South Africa can’t get away with just ‘digging dirt’ – Paul Jourdan – by Martin Creamer (MiningWeekly.com – June 5, 2013)

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CAPE TOWN (miningweekly.com) – While Australia could get away with mining minerals and exporting them without paying attention to local value addition, South Africa could not, independent South African mineral policy analyst Paul Jourdan told the International Mining and Metals third African Iron Ore conference here.

With its far larger population and far fewer square kilometres, South Africa had no option but to concern itself with mineral beneficiation, which he defined as the total domestic value addition embodied in the final exports, excluding all imported inputs.

“Australia can dig dirt for the next 200 to 300 years, and they’ll be fine,” he said.

But South Africa, at one-sixth of Australia’s size and with nearly three times its population, was compelled to introduce ore beneficiation strategies for mineral value chains and resource-based industrialisation.

“Just digging dirt is not an option for us,” the former Department of Trade and Industry (DTI) deputy director-general, former Mintek head and coauthor of the African National Congress’s State Intervention in the Minerals Sector document said in response to Mining Weekly Online questions.

Jourdan is currently working with the DTI, Department of Mineral Resources, Department of Science and Technology and the State-owned Industrial Development Corporation (IDC) to develop mineral value chains.

Speaking on the opportunities for the beneficiation of iron-ore, he presented a five-point plan, beginning with the inducement of new players.

He flashed on to a big screen a map showing iron-ore deposits, mines, steel plant and steel plant options, which fell into two types.

There were coastal entities, from which he proposed steel-for-ore deals, for example, granting 20-million tons of ore for 5-million tons of steel, and there were inland entities.

Inland, the IDC’s Scaw expansion would be for long products, there would be a possible new Middelburg plant for flat steel products, a Highveld Steel and Vanadium expansion for flats, a potential integrated plant at Kathu, where reductant expense was an issue, and a possible steel mill and world-scale pigment plant using iron-ore from the Bushveld.

He believed that ore for steel negotiated with a foreign customer at export parity prices would probably be the most powerful arrangement.

The second strategy was the introduction of competitive tendering for known iron-ore assets, with bids based on the amount of value added.

He advocated only issuing prospecting rights on ground with no known resources and accused most mining companies of delineating deposits already well known rather than discovering new deposits.

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