Untitled - Department of Mineral Resources

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DEPARTMENT: MINERAL RESOURCES
REPUBLIC OF SOUTH AFRICA
Directorate: Mineral Economics
SOUTH AFRICA’S MINERAL INDUSTRY
2010/2011
The cover picture represents South Africa’s Diamond Mining Industry at
Finsch Diamond Mine.
Issued free by and obtainable from the
Director: Mineral Economics, Travenna Campus,
70 Meintjies Street, Pretoria 0002, Private Bag X59, Arcadia 0007
Telephone +27 (0) 12 444 3531, Telefax +27 (0) 12 320-4327
www.dmr.gov.za
iii
External Editor:
I Robinson
Chief Editor
M Bonga
Editors:
M Ikaneng, N Dlambulo, P Mwape, R Motsie, L Malebo
Statistics: M Köhler
Co-ordinator: M Bonga
First Published August 1984
This, the 29th edition, published December 2011
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: 978-1-920448-00-4
iii
FOREWORD
The economic recovery experienced in 2009 led to improved demand for commodities resulting in
higher prices during 2010. Consequently, the rush for South Africa‟s mineral commodities continued
unabated as illustrated by the thousands of prospecting and mining rights and permits applications
received by the department during the year. The drive for further exploration of South Africa
intensified evinced by the growing number of exploration activities currently taking place and the
amendment of the country‟s Geosciences Act, which includes sections that promote active state
exploration.
In 2010, employment in South Africa‟s mining industry was 1.2 percent higher than in 2009,
amounting to 498 141 employees. This figure represented 2.9 percent of the country‟s total workforce
in 2010. The DMR continued to lend support to Small, Micro and Medium Enterprises (SMME),
through its Beneficiation Economics and Small Scale Mining Directorates, to help realise the potential
of small scale mining and beneficiation projects. As the department‟s efforts to reduce poverty and
unemployment intensified, the number of projects supported through these programmes rose to 44 in
2010, which brought the total number of operational projects, which the department has supported
since the inception of the Small Scale Mining programme to 115. These projects are estimated to
have created a total of 1 120 jobs.
Cooperation between the government and its social partners, (organised business and labour)
through MIGDETT, which was tasked with recommending strategic interventions to help mitigate the
potentially devastating impact of the recession on employment in the mining industry and to develop
interventions to position South Africa‟s mining industry for sustainable growth, has delivered on the
first mandate and is busy with the second. Work on the second mandate, which culminated in the
signing of the Declaration of Strategy for Sustainable Growth and Meaningful Transformation of the
Mining Industry is intended to lead to the resolution of the various infrastructural and regulatory
challenges that were identified. The ongoing amendment of the Mineral and Petroleum Resources
Development Act (Act xxx of 2004) MPRDA, the gazetting of a new Mining Charter in 2010 and the
completion of the auditing exercise on prospecting permits received and approved during the
moratorium period on new prospecting permits that was declared by the Minister, indicates the
seriousness with which the government views the impact of these measures on the growth and
development of the industry. The moratorium expired on the 31 March 2011 except for Mpumalanga,
where it was extended to the end of September 2011 owing to the complexity and multiplicity of
challenges facing that province‟s minerals and mining sector. In April 2011, the department introduced
a new on-line application system, known as the South African Mineral Resources Administration
(SAMRAD), in order to speed up the application and approval process while minimising any
interference with the system.
The continuing development of the Beneficiation Strategy Implementation Plan to help realise the
vision of expanding the local manufacturing base and accelerate the industrialisation of the country‟s
economy through the establishment of local downstream value addition industries, demonstrates the
government‟s serious intentions to speed up the transition from a dominantly extractive industry
characterised by the exportation of raw material and importation of more expensive finished metal and
mineral products. As the world economic conditions continued to improve in 2010, the country‟s total
processed minerals sales volumes rose by 9.5 percent while total revenues from total sales increased
by 31.6 percent owing to higher prices indicating the additional potential benefit that South Africa
could realise from the speedy development and execution of the Beneficiation Implementation Plan.
However, since South Africa is rated as the most unequal society in the world in terms of income
disparities despite being well endowed with resources, the question that is currently exercising the
country‟s policymakers‟ mind is : What can be done to accelerate growth of the contribution of the
minerals complex to inclusive economic growth that meaningfully reduces the high levels of
unemployment and arrest the growing gap between wealth and destitution in the face of the growing
scarcity of resources that is likely to disrupt the developmental agenda? This is the critical
st
national question of the 21 century, which various interventions including the Beneficiation Strategy
and its Implementation Plan, seek to address decisively to resolve the inequality challenge that the
nation faces, which is risibly incompatible with who we are and what we intend to be as a nation.
As the “weather gods” continued to wreak havoc with mining operations in various parts of the world,
supplies of certain mineral commodities became tight forcing prices to appreciate significantly as
many mining companies declared force majeure. This raised hopes that a new super-cycle could
materialise a lot sooner than previously anticipated prompting analysts to predict a speedier world
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economic recovery. However, the US economic crisis appeared to persist into 2010 and beyond
compounded by the extreme weather conditions experienced in that country and elsewhere.
Furthermore, lack of solidarity in the EU on how to respond decisively to the sovereign debt crisis
emanating from the PIIGS countries, further aggravated the situation. The complex confluence of
factors, particularly, the Euro-zone debt crisis and the stagnating US economy could re-infect the
whole world economy if the cancer is allowed to metastasise. Although this could have a severe
negative impact on South Africa‟s mineral exports, it could also present the country with an
opportunity to accelerate the execution of the Beneficiation Implementation Plan.
It is appropriate to congratulate Dr Thibedi Ramontja on his appointment as the Director General of
the Department of Mineral Resources (DMR). Dr Ramontja, who has served the private sector in
various capacities, from senior mine geologist to company Director, joined the department as Director:
Mineral Economics and was subsequently promoted to Chief Director: Mineral Promotion. He joined
the Council for Geosciences as Deputy Chief Executive Officer (DCEO), where-after he was promoted
to CEO, which position he held until September 2011 when he was transferred back to the DMR. The
department wishes to welcome Director General Dr Ramontja into the DMR family.
The department would like to express its sincere gratitude to all those that have made the compilation
of this publication possible, particularly, the mining industry for submitting the requisite statistics as
well as Dr Ian Robinson as external editor for this publication. Finally the input of DMR officials, whose
efforts ensured the successful compilation of this publication, is highly appreciated.
M Bonga
N Dlambulo
Professional Economist
Mineral Economics Directorate
Acting Director:
Mineral Economics Directorate
iv
CONTENTS
Page
iii
vii
viii
FOREWORD
ABBREVIATIONS AND SYMBOLS
EXPLANATORY NOTES
PART ONE: GENERAL OVERVIEW (P Mwape, M Mnguni, E Mokwena, T
Tjatjie, T Mamaru, M Mahote, K Menoe, A Andreas)
Introduction
Structure of the Industry
Policy Developments in 2009/2010
South Africa's Mineral Industry Strengths
Mineral Exploration
Infrastructure Developments
Role of Mining in the National Economy
Mineral Production and Sales
Selected Processed Mineral Sales, 2009
Imports of Selected Primary and Processed Mineral Products, 2008
Reported Mineral Related Projects in South Africa
Mineral Beneficiation
Economic Outlook for the South African Minerals Industry 2010/2011
1
1
1
3
8
10
10
12
18
20
21
22
23
23
PART TWO: REVIEW OF SELECTED COMMODITIES
PRECIOUS METALS AND MINERALS
Overview
Diamonds
Gold
Platinum-group Metals
Silver
O Moumakwa
O Moumakwa
P Perold
O Moumakwa
O Moumakwa
26
29
34
40
45
K Revombo
K Revombo
K Revombo
T Chilli
50
52
59
64
ENERGY MINERALS
Overview
Coal
Hydrocarbon Fuels
Uranium
NONFERROUS METALS AND MINERALS
Overview
Aluminium
Antimony
Cobalt
L Maphango
T Chilli
L Maphango
M Ikaneng & L Ramane
68
71
76
80
Copper
T Chilli
86
Lead
Nickel
Titanium
Zinc
Zirconium
L E Pitso
M Ikaneng & L Ramane
L Maphango
L E Pitso
L Maphango
v
91
95
100
105
110
FERROUS MINERALS
Overview
Chromium
Iron Ore
Manganese
Silicon
Vanadium
M Bonga & M Mashale
MC Mosiane & M Mashale
MC Mosiane & K Ratshomo
K Ratshomo
K Ratshomo
MC Mosiane & M Mashale
113
117
123
128
135
139
INDUSTRIAL MINERALS
Overview
Aggregate & sand
Alumino-silicates
Dimension Stone
Fluorspar
Limestone and Dolomite
Phosphate Rock
Special Clays
Sulphur
Vermiculite
R Motsie
R Motsie
M Modiselle
R Motsie
M Modiselle
R Motsie
L Ramane
M Modiselle
M Modiselle & L Ramane
L Ramane
143
151
154
Other Industrial Minerals
M Modiselle, L Ramane& R Motsie
186
158
161
165
170
173
179
183
PART THREE: GENERAL INFORMATION
RECENT PUBLICATIONS OF THE DIRECTORATE: MINERAL ECONOMICS
194
USEFUL ADDRESSES:
197
Department of Mineral Resources
Department of Environmental Affairs and Tourism
Department of Land Affairs
Department of Science and Technology
Department of Trade and Industry
Department of Water Affairs and Forestry
Statistics South Africa
State Owned Enterprises
Other Mineral-related Organisations
197
199
199
199
199
199
200
200
202
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ABBREVIATIONS AND SYMBOLS
A$
bbl
bbl/d
BGS
billion
CIF
CIS
China
CPI
conc
ct
DM
DMR
DRC
DRI
e
EAF
EU
FOB
FOR
FSU
g
Ga
g/t
GAR
GWe
ILZSG
INSG
kcal
kg
kg/t
km
kt
kt/a
lb
Australian dollar
barrel
barrels per day
British Geological Survey
thousand million
cost, insurance, freight
Commonwealth of Independent States. Par
of the former Union of Soviet Socialist
Republics (USSR)
People‟s Republic of China
Consumer price index
concentrate carat ct carat
carat
Deutsche Mark
Department of Mineral Resources
Democratic Republic of Congo
Direct reduced iron
estimate
Electric-arc furnace
European Economic Union
free on board
free on rail
Former Union of Soviet Socialist Republics
(USSR)
gram
giga year
gram per ton
gross as received
net gigawatts electric
International Lead and Zinc Study Group
International Nickel Study Group
kilocalorie
kilogram
kilogram per metric ton
kilometre
kiloton
kiloton per annum
pound avoirdupois
vii
LME
m
3
m
Ma
mic
Mct
Mozt
Mozt/a
Mt
Mt/a
MVA
MWh
na
nar
ns
NW
ozt
pa
PGMs
ppm
R
SA
S.ton
t
t/a
TCF
UAE
US
USBM
USGS
w
WBMS
y
y-o-y
$
C$
£
%
London Metal Exchange
metre
cubic metre
million years
metal-in-concentrate
million carats
million ounces troy
million ounces troy per annum
megaton (million tons)
million tons per annum
megavolt ampere
megawatt hour
not available
not as received
not specified
North West Europe
troy ounce
per annum
platinum-group metals
parts per million
rand (South African currency)
South Africa
Short ton
metric ton
tons per annum
trillion cubic feet
United Arab Emirates
United States of America
United States Bureau of Mines
United States Geological Survey
withheld
World Bureau of Metal Statistics
year
year-on-year
US dollar, unless stated otherwise
Canadian dollar
British pound sterling
per cent
EXPLANATORY NOTES
Reference
Due to space limitations, only the sources of statistical information are given.
The absence of a source reference to statistical data indicates that such data
was sourced from the Directorate: Mineral Economics database of mineral
production, sales and labour in South Africa. A bibliography is presented in
Part Three.
Mineral Resource
Mineral Resource covers in situ mineralization as well as dumps or tailings,
which have been identified and estimated through exploration/assessment
and sampling from which mineral reserves may be derived by the application
of modifying factors.
Minerals Reserve
In this publication, mineral reserve refers to the economically mineable
material derived from a measured and indicated mineral resource. It includes
diluting materials and allows for losses that are expected to occur when the
material is mined. Appropriate assessment to a minimum of pre- feasibility
study for a project or a Life of Mine Plan for an operation, must have been
carried out, including consideration of, and modification by, realistically
assumed mining, metallurgical, economic, marketing, legal, environmental,
social and governmental factors.
viii
PART ONE: SOUTH AFRICA’S MINERAL INDUSTRY
GENERAL REVIEW
P Mwape, M Mnguni, E Mokwena, T Tjatjie, T Mamaru, M Mahote
INTRODUCTION
The South African mining industry has long been recognized as the most prominent sector in the South
African economy and, despite the fact that it is only the sixth largest contributor to total Gross Domestic
Product (GDP) at present, it is still regarded as a cornerstone of the economy and, the largest employer.
Other sectors that contribute significantly to the country‟s economy are: manufacturing, electricity, financial
services, tourism, communications and construction.
Demand for South African minerals has played a major role in the growth of the economy of the country.
The mining industry is a well-established and resourceful sector of South Africa‟s economy and has a high
degree of technical expertise as well as the ability to mobilize capital for new development. It has provided
the impetus for the development of an extensive and efficient physical infrastructure and has contributed
greatly to the establishment of the country‟s secondary industries. With the diversity and abundance of its
natural resources, South Africa is a leading producer and supplier of a range of minerals and produced
approximately 53 different minerals from 1 548 mines and quarries in 2010 as well as exporting to
approximately 74 countries. Gold was produced from 53 mines, platinum-group metals (PGMs) from 45
mines, coal from 108 mines and diamonds from 395 mines, all as primary commodities.
STRUCTURE OF THE MINING INDUSTRY
South Africa is now in its second decade of a constitutional democracy that has endorsed the principles of
private enterprise within a free-market system, offering equal opportunities for its entire people. The State‟s
influence within the mineral industry is not only confined to orderly regulation and the promotion of equal
opportunity for all its citizens and investors, but it also participates in mining operations through state
owned companies like Alexkor, African Exploration Mining and Finance Corporation (Pty) Ltd (AEMFC),
Industrial Development Corporation (IDC) etc.
