South Africa's Mineral Industry
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DEPARTMENT: MINERAL RESOURCES REPUBLIC OF SOUTH AFRICA Directorate: Mineral Economics SOUTH AFRICA’S MINERAL INDUSTRY 2016/2017 The cover picture represents South Africa’s Minerals Mining Industry. Issued free by and obtainable from the Director: Mineral Economics, Trevenna Campus, 70 Meintjies Street, Pretoria 0002, Private Bag X59, Arcadia 0007 Telephone +27 (0) 12 444 3531, Telefax +27 (0) 12 341 4134 www.dmr.gov.za Editors: TR Masetlana; M Ikaneng; R Motsie; L Malebo; M. Machaka; P Mwape Statistics: M Galane & M Mahote Co-ordinator: TR Masetlana First Published August 1984 This, the 34th edition, published March 2018 Whereas the greatest care has been taken in the compilation of the contents of this publication, the Mineral Economics Directorate does not hold itself responsible for any errors or omissions. Copyright Reserved ISBN: 978-0-621-46269-2 FOREWORD South Africa's mineral wealth has been built on the country's enormous resources and the mining sector continues to play an economic and socio-economic role in the country’s development. South Africa accounts for 94 percent of known global reserves of the platinum group metals (PGMs), 73.7 percent of chrome, 29 percent of manganese, 18.4 percent of vanadium and 10.5 percent of gold reserves. As a leading producer and supplier of a range of minerals, the country offers a highly competitive investment location, ensuring that it can meet specific trade and investment requirements of prospective investors and business people, whilst also meeting the development needs of its populace. The country has the potential to supply a large share of the global demand for many commodities, but its rich endowment of natural resources and high mineral potential can only be developed and extended through a vibrant exploration sector. Despite improved commodity prices in 2016, both major and junior exploration companies reduced their exploration expenditure. The year 2016 is the fourth consecutive year of declining exploration expenditure with the total of US$6.89 billion from 1580 companies, the lowest since 2009 and 21 percent lower than US$8.77 billion in 2015 from 1798 companies. South Africa’s total exploration budget also fell significantly by 17.9 percent in 2016, from $117.1 million in 2015 to $96.1 million representing one percent global share. Platinum group metals (PGMs) and diamonds were the leading explored targets with the total amount of $29.5 million and $25.6 million respectively and the large part of the country’s total exploration budget was spent on late stage and feasibility at $43.9 million followed by mine site at $35.4 million and then grassroots at $16.8 million. After a number of years of sustainable growth, dating back from 1992, the country’s economy became a casualty of economic recession of the year 2009. Following, a good sign at the end of the recession, the downward trend in commodity prices, started again in 2011, continuing well into 2015. Weaker demand and excess supply internationally, have underpinned the adverse price trends in most instances, with a stronger US dollar aggravating the situation. The 2016 financial year marked another challenging period for South Africa’s mining industry with a continuing downswing in commodity prices and a slower than expected economic growth. However, South Africa’s total primary minerals sales value increased by 6.8 percent from R397.4 billion in 2015 to R424.4 billion in 2016 helped by a weaker rand. In 2016, mining contributed R306.2 billion or 7.9 percent to gross domestic product from R286.5 billion in 2015 an increase of R19.7 billion. In 2016, mining contributed R306.2 billion or 7.9 percent to gross domestic product from R286.5 billion in 2015 an increase of R19.7 billion. The increase in value added by mining can be attributed to weakening of the rand against the dollar which depreciated to R14.70 in 2016 from R12.76 in 2015. However, due to the depreciation of the rand from R12.76 in 2015 to R14.70 in 2016 mining contribution to the economy in US dollar decrease from $22.45 billion to $20.83 billion over the same period. In 2016, Mining and quarrying contribution to Gross Fixed Capital Formation (GFCF) increase to 11 percent from 10.8 percent in 2015. SA’s total mining employment declined by 4.7 percent from 480 209 in 2015 to 457 688 in 2016. This is due to the fact that the mining companies were under pressure from rising operating costs and, capital investment declined, making it difficult to create new jobs. During the same period, remuneration in the mining sector increased by 5.6 percent from R 114.1 billion in 2015 to R 120.5 billion in 2016 due annual increaments and bonuses paid to employees SA’s total mining employment figure declined by 4.7 percent from 480 209 in 2015 to 457 688 in 2016. Mining companies were