According to Dr. Paul Jourdan, South Africa would do better leaving its minerals in the ground if it can’t better link its mining sector to the broader economy
JOHANNESBURG (Mineweb) – Dr Paul Jourdan, who was part of the research team that compiled the ANC’s State Intervention in the Minerals Sector (SIMS) report, has said that South Africa needs more than just dirt diggers in its mining industry and that if the sector does not make the linkages as envisaged in the report then it would be better to leave the minerals in the ground.
“If you say I’m just a dirt digger and this is my core competence then fine, go to Australia. I’m not sure that we want companies that are just going to dig holes. I think that we want companies that are going to make those linkages and build our economy for the future, post mining” said Jourdan.
Speaking at the AngloGold Ashanti and Motjoli Resources Mining for Change breakfast in Johannesburg today, Jourdan described Australia as suffering from the Dutch disease where he said that the current minerals boom is causing de-industrialisation in other parts of their economy.
However, Jourdan explained, Australia could accommodate diggers without developing other aspects of its economy due to it not being as densely populated as South Africa is.
Advising against quick wins in order to increase jobs in the country, Jourdan said that the industry should be a catalyst for long term industrialisation.
“In the objectives of the MPRDA [Minerals and Petroleum Resources Development Act], we need to put in the maximisation of the linkages; it is there in a fluffy sense about enhancing socio-economic development…we need to clearly say that we are not going to mine unless we make the linkages. The condition of getting a permit to mine the nation’s minerals is to make the linkages” exclaimed Jourdan.
Jourdan laid out the linkages as proposed in the SIMS report. These are:
· Fiscal linkages: the importance of capturing the fiscal benefits of South Africa’s minerals via the proposed resource rent tax
· Spatial linkages: infrastructure and local economic development
· Knowledge linkages: human and technology development
· Backward linkages: supply of capital goods, consumables and services
· Forward Linkages – beneficiation and industrialisation, strategic minerals, export tariffs, steel pricing competition.
Jourdan emphasised that the backward linkages had weakened locally due to the knowledge linkages having been lost as mining companies had relocated offshore. An example given was BHP Billiton’s closure of its technology centre.
Citing advice received from Finland during the research of the SIMS report, Jourdan said the key to future development for the country was to produce “engineers, engineers and more engineers”.
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