Private Sector
Corporate restructuring of the South African mining industry remains an ongoing exercise. Not only South
Africa possess large mineral resources and is a leading producer of a wide range of minerals, but some of
the largest mining companies in the world have operations in the country. The introduction of the Mining
Charter in South Africa was aimed at transforming the mining industry to redress historical imbalances, so
that the industry is aligned with the changes in the country‟s overall transformation of its social, political and
economic landscape. The transformation of the mining industry has included the consolidation of
ownership through minority buy-outs, separation of large diversified companies into two or more
specialised companies as well as the purchase of South African mining assets by foreign companies.
Associations involved in the South African mining industry include:
The Chamber of Mines of South Africa is a voluntary, private sector employers‟ organisation founded in
1889, three years after gold was discovered on the Witwatersrand. The Chamber is an association of
mining companies and mines operating in the gold, coal, diamond, platinum and other mineral commodity
sectors. Today, the organisation acts as the principal advocate of the major policy positions endorsed by
mining employers. The Chamber represents the formalised views of its membership to various organs and
spheres of governments, and to other relevant policy-making and opinion-forming entities, both within and
outside of the country. The Chamber is represented in the Minister of Mineral Resources‟ Advisory Board,
whose founding is rooted in Chapter 5 of the MPRDA.
The South African Mining Development Association (SAMDA) started in 2000 as a junior mining initiative
by a group of people associated with various South African junior and BEE mining companies. SAMDA‟s
mission is to create an enabling environment for raising finance, developing technical and other skills,
practising responsible environmental management and sustainable development and the maintenance of
standards of good practice in the junior mining sector.
1
Workers in the mining industry are represented by the following organisations:

The National Union of Mineworkers (NUM) which was formed on 4 December 1982. The NUM is
the largest recognised collective bargaining agent representing workers in the Mining, Construction
and Electrical Energy Industries in South Africa and the largest affiliate of COSATU, with offices in
all the South African Provinces.

The United Association of South Africa (UASA), which plays an important role in the international
labour arena, joining hands with various international federations that promote global solidarity
among workers of the world in their struggle against the negative effects of globalisation of the
economy. It is affiliated with the International Federation of Transport Workers (FIOST), the
International Confederation of Free Trade Unions (ICFTU), and the World Confederation of Labour
(WCL).

Solidarity, a movement which fights for the rights of its members and their communities.
Many co-operative organizations serve the interests of the smaller groups and independent operators, or
specific sectors of the industry. These include the Aluminium Federation of South Africa, the South African
Copper Development Association, the Ferro-Alloy Producers Association, the Engineering Industries
Federation of South Africa, the Southern Africa Stainless Steel Development Association, the Diggers
Association and the Aggregate and Sand Producers Association of South Africa.
Government
Ownership, access and opportunity in regard to the country's mineral resources are regulated by the
Mineral and Petroleum Resources Development Act of 2002 (MPRDA), which recognizes the state's
custodianship over the country's mineral resources. The MPRDA regulates the prospecting for, and optimal
exploitation, processing and utilisation of minerals, provides for safety and health in the mining industry,
and controls the rehabilitation of land disturbed by exploration and mining. This Act defines the entire
regulatory environment of the minerals industry, from rights and ownership to mineral sales and
beneficiation. It also pertains to all other industries and entities that have an influence on the minerals
business.
The Act‟s main objectives are to:
recognize State custodianship of all mineral resources within the Republic of South Africa;
promote equitable access to the nation's mineral resources, especially among historically
disadvantaged South Africans;
promote investment, growth and employment in the mineral industry thus contributing to the
country‟s economic welfare;
provide for security of tenure in respect of existing prospecting and mining operations;
give effect to section 24 of the Constitution by ensuring that the nation's mineral resources are
developed in an orderly and ecologically sustainable manner; and
ensure that holders of mining rights contribute towards the socio-economic development of the
areas in which they are operating.
Recognizing State custodianship of natural resources has brought South Africa in line with international
best practice. This more universally recognized mineral rights system has led to the freeing-up of unused
old order rights and hitherto effectively sterilized privately-owned mineral rights in prospective mineral
terrains, which attracts international exploration and mining companies and increases the level of
competition among local players.
The Act also aims to assist historically disadvantaged South Africans aspiring to conduct prospecting or
mining activities, with the proviso that such assistance is fair and equitable and does not harm the interests
of other parties. The Act provides a safe haven for owners of existing rights, or for those whose
applications were being processed at the time of enactment and guarantees security of tenure in respect of
prospecting and mining operations. Furthermore, this gives the holder of an “old order” mineral right an
opportunity to comply with the provisions of the Act and also to promote equitable access to the country‟s
mineral and petroleum resources.
2
The Advantages of the New System of State Custodianship of Mineral Rights in South Africa
The change from a dual system of ownership to a singular system where the state controls the
ownership of mineral rights on behalf of the nation has facilitated access to mineral terrains for new
entrants into the mining and minerals industry thus stimulating private sector activity.
State control of mineral rights removes difficulties in legal and administration costs and delays
caused by a fragmented mineral right holdings structure.
The system of state custodianship of mineral rights enables the state to enforce the submission
and release of exploration information, thereby avoiding the duplication of exploration activities.
State custodianship of mineral rights prevents the hoarding of mineral rights and allows equal and
equitable access to potential investors.
Review of the Mining Charter
The first Mining Charter of 2002 was developed on the basis of principles of co-determination with all
stakeholders in South Africa‟s mining industry. This charter provided for a review after five years in terms of
progress made by all stakeholders. Through the second mandate of the Mining Industry's Growth,
Development and Employment Task Team (MIGDETT), which started during the latter part of 2009,
competitiveness and transformation were identified as mutually reinforcing attributes that will position
South Africa‟s mining industry along a sustainable growth path. On 30 June 2010 mining stakeholders
represented in MIGDETT (Chamber of Mines, SAMDA, NUM, UASA and Solidarity) affirmed their
commitment by signing a Declaration on the strategy for the sustainable growth and meaningful
transformation of South Africa‟s mining industry. The declaration formed the basis for the Mining Charter
review, and it is thus the background to the revised Mining Charter. The revised Mining Charter which
includes “sustainable development” as an additional element was published on the 13 September 2010.
Other Mining Policy Amendments
Chapter XVI of the Mining Rights Act, (Act No 20 of 1967) in the form of the Precious Metals Act,
2005 (Act No. 37 of 2005);
The Diamonds Act, 1986 (Act No 56 of 1986) in the form of the Diamonds Amendment Act, 2005
(Act No 29 of 2005), and the Diamonds Second Amendment Act, 2005 (Act No 30 of 2005).
Geoscience Amendment Act, 16 of 2010
The Geoscience Amendment Act (16/2010) Regulations
The Housing and Living Conditions Standards for the Mining and Mineral Industry,
The Codes of Good Practice for the Mining and Mineral Industry
Section 22 (5) Guidelines; and
Draft Mineral and Petroleum General Laws Amendment Bill 2011
Section 22 (5) Guidelines
The Precious Metals Act, 2005 (Act No. 37 of 2005)
The objective of this Act is to provide for the acquisition, possession, smelting, refining, beneficiation, use
and disposal of precious metals. Precious metals include gold and the platinum group metals (PGMs).
Since silver is produced as a byproduct and because of its low value (price) compared to other precious
metals, it has been excluded from the definition of precious metals.
The Diamonds Amendment Acts, 2005 (Act No. 29 of 2005 and Act No. 30 of 2005)
The rationale for the amendment of the Diamonds Act, 1986 (Act No.56 of 1986) was: to increase access
to rough diamonds for jewellery manufacturing in South Africa, maintain security of supply of rough
diamonds, and promote the beneficiation of diamonds in South Africa, thus creating jobs and increasing
participation especially from Historically Disadvantaged South Africans throughout the diamond value
chain.
Housing and Living Conditions Standards for the Mineral Industry
The Housing and Living Conditions Standards were gazetted in April 2009, with the objective of developing
basic guidelines for suitable housing and living conditions standards to ensure a decent standard of
housing for mine workers.
3
The Review of the Codes of Good Practice for the South African Minerals and Mining Industry
The objective of this Document is to create an industry that will proudly reflect the promise of a non-racial,
non-sexist and prosperous South Africa and to set out administrative principles in order to facilitate the
effective implementation of the minerals and mining legislation and enhance the implementation of the
Broad-Based Socio-Economic Charter applicable to the mining industry as well as to give effect to section
100(1) (b) of the Mineral and Petroleum Resources Development Act, 2002.
The process of reviewing the Codes was initiated in September 2010. Draft of reviewed Codes were
developed and then referred to the Minister who has since approved for consultation purposes. The
purpose of the review is to outline ethical standards to be adhered to by all mining industry stakeholders in
respect of fronting, labour practices, fair business practices, beneficiation, community upliftment, employee
welfare, sustainable development and safe mineral exploitation. In the Draft Review of the Codes of Good
Practice, stakeholders commit to exercising ethical behaviour, respect for employees rights and promote
economic development within mine communities. Extensive consultation with all relevant stakeholders on
the Draft Reviewed Codes will be conducted after the Minister has approved the Draft Reviewed Codes
document.
Geoscience Amendment Act 16 of 2010
Following an extensive consultation process, a Draft Amendment Bill was prepared and tabled in
Parliament in June 2010. In September 2010, the Bill was considered by the Parliamentary Portfolio
Committee and approved by the National Assembly in late November 2010. The President of the Republic
assented to and signed the Bill into law on the 3rd of December 2010.
The main objectives of the Amendment Act are to mandate the Council for Geoscience to be the custodian
of the geotechnical information, to be a national advisory authority in respect of geohazards related to
infrastructure and development, and to undertake reconnaissance operations, prospecting research and
other related activities in the mining sector.
The Geoscience Amendment Act (16/2010) Regulations
Consequent to the promulgation of the Amendment Act, the Mineral Policy Development Directorate,
together with the Council for Geoscience, developed Draft Regulations. The purpose of the regulations is
to prescribe the processes, procedures and requirements for compliance with the Amendment Act. All the
relevant stakeholders will be consulted on the Draft Regulations. The regulations are expected to be
finalised and gazetted towards the end of 2011.
Section 22 (5) Guidelines
In March 2011, comprehensive section 22 (5) guidelines were prepared. The purpose of the guidelines is
to create an enabling environment for the Department to facilitate the processing of applications made in
terms of section 22 (5). Section 22 (5) empowers the Minister to exercise his/her discretion by publishing a
notice in the Government Gazette inviting applications for mining rights in respect of specific land.
The guidelines are aimed at achieving the following objectives: optimal mining of South Africa‟s mineral
resources; promotion of investment in the mining and minerals industry; equitable access to the nation‟s
mineral resources; substantial and meaningful opportunities for historically disadvantaged persons;
promotion of economic growth and mineral resources development as well as promotion of employment
and advancement of the social and economic welfare of all South Africans.
The draft guidelines were approved by the Director General (DG) and the Minister for Implementation.
Draft Mineral and Petroleum General Laws Amendment Bill 2011
The objectives of the amendment are to improve the current construct of the Act to remove ambiguities,
make provision for a comprehensive consultation process, make provision for enhanced punitive
measures, streamline the licensing processes and provide for a single regulatory authority. Numerous
workshops with industry stakeholders (MIGDETT) and Department of Water Affairs and Department of
Environmental Affairs have been held since the inception of the amendment exercise. Inputs and
comments received have been given due consideration and informs the development of the Draft Bill.
Drafting meetings are held regularly to discuss outstanding issues and update the Draft Bill accordingly.
4
The Draft Bill currently awaits Cabinet approval to engage stakeholders and to introduce the Bill into the
Parliamentary process once the consultation process has been finalized.
Association of African Diamond Producing Countries (ADPA)
ADPA is an association of diamond producing African countries, 11 of which have full membership while
seven only enjoy observer status. At the time of inception, the Republic of Angola held the Chairmanship
until July 2010 when Hon. Minister Susan Shabangu, of Mineral Resources, assumed the role of
chairperson. This coincided with South Africa hosting the Association‟s 2nd ordinary council of Ministers‟
meeting from the 14th – 15th July 2010 in Pretoria.
The main focus of ADPA revolves around the implementation of aligned policies and strategies intended to
maximize the benefits derived from revenues of diamonds across the African continent. In so doing ADPA
explores the development of a best practice document that will promote the realisation of harmonised the
policies across Africa with goal to increase foreign investment into the diamond sector for the benefit of all
member States.
Department of Mineral Resources (DMR)
The Department of Minerals and Energy was divided into two separate departments in 2009 namely,
Mineral Resources and Energy. The Department of Mineral Resources (DMR) assumes the custodianship
of all mineral resources in the Republic of South Africa on behalf of its citizens. To this end, the department
promotes and regulates the Minerals and Mining Sector for transformation, growth, development and to
ensure that all South Africans derive sustainable benefit from the country‟s mineral wealth. Various
specialised divisions of the DMR and associated institutions are responsible for the administration of the
mining and regulations (Figure 1) and for promoting the development of the industry. Mining is regulated by
three branches, viz the Mineral Policy and Promotion branch, Mineral Regulation branch and the Mine
Health and Safety Inspectorate.
