The Mineral Industry of South Africa in 2002
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THE MINERAL INDUSTRY OF SOUTH AFRICA By George J. Coakley The Republic of South Africa holds a major economic and Significant industrial minerals production included andalusite, physical presence on the African continent. Its rich natural- aggregate and sand, asbestos, dimension stone, fluorspar, lime resource endowment serves as a base for one of the strongest and limestone, phosphate rock, sulfur, and vermiculite. South economies in Africa with a gross domestic product (GDP) based Africa was a major producer and the world’s third leading on purchasing-power-parity data for 2002 of $427.7 billion exporter of coal and the largest producer of synthetic liquid fuels and a GDP per capita of $10,4001;1 it ranks fifth in population and petrochemicals derived from coal. South Africa’s well- and land area on the continent with 42.8 million people and developed railway and port infrastructure served the domestic 1,219,912 square kilometers. During 2002, its export-oriented minerals industry and those in neighboring countries. economy had a real growth rate of 3% and an inflation rate of 9.9% (International Monetary Fund, 2003§;2 U.S. Central Government Policies and Programs Intelligence Agency, 2003§). The 8-year-long devaluation of the rand against the U.S. dollar appeared to have ended The DME is the primary Government entity responsible in December 2001 when the monthly average exchange rate for the establishment and implementation of minerals and depreciated from 3.07 rands to the dollar in January 1993 to energy policy and for oversight of the country’s mineral 11.59 rands to the dollar in December 2001. During 2002, the industry. Within the DME are the Mineral Development rand appreciated by 23% against the dollar to 8.94 rands by Branch, which is responsible for regional mineral development, yearend 2002. The rand appreciation, however, had implications mineral economics (Minerals Economics Directorate), mine for the mining and mineral-processing sector because its dollar- rehabilitation, and mining rights; the Energy Branch, which denominated exports brought in fewer rands to meet domestic promotes the optimum use of energy resources; and the rand-denominated operating costs. Mine, Health and Safety Inspectorate. A number of parastatal According to the Ministry of Mines and Energy’s Department institutions were associated with the DME; these included the of Minerals and Energy (DME), in 2002, South Africa produced Atomic Energy Corp.; the Council for Geosciences (formerly more than 56 different mineral commodities from about 778 the Geological Survey of South Africa); the Council for Mineral mines and quarries, which included 57 coal, 51 diamond, 33 Technology (Mintek), which is the parastatal mineral-research gold, and 17 platinum-group metals (PGMs) operations. organization; the Council for Nuclear Safety; the National It ranked first in the world in the production of Electricity Regulator; the South African Diamond Board; and aluminosilicates (andalusite), chromite, ferrochrome, gold, the Central Energy Fund (Pty.) Ltd. (CEF) through which the manganese, and PGMs and second for fluorspar, titanium state’s interest in the liquid fuel industry is owned, developed, minerals (chiefly ilmenite), vanadium, vermiculite, and and managed commercially. zirconium. Mining and quarrying contributed $7.7 billion, or On April 12, 2002, following 6 years of public and internal 8.1%, to the GDP in 2002, and, if the indirect multiplier effects Government debate, the Minerals and Petroleum Resources of the industry, such as related service and supply industries, Development Bill (B15D/2002) was passed by the National are included, then the overall contribution of mining to GDP is Assembly and the National Council of Provinces on June 25 estimated to be 12%. According to the Chamber of Mines of and 26, 2002, and became law in October 2002. It replaced the South Africa (2003§), the mining companies have committed to Minerals Act, 1991 and the Minerals Amendment Act, 1993. invest about $9.6 billion in capital projects between 2003 and The new Act provides for the equitable access to and sustainable 2007. development of the nation’s mineral and petroleum resources. The most important mineral commodities produced in South The objective criteria framework of the bill was stated in the Africa were, in terms of value in declining order, PGMs, gold, preamble (Department of Minerals and Energy, 2002a§): coal, ferroalloys (ferrochromium, ferromanganese, ferrosilicon, • Recognizes that minerals and petroleum are nonrenewable and ferrovanadium), aluminum, steel, titanium, iron ore, natural resources; diamond, vanadium, and copper. Additionally, important output • Acknowledges that South Africa’s mineral