey, and among the largest reserves of gold, diamonds, chromites ore and vanadium. Chromium 1 st 6.17 million Titanium 1 st 1.19 million Manganese 1 st 0.89 million 46.74% 16.23% 4.61% Platinum 1 st 110,324 kg 69.28% Palladium 1 st 66,157 kg 34.33% Rhodium 1 st 14,525 kg 75.97% Vermiculite 1 st 0.14 million Zircon 2 nd 0.38 million Fluorspar 4 th 0.16 million Iron and alloys 5 th million Steam Coal 5 th million 32.65% 24.65% 2.38% 3.38% 4.18% Gold 6 th 151,662 kg 5.04% Diamond (Gem) 7 th 3.22 million carat 4.25%

3 South Africa Mining Industry - Outlook Exports Pearls, stones: billion USD (2015) Mineral fuels, oils: 8.17 billion USD Ores: 6.87 billion USD Aluminum: 1.2 billion USD Copper: billion USD Imports Mineral fuels, Oils: billion USD Trade Data China USA South Korea Germany Japan UK Hong Kong Diamond Mining: De Beers Rio Tinto BHP Billiton Gold Mining: AngloGold Ashanti Anglo American Harmony Gold Gold Fields Mining Companies in South Africa0.33 Platinum Mining: Rustenburg Platinum Mines Bafokeng Rasimone Platinum Mines BHP Billiton Impala Platinum Coal Mining: BHP Billiton's Energy Coal South Africa (BECSA) Anglo American Thermal Coal Xstrata Coal Exxaro Resources Sasol Mining Key Growth Drivers of the Industry Market Context: Factor market efficiency Industry structure Inherent potential : Natural resource endowment Human capital/ skills Geographical factors Product Demand: Accessibility of markets Domestic demand International demand Regulatory environment: Regulatory and legal requirements Institutional capacity Enabling factors : Infrastructure Ease of doing business Social licence Security of tenure Rule of law Macroeconomic stability

4 South Africa Mining Industry - Incentives Incentives for Mining R&D Tax Incentive Regime The South African R&D tax incentive regime aims to provide an additional super 50% income tax deduction on eligible R&D expenditure in the mining industry, which would equate to a saving of 14% tax on every rand of identified R&D expenditure. The areas that have been identified to benefit from the tax incentive include activities involved in the development of new or old mines; logistics modelling, handling and shipment efficiencies; the development of new mining methods; thedesign, testing and development of pollution control dams; rehabilitation and water treatment systems; ventilation and gas management systems; and noise and dust suppression techniques. Other fields are also to benefit from the incentive, including wireless technology used at mining sites at variable depths and computer programming for real-time monitoring and exception reporting; the development of global positioning system surveying technology; remotely operated equipment; automated systems and robotics; seismic mapping; development of three- and four- dimensional simulation and wireless sensors technologies; iterative development and testing of new or modified offshore platform systems, including supporting logistics; and the automation of monitoring systems with regard to emissions control and gas flaring. Capital expenditure allowances South African law offers generous capital expenditure allowances to mining companies: Considerable capital expenditure by mining companies can be fully deducted against tax including spending on: prospecting; mining equipment and shaft sinking; and development, general administration and management prior to commencement of production. Mining companies are allowed to deduct these capital expenditures in the year in which they occur; this is more favourable than in the manufacturing industry, which has a 40 % write-off in the first year and 20 % in the subsequent three years. Some other mining company expenditures are subject to less capital allowance, such as employee housing at 10 % in the first year and private cars at 20 %. The Income Tax Act also provides for a further capital allowance for gold mines, which is deducted against capital expenditure and which serves as an incentive for new mining development. The allowance is calculated asa percentage of capital expenditure, ranging from 10 to 12 % per year depending on the mine. Mining companies can offset against tax their obligatory spending on organizations engaged in mining-related environmental rehabilitation or protection. As with other sectors, mining companies can carry forward any losses for an indefinite period and set these against future profits. There are no restrictions on the repatriation of profits.

5 South Africa Mining Industry Location Location of mining sites in South Africa

6 South Africa Mining Industry Value Chain Exploration Mining Mineral Processing Smelting and Refining Semi fabrication Final product manufacturing The processing of the minerals extracted is handled by the companies operating the mines. The Mafube Colliery project is recorded by Africa Mining IQ to produce 1.1 million tonnes of coal per year. The New Largo Project, the South African coal industry s second largest operation, is geared to produce around 15 million tonnes of coal per year. Making the refining process more thorough and economically viable, gold mining in South Africa projects, such as the ERGO Mines Joint Venture in Brakpan, will facilitate the reprocessing of 1.7 billion tonnes of gold tailings to refine a further 15 million ounces of gold. De Beers had always played a pivotal role in the industry, dominating diamond trading and diamond mining in South Africa as well as abroad. The company operates and controls around 9 large-scale diamond mining operations in South Africa. Platinum mining in South Africa regards AMPLATS the industry leader in the mining, marketing, and distribution of the precious mineral. Operating within platinum mining in South Africa, as well asother platinum group metals, AMPLATS produces 40% of the world s total platinum group metals.