FIGURE 1: SUMMARY OF SOUTH AFRICA‟S ADMINISTRATION OF MINERAL LAWS
ADMINISTRATION OF LAWS
DMR
Mines and Workd Act, 1956
(Act No 27 of 1956
(Section 9))
Mineral Technology Act, 1989
(Act No. 30 of 1989)
Geoscience Act, 1993
Mine Health and Safety Act, 1996
(Act No. 29 of 1996) as amended
Act No. 100 of 1993)
Geoscience Amendment Act, 16 of 2010
(
Minerals and Petroleum Resources Development Act
(Act No. 28 of 2002)
Mining Titles Registration Amendment Act, 2003
(Act No. 24 of 2003)
Diamonds Act, 1986
(Act No 56 of 1986)
Precious Metal Act, 2005
(Act No 37 of 2005)
Diamond Amendment Act, 2005
(Act No 29 of 2005)
Diamond Amendment Act, 2005
(Act No 30 of 2005)
Source: DMR
5
The Mineral Policy and Promotion Branch of the DMR is responsible for formulating and promoting mineral
related policies that will encourage investment in the mining and minerals industry, making South Africa
attractive to investors. The branch consists of four Chief Directorates: Mineral Policy, which develops new
policies, reviews existing policies and amends legislation to promote investment growth and achieve
transformation in the minerals and mining industry, Economic Advisory Services that undertakes regulatory
impact assessments of the laws and policies implemented by the Department as well as monitors and
evaluates transformation in the mining industry; Mineral Promotion promotes mineral development and
advises on trends in the mining industry to attract additional investment, and Mine Environmental
Management that provides strategic guidance to mine environmental management and mine closure
issues, including the management of derelict and ownerless mines.
The Mineral Regulation Branch regulates the minerals and mining sector to promote economic growth,
employment, transformation and sustainable development. Mineral Regulation is also responsible for the
administration of prospecting and mining rights licensing and compliance with the Mineral and Petroleum
Resource Development Act, 28 2002 (the Act), including mine environmental management compliance.
The Mineral Regulation branch consists of four Chief Directorates that are accountable for all matters
relating to mineral regulation within the nine regions. The Central Region is responsible for Free State and
Northern Cape provinces; Western Region for Gauteng and North West; Northern Region for Limpopo and
Mpumalanga provinces; while the Coastal Region is responsible for KwaZulu Natal and Eastern and
Western Cape provinces.
The Mine Health and Safety Inspectorate (MHSI) is responsible for implementing mine health and safety
legislation. The Inspectorate ensures the safe mining of minerals under healthy working conditions and is
represented in the various provinces by Principal Inspectors. The branch is comprises two sub –
programmes which are Mine Health and Safety (Regions) responsible for audits, inspections,
investigations, enquiries, enforcing the Mine Health and Safety Act and its provisions, examination services
and providing professional advice and Governance Policy and Oversight that develops policy and
legislation to guide enforcement mining, provide technical support to regional offices, chair tripartite
structures and facilitate HIV and AIDS work in the mining sector.
Through the Mine Health and Safety Council (MHSC), the inspectorate provides leadership and
participates in initiatives and activities of tripartite institutions to respond to current health and safety
challenges. The MHSC is a national public entity (schedule 3A) established in terms of the Mine Health
and Safety Act, No 29 of 1996 as amended. The main task of the Council is to advise the Minister of
Mineral Resources on occupational health and safety legislation and research outcomes focused on
improving and promoting health and safety in South African mines. The MHSC continues to respond to
health and safety challenges through implementation of focused programmes addressing milestones
agreed upon by stakeholders (labour, state and employers) during their health and safety summit in 2003.
Resolutions included that the mining sector would achieve a 20 percent decline in safety statistics per year
and eliminate Silicosis and Noise Induced Hearing Loss by 2013.
The Mining Qualifications Authority (MQA) also plays a critical role by addressing skills shortages in the
mining industry through capacity development and process improvement. The MQA as established by the
Mine Health and Safety Act (MHSA), No. 29 of 1996, is mandated to ensure that the mining and mineral
sector has sufficient competent people who will improve health and safety.
The DMR conducts regulatory and promotional activities in association with several, highly specialised
associated institutions of government:
The Council for Geoscience undertakes geological mapping and carries out studies pertaining to the
identification, nature, extent and genesis of ore deposits and also maintains national databases of the
country‟s geoscientific data and information.
6
Council for Mineral Technology (MINTEK) assists the minerals industry to operate more effectively by
developing and making available the most appropriate and cost-effective mineral recovery and mineral
beneficiation technologies. It is engaged in the full spectrum of minerals research: from the mineralogical
examination of ores to the development of processing, extraction and refining technologies and it also
conducts research into the production of added value products and feasibility and economic studies. Much
of this work is carried out in close liaison with the local and international minerals and metallurgical
industries.
The South African Nuclear Energy Corporation (NECSA) undertakes and promotes research and
development in the field of nuclear energy technology and radiation sciences in order to process source
material, special nuclear material and restricted material as described in Nuclear Energy Act, No 146,
1999, Sections 2(a), 2(b) and 2(c).
The Council for Scientific and Industrial Research (CSIR) conducts, inter alia, research related to specific
minerals, brownfields mineral exploration, air quality, water pollution and purification, as well as mining and
mineral processing technologies. The CSIR‟s Division of Natural Resources and Environment in the
mining category focuses its research and development on the mining industry. Major research activity in
this division focuses on the most crucial challenges threatening the health and safety of the underground
workforce and overcoming a variety of technological challenges that impact on profitability in the mining
industry.
The division conducts fundamental research and technology development and provides general advice
and assistance relating to the improvement of the underground environment and strata control, reduction
of hazardous conditions associated with rock pressure in mining operations, as well as development of
new or improved mining systems and equipment.
The South African Diamond & Precious Metals Regulator (SADPMR) was established by Section 3 of the
Diamonds Act, 1986 (as amended in 2005), and replaced the South African Diamond Board which was delisted as a Schedule 3A public entity in March 2007. The South African Diamond Board established in 1987
in terms of the Diamond Act, Act 56 of 1986 to regulate control over possession, the purchase and sale of
diamonds, processing and the export of diamonds.
The State Diamond Trader (SDT) is a state owned entity established in terms of Section 14 of the
Diamonds Amendment Act, 29 of 2005. The SDT‟s main business is to buy and sell rough diamonds in
order to promote equitable access to and beneficiation of diamond resources. The main aim of the SDT is
to address distortions in the diamond industry and correct historical market failures to develop and grow
South Africa‟s diamond cutting and polishing industry. The entity is eligible by law and proclamation to
purchase up to 10% of the run of mine stones empowerment from all diamond producers in South Africa,
and sell to registered customers through their application and approval process.
Petroleum Agency South Africa (PASA), promotes exploration for onshore and offshore oil and gas
resources and their optimal development on behalf of government, as designated in terms of the Mineral
and Petroleum Resources Development Act (MPRDA). The Agency regulates exploration and production
activities, and acts as the custodian of the national petroleum exploration and production database.
Most of South Africa‟s institutions of higher education (universities and universities of technology) are not
only responsible for the training of professional and technical personnel required by the mineral industry
but also undertake mineral and/or mining research. The mining industry strives to conform to strict
professional ethics and competitive technical practices through organisations such as the Geological
Society of South Africa (GSSA), the Southern African Institute of Mining and Metallurgy (SAIMM) and the
South African Council for Natural Scientific Professions (SACNASP).
7
MINERAL INDUSTRY STRENGTH
South Africa's minerals wealth has been built on the country's enormous resources most of which are
usually found in the following distinctive geological structures and settings:
•
•
•
•
•
•
•
•
The Witwatersrand Basin yields some 93 percent of South Africa‟s gold output and contains
considerable resources of uranium, silver, pyrite and osmiridium;
The Bushveld Complex is known for its platinum group metals (with associated copper, nickel and
cobalt mineralisation), chromium and vanadium bearing titanium iron ore formations as well as
large deposits of the industrial minerals, including fluorspar and andalusite;
The Transvaal Supergroup contains enormous resources of manganese and iron ore;
The Karoo Basin extends through Mpumalanga, KwaZulu-Natal, Free State as well as Limpopo
Province hosting considerable bituminous coal and anthracite resources;
The Palaborwa Igneous Complex hosts extensive deposits of copper, phosphate, titanium,
vermiculite, feldspar and zirconium ores;
Kimberlite pipes host diamonds that also occur in alluvial, fluvial and marine settings;
Heavy mineral sands contain ilmenite, rutile and zircon;
Significant deposits of lead-zinc ores associated with copper and silver are found in the Northern
Cape near Aggeneys.
South Africa accounts for 88 percent of known global reserves of the platinum group metals (PGMs), 80
percent of manganese, 72 percent of chrome, 26 percent of vanadium and 13 percent of gold reserves
(Table 2). Since most of the identified mineral resources and reserves were discovered by means of
obsolete exploration methods, there is still significant potential for the discovery of other world-class
deposits in areas not yet thoroughly explored using modern exploration technologies. As a major mining
country, South Africa's strengths include a high level of technical expertise as well as comprehensive
research and development activities. In order to encourage development, the new mining legislative
framework facilitates access to permits/rights for interested parties.
8
TABLE 2 – SOUTH AFRICA‟S ROLE IN WORLD MINERAL RESERVES, PRODUCTION AND EXPORTS,
2010
COMMODITY
RESERVES
Unit
Aluminium
+
PRODUCTION
Mass
%
Rank
Unit
Mass
EXPORTS
%
Rank
*
*
*
kt
812
Alumino-silicates
Mt
51
*
*
kt
265
61,3
1
Antimony
kt
21
1,2
5
t
3 239
2,2
2
1
Unit
Mass
%
Rank
kt
549
3,1
7
kt
134
*
*
*
*
*
Chrome Ore
Mt
5 500
72,4
1
kt
10 871
41.6
1
kt
1 929
22.3
2
Coal
Mt
30 156
3,5
8
Mt
254,5
3,5
7
Mt
66,4
7
6
Copper
Mt
11
2,1
14
kt
84
*
*
kt
49
*
*
Ferro-chrome
*
*
*
kt
3 607
40,8
1
kt
3 116
55,2
1
Ferro-Mn/Fe-Si-Mn
*
*
*
kt
790
*
*
kt
751
*
*
Ferro-silicon
Fluorspar
Mt
Gold
t
*
*
*
kt
128
2,4
6
kt
59
3,1
5
41
17,8
1
kt
130
2,4
5
kt
*
*
*
12,8
2
t
188,7
7,1
5
t
176,8
*
*
6 000
1
Iron Ore
Mt
1 500
0,9
12
Mt
58,7
3,1
9
Mt
47,4
4,5
4
Lead
kt
3 00
0,4
13
kt
50
1,2
11
kt
53
1,9
14
Manganese Ore
Mt
4 000
80,0
2
kt
7 171,7
15,6
2
kt
5 986
30,3
1
Nickel
Mt
3,7
4,9
8
kt
40,0
2,7
11
kt
33,1
*
*
PGMs
t
70 000
87,7
1
t
287,2
58,7
1
t
244,5
*
*
Phosphate Rock
Mt
1 500
2,3
5
kt
2 493,9
1,4
11
kt
25
*
*
Silicon Metal
*
*
*
kt
46,4
2,5
8
kt
62,4
4,5
6
Silver
*
*
*
t
79,3
0,4
20
t
78,9
*
*
Titanium Minerals
Mt
71,3
10,3
4
kt
1 250
19,8
2
*
*
*
Uranium
kt
295
8
5
t
655
1,3
10
*
*
*
Vanadium
kt
3 500
26
3
kt
22,6
38
2
kt
16,9
*
*
Vermiculite
Mt
14
*
*
kt
199,3
40
1
kt
166,5
*
*
Zinc
Mt
15
3,3
8
kt
36
0,3
25
kt
7
0,1
24
Zirconium
Mt
14
25
2
kt
389
32,8
2
*
*
*
Sources:
Notes:
USGS, BP statistical review of world energy 2011, Mineral Economics Directorate,
Full details given in respective commodity chapters
Figure under Reserve refers to metal production capacity
* Information not available
1
Figure refers to reserve base
+
South Africa is the world‟s top producer of PGMs, chrome ore, vermiculite and alumino-silicates, and is
among the top three producers of antimony, manganese ore and titanium minerals. The country accounts
for over 58 percent of the global production of PGMs and alumino-silicates (Table 2). South Africa is also
ranked as the world‟s largest exporter of manganese ore, second largest exporter of chrome ore, with coal
and iron ore both ranked at positions 6 and 7, respectively.
9
MINERAL EXPLORATION
Exploration expenditure is primarily driven by demand for specific commodities, the potential for discovery
and the investment and regulatory environment. In 2010, the demand and prices for most commodities
improved, which resulted in companies increasing their exploration budget. The world total exploration
expenditure showed a significant increase of 53 percent from $7.32 billion in 2009 to $11.2 billion in 2010.
According to Metals Economics Group (MEG), the share of the world‟s total exploration budget for two
exploration stages namely, grassroots and late stage increased from 32 percent to 33 percent and from 41
percent to 42 percent, respectively, while mine site exploration budget decreased from 27 percent to 25
percent. Canada and Australia maintained their top positions in world exploration spending, respectively
accounting for 19 percent and 12 percent share of world exploration expenditure (Figure 2), while South
Africa lost its place in the top ten countries to Argentina. It is anticipated that global exploration expenditure
will continue to increase on the back of economic recovery underpinned by high levels of international
commodity prices.
FIGURE 2: EXPLORATION EXPENDITURE BY REGION, 2010
Pacific/Southeast Asia
7%
United States 8%
Australia 12%
Latin America 27%
Africa 13%
Rest of World 14%
Canada 19%
Source: Metal Economics Group, 2010
Since the inception of the MPRDA in 2004, a total amount of 28 712 applications for prospecting and
mining rights have been received by the Department of Mineral Resources (DMR). Of the total number of
applications received, 16 704 applications were for prospecting rights and 233 were for exploration rights.
This shows that currently prospecting right applications were in the majority, indicative of the continuing
interest in exploration activities in South Africa, with PGM‟s, diamonds, gold, uranium and coal being the
dominant targets. 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.
Mining is one of the economy‟s key sectors contributing 9.6 percent to GDP, with potential for major
contribution to economic growth, job creation and transformation, consistent with the Government‟s
objectives of higher and more balanced economic growth. The depleting nature of the mineral resources
necessitate that South Africa should refocus on investment in Greenfield exploration, in order to sustain the
mining industry through the opening of new mines and expansion of existing operations. Mineral
exploration investment as highlighted under the sustainable development section of the declaration
document on the strategy for sustainable growth and meaningful transformation of South Africa‟s mining
industry was identified as one of the key elements in growing and developing the mining industry. A task
team was then established to develop mechanisms of accelerating mineral exploration investment in the
country.
