South African Natural Resources Economics Essay

South African Natural Resources Economics Essay The South African natural resources mining industry is long recognized as the most important sector and in spite of the fact that it is the sixth largest provider to total Gross Domestic Product (GDP) at currently; and is still regarded as a foundation stone of the economy and the chief employer. The mining industry is a well-established and resourceful sector of South Africas economy and has a high degree of technical expertise as well as the ability to assemble capital for new development. The immensity of the known mineral resources and reserves were revealed by means of conservative exploration methods, still significant potential is expected for the unearthing of other top-notch deposits in areas still to be thoroughly explored with contemporary exploration technology. South Africa is a leading producer and supplier of a range of minerals and produces approximately 53 different minerals from 1548 mines and quarries as well as exports to approximately 80 countries. As a chief mining country, South Africas strengths comprise a soaring level of technical expertise and research and development activities. South Africas Mineral Resources can be classified into: Precious Metals and Minerals Energy Minerals Non- Ferrous Metals and Minerals Ferrous Metals and Minerals Industrial Minerals PRECIOUS METALS MINERALS INTRODUCTION South Africa is the worlds largest producer of platinum-group metals (PGMs) and the fifth largest producer of gold. The country is also a major producer of diamonds, while silver is produced as a by-product from gold, lead-zinc, copper and PGM mines. 1.1 DIAMOND South Africas 2009 diamond production was less than half of 2008 production, falling by 52.3 percent to 6.1 Mat. Diamonds sourced from kimberlitic contributed 91.8 percent to the countrys total production, while alluvial and marine diamonds contributed 4.8 and 3.4 percent, respectively. Production from De Beers Consolidated Mines dominated the countrys total output with a contribution of approximately 85 percent, despite a 49 percent reduction in carats recovered in 2009. 1.2 GOLD South Africas gold industry has been the principal focus of black economic empowerment, resulting in a changing ownership structure. With the increase in the price of gold and the worldwide economic slowdown, investment in gold has increased, with investors seeking safe haven investments. Demand for gold also increased in 2009, particularly from India and China. 1.3 PLATINUM GROUP METALS The PGMs include platinum, palladium, gold, rhodium, osmium, rhenium, iridium and ruthenium. Platinum, palladium and rhodium are produced in substantial quantities. South Africa is the largest producer of platinum in the world and holds a large percentage of global reserves. 1.4 SILVER Silver is produced in South Africa as a by-product of gold, lead-zinc, copper and PGM mines. South Africa does not have a primary silver mine and the metal is only produced as a by-product of other minerals, most notably gold. 2. ENERGY MINERALS INTRODUCTION South Africa is well endowed with both coal and uranium reserves and is ranked amongst the top ten in the world, but has relatively small known reserves of oil and gas. South Africa is the 7th and 11th largest world producer of coal and uranium, respectively. 2.1 COAL According to the 2010 BP Statistical Energy Survey, South Africa had end 2009 coal reserves of 30408 million tones, 3.68% of the world total. South Africa has Africas only significant coal reserves. 2.2 OIL NATURAL GAS According to the 2012 BP Statistical Energy Survey, South Africa consumed an average of 547.25 thousand barrels a day of oil in 2011, 0.64% of the world total. South Africa is the leading economic power in Africa as well as a key player in the African oil industry. 2.3 URANIUM The AngloGold Ashanti mine is the major producer of uranium as a by-product of gold in South Africa from three mines, namely, Great Noligwa, Moab Khotsong and Kopanang. Nuclear Fuel Corporation (Nucor) exports all uranium oxide (U3O8), which is processed through calcinations of uranium slurry. 3. NON-FERROUS METALS AND MINERALS INTRODUCTION South Africas non-ferrous minerals resources are rated amongst the top 10 countries in the world. The country is well endowed with titanium and zirconium resources, which is economically mineralized in heavy mineral sands in Kwan-Zulu Natal as well as the Eastern and Western Cape. 3.1 BAUXITE South Africa does not mine any bauxite. It does, however, have an active aluminum smelting industry. The Hillside aluminum smelter sited in Richards Bay is one of the worlds most superior and efficient AP30 smelters and produces T-bars and primary aluminum ingots. 3.2 ANTIMONY South Africa is a major global antimony producer, producing 3 000 t in 2009. The largest antimony producer in South Africa is Consolidated Murchison, a subsidiary of Metorex Limited. 3.3 NICKEL COBALT Most of South Africas nickel and cobalt are produced as by product of platinum mining activities on the Bushed Igneous Complex. Nickel mining is done by means of an underground shaft and also by open-pit mining. Oxidized chromatist is also mined as division of the pre-strip of the future open pits. 3.4 COPPER Parabola, South Africas leading copper producer, is located 360km north east of Pretoria, close to the Kruger National Park. Parabola is also a major source of vermiculite and baddeleyite (zirconium oxide). The majority shareholders in Parabola Mining Co. are Rio Tinto plc (57.7%) and Anglo-American. 3.5 ZINC LEAD Exira owns Zinced, an electrolytic zinc refinery with the capacity to produce 110ktpa of zinc and 170 kappa of sulphuric acid. The refinery, located 50 km east of Johannesburg in Springs, processes some 240ktpa of zinc concentrate. 