THE MINERAL BENEFICIATION POLICY PRESENTATION AT THE 3RD MINING LEKGOTLA 14 JULY 2014 Gallagher Convention Center, Midrand

INTRODUCTION The mineral beneficiation strategy was adopted by Government as policy The strategy represents an opportunity for South Africa - a fulcrum to catalyse industrialisation and contribute towards a knowledge based economy. The strategy is complementary to IPAP-series and other development programmes of Government Provides strategic focus for the minerals’ industry i.t.o beneficiation Presents a coherent plan to: capture & maximise the “window of opportunity” inherent in natural resources (before they’re exhausted): align strategies for resources with the National Industrial Policy Framework unlock downstream beneficiation of minerals facilitate economic diversification encourage the movement towards a knowledge based economy.

MINING VALUE ADD FRAMEWORK Beneficiation is part of a broader policy and legislative framework that leverages more value from the mining sector beyond taxes and royalties. This framework will enhance the beneficiation element of the framework and leverage on others

BROAD VISION - BENEFICIATION Increase a ratio of beneficiation extent to mineral production, localise exports, increase export revenue Facilitate economic diversification Attain incremental GDP growth in mineral value addition and increase the country’s productive capacity Expedite progress towards a consolidated knowledge based economy Create opportunities for new enterprise development and a basis for radical economic transformation Contribute to creation of decent jobs and poverty alleviation Aligned to the New Growth Path “Premised on the notion that Mineral Resources are finite, but creativity is unlimited”

INTERVENTIONS 1. SECURITY OF RAW MATERIAL SUPPLY Strengthening beneficiation provisions contained in Section 26 of the MPRDA, in order to: Empower government to avail requisite, qualities, quantities and timeframes of minerals for local beneficiation cost competitively 2. QUANTIFICATION OF SA NEEDS – INDUSTRIALISATION AND BENEFICIATION An example of such a quantification/target is the objective set for SA to work towards capturing 25% of global catalysis market – In the Hydrogen Strategy The Integrated Energy Plan (IEP) and the Integrated Resource Plan (IRP) also provides quantification of energy requirements This enables government to work-out progressive quantities of input material required to achieve this objective in terms of the proposed section 26 provisions of MPRDA Bill

INTERVENTIONS, cont…. 3. MECHANISMS TO PASS THE BENEFITS TO LOCAL ECONOMY 4. INFRASTRUCTURE (implication of the National Infrastructure Prog) Infrastructure Programme to adequately feature beneficiation requirements. E.g. Linkages of mining areas with envisaged beneficiation centers Infrastructure Programme to enhance logistics efficiencies to ensure cost effective transport to support “export led growth” of beneficiated products Energy security for beneficiation is critical (provisioning of electricity and mechanisms to support co-generation) Development of mechanisms to use infrastructure (public good) as an incentive for beneficiation

INTERVENTIONS, cont…. 5. MARKET GENERATION, GROWTH AND ACCESS Strengthen the enforcement of the obligatory National Industrial Participation Programme (NIPP), the Competitive Supplier Development Programme, the Preferential Procurement Policy Framework Act and the procurement provisions of the BBBEEA Strengthen and enforce implementation of sector procurement provisions Integrated approach to monitoring and evaluation of mineral extraction, transportation, local consumption into beneficiated goods and through customs Leverage the African growth story, e.g. the African infrastructure development programme (PIDA), including the High speed train linking Africa cities Leverage multi-lateral agreements for access to beneficiated good 6. SKILLS DEVELOPMENT A dedicated effort towards development of skills needed to underpin the beneficiation and industrialisation policies Mechanisms for limited expatriate skills transfer (with a maximum limit and a proven progress on skills transfer and progress) 7. RESEARCH AND DEVELOPMENT Coordinated and targeted research and development programme for beneficiation to: Further enhance competitiveness of existing beneficiation initiatives in SA Create nascent industries

Metals and minerals in a Smart Phone Copper (16 grams) ¹ Silver (0.35 grams) ¹ Gold (0.034 grams) ¹ Palladium (0.015 grams) ¹ Platinum (0.00034 grams) ¹ Ceramic magnetic switches containing rare earths ² Indium² Titanium dioxide ² Indium tin oxide ² ¹ source – USGS http://pubs.usgs.gov/fs/2006/3097/ ² source – NRC critical minerals report

Metals and Minerals in a car 960kg iron &steel 109kg Aluminum 22.7kg Carbon 19 kg Copper, 34kg for a hybrid 19kg Silicon 11 kg Lead 10kg Zinc 7.7kg manganese 6.8kg Chromium 4.1kg Nickel 0.3 kg Platinum + Antimony, barium, beryllium, cobalt, gallium, gold, magnesium, molybdenum, neodymium, indium, palladium, Sulphur, rhodium, silver, strontium, tin, titanium, tungsten, vanadium, zirconium.

Wind Turbine uses a significant amount of metals and minerals 335 tons of steel (chrome included) 4.7 tons of copper 13 tons of fiberglass 3 tons of aluminum 1,200 tons of reinforced concrete

Cosmetics and makeup……… Constituent minerals: Talc Mica Kaolin Calcite Titanium dioxide Zinc oxide

Even a bright smile, comes from mining……. Constituent minerals: Silica Limestone Aluminum Phosphate Fluoride Titanium Mica Petroleum

CONCLUDING REMARKS This beneficiation value proposition represents a potential win-win scenario for all stakeholders in domestic mineral value chains. During the implementation of this provision, miners will not be expected to beneficiate, however will be expected to contribute. Effective co-ordination across relevant departments and partnerships with both mining industry and manufacturers constitute key for successful implementation. The mining charter off-set against ownership presents a further lever for the downward negotiation of mineral pricing for local beneficiation to attain greater cost competitiveness in manufacturing.

I Thank You