INFRASTRUCTURE DEVELOPMENTS
South Africa is one of the most sophisticated and promising emerging markets in the world. The unique
combination of a well developed First-World economic infrastructure, and a rapidly emerging market
economy, has given rise to an entrepreneurial and dynamic investment environment with many global
10
competitive advantages and opportunities. 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 meeting the development needs of its populace. The implementation of the Precious Metals
Act, 2005 as well as the Diamond Second Amendment Act, 2005 is expected to increase investment in
South Africa‟s mineral industry by ensuring the continuation of a competitive business environment and the
lowering of barriers to entry. The Southern African subcontinent will also benefit from improved regional
co-operation, seeking to harmonize legislation governing the mining industry.
South Africa boasts the most modern and extensive infrastructure in Africa, with a highly developed
transport infrastructure consisting of extensive road and rail networks. Transnet is a public company which
is a dominant player in the Southern African transport infrastructure, aimed at both supporting and
contributing to the country‟s freight logistics network. Its activities extend beyond the borders of South
Africa into Africa and the rest of the world. Transnet Freight Rail (TFR) is the largest division within
Transnet, representing the group‟s rail freight transport interests. The total rail infrastructure comprises 30
000 km of track, of which about 1 500 km comprises heavy–haul lines. There are dedicated railway lines
for iron ore from Sishen, in the Northern Cape to Saldanha Bay on the west coast, and another for
transporting coal from the coal fields of Mpumalanga to the Richards Bay Coal Terminal (RBCT) on the
east coast. In March 2010, Transnet indicated in its five-year strategy that more than R93 billion would be
spent on infrastructure expansion and other projects to improve customer services and ensure financial
sustainability in future. It will also fund the acquisition of 304 locomotives and will increase its stock of 72
643 wagons by 10 percent to improve coal and iron ore freight capacity and the general freight business.
Portnet is the largest port authority in Southern Africa, with the best-equipped and most efficient network of
ports in Africa. The network connects the ports of South Africa and the rail networks of the Sub Saharan
region. Most of South Africa‟s minerals are exported through five major ports, the largest of which is
Richards Bay with the capacity of 92 Mt per annum, mainly for coal exports. According to South Africa
Maritime Safety Authority (SAMSA), Richards Bay handled a total of 85.15 million tons of cargo including
5.7 million tons of imports, 78.9 million tons of exports and 436.1 thousand tons of coastal shipping cargo.
Saldanha Bay which is the only dedicated iron ore export facility in the country has also increased its
capacity to about 60 Mt per annum and Durban port has a capacity of 31.4 Mt, mainly for liquids,
containers and break bulk cargoes. The Port of Ngqura being developed near Port Elizabeth in the Eastern
Cape will increase the country‟s port capacity substantially. The port is capable of serving post-Panamax
dry and liquid bulkers and the new generation of cellular container ships.
South Africa boasts an outstanding telecommunications infrastructure, which has shown a rapid growth of
the mobile telephone communications across the country. The country joined together all its resources to
ensure the successful hosting of the world‟s biggest sport event, the 2010 World Cup. Over R1.5 million
was spent on the broadcasting and telecommunications. In addition to ensuring world-class
telecommunications and broadcast-infrastructure support for the tournament, government helped to set up
the International Broadcasting Centre (IBC) at the National Exhibition and Recreational Centre in
Johannesburg. The Department of Communications is working on the development of an Integrated
National ICT Policy Framework, which seeks to promote the convergence of technologies and stimulate
the growth of the economy in line with the objectives of the National Industrial Policy. It aims to encourage
e-commerce activities and expand ICT infrastructure, linking rural and urban communities as well as
uplifting the poor. The number of South African Internet users passed the five-million mark for the first time
in 2008, finally breaking through the 10% mark in Internet penetration for the country. This is a key finding
of the Internet Access in South Africa 2010 study, conducted by World Wide Worx, released in January
2010. Telkom is the largest provider of communications services in Africa, with the second landline
operator being Neotel.
Electric power is generated by the country‟s electricity utility, Eskom. In April 2010, the government
welcomed the decision by the World Bank to grant a $3.75 billion project loan to Eskom. The loan will cofinance the Medupi Power Station and the country‟s first large wind and concentrated solar power (CSP)
projects. In October 2010, government extended guarantees to Eskom of R774 billion to enable it to
continue with its Build Programme responsible for additional power stations and major power lines through
2017. The construction of the Medupi Power Station will provide much needed new base load capacity,
which will be commissioned in stages from 2012 onwards. Ultimately, Eskom plans to double its capacity to
80 000MW by 2026. This will ensure that the country‟s economic development objectives remain on track
and that security of supply is restored. Investment in energy remains a cornerstone of government‟s
economic growth strategy. South Africa is committed to meeting its long-term climate change mitigation
objectives and is pursuing an energy strategy compatible with commitments made in Copenhagen to
promote energy efficiency and reduce greenhouse gas (GHG) intensity of its economy. There is also a
dedicated drive to invest in research and development for energy efficient technologies.
11
South Africa‟s banking system is well-developed, which sets it apart from many other emerging economies,
offering a mature market with a good regulatory and legal framework. The South African Reserve Bank
(SARB) oversees the local banking services industry. The non-banking financial services industry is
governed by the Financial Service Board (FSB). The South African banks are well capitalised and
managed; and have sophisticated risk-management systems and corporate-governance infrastructures
comparable to First World economies.
South Africa has a sizeable labour pool and a Human Development Index (HDI) survey, conducted by the
United Nations in about 169 countries, places South Africa at 110 as a medium human development
country. The Government, through the Amended Skills Development Act of 2003 tightened regulations to
ensure continuous improvement in the skill development strategies across all sectors. The Mining
Qualifications Authority (MQA) is responsible for the provision and administration of skills development
projects for the mining and minerals sector.
ROLE OF MINING IN THE NATIONAL ECONOMY
South Africa‟s mining industry continues to play a critical role in the country‟s economic growth and
development. In 2010, mining contributed R230.4 billion ($31.5 billion) or 9.6 percent to gross domestic
product (Figure 3), an increase of R17.9 billion over the previous year. The increase in real value added by
mining can be attributed to rising production, particularly PGMs and coal, and commodity prices due to
higher demand in the wake of the global economic recovery. If the value-added contribution of processed
minerals (presently included in the manufacturing sector‟s figures) were added to that of mining and
quarrying, the impact of mining on the national accounts would be significantly higher. During 2010, mining
and quarrying contributed 12.1 percent to Gross Fixed Capital Formation (GFCF), the first decline recorded
since 2005.
FIGURE 3 – CONTRIBUTION OF MINING AND QUARRYING TO GROSS DOMESTIC PRODUCT
AND TOTAL FIXED CAPITAL FORMATION OF SOUTH AFRICA, 2001 – 2010
(Current Rand Prices)
Percentage
13
12
Contribution to Gross Domestic Product
11
Contribution to Total Fixed Capital Formation
10
9
8
7
6
2001
2002
2003
2004
2005
2006
Source: South African Reserve Bank: Quarterly Bulletin, June 2011
12
2007
2008
2009
2010
TABLE 3 – CONTRIBUTIONS OF MINING AND QUARRYING TO GROSS DOMESTIC PRODUCT,
FIXED CAPITAL FORMATION AND TOTAL NATIONAL EXPORTS OF
GOODS, 2001–2010 (at current prices)
CONTRIBUTION TO VALUE ADDED
National Gross
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources:
Notes
Domestic Product
From Mining
R‟million
R‟million
1 020 007
1 171 086*
1 272 537*
1 415 237*
1 571 082*
1 767 422*
2 017 102*
2 283 223*
2 176 599*
2 405 383
77 214
92 730*
82 770*
91 198*
105 992*
132 301*
156 969*
210 079*
198 180*
230 402
%
7,6
7,9
6,7
6,4
6,7
7,5
7,8
9,2
9,1
9,6
CONTRIBUTION TO FIXED
CAPITAL FORMATION
Total
Fixed
Capital
From
Formation
Mining
R‟million
153 525
172 151*
196 999*
226 180*
263 754*
324 083*
406 918*
513 749*
531 957*
521 613
R‟million
15 871
19 802*
21 706*
17 917*
16 743*
27 715*
39 742*
51 266*
64 940*
63 298
CONTRIBUTION TO NATIONAL
TOTAL EXPORT OF GOODS
Total
Exports
From Mining
%
R‟million
R‟million
10,3
11,5
11,0
7,9
6,3
8,6
9,8
10,0
12,2
12,1
265 832
333 251*
291 434*
310 525*
358 361*
447 690*
533 791*
704 293*
556 432*
625 359
89 943
109 357*
86 747*
89 546*
102 486*
138 878*
161 755*
219 593*
176 837*
224 225
%
33,8
32,8
29,8
28,8
29,1
31,8
30,3
30,8
31,8
35,9
Department of Mineral Resources, Directorate Mineral Economics
South African Reserve Bank, Quarterly Bulletin June 2011, pS105 & 114
* Revised figures
The contribution of primary mineral exports sales to South Africa‟s total export revenue during 2010
increased by 26.8 percent from R176.8 billion in 2009 to R224.2 billion in 2010, accounting for 35.9
percent of the total exports of goods, the highest in over a decade (Figure 4 and Table 3). The increase in
export revenue was mainly due to increased global demand and commodity prices, particularly from China
and India. This was despite the appreciation of the rand to dollar exchange rate from R8.44 in 2009 to
R7.32 in 2010.
13
#
FIGURE 4 – CONTRIBUTION OF PRIMARY MINERALS TO SOUTH AFRICA‟S EXPORTS SALES ,
2001-2010
250
40
35
30
25
150
20
100
15
Percentage
R billion
200
10
50
5
0
0
2001
2002
All Minerals
2003
2004
PGM's
2005
Gold
2006
2007
2008
2009
2010
Nominal Value of Mineral Exports+
Sources: DMR, Directorate Mineral Economics
+
Notes:
Includes gold
#
Total exports of goods only, including gold
In 2010, South Africa exported primary minerals to 74 countries with processed minerals exported to 72
countries. Europe and Pacific Rim countries remained the most important export destinations accounting
for 67.8 percent of primary minerals and 46.3 percent of the selected processed minerals respectively
(Table 4). When precious metals and minerals are excluded from primary mineral exports, Pacific Rim
accounted for 54.9 percent and the European countries for 29.4 percent of the total export value in
2010.The export value of primary minerals to the Pacific Rim region increased by 57.6 percent in 2010,
with exports to China and India increasing by 91.3 percent and 55.1 percent respectively, mainly due to
high economic activities. However, exports of processed minerals to China declined by 21.5 percent while
exports destined for India rose by 116.9 percent.
14
TABLE 4 – SOUTH AFRICA‟S EXPORT VALUE OF PRIMARY AND SELECTED PROCESSED
MINERAL PRODUCTS ACCORDING TO DESTINATION, 2010
REGION
PRIMARY
Including precious
metals/minerals
%
2009
2010
Europe
Pacific Rim countries
Middle and Near East
North and Central America
South America
Africa
Other
TOTAL
Sources:
73,0
20,2
0,7
0,4
0,3
0,4
5,0
100,0
PROCESSED
Excluding precious
metals/minerals
%
2009
2010
67,8
25,0
1,3
0,5
0,2
0,4
4,7
100,0
33,1
50,0
1,8
1,1
0,6
1,0
12,4
100,0
29,4
54,9
2,8
1,2
0,4
0,9
10,4
100,0
%
2009
30,2
50,5
0,7
15,4
0.3
2,8
0,1
100,0
2010
33,7
46,3
1,3
17,5
0,4
0,7
0,1
100,0
Department of Mineral Resources: Mineral Economics
The total state revenue from the mining sector, which includes assessed tax, provisional tax and secondary
tax increased by 23.3 percent from R14.2 billion in 2009 to R17.5 billion in 2010 (Table 5). Iron ore
outperformed other minerals/metals and became the largest contributor to state revenue, followed by coal
and platinum.
TABLE 5 – CONTRIBUTIONS OF MINING AND QUARRYING TO STATE REVENUE, 2001–2010
YEAR Ended
31 Mar
2001
¢
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources:
Notes: *
#
¢
Mining Taxation
R‟ 000
4 499 248
8 885 713
6 850 764
3 300 975
8 754 436*
16 748 340*
19 897 986*
33 394 126*
14 054 769*
17 053 890*
State Share of Profits
and Diamond Exports
Duties
R‟000
452 903
169 313
1 034 702
421 793
1 132 179*
676 282*
748 188*
550 883*
162 210*
468 596*
Total Revenue
R‟000
4 952 151
9 055 026
7 885 467
3 722 769
9 886 615*
17 424 623*
26 646 175*
33 945 009*
14 216 979*
17 522 486*
As Percentage
of Total State
Revenue
%
0,7
0,3
0,3
0,9
0,4
0,2
0,1
0,1
0,1
0,1
State Aid
#
R‟000
34 939
28 914
20 349
32 530
36 225
37 339
24 139
21 000
21 000
18 000
Department of Finance, South African Revenue Service
Department of Mineral Resource: Directorate Financial Planning and Management Accounting
Revised figures
Aid to marginal mines
In 2002, R28 914 000 from State Aid budget was directed to Council for Geoscience for technical investigation on the
mines that
required State Aid.
Mining continues to make a significant contribution to public finances in terms of the large labour force it
employs. In 2009, the mining industry, excluding exploration, research and development organisations and
head offices, employed 2.9 percent of South Africa‟s economically active population (Table 6), or 3.2
percent of all workers in the non-agricultural formal sectors of the economy. In 2010 these percentages
remained nearly unchanged at 2.9 percent and 3.3 percent. The average number of workers employed in
the mining industry increased marginally by 1.2 percent or 5 922 workers from 492 219 in 2009 to 498 141
in 2010, but fell short of recouping the 26 300 jobs lost during the global recession of 2008. Over the last
ten year period, 2001-2010, a total of 91 147 jobs were created, highlighting the significance of mining to
the South African economy.
Wage income from mining amounted to R 72.72 billion in 2010 or 24.1 percent of total mining revenue
(Table 6), an increase in nominal terms of 10.0 percent compared with that of 2009.