3.6 TITANIUM ZIRCONIUM South Africa is Africas main producer, with 30% of world production, second after Australia. Limonite, retiled and leucoxene are the primary ore minerals of titanium and are usually found in localized beach placer deposits, hence the term Heavy Mineral Sands. Anglo American and BHP Billiton are the main producers from their operation on both coasts of South Africa. 4. FERROUS METALS AND MINERALS INTRODUCTION South Africa is the worlds largest producer of chromium and vanadium ores and a leading supplier of their alloys. It is also a major producer of iron and manganese ores, an important supplier of manganese alloys and a small producer of ferrosilicon and silicon metal. 4.1 CHROMIUM African chrome is produced from the Bushed Complex in South Africa, which has 80% of global reserves and produces approximately 50% of global chromate. Nearly all of Zimbabwes chrome production is sourced from the Great Dyke and consumed for local ferrochrome plants. 4.2 IRON ORE According to the USGS, South Africa produced 53 million metric tons of iron ore in 2009, making it the worlds 7th largest producer. It also estimated, in 2009, that South Africa has 1000 million tons of crude ore reserves and 650 million metric tons of iron content reserves. 4.3 MANGANESE South Africa currently accounts for about 75% of the worlds identified manganese resources. These mostly occur near Hoatzin in the Northern Cape Province. According to the USGS, reserves were estimated at 15 billion tons in 2011. South Africa was the worlds largest producer of manganese in 2011, producing 3.4 million tons. 4.4 VANADIUM Pure vanadium (V) is a bright white metal, and is soft and ductile. It is has a good corrosion resistance to a variety of alkalis and acids, but oxidizes readily above 660 C. About 85% of vanadium is used as ferrovanadium or as a steel additive. 5. INDUSTRIAL MINERALS INTRODUCTION Industrial minerals are generally high volume, low value commodities that will usually bear minimum costs of underground exploitation since most occur near surface. As a result, most industrial minerals require less complicated mining techniques and, therefore, present opportunities for small-scale mining development. SOUTH AFRICAN CEMENT INDUSTRY The cement production process Cement is a synthetic grind that, when assorted with water and aggregates, produces concrete. The cement-making process can be divided into a few basic steps: Mining limestone Proportioning and grinding limestone with other à ¢Ã¢â€š ¬Ã… ¾correctiveà ¢Ã¢â€š ¬Ã… ¸ raw materials Manufacturing clinker in a kiln at temperatures of 1,450ËÅ ¡C Grinding clinker and extra minerals to produce the powder known as cement Distributing cement to clients Southern Africa Cement Industry: Overview A resource-rich country, characterized by vigorous GDP growth and a flourishing construction market, South Africa has all the markings of a sensation story for cement producers. With numerous capacity extension projects being planned or recently concluded, South African cement companies are gearing up for a constant expansion of the cement market. Consumption South Africa has enjoyed a stable increase in its cement utilization in recent years and the 2004-2006 periods proved no exception. In 2004, conjugal cement demand stood at 10.69Mt, rising by 11.6 per cent to 11.934Mt the year after. The strongest regional growth in 2006 was recorded in the Western Cape which saw its cement market inflate by almost 20 per cent. Other markets to trace double-digit growth figures were Mpumalanga (16.8 per cent), Kwazulu-Natal (14.7 per cent), Gauteng (13.4 per cent) and Free State (10.5 per cent). Market movement The market shares of the four players on the basis of production capacity are as follows: PPC cement leads the pack at 43%, followed by Afrisam at 24% and Lafarge at 23%. Cimpor accounts for 10% of overall production capacity. When, or if, all the new pipeline capacity is in production, PPCs production market share is expected to decline to 41%, Afrisam to 19%, Lafarge to 18%, while Sephaku will account for 10% of overall production capacity, and Conticem an anticipated 3%. Challenges faced by the Cement Industry Soaring fuel prices and deceitful road and railway facilities facade a serious difficulty when it comes to the transport of cement. Mounting electricity and raw material costs are also totaling to production costs. Skills deficiency: Worldwide antagonism for skills. Accessible infrastructure besieged to get by with growth. Equipment and civil contract lead times increasing. Resistance in SA to make use of of kilns to set out waste Looking to the future of the cement sector in SA South Africa is in the process of restructuring its future. Structural improvements are taking place in its economy, infrastructure improvements have enlarged the nations economic capacity and will prop up, not obstruct future economic growth. A key move towards opening the construction industry to increasing opportunities is the Department of Housings invitation in March 2010, to invite suppliers of substitute building methods to team up later this year. The Major Cement Producing Players in South Africa 1. PRETORIA PORTLAND CEMENT: PPC is the principal supplier of cement in southern Africa through eight cement manufacturing facilities and three milling depots in South Africa, Botswana and Zimbabwe that can produce around eight million tons of cement products each year. 2. LAFARGE CEMENT ZIMBABWE: Lafarge Cement Zimbabwe Limited, previously Circle Cement Limited, is a Zimbabwe-based cement manufacturer and also a distributor of cement and related products. Lafarge has a production capacity of 450,000 MT per year, 120,000 MT of which is exported. 3. LAFARGE ZAMBIA: Lafarge Cement Zambia manufactures and provides cement for its local market and also exports to bordering DRC and Burundi.