7 Coal Gold Diamond Platinum The main coal mining areas in South Africa are the Witbank, Ermelo and Highveld Coalfield areas of Mpumalanga, around Sasolburg Vereeniging in the Free State, as well as in north-western KwaZulu Natal, which hosts a number of smaller operations. In Limpopo there is a single large colliery near Lephalale in the Waterberg Coalfield and a small colliery in Soutpansberg East area. South Deep gold mine located 45km south-west of Johannesburg in the Witwatersrand Basin, South Africa, is the second largest gold mine in the world. Mponeng gold mine located near the town of Carletonville, South Africa, ranks as the tenth largest gold mine in the world. The underground mining and recovery of diamonds continues to this day in the vicinity of Kimberley. To the west of Kimberley, and on the southern banks of the Orange River some 60km upstream from Port Nolloth, Trans Hex mines largely alluvial diamonds at its Baken and Bloeddrif operations. Further north in Limpopo province, the Venetia mine owned by De Beers is South Africa s largest diamond producer. The Finsch mine, part of the Petra Diamonds group, is South Africa s second largest producer and operates exclusively as an underground mine using conventional sub-level caving methods. Near Pretoria and also part of the Petra group, the Cullinan mine (originally called Premier) is being restructured and expanded to mine at ever-increasing depths with a life expectancy in excess of 50 years. The Bushveld Complex is found in the northern part of South Africa, and is the world s largest layered intrusion. This igneous body hosts more than half the work s platinum group metals, and other associated minerals such as chromium, vanadium and refractory minerals. The Bushveld Complex is made up of the Rustenburg Layered Suite, the Lebowa Granites and the Rooiberg Felsics. The marginal zone is found around the edge of the intrusion, while from the base of the complex up is the Lower Zone, the Critical Zone, the Main Zone and lastly the Upper Zone. The chromitite seams in the Critical Zone are divided into the lower, the middle and the upper groups (UG), with the LG6, UG1 and UG2 being of greatest economic importance. The magnetite in the Upper Zone is rich in vanadium. The Merensky Reef is found between the Critical and the Main Zone, and is rich in Platinum Group Elements (PGEs) i.e. platinum, palladium, rhodium, iridium, osmium and ruthenium.

8 Region wise product system COAL

9 GOLD

10 DIAMOND

11 PLATINUM

12 South Africa Mining Industry Investments Investments Announced in the Mining Sector The mining sector attracts 15-25% of total FDI into South Africa. South Africa has introduced a Manufacturing Competitiveness Enhancement Programme (MCEP) to enhance the value of the country s raw materials. Since its introduction, this programme has approved 562 projects with a projected investment value of R15.9bn ($ 1.11 billion). The programme helped to sustain 139,911 jobs since its inception in agro-processing, metals, chemicals, plastic, electro technical, printing, pharmaceuticals, film and wood. Under this for metals sector a grant of $ million is provided with an investment value of $ million and 2,646 jobs retained. The Manufacturing Investment Programme (MIP) approved 1,856 projects, with projected investment of R35.4 billion ($ 2.47 billion) and 43, 570 jobs, and a total incentive value of R4.9 billion ($ 0.34 billion): 25% and 22.5% in Metals and Chemicals subsectors, respectively. Diamond miner De Beers has formed joint ventures with the Botswana and Namibian governments to bolster local beneficiation, and is currently in talks to work with the South African government to bolster beneficiation. Anglo American, which owns 85% of De Beers, has invested R20-million ($ 1.41 million) in South Africa to build an underground operation to support local diamond cutting and polishing at its flagship Venetia mine, in Limpopo, thereby creating 3,000 new jobs. The mine will supply the South Africa market until Sephaku Holdings Sepfluor embarked on a fundraising drive to finance the development of its proposed R2.1-billion ($ 150 million) mine and beneficiation plant outside Bronkhorstspruit, in north-east Gauteng. Of the R2.1-billion, R1.2-billion ($ 80 million) will be used for the beneficiation plant, which will use about t/y of its own manufactured hydrogen fluoride toflow directly tothe manufacturing of t/y of aluminium trifluoride, to be supplied to local and international aluminium smelters. Kumba Iron Ore awarded Tenova Bateman Technologies a contract to supply a 50 t/h modular beneficiation plant for its Sishen mine, in the Northern Cape province. The plant will be used to demonstrate the commercial feasibility of separating iron-ore at specific operating densities, using cyclone-based technology.

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