15
TABLE 6: EMPLOYMENT AND WAGES IN SOUTH AFRICA‟S MINING INDUSTRY, 2001–2010
EMPLOYMENT
Number
As % of total
employed
economically
active population
YEAR
WAGES
Per worker
per annum
Total
Nominal
Real
+
Nominal
R million
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources:
Notes:
Notes:
406 994*
415 988*
435 628*
448 909*
444 132*
456 337*
495 150*
518 519*
492 219
498 141
2,7
2,6
2,7
2,9
2,6
2,7
2,9
2,9
2,9
2,9
24 368
26 228
30 827
33 655
36 682
39 447
50 072
60 876
66 096
72 724
R
28 595
28 339
33 056
34 124
36 703
41 756
49 924
65 193
68 935
72 724
59 979*
63 335*
71 748*
77 515*
86 299*
92 578*
100 826*
125 730*
140 049*
145 991
Real
+
As % of
total mining
#
revenue
R
69 301*
67 040*
72 740*
80 146*
90 305*
99 149*
100 527*
134 647*
146 064*
145 991
24,7
19,3
26,2
26,9
25,6
20,3
22,4
20,3
27,4
24,1
Quarterly Labour Force Survey (Stats SA), May 2010
Department of Mineral Resource: Directorate Mineral Economist
#
Export plus local commodity sales
+
Deflated by means of the CPI with 2008 as base year
* Revised figures
Provincial employment distribution was distinctly lopsided with five provinces (North West, Mpumalanga,
Gauteng, Limpopo and the Free State) employing 90.8 percent of the mining workforce, which in turn
earned 89.8 percent of the total remuneration (Table 7).
TABLE 7: EMPLOYMENT AND REMUNERATION BY PROVINCE, 2010
PROVINCE
North West
Mpumalanga
Gauteng
Limpopo
Free State
Northern Cape
KwaZulu-Natal
Western Cape
Eastern Cape
TOTAL
Source:
EMPLOYEES
TOTAL REMUNERATION
Number
%
R million
%
168 430
94 771
84 063
62 881
42 163
30 839
10 973
3 003
1 018
33.8
19.0
16.9
12.6
8.5
6.2
2.2
0.6
0,2
24 168
17 275
10 583
8 812
5 759
5 006
2 038
503
82
32.6
23.2
14.3
11.9
7.8
6.7
2,7
0,7
0.1
498 141
100,0
74 226
100,0
Department of Mineral Resources: Directorate Mineral Economics
In 2010, PGMs remained the largest employer, contributing 37 percent to the total mining industry‟s labour
force, followed by gold and coal contributing 32 percent and 15 percent respectively (Figure 5). The
diamond sector employment declined by 8 percent from 12 109 employees in 2009 to 11 143 employees in
2010, the highest decrease in the industry, while the coal industry employment increased by 4 percent to 73
817 from 70 792 in the same period, mainly due to newly operating mines.
16
FIGURE 5: MINING INDUSTRY‟S EMPLOYMENT BY SECTOR, 2010
Other Minerals
15%
Diamonds
2%
Gold
32%
PGM's
37%
Coal
15%
Source: DMR, Directorate Mineral Economics
The PGMs industry accounted for 36 percent of the total remuneration, followed by gold and coal industry
which accounted for 27 percent and 19 percent, respectively (Figure 6).
FIGURE 6: MINING INDUSTRY‟S REMUNERATION BY SECTOR, 2010
Other Minerals
16%
Diamonds
3%
Gold
27%
PGM's
36%
Coal
19%
17
MINERAL PRODUCTION AND SALES IN 2010
In 2010, global demand and prices for most commodities strengthened. As a result of improved demand,
South Africa‟s platinum group metals (PGMs) production increased by 5.9 percent from 271.4 t in 2009 to
287.3 t in 2010. However, the country‟s gold production continued with its declining trend, recording a
decrease of 4.5 percent from 197.6 t in 2009 to 188.7 t 2010. The gold production decrease could be
attributed largely to lower grade ore and problems associated with deep level mining.
South Africa‟s total primary mineral sales revenue increased by 24.9 percent from R241.9 billion in 2009 to
R302.2 billion in 2010, slightly lower than the pre global economic crisis total sales revenue of R302.6
billion in 2008 (Table 9). Due to the strength of the rand in 2010, when the total sales and export sales are
expressed in US dollars, the annual increases were 43.9 percent (from $28.7 billion to $ 41.3 billion), and
46.4 percent (from $20.9 billion to $30.6 billion) respectively. PGMs and coal emerged as the highest total
sales revenue earners, each contributing 24 percent, followed by ferrous at 20 percent, gold 18 percent
and non ferrous and industrial contributing 4 percent each (figure 7). Coal‟s contribution to total sales is
expected to continue to grow due to increased demand both locally and globally particularly from Asia
(figure 8). PGMs maintained its leading position as the highest export earner with 29.4 percent, followed by
gold (22.8 percent) and coal (16.4 percent). The significant increase in gold price boosted its export
revenue which increased by 8.7 percent during the period under review.
FIGURE 7: CONTRIBUTION OF PRIMARY MINERAL COMMODITIES TO TOTAL SALES REVENUE,
2010
Miscellaneous 6%
Industrial 4%
Gold 18%
Coal 24%
PGMs 24%
Non ferrous 4%
Ferrous 20%
Total local mineral sales value increased by 19.6 percent to R77.9 billion in 2010 from R65.1 billion in
2009, edging closer to sales revenue of R80.7 billion pre-global economic crisis in 2008. When expressed
in dollar terms, the local sales value increased by 19.5 percent to $9.2 billion in 2010 from $7.7 billion in
2009. Coal remained the major local income earner for the year 2010 at 46.8 percent, followed by industrial
commodities at 12.5 percent, miscellaneous mineral commodities at 10.9 percent, platinum at 10.1 percent
and gold accounted for 2.6 percent.
18
TABLE 8– SOUTH AFRICA‟S PRIMARY MINERAL SALES BY PROVINCE, 2010*
PROVINCE
LOCAL SALES
(FOR)
Mpumalanga
EXPORT SALES
(FOB)
TOTAL SALES
32 737 265
42.0
47 386 837
21.1
80 124 102
26.5
North West
9 449 700
12.1
58 145 905
25.9
67 595 605
22.4
Northern Cape
6 554 736
8.4
49 647 149
22.1
56 201 885
18.6
Limpopo
14 042 384
18.0
25 424 700
11.3
39 467 084
13.1
Gauteng
3 873 001
5.0
26 270 960
11.7
30 143 961
10.0
Free State
3 225 268
4.1
11 179 392
5.0
14 404 660
4.8
2 704 440
3.5
4 681 397
2.1
7 385 837
2.4
Western Cape
4 781 869
6.1
1 489 140
0.7
6 271 009
2.1
Eastern Cape
580 400
0.7
0
0.0
580 400
0.2
77 949 063
100,0
224 225 480
100,0
KwaZulu-Natal
#
TOTAL
#
302 174 543
100,0
Note: # Hydrocarbons were produced and sold at a value of R1 070 million locally
* Revised methodology used, therefore substantial changes from previous years is expected
The bulk of the total mineral revenues were generated from Mpumalanga, North West, Northern Cape,
Limpopo and Gauteng provinces collectively accounting for 90.6 percent of the total primary mineral sales
revenue (Table 8). Mpumalanga emerged as the leading contributor to both local and total sales revenue
with 42 percent and 26.5 percent respectively, with North West province being the major contributor to
export sales revenue with 25.9 percent. Mpumalanga is mainly dependent on coal as the contributor
towards minerals revenue, North West depends on PGMs, Northern Cape on diamonds, Limpopo on
PGMs, diamonds, copper as well as coal and Gauteng on gold.
TABLE 9: MINERAL PRODUCTION AND SALES, 2010
COMMODITY
1. Precious
Diamonds
Gold
Platinum-group
metals
Silver
PRODUCTION
3. Ferrous
4. Non-ferrous
5.
+@
Energy
Coal
Uranium oxide
EXPORT SALES (FOB)
TOTAL SALES
Quantity
Value (R)
Quantity
Value (R)
Quantity
ct
kg
8 868 389
188 701
**
7 219
**
2 055 697 665
**
284 754
**
51 037 449 221
**
288 579
**
53 093 146 886
kg
kg
287 304
79 315
**
7 837
7 892 569 539
35 639 102
254 066
78 899
65 894 340 635
350 439 778
**
86 736
73 786 910 174
386 078 880
*
*
*
*
*
*
*
8 750 199 172
55 408 389
51 947 777 682
*
60 697 976 854
94 947
4 529 825 235
117 587
7 098 306 231
212 534
11 628 131 466
36 455 545 191
**
66 395 802
**
36 746 983 377
**
254 506 284
**
73 202 528 568
**
2. Semi-precious stones
@
LOCAL SALES (FOR)
Quantity
t
76 752 170
t
214 446
t
kg
254 521 945
682 289
188 110 482
**
Value (R)
6.
Industrial@
9 711 251 177
1 068 836 979
10 780 088 156
7.
Miscellaneous
8 518 336 033
10 081 346 154
18 599 682 187
77 949 063 114
224 225 480 057
302 174 543 171
TOTAL#
Notes: All quantities are in metric tons, unless otherwise specified
** Not available: where applicable, earnings are included under „Miscellaneous‟
@
Full details given in respective overview chapters
+
Excludes titanium and zirconium minerals which are included under Miscellaneous‟
* Nil
#
In addition Hydrocarbons were produced and sold at a value of R1 070 million locally
19
SELECTED PROCESSED MINERAL SALES
Total production of processed minerals increased by 21.2 percent from 6.6 Mt in 2009 to 8 Mt in 2010 due
to the increase in local and global demand as a result of the world economic recovery. The total sales
revenue increased by 31.6 percent from R46.8 billion in 2009 to R61.6 billion in 2010, with export sales
accounting for 82 percent. The largest contributors to total sales were chromium alloys at 44 percent
followed by a conglomerate of classified commodities at 39.8 percent. The increase in the total processed
minerals sales can be attributed to strong growth in the global stainless steel market underpinned by
increased commodity prices. The value of local sales of processed mineral products also increased by 19.4
percent from R9.4 billion in 2009 to R11.2 billion in 2010 (Table 10).
TABLE 10 – SOUTH AFRICA‟S PRODUCTION, LOCAL AND EXPORT SALES OF SELECTED
PROCESSED MINERAL PRODUCTS, 2010
COMMODITY
PRODUCTION
LOCAL SALES
EXPORT SALES
TOTAL SALES
Mass
Value (FOR)
Mass
Value (FOB)
Mass
Value
T
T
R‟000
T
R‟000
T
R‟000
3 607 132
397 356
2 851 837
3 116 104
24 216 069
3 513 460
27 067 906
789 884
64 847
600 757
751 321
7 015 892
816 168
7 616 650
22 606
1 886
286 233
16 883
2 182 163
18 768
2 468 396
3 594 283
637 590
7 437 574
2 829 289
17 048 726
3 466 879
24 486 299
TOTAL 2010
8 013 905
1 101 679
11 176 401
6 713 597
50 462 849
7 815 275
61 639 251
TOTAL 2009
6 628 623
1 222 654
9 358 445
5 916 187
38 013 673
7 138 841
46 823 292
Chromium alloys
Manganese alloys
Vanadium+
x
Other: Classified
: USGS
Notes :
+
x
Contained vanadium.
Comprises aluminium, titanium slag, zinc metal, low-manganese pig iron, silicon alloys and
metal, phosphoric acid, and antimony trioxide
Three provinces, viz. KwaZulu-Natal, Mpumalanga and North West collectively accounted for 87.7 percent
of the total processed minerals sales revenue in 2010 (Table 11). Aluminium and titanium slag dominated
the KwaZulu-Natal contribution, whilst more than three quarters of Mpumalanga‟s total sales revenue was
derived from chromium alloys. North West‟s total processed mineral sales revenue was almost entirely
derived from chromium alloys and vanadium, which contributed 85.0 and 12.4 percent respectively. These
three provinces dominated the export sales revenue, with a combined contribution of 89.1 percent. Chief
contributors to local sales revenue were KwaZulu-Natal, Mpumalanga and Gauteng, together aggregating
91.6 percent.
TABLE 11 – SOUTH AFRICA‟S LOCAL AND EXPORT SALES OF SELECTED PROCESSED
MINERAL PRODUCTS BY PROVINCE, 2010
PROVINCE
KwaZulu-Natal
Mpumalanga
North West
Gauteng
Limpopo
Western Cape
TOTAL
LOCAL SALES
(FOR)
R‟000
5 080 459
3 196 257
791 826
1 951 308
106 880
49 672
11 176 402
EXPORT SALES (FOB)
%
45.5
28.6
7.1
17.5
1.0
0.4
100.0
20
TOTAL SALES
R‟000
%
R‟000
%
16 229 667
16 671 705
12 082 192
3 983 284
840 062
655 939
50 462 849
32.2
33.0
23.9
7.9
1.7
1.3
100.0
21 310 126
19 867 962
12 874 018
5 934 592
946 942
705 611
61 639 251
34.6
32.2
20.9
9.6
1.5
1.1
100.0
SOUTH AFRICA’S IMPORTS OF SELECTED PRIMARY AND PROCESSED MINERAL PRODUCTS,
2011
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 value of the more significant imports during 2010 decreased by 26.57
percent from R14.3 billion in 2009 to R10.5 billion in 2010 (Table 12).
TABLE 12 –SOUTH AFRICA‟S IMPORTS OF SELECTED PRIMARY AND PROCESSED MINERAL
PRODUCTS, 2010
PRODUCT
VALUE (FOB)
2009
2010
R‟000
R‟000
Year on year %
change
Diamonds
691 817
323 106
-53.3
Other precious and semi-precious stones *
214 198
375 834
75.46
Precious metals +
11 106
15 234
37.17
Primary
562 357
460 008
-18.2
Processed
16 878
17 165
1.7
Nonferrous@
154 238
189 264
22.71
Coking Coal
168 164
190 306
13.17
Primary
4 323 486
1 041 080
-75.92
Processed
6 927 160
5 718 854
-17.44
1 236 413
2 174 067
75.84
14 305 817
10 504 918
-26.57
Precious
Ferrous@
Industrial@
Manufactured
TOTAL
#
Source:
South African Revenue Service, 2010
Notes:
*
Includes natural and synthetic precious or semi-precious stones and dust and powders of these stones
Includes alloys containing base metals
@
Full details given in relevant chapters
#
In addition, crude oil to the value of R147 billion was imported during 2010.