under pressure from rising operating costs and capital investment has been in decline making it difficult to create new jobs. During the same period remuneration in the mining sector increased by 5.6 percent from R 114.1 billion in 2015 to R 120.5 billion in 2016 due to an increase in bonuses paid to employees. i As a result of its vast mineral resources, South Africa is, to a large degree self-sufficient with respect to the supply of minerals. However, there are some minerals and mineral products, which need to be imported due to lack of local resources. The total value of imports increased by 14.9 percent from R24.1 billion in 2015 to R27.7 billion in 2016. Beneficiation remains a key initiative ii For government, as it seeks to leverage the country’s comparative advantage in mineral resource endowment to create a competitive advantage for domestic mineral beneficiating entities, thus playing a contributory role towards setting the country’s growth trajectory on a production led growth path. South Africa’s minerals industry is open to investment, in exploration, mining and value addition activities. Thus, addressing challenges facing the mining industry would significantly improve the outlook of the sector, making it viable and resilient. To this end, the Honorable Minister Gwede Mantashe has committed to finalise the Mining Charter as well as the MPRD Amendment Bill by end of June 2018. This paves the way for investment into the country, despite a myriad of challenges that the sector faces. It is against this background that there is hope that the country will grow stronger among the favorite investment destinations. I wish to on behalf of Mineral Economics team thank the staff of the Mineral Policy and Promotion for their continued sterling performance in contributing to the compilation of this flagship publication, as well as the industry for its support and cooperation. Special appreciation is extended to the interns Ms. Nancy Rabuma, Mr. Tshepo Rakhudu and Ms. Mmapoo Maredi who contributed to the edition. I wish to join the Mineral Economics and the Department at Large in bidding farewell to Mr. Paul Mwape and Mr. Peaga Gad Kwata both of whom served the department with conviction and commitment for a combined total of more than 30 years. They will both be missed for unselfishly imparting knowledge to both the young and older talents in the department. Their work in the department will remain notable as we radically transform our country towards becoming a truly “democratic, united, non-racial, non-sexist, equal and prosperous” nation. MR RAY MASETLANA ii CONTENTS Page FOREWORD i LIST OF FIGURES vi LIST OF TABLES ix ABBREVIATIONS AND SYMBOLS xiv EXPLANATORY NOTES xvi PART ONE: SOUTH AFRICA’S MINERAL INDUSTRY 1 GENERAL REVIEW P MWAPE, M MAHOTE, E MOKWENA, E MALEMATJA, V MADZUHE, S MALIE, G KWATA; K MENOE 1 INFRASTRUCTURE DEVELOPMENTS 1 MINERAL INDUSTRY STRENGTH 4 PRODUCTION OVERVIEW OF SELECTED MAJOR MINERALS 6 EXPLORATION EXPENDITURE BY REGION, 2016 6 THE ROLE OF MINING IN THE NATIONAL ECONOMY 8 PRIMARY MINERAL SALES IN 2016 11 SELECTED PROCESSED MINERAL SALES 14 SOUTH AFRICA’S IMPORTS OF SELECTED PRIMARY AND PROCESSED MINERAL PRODUCTS, 2016 16 TOTAL EMPLOYMENT IN 2016 18 SMALL-SCALE MINING SECTOR IN SOUTH AFRICA 20 MINERALS AND METALS PRICES 2016 21 ii PART TWO: REVIEW OF SELECTED COMMODITIES 25 OVERVIEW L MALEBO 25 DIAMONDS O MOUMAKWA 28 GOLD P PEROLD 32 PLATINUM-GROUP METALS (PGMs) O MOUMAKWA 41 SILVER P PEROLD 49 ENERGY COMMODITIES 55 OVERVIEW KL REVOMBO 55 COAL KL REVOMBO 60 HYDROCARBON FUELS KL REVOMBO 73 URANIUM K TSHETLANYANE 80 NONFERROUS METALS AND MINERALS 85 OVERVIEW L RAMANE 85 ALUMINIUM K TSHETLANYANE 89 ANTIMONY Y MUNYU & L RAMANE 94 COBALT L RAMANE 97 COPPER S MNYAMENI 102 LEAD S MNYAMENI 109 NICKEL N RABUMA & L RAMANE 114 TITANIUM K TSHETLANYANE 120 ZINC S MNYAMENI 126 ZIRCON Y MUNYU & M IKANENG 132 iii FERROUS METALS AND MINERALS 137 OVERVIEW L MALEBO 137 CHROMIUM M KHAILE 140 IRON ORE R RAVHUGONI 147 MANGANESE ORE R RAVHUGONI 152 SILICON R RAVHUGONI 158 VANADIUM M KHAILE 162 INDUSTRIAL MINERALS 167 OVERVIEW R MOTSIE 167 AGGREGATE AND SAND R MOTSIE 174 ALUMINO-SILICATES M MODISELLE 178 DIMENSION STONE R MOTSIE & O RADIPABE 185 FLUORSPAR M MODISELLE 190 LIMESTONE AND DOLOMITE P KONANANI & R MOTSIE 195 PHOSPHATE ROCK M MURAVHA & O RADIPABE 201 SPECIAL CLAYS M MURAVHA 206 SULPHUR M MODISELLE & P KONANANI 214 VERMICULITE M MURAVHA 219 STATISTICS FOR OTHER INDUSTRIAL MINERALS R MOTSIE & M MAREDI 224 iv PART THREE: GENERAL INFORMATION 235 USEFUL ADDRESSES 235 DEPARTMENT OF MINERAL RESOURCES HEAD OFFICE 235 MINERAL REGULATION REGIONAL DIRECTORATES 235 ASSOCIATED GOVERNMENT DEPARTMENTS 239 STATE OWNED ENTERPRISES 241 OTHER MINERAL-RELATED ORGANISATIONS 245 RECENT PUBLICATIONS 248 v LIST OF FIGURES Page FIGURE 1: DISTRIBUTION OF EXPLORATION EXPENDITURE BY REGION, 2016 ................................................