and petroleum of metallic commodities included antimony, chromite, cobalt, resources belong to the nation and the state is the custodian lead, manganese, nickel, silver, uranium, zinc, and zirconium. thereof; • Affirms the state’s obligation to protect the environment for the benefit of present and future generations, to ensure 1 Where necessary, values have been converted from South African rands (R) ecologically sustainable development of mineral and petroleum to U.S. dollars at the rate of R10.54=US$1.00 for 2002 and R8.61=US$1.00 for resources, and to promote economic and social development; 2001. • Recognizes the need to promote local and rural development 2References that include a section mark (§) are found in the Internet References Cited section. and the social upliftment of communities affected by mining; THE MINERAL INDUSTRY OF SOUTH AFRICA—2002 26.1 • Reaffirms the state’s commitment to reform to bring about “scorecard” system for companies to report their progress to the equitable access to South Africa’s mineral and petroleum Government in meeting these Mining Charter objectives was resources; released in February 2003 (Department of Minerals and Energy, • Commits to eradicating all forms of discriminatory practices 2002b§, 2003a§). in the mineral and petroleum industries; • Considers the state’s obligation under the Constitution to take Environmental Issues legislative and other measures to redress the results of past racial discrimination; The Department of Environmental Affairs and Tourism • Reaffirms the state’s commitment to guaranteeing security of (DEAT) is the focal point for environmental planning and tenure in respect of prospecting and mining operations; and management within South Africa. The DEAT has been • Emphasizes the need to create an internationally competitive developing a comprehensive set of geospatial data and and efficient administrative and regulatory regime. environmental indicators for use in national environmental Other key mineral-related legislation included the Mining and land-use planning and resource management, which Titles Registration Act, 1967; the Mining Titles Registration are accessible through its Web site via URL http://www. Amendment Act, 2003; the Central Energy Fund Act, 1977; the environment.gov.za. The DEAT implements the National Petroleum Products Act, 1977; the Diamonds Act, 1986; the Environmental Management Act (107 of 1998) (NEMA), which Electricity Act, 1987; the Mineral Technology Act, 1989; the created a framework for environmental management in South Nuclear Energy Act, 1993; the Liquid Fuels and Oil Repeal Act, Africa, and established principles for sustainable development, 1993; the Mineral and Energy Laws Rationalization Act, 1994 procedures for coordinating the environmental functions of (which repealed the Mining Rights Act of 1967); and the Mine Government, and mechanisms for civil society participation. Health and Safety Act, 1996. A 1998 ruling by the Minister of As required under the NEMA, the DME put the Finance had set the corporate tax rate at 35% for all companies Environmental Management Plan that addressed mineral sector that entered into offshore oil and gas subleases with Soekor issues in place during 2000 (Department of Minerals and (Pty.) Ltd. by the end of 1999. Energy, 2001§). In October 2002, the Government released the Proposed Broad-Based Socio-Economic Empowerment Charter for the Production South Africa Mining Industry. The Mining Charter vision statement declares, “All the actions and commitments set In 2002, South Africa was one of the largest and most diverse out below are in the pursuit of a shared vision of a globally minerals producers in the world. Mineral production statistics competitive mining industry that draws on the human and are listed in table 1. For 2002, the DME Minerals Economics financial resources of all South Africa’s people and offers real Directorate (formerly the Minerals Bureau) reported the value benefits to all South Africans. The goal of the empowerment of primary mined products to be $12.9 billion and that of charter is to create an industry that will proudly reflect the processed mineral products to be $2.26 billion. In addition, promise of a non-racial South Africa.” The Mining Charter hydrocarbons were valued at $229 million. The mining and aims to redress historical and social inequalities suffered quarrying sector paid out $2.8 billion in wages and more than by historically disadvantaged South Africans (HDSA) by $675 million in taxes to the Government. On a value basis, formalizing the mining industry’s commitment “to adopt a about 23% of processed mineral materials and 20% of primary proactive strategy of change to foster and encourage black mined products were consumed domestically in 2002. Coal economic empowerment (BEE) and transformation