+
As expected since 2007 when the country started seeing a decrease in mineral imports, total imports
continued to decline as the beneficiation drive intensified, and projects are developed to produce products
locally which can substitute imported products.
The value of imports of other precious and semi precious stones and manufactured minerals increased by
75.5 and 75.8 percent respectively in 2010, due to backlog in capturing the statistics, experienced by the
South African Revenue Services. Primary industrial minerals decreased by 75.9 percent from R4.3 billion
in 2009 to R1.0 billion in 2010.
21
REPORTED MINERAL-RELATED PROJECTS IN SOUTH AFRICA
Known and reported committed investment in mineral related projects in South Africa stood at R36.9 billion
by August 2011, of which 91.7 percent is for primary minerals and 8.3 percent recorded for processed
mineral products (Table 13). Platinum projects dominated the primary minerals, accounting for 45.8 percent
followed by other minerals‟ 29.7 percent and gold‟s 24.5 percent.
In addition, investments of R21 billion in other mining and mineral-related projects were being considered
(Table 14). These are projects that have been identified but funds are not yet allocated. All the recorded
projects are for primary minerals. Gold related projects dominated this category, accounting for 80.9 percent
of the total minerals and mining projects. The remaining 19.1 percent was accounted for by other mineral
commodities. It is noted in this category that there are no platinum projects recorded, as all platinum related
projects have been rapidly moved to the committed category due to the growing demand for the commodity.
TABLE 13 – NEWLY COMMITTED MINERAL-RELATED PROJECTS IN SOUTH AFRICA, 2010
SECTOR
COST
R million
COST+
$ million
AS A PERCENTAGE OF
PRIMARY MINERALS
AS A PERCENTAGE OF
TOTAL MINERAL PRODUCTS
100.0
24.5
45.8
29.7
91.7
22.5
42.0
27.2
Primary
Gold
Platinum
Other
338 691
83 013
155 120
100 558
47 777
11 710
21 881
14 185
Processed minerals
30 821
4 347
8.3
369 512
52 124
100.0
TOTAL
Note:
+
At a Rand/dollar exchange rate of R7, 0890, as at August 2011
TABLE 14 – POTENTIAL MINERAL-RELATED PROJECTS IN SOUTH AFRICA, 2010
SECTOR
COST
R million
Primary
Gold
Platinum
Other
Processed minerals
TOTAL
Note:
+
COST+
$ million
AS A PERCENTAGE OF
PRIMARY MINERALS
AS A PERCENTAGE OF
TOTAL MINERAL PRODUCTS
100.0
80.9
0
19.1
100.0
80.9
0
19.1
21 005
17 000
0
4 005
2 963
2 398
0
564
0
0
0
21 005
2 963
100
At a Rand/dollar exchange rate of R7, 0890 as at August 2011
SADC mining and mineral production of selected major minerals
The Southern African Development Cooperation (SADC) countries continue to be major contributors to the
world‟s mining and mineral production. The region contributes on average 20 to 30 percent of the world
production in a range of selected minerals. SADC produces more than 60 percent of all the selected
minerals (Table 15) of Africa‟s total production. The region contributed 100 percent to the continent‟s
platinum group metals and nickel production, 96 percent of copper production and 82 percent of cobalt in
2010.
During the last five years, a number of SADC countries attracted considerable investment, which has led to
increased production in minerals mainly copper, whose production rose by 101 percent, cobalt by 26
percent, and mineral diamonds by 20 percent (Table 15). Major contributors to the copper production were
Zambia and the Democratic Republic of Congo, which respectively produced 57.9 percent and 30.3 percent
of the region‟s production. The two countries also dominated the region‟s cobalt production, with Zambia
accounting for 50.5 percent and the DRC producing 41.2 percent of the total region‟s output.
Despite the economic crisis most of the mineral commodities recorded substantial increases in production,
except for gold and nickel whose production decreased by 29 percent and 11 percent respectively. The
22
decrease in gold production can be attributed to the closure of a number of mining shafts in South Africa due
to operating costs.
TABLE 15 – SADC MINE PRODUCTION OF SELECTED MAJOR MINERALS
MINERAL
PRODUCTION
% of world
unit
2006
2007
2008
2009
2010
production
Coal
t
245 000 000
247 666 358*
252 699 108*
252 100 000
256 200 000
3.5 %
Cobalt
t
6 290
5 482
2 681
8 041
10 149
13.3 %
Copper
t
660 500
849 300
643 700
652 600
1 263 400
8.0 %
Chromite
t
8 204 862
10 131 234
10 346 593
10 742 600
11 340 000
41.4 %
Diamonds
carats
76 680 155
63 330 000
88 431 401
57 807 117
69 574 658
52.2 %
Gold*
kg
272 101
341 400
316 598
266 344
188 701
7.5 %
PGMs
kg
312 061
317 512
313 953
287 599
295 200
86.1 %
Nickel
t
80 000
79 300
81 900
80 530
71 700
4.6 %
Lead
t
48 273*
69 000
46 440*
60 000
63 000
1.5 %
Zinc
t
261 000
219 000
316 000
233 000
241 000
2.0 %
*RSA Figures (other SADC countries figures not available)
Source: DMR (Mineral Economics)
World Bureau of Metal Statistics
International Lead & Zinc Study Group
MINERAL BENEFICIATION
The South African Government has developed a number of policies intended to address the daunting
developmental challenges that face the country and one such policy is the National Industrialisation Policy
Framework (NIPF) and its implementation plan IPAP-2. The NIPF seeks to ensure the long term
intensification of the country‟s industrialisation thus facilitating diversification beyond our current reliance on
traditional mineral commodities. These minerals are generally exported in a raw or semi processed form for
use as inputs in a number of industrial processes.
Recognising this linkage between minerals and industrialisation, Government through the Department of
Mineral Resources (DMR) went about developing the mineral beneficiation strategy. This strategy was
adopted by Cabinet as the country‟s policy in the first quarter of the 2011/12 financial year. Following this
adoption, Cabinet further mandated the DMR to develop the implementation plans for the five mineral
value chains outlined in the strategy. These implementation plans will be developed and submitted to
Cabinet in the 2011/12 financial year.
ECONOMIC OUTLOOK FOR THE SOUTH AFRICAN MINERALS INDUSTRY 2010/2011
The global economic recovery continued throughout 2010, with emerging economies outpacing developed
economies. African economies, in particular, appear to be recovering from the crisis with potential to
significantly increase growth rates beyond 2010. Many investors reportedly view Africa‟s economic growth in
2010 as stemming from an expected rise in mining activity, following its collapse in late 2008. African
economies also appear to be benefiting from investment and trade with large emerging economies such as
China, India, Russia and Brazil. Despite these positive trends, economic growth has failed to raise incomes
to levels sufficient to trigger significant progress in creating jobs and eradicating poverty on the continent.
African exports still remain the least diversified of all developing nations. Many African economies remain
dependent on primary commodity exports, which render them vulnerable to external shocks.
In South Africa, the real Gross Domestic Product (GDP) growth recovered from -1.7 percent in 2009 to 2.8
percent in 2010. However, this rate of GDP growth remained below the potential, estimated at around 4
percent per annum for the country. GDP is expected to grow at a rate of 3.6 per cent in 2011 and 4.3 per
23
cent in 2012. The 2010 GDP growth was mainly driven by a steady recovery in consumer spending, partially
attributed to the FIFA World Cup.
China has become the top destination for South Africa‟s total exports since 2009 and is also the country‟s
leading source of imports. China is also becoming the dominant investment partner among most African
countries and other emerging markets. China‟s Foreign Direct Investment (FDI) into Africa in 2010 totalled
R33 billion. In December 2010 South Africa became an official member of the BRICS (Brazil-Russia-IndiaChins-South Africa), thereby making it a gateway for BRICS to other African countries.
The global mining sector is currently enjoying an unprecedented boom and new mines are increasingly
being developed. South Africa, with the world‟s fifth largest mining sector by GDP value, experienced a
decline in commodity prices and demand in late 2008 and early 2009. This prompted mining companies to
cut production to match lower global demand. According to South African Statistics, the result of these
measures was that the industry growth shrunk by 4.2 per cent in 2009, before bouncing back with a positive
growth of 5.8 per cent in 2010. The strong performance of the industry in 2010, mainly reflected an improved
commodity environment for metals and minerals, which saw stronger prices and improving market sentiment
in important end-user industries such as automotive and construction. In South Africa, several planned
mining investment projects were announced to come on stream within the next 2 to 9 years, exceeding R160
billion.
Although the country‟s mining industry has performed poorly when compared with other sectors in the SA
economy, it still remains an essential core of the economy particularly as a source of raw material input into
the manufacturing sector. The industry also has the potential to create over a million direct and indirect jobs.
According to the Chamber of Mines of South Africa, the industry also accounts for 18.5 percent of national
corporate tax, 50 per cent of the utilization of Transnet‟s rail and ports, 93 per cent of electricity generation
via coal power plants and 15 per cent of electricity demand.
For the period 2010 to 2020, a conservative modelling indicates that a 3 to 4 per cent growth rate and 100
000 new jobs for the sector is realistically possible. The long-term future for the South African mining
industry depends on the outcome of ongoing exploration activities and possible future changes in
government regulation of mining. However, labour unrest and energy shortages are two major obstacles
which mining companies in South Africa will need to overcome.
24
TABLE 16 - MINERALS AND METALS ANNUAL AVERAGE PRICES, 2005 - 2010
COMMODITY
UNIT
2005
2006
2007
2008
2009
2010
Aluminium High Grade, LME Cash
Antimony, Metal Bulletin Free
Market
$/t
1 898.34
2 569.87
2 638.59
2 573.21
1 664.36
2 173.19
$/t
3 458.42
5 171.99
5 538.03
6 108.16
5 200.86
9 020.27
Cadmium,Metal Bulletin Free Market
$/lb
156.10
154.38
375.73
297.51
149.25
193.50
Coal - Steam: Local FOR
R/t
80.92
85.17
100.00
141.53
162.75
180.50
+
Export FOB
R/t
293.17
310.42
359.50
711.99
515.58
549.33
Anthracite: Local FOR
R/t
429.75
477.17
485.50
602.42
690.33
781.75
Export FOB
R/t
386.30
415.58
480.75
598.43
889.75
776.83
Cobalt, Metal Bulletin Free Market
$/lb
15.83
16.48
29.33
38.64
17.35
20.57
Copper: Grade A, LME Cash
$/t
3 678.82
6 723.54
7 118.72
5 112.77
Republic Copper Price
R/t
25 776.40
51 185.49
56 759.48
6 899.55
65
381.67
n/a
7 533.92
61
890.91
Ferrochrome: Charge 52% Cr*
Ferromanganese: High Carbon 7,5%
C*
$/lb
0.74
0.71
0.90
1.80
0.91
1.24
€/t
634.12
584.69
895.87
1 803.93
912.74
1 091.52
Ferrovanadium 70-80% V*
$/kg
70.62
38.49
37.13
61.34
25.01
29.99
Gold, London Price
$/ozt
444.89
604.52
696.76
872.13
973.32
1 225.05
Ilmenite Concentrate 54% TiO2
A$/t
79.85
80.00
80.00
102.71
86.05
74.31
Lead, LME Cash
$/t
976.43
1 289.77
2 578.95
2 090.78
1 718.86
2 144.44
Lithium Ore: Petalite 4%
Manganese Ore: 48-50%
Metalurgical*
$/t
224.85
212.50
212.50
212.50
212.50
212.50
$/mtu
3.27
2.60
3.54
14.09
5.37
7.71
Molybdenum: Molybdic Oxide*
$/lb
32.70
24.99
30.30
Nickel, LME Cash
$/t
14 738.33
24 246.16
37 208.50
29.97
21
100.92
11.38
14
633.19
15.84
21
803.81
Palladium, London Price
$/ozt
201.27
320.38
356.84
355.65
263.48
526.32
Platinum, London Price
Rhodium, Johnson Matthey Base
Price
$/ozt
893.81
1 141.70
1 302.68
1 574.87
1 204.85
1 610.89
$/ozt
2 050.81
4 547.54
6 199.32
6 584.88
1 586.51
2 458.43
Rutile Concentrate 95% TiO2
A$/t
610.43
630.00
647.31
709.32
741.76
756.68
Silver, London Price
$/ozt
7.31
11.57
13.43
15.01
14.66
20.16
Tantalum Ore: 30% Ta2O5
$/lb
36.00
35.54
35.00
Tin, LME Cash
$/t
7 382.58
8 780.68
14 538.60
35.00
19
189.50
35.00
13
563.83
n/a
20
405.83
Uranium Oxide, NUEXCO spot
$/lb
27.84
47.62
99.11
64.24
46.68
45.87
Vanadium Pentoxide*
$/lb
16.29
7.87
7.40
13.55
6.04
6.92
Zinc, Special High Grade
$/t
1 381.59
3 276.10
3 242.50
1 875.18
1 653.77
2 160.71
598.65
745.00
772.74
762.50
854.68
839.35
Zircon: Foundry Grade, Bulk, FOB
A$/t
Note: N/A prices not available
25
PRECIOUS METALS AND MINERALS OVERVIEW
Donald O Moumakwa
INTRODUCTION
South Africa is the world‟s 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. Precious metals were produced from 98 mines, while diamonds
were produced by 395 operations during 2010.
PRODUCTION AND SALES
South Africa‟s production and sales of precious metals in 2009 and 2010 are shown in Table 1. The
country‟s aggregated production increased by 1.57 percent to 555.3t in 2010, despite a 5.9 percent
increase in PGMs production. Despite a marginal decrease of 2.2 percent to 490.7t in the precious metals
export volumes, revenue from such sales increased by 16.5 percent to R 117 billion, mainly due to the
recovery in both the gold and PGM prices, indicative of the market recovery. Similarly, revenue from total
sales increased by 19.2 percent to R127 billion.
TABLE 1: SOUTH AFRICA'S PRODUCTION AND SALES OF PRECIOUS METALS, 2009-2010.
COMMODITY
GOLD
PGMs
SILVER
TOTAL
YEAR
PRODUCTION
LOCAL SALES
EXPORT SALES
TOTAL SALES
t
t
R million
t
R million
t
R million
2010
188.7
7.2
2 055.7
176.8
51 037.4
184.0
53 093.1
2009
197.6
6.6
1 701.3
180.6
46 994.2
187.2
48 695.5
2010
287.3
*
7 892.6
244.5
65 894.3
*
73 786.9
2009
271.3
*
4 322.9
251.0
53 459.3
*
57 782.2
2010
79.3
7.8
35.6
78.9
350.4
86.7
386.0
2009
77.8
8.1
31.0
70.1
256.2
78.2
287.2
2010
555.3
*
9 983.9
490.7
117 282.1
*
127 266.0
2009
546.7
*
6 055.2
501.7
100 709.7
*
106 764.9
* Confidential
South Africa‟s 2010 diamond production increased by 45.9 percent to 8.9 Mct, due to improved levels of
local and global demand. However, export sales volume decreased by 10.4 percent as more rough was
made available for local beneficiation, in line with the government‟s drive to increase the level of
beneficiated diamonds output. Export sales revenue improved by 4.4 percent, a clear indication of the
recovery in prices. By contrast, local diamond sales volume increased by 11.1 percent in 2010, with
revenue from these sales also improving by 43.3 percent over the 2009 figure.
EMPLOYMENT
Employment in the precious metals and mineral mines declined marginally by 1.7 percent to 350 181
(Table 2) in 2010, mainly as a result of an 8.5 percent drop in the number of employees in the diamond
mines due to a certain degree of uncertainty in the sector. No major expansion projects took off in 2010
and some operations ceased to be economically viable, even with an improvement in prices, prompting
producers to close them down and retrench workers. However, total remuneration in the precious metals
sector increased by 9.7 percent to just over R48 billion, raising the average remuneration per employee by
11.6 percent to R138 119.
26
TABLE 2: EMPLOYMENT AND REMUNERATION IN SOUTH AFRICA'S PRECIOUS METALS AND
MINERALS MINES, 2005-2010.
YEAR
AVERAGE NUMBER
OF EMPLOYEES
TOTAL REMUNERATION
(R'000)
AVERAGE
REMUNERATION
(R/employee)
2005
337 701
26 143 212
68 100
2006
347 998
27 618 263
79 363
2007
371 945
35 040 346
64 208
2008
384 978
41 486 270
107 763
2009
356 197
44 064 129
123 707
2010
350 181
48 366 955
138 119
DOWNSTREAM VALUE ADDITION
Gold beneficiation in South Africa is mainly part of the Jewellery industry, and to some extent
recycling companies. Downstream value addition of PGMs in SA is expected to grow in line with
growth in the automotive industry and the fuel cell technology, both of which require PGMs as
essential components for hydrogen economy. Despite the government‟s efforts to avail rough
diamonds through the SDT, the level of beneficiated diamond output remains low in the country
due to limited rough supply.
PROJECTS AND OTHER DEVELOPMENTS
The effects of the financial crisis are still apparent as the current number of projects in the precious metals
and minerals sector is nowhere near pre-crisis levels, although it is steadily increasing on the back of
surging demand for the commodities and increased prices. For PGMs this has involved expansion plans
and share trading. The gold sector has been dominated by acquisitions and expansions, both of which
happened in 2010 and early 2011. The diamond sector was mainly characterized by sales and expansions,
both of which involved De Beers.
OUTLOOK
Gold, silver and platinum prices will continue to rise, driven by jewellery, investment demand and the global
economic growth. Despite rising gold prices, overall demand for gold is expected to remain strong in 2011,
with China and India as the major demand drivers, accounting for over half of the world demand for
jewellery, bars and coins. Based on current economic factors, gold prices are expected to end the year
between $1 700 and $2 000 per ounce, with silver and platinum prices also increasing due to growing
investor demand.
Despite recent acquisitions and expansions in the South African gold industry, local gold production is
expected to decline during 2011, due to continued mining of lower grade ore. Like gold, silver is both a
safe haven in the event the economy regresses and a scarce commodity that will soar if the economy
enters an inflationary boom. Silver fabrication is also expected to increase industrial demand for silver,
which is forecast to grow by 5 percent, following a strong rebound in 2010. The metal is expected to rise
to a range of $36 - $39 an ounce for the rest of 2011.
Investment in exchange-traded funds (ETFs) and global jewellery demand are expected to be the major
demand drivers for platinum in 2011. Auto-catalyst platinum demand is also expected to improve as the car
sector continues its recovery from the financial crisis. This is expected to increase South Africa‟s platinum
output, which provides approximately 80 percent of the global supply each year. Assuming no major
supply disruptions, the platinum market may be tight or slightly in deficit in 2011, which is likely to push the
platinum price to a year average of around $1 800 per ounce, with the price having already tested this
mark for the first time in April 2011.
The global diamond market has remained resilient throughout 2010 on the back of continued world
recovery from the effects of the global economic crisis. However, consumer demand has not yet fully
recovered to pre-crisis levels, thus a high level of uncertainty remains. Nevertheless, positive growth is
27
expected to continue, with production expected to increase in 2011 over 2010 levels, but not expected to
return to historic highs for the foreseeable future.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
DMR, Directorate Mineral Economics.
Johnson Matthey, Platinum 2011.
World Silver Survey, 2011.
Kimberley Process Certification Scheme Statistics.
Gold Survey 2011.
www.silver-investor.com
News.kitco.com/2011
28
DIAMONDS
Donald O. Moumakwa
WORLD SUPPLY
According to the Kimberley Process Certification Scheme (KPCS) statistics, world diamond mine
production increased by 6.7 percent to 133.1 million carats (Mct) in 2010 as markets continued to recover
from the world economic crisis (Table 1). Notable increases occurred mainly in countries where the De
Beers Group and its joint venture partners operate, including Botswana and South Africa, as well as
Zimbabwe. However, the value of global mine production increased by a much larger margin of 38.9
percent to just under $12.0 billion.
TABLE 1: WORLD ROUGH DIAMOND PRODUCTION, 2010.
PRODUCTION
COUNTRY
MASS
Mct
%
VALUE
RANK
US $ million
%
RANK
Angola
8.4
6.3
8
976
8.1
5
Australia
9.9
7.4
5
251
2.1
8
Botswana
22.0
16.5
2
2 586
21.6
1
Canada
11.8
8.9
4
2 305
19.2
3
DR of Congo
20.2
15.2
3
174
1.5
9
1.7
1.3
9
744
6.2
6
34.9
26.2
1
2 382
19.9
2
Sierra Leone
0.4
0.3
10
106
0.9
10
*
8.9
6.7
6
1 799
14.9
4
8.4
6.3
7
339
2.8
7
6.5
133.1
124.8
4.9
100.0
336
11 998
8 636
2.8
100.0
Namibia
Russian Federation
South Africa
Zimbabwe
Other
Total: 2010
2009
Source: KPCS Statistics
*
Directorate Mineral Economics
The Russian Federation recorded a modest increase of 0.3 percent to 34.9 Mct valued at $2.4 billion, to
remain the world‟s largest rough diamond producer by volume and second largest producer by value. By
contrast, Botswana remained the largest producer by value and became the second largest producer by
volume, with 22.0 Mct produced valued at $2.6 billion. At 20.2 Mct, the DRC ranked third in terms of
volume, but only ninth in terms of value. South Africa‟s rank improved in terms of both volume and value.
The country is now ranked sixth by volume and fourth by value. Other top producers in 2010 included
Canada, Australia, Angola and Namibia, while Sierra Leone replaced Guinea as the tenth ranked producer
in both categories.
Zimbabwe recorded the most notable increase in production in 2010, with a more than seven fold increase
from approximately 1.0 Mct to 8.4 Mct valued at $339 million. As a result, the country‟s rank improved from
ninth to seventh in terms of both volume and value. This was made possible by the Kimberley Process
approval that allowed legal export of diamonds from the Marange diamond field.
WORLD TRADE
Rough diamond trade (exports) between countries improved by 50.4 percent to $37.6 billion in 2010,
signaling a recovery in global demand. A total of 413.9 Mct were exported around the globe, with the
European Community (EC) accounting for just over 37.0 percent of both total volume and value (Figure 1).
However, it should be borne in mind that the EC does not produce rough diamonds and therefore reexports diamonds imported from producing countries. Rough diamonds were exported to various cutting
and polishing, and trading centres in various geographic regions, mainly Mumbai and Surat (India),
Antwerp (Belgium), Tel Aviv (Israel), Shanghai (China), Japan, Dubai and New York (USA).
29
FIGURE 1: GLOBAL ROUGH DIAMOND EXPORTS, 2010.
45
40
35
Percentage
30
25
20
15
10
5
0
EC
UAE
Russia
carats
Israel
Others
value
Source: KPCS statistics.
The U.S. imported $524 million worth of rough diamonds in 2010, shooting up 298.4 percent compared to
gross imports in 2009. Exports more than doubled, increasing by 110.5 percent to $340.8 million, resulting
in net imports of $183.2 million, based on figures released by the U.S. Department of Commerce. By
volume, the US imported 388 653 carats, a 15.3 percent decline, and exported 1.06 Mct carats, a 27.4
percent increase. This resulted in a negative net trade of 671 823 carats.
The peculiar trade in rough diamonds via the U.S, where there is a nearly constant situation of exports
exceeding imports, even though the U.S. does not have any commercial diamond mines, results from an
excess of rough diamonds which enter the US from producing countries, primarily South Africa, Angola,
Botswana and Canada (gross imports of $466.2 million, net imports of $437.5 million). Rough diamonds
are then re-exported to trading centres in Israel, Belgium and India (gross exports of $269.7 million, net
exports of $266.2 million).
Polished diamond trading via Dubai doubled in 2010, according to the Dubai Diamond Exchange. Imports
rose by 88 percent to 90 Mct with a value of $13.3 billion, while polished exports leaped 128 percent to
73.6 Mct worth $14.6 billion. Similarly, India‟s polished exports grew 60 percent to $23.8 billion, while
imports rose by 53 percent to $14.7 billion, resulting in net polished exports increasing by 74 percent to
$9.1 billion.
The US remained the world‟s largest market for polished diamonds in 2010, despite its net polished
diamond imports declining. The country‟s net imports of $7.83 billion of polished diamonds in 2010 were a
19.3 percent decline compared to 2009, while gross imports increased 45.1 percent to $18.1 billion. The
volume of annual gross imports increased by 32.6 percent to 14.4 million carats, registering an average
value of $1 255.99 per carat, an increase of 9.4 percent. However, polished exports of 22.7 Mct worth
$10.23 billion averaged only $451.36 p/c, meaning that most of the exports were lower priced goods.
PRICES
IDEX (International Diamond and Jewellery Exchange) Online global polished diamond price index (PPI)
indicates that average global polished diamond prices were on the increase throughout most of 2010, a
clear indication that the market remained resilient throughout the year (Figure 2). The PPI increased by
7.7 percent between January and December 2010. After increasing for nine consecutive months since the
beginning of the year, the PPI fell slightly by 0.3 percent in October 2010 due to uncertain demand for
polished diamonds, which caused retailers to cancel back-up orders for diamond jewellery. As a result,
diamond suppliers with excess goods were forced to reduce prices in an effort to move inventory.
However, it was not long before the demand solidified again and the PPI recovered, showing a 0.6 percent
increase in December 2010 from its average November level.
30
FIGURE 2: THE IDEX ONLINE POLISHED DIAMOND PRICE INDEX BY MONTH, 2010.
119.0
118.0
117.0
Price Index
116.0
115.0
114.0
113.0
112.0
111.0
110.0
109.0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Note: Price Index is a percentage number that shows the extent to which a price has changed over a period as
compared with the price in a certain year, in this case April 2004-March 2005, taken as a standard year.
Source: IDEX Online.
Recovery in consumer demand for diamonds resulted in a 30.2 percent increase in the 2010 average
rough diamond price to $90.13 per carat, according to the KPCS statistics. Lesotho produced the most
valuable rough stones, with an average price per carat of $1 816.63. This was distantly followed by Liberia
and Namibia, with average prices per carat of $600.00 and $439.57, respectively. Diamonds produced in
South Africa were valued at an average of $202.13 per carat, while those from the DRC were of relatively
low quality, with an average of only $8.64 per carat.
DEVELOPMENTS IN SOUTH AFRICA
Local Supply and Sales
In line with the global trend, South Africa‟s 2010 diamond production showed improvement, increasing by
45.9 percent to 8.9 Mct. Diamonds sourced from kimberlites contributed 95.5 percent to the country‟s total
production, while alluvial and marine diamonds contributed 3.4 and 1.1 percent, respectively. The major
reason for the higher production levels recorded in 2010 was the improved levels of demand from
consumers and higher diamond sales recorded globally. However, South Africa recorded a decrease of
10.4 percent in terms of export sales volume as more rough stones were made available for local
beneficiation, but revenues improved by 4.4 percent, a clear indication of the recovery in prices. Local
diamond sales volume increased by 11.1 percent in 2010, mainly due to the government‟s efforts, through
the State Diamond Trader (SDT), to promote local sales for beneficiation purposes. Revenue from local
sales also improved by 43.3 percent over the 2009 figure.
Employment
Despite overall improvement in the diamond market, the effects of the global economic crisis on
employment were still apparent in 2010, probably due to a certain degree of uncertainty in the sector. In
South Africa, no major expansion projects took off in 2010 and some smaller operations ceased to be
economically viable, even with an improvement in prices, prompting producers to close them down and
retrench workers. As a result, the average number of employees in the country‟s diamond mining industry
declined by 7.8 percent to 11 159 in 2010 (Table 2), while total remuneration for the year improved by 5.7
percent to just over R1.9 billion. This resulted in an average remuneration per employee of approximately
R171 343, an increase of 14.7 percent over the 2009 value. Productivity per employee increased by 58.3
percent from 504 carats in 2009 to 798 carats in 2010.
31
TABLE 2: EMPLOYMENT (INCLUDING CONTRACTORS) AND REMUNERATION IN SOUTH
AFRICA'S DIAMOND MINING INDUSTRY, 2010.
YEAR
AVERAGE NUMBER
OF EMPLOYEES
TOTAL REMUNERATION
(R'000)
AVERAGE
REMUNERATION
(R/employee)
2006
20 115
2 205 838
109 661
2007
19 471
2 192 902
112 624
2008
18 609
2 181 625
117 235
2009
12 109
1 809 550
149 438
2010
11 159
1 912 019
171 343
Downstream Value Addition
Section 14 of the Diamonds Amendment Act led to the establishment of the State Diamond Trader (SDT),
the objectives of which are to promote equitable access to, and local beneficiation of, South Africa‟s
diamonds, as well as to promote the South African diamond industry through the necessary research,
support and development.
In order to promote equitable access, the focus of the SDT‟s sales strategy is on small companies with less
than five employees, with a high level of Historically Disadvantaged South Africans (HDSA) participation
(>26% ownership) and that do not have access to regular supplies of rough diamonds from any other
source. In order to promote beneficiation of the Republic‟s diamonds, the SDT has engaged in a policy of
only selling to those companies in possession of a valid beneficiation licence issued by the South African
Diamond and Precious Metals Regulator (SADPMR).
Despite the government‟s efforts to avail rough diamonds through the SDT, the level of beneficiated
diamond output remains low in the country due to limited rough supply. The government therefore
continues to look at improving access to rough diamonds by engaging in different pilot projects. This will
ensure growth and sustainability of the diamond beneficiation industry, as well as job creation and poverty
alleviation in the country.
Projects and Acquisitions
Having successfully weathered the global financial crisis, various South African companies are now
assessing and implementing growth opportunities. A series of internal growth projects, production
efficiency and revenue enhancement initiatives, together with external growth through targeted acquisitions
are being pursued.
It was announced on 01 March 2011 that De Beers had finalized the sale of its prospecting rights, the
Krone-Endora Project at Venetia, to Diamcor Mining Inc. The Project consists of the prospecting rights over
the farms Krone 104 and Endora 66 with a combined area of approximately 5 888 hectares directly
adjacent to De Beers' Venetia diamond mine. The deposits at Krone and Endora have been identified as
both an upper alluvial deposit, as well as a rare lower eluvial deposit, both believed to have originated from
the higher grounds of the adjacent Venetia kimberlites. Diamcor plans to identify additional resources and
determine a current market diamond price estimate for the project.
In February 2011, De Beers announced approval of the next stage of a feasibility study to extend mining
operations at its Venetia mine in Limpopo province. The underground expansion would require a capital
investment of up to R10 billion and would increase Venetia‟s mine life to 2046, from 2021. Venetia is
currently an open-pit operation and underground operations are expected to commence between 2018 and
2021, leading to an increase in employment figures as the mine becomes deeper. De Beers also
announced that it was conducting focused exploration work programs on specific ground holdings,
identified through a process of technical reviews of field work completed. This work was well under way
and teams were active on a portfolio of promising early stage exploration projects on licences held by the
company.
In January 2011, De Beers announced the sale of yet another mine, the Finsch Diamond Mine, to Petra
Diamonds Limited. Petra, which formed an empowerment consortium to acquire the mine, will pay De
Beers Consolidated Mines (DBCM) R1.4 billion in cash for the mine. Finsch is expected to produce over
1.5 Mct per annum in its first full year of production, more than doubling Petra‟s current production. It is
also expected to increase the company‟s production to approximately 4.0 Mct per annum by the 2014
financial year and to over 5.0 Mct per annum by 2019. Petra will hold a 74.0 percent interest in Finsch via
32
its subsidiary Afropean Diamonds (Pty) Limited. The remaining 26.0 percent interest will be held by its
Finsch BEE partners Sedibeng Mining (Pty) Limited and Namoise Mining (Pty) Limited (commercial BEE
partners), and the Petra Diamonds Employee Share Trust, a broad-based trust established for all Petra‟s
South African employees.
In September 2010, DBCM sold its Jagersfontein mine, in the Free State province, to BEE company, the
Superkolong Consortium for an undisclosed amount. The Jagersfontein mine operated for 100 years,
leaving more than 13 million tons of mineral resources in tailings, with an average grade of 12.8 carats per
hundred tons. DBCM stated that the Jagersfontein community would be the sole beneficiary of a soon to
be established community trust, which would hold a 10 percent equity interest in the consortium‟s assets.
The Superkolong Consortium has also made a commitment to facilitate skills transfer to the members of
the community with a view to ultimately sourcing skilled labour from Jagersfontein.
OUTLOOK
The global diamond market has remained resilient throughout 2010 on the back of world recovery from the
effects of the global economic crisis. However, increasing consumer demand has not yet fully recovered to
pre-crisis levels, thus a high level of uncertainty remains. Nevertheless, positive growth is expected to
continue, with production expected to increase in 2011 over 2010 levels, but not expected to return to
historic highs for the foreseeable future. Production in SA is also expected to increase in line with
increasing demand.
The additional supply of rough diamonds in 2011 is expected to put downward pressure on prices in the
short-term. However, the longer-term outlook remains positive as increased demand for diamond jewellery
is expected to provide a platform for diamond price increase.
REFERENCES
1.
2.
3.
4.
5.
6.
DMR, Directorate: Mineral Economics.
Kimberley Process Certification Scheme Statistics.
IDEX Online.
Miningweekly.com, 09 February 2011.
Miningmx.com, 21 January 2011
Miningweekly.com, 28 September 2010.
33
GOLD
P J Perold
WORLD SUPPLY
Total world gold supply increased marginally by 0.5 percent to 4 319.3t during 2010, with mine production
and gold scrap accounting for 61.9 percent and 38.1 percent, respectively. Mine production increased by
3.9 percent to 2 674.3t, while gold scrap fell by 2.9 percent to 1 645t, despite a 26 percent surge in the
dollar price. This was mainly due to declines in emerging markets as sellers held back in anticipation of
further price gains.
The positions of the five leading global gold-producing companies, relative to gold production, remained
unchanged in 2010 compared with 2009, albeit small annual increases in production recorded by each
company. Top global gold producer, Barrick Gold (Canada) recorded an output of 241.5t in 2010, followed
closely by United States‟ Newmont mining with 167.7t AngloGold Ashanti (South Africa), Gold Fields
(South Africa) and Goldcorp (Canada) retained their third, fourth and fifth positions with production of
140.4t, 102.4t and 78.4t, respectively.
According to the Gold Fields Mineral Services (GFMS), 2011, Australia recorded the most significant
increase in supply, due to a build up in production from Newmont‟s Boddington. China, Argentina and the
United States also recorded strong increases, with mine production increasing by 8.3 percent, 31.2 percent
and 5.6 percent, respectively. South Africa contributed 7.1 percent to total gold production (Table 1).
TABLE 1 – WORLD GOLD RESERVES AND MINE PRODUCTION, 2010
COUNTRY
RESERVES
PRODUCTION°
t
%
Rank
t
%
Rank
Australia
7 300
15.5
1
China
1 900
4.0
7
260.9
9.8
2
350.9
13.1
1
Ghana
1 400
3.0
8
92.4
3.5
8
Indonesia
3 000
6.4
4
136.6
5.1
7
Peru
Russia
2 000
4.3
6
162.0
6.1
6
5 000
10.6
3
203.4
7.6
4
South Africa#
6 000
12.8
2
188.7
7.1
5
USA
3 000
6.4
4
233.9
8.7
3
Other
17 400
37.0
-
1 045.4
39.1
-
TOTAL
47 000
100.0
2 674.2
100.0
Sources:
#
# Resources not included in reserves figure.
USGS, 2011, pp 66-67
Klapwijk, et al, 2011, pp 40 - 41
*
DMR, Directorate Mineral Economics
WORLD DEMAND
In 2010, total world gold demand increased marginally by 0.5 percent to 4 319.3t. This was the net effect of
a 52.0 percent fall in implied net investment to 54 t, a 56.4 percent fall in producer de-hedging to 133t, and
an increase of 65.7 percent in physical bar investment to 349t. Demand from jewellery fabrication
increased by 11.2 percent to 203t in 2010, while net official sector sales shifted by 73t to net official sector
purchases in the demand side of the market for the first time since 1988. Total fabrication demand
increased by 10.7 percent to 268t in 2010.
PRICES
The average dollar gold price for 2010, at $1 224.42/ozt (Table 2), was 26.1 percent higher than in
2009.This was primarily caused by a surge in investment demand, particularly in the second and fourth
quarters, partly in response to the timing of the EU debt crisis and, to a lesser extent, the official sector‟s
34
swing to net purchases, a recovery in jewellery demand and the absence of producer hedging. The South
African Reserve Bank gold price opened with an average price of $1 111.77/oz and closed the year with an
average of price of
$1 391.46/oz in 2010, an increase of 25.1 percent.
+
TABLE 2 – LONDON GOLD PRICE , 2010
MONTH
AVERAGE
$/ozt
1 111.77
1 095.61
1 114.45
1 148.58
1 203.84
1 232.65
1 194.48
1 215.55
1 271.22
1 342.61
1 370.84
1 391.46
1 224.42
January
February
March
April
May
June
July
August
September
October
November
December
2010 average
Sources:
#
*
Note:
+
#
HIGH*
$/ozt
1 158.00
1 119.75
1 136.25
1 179.25
1 241.25
1 261.00
1 240.00
1 246.00
1 311.00
1 380.75
1 421.00
1 426.00
1 260.02
LOW*
$/ozt
1 078.50
1 052.25
1 090.75
1 116.00
1 165.00
1 203.50
1 157.00
1 178.00
1 240.00
1 313.00
1 336.50
1 363.00
1 191.13
#
AVERAGE
R/ozt
8 300.61
8 376.35
8 237.87
8 417.76
9 161.82
9 391.35
8 984.65
8 837.42
9 006.13
9 226.64
9 496.92
9 459.70
8 908.10
South African Reserve Bank, 2010, 2011
London Bullion Market Association, 2011
London AM and PM fixings
SOUTH AFRICAN DEVELOPMENTS
Production and sales
The South African Reserve Bank held gold reserves of 124.9t valued at R37.4 billion at the end of 2010
(Table 3). South Africa‟s gold production decreased by 4.5 percent from 197.6t in 2009 to 188.7t in 2010
(Table 3), resulting in the country dropping in production ranking from fourth to fifth. The decrease in
production was a result of the mining of lower-grade ore, made economic by higher rand gold prices. The
country‟s total sales revenue increased by 9.0 percent to R53 billion, due to a 9.8 percent rise in the
average rand price for the year, despite lower sales volumes. South Africa‟s export volumes increased by
2.1 percent from 176.8t in 2009 to 180.5t in 2010, while local sales volumes decreased by 8.8 percent from
7.7t in 2009 to 6.5t in 2010 due to decreased local demand during 2010.
TABLE 3 – SOUTH AFRICA‟S GOLD PRODUCTION, TOTAL SALES VALUE AND RESERVE BANK
HOLDINGS, 2001 – 2010
YEAR
PRODUCTION
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
394.8
398.5
373.3
337.2
294.7
272.1
252.6
212.7
197.6
188.7
Sources:
Note:
*
TOTAL
SALES VALUE
R ' 000
29 011 598
41 222 165
33 052 899
29 329 871
24 601 241
37 443 092
38 035 724
45 992 244
48 695 502
53 093 146
RESERVE BANK HOLDINGS*
t
177.9
173.6
123.6
123.9
124.0
124.1
124.3
124.7
124.8
124.9
R ' 000
17 302 131
14 989 624
9 798 741
8 886 591
12 970 035
17 634 409
22 843 006
32 426 081
32 752 733
37 492 459
South African Reserve Bank, 2001 - 2011
Gold holdings at year-end
Figures 1 and 2 depict the breakdown of production by gold field and province, respectively. The
latter illustrates that Gauteng was the largest gold producer at 94.2t, while the former illustrates
that the West Wits Line yielded the largest gold production at 72.1t.
35
FIGURE 1: SOUTH AFRICA‟S PRIMARY GOLD PRODUCTION AND CONTRIBUTION TO
TOTAL PRODUCTION BY GOLD FIELD, 2010 (t, %)
4.9t, 2.6%
5.8t, 3.1%
3.4t, 1.8%
16.0t, 8.5%
72.1t, 38.2%
2.2t, 1.2%
West Wits Line
11.2t, 6.0%
Free State
Klerksdorp
West Rand
33.7t, 17.8%
Evander
Central Rand
East Rand
39.4t, 20.9%
Other °
By-product *
Source:
Note:
°
Gold mines outside the Witwatersrand Basin
*
Platinum and base metal mines
FIGURE 2: SOUTH AFRICA‟S PRIMARY GOLD PRODUCTION AND CONTRIBUTION TO
TOTAL PRODUCTION BY PROVINCE, 2010 (t, %)
5.9t, 3.1%
3.2t, 1.7%
39.4t, 20.9%
Gauteng
94.2t, 49.9%
North West
Free State
41.9t, 22.2%
Mpumalanga
Limpopo
Source:
Note
°
Gold Mines outside the Witwatersrand Basin
36
Employment
Employment in the gold mining sector fell from 159 925 in 2009 to 157 019 in 2010, with total
remuneration increasing by 14.4 percent in the same period (Table 4).
TABLE 4 – SOUTH AFRICA‟S GOLD MINES, EMPLOYMENT AND REMUNERATION, 2005 2010
YEAR
2006
2007
2008
2009
2010
Source:
NUMBER OF EMPLOYEES*
Total
Male
Female
159 782
166 063
166 424
159 925
157 019
155 489
159 827
158 011
150 562
145 865
Total
R ' 000
12 865 125
14 506 400
15 960 051
17 371 249
19 877 654
4 293
6 236
7 513
9 363
11 154
REMUNERATION
Male
R ' 000
12 434 636
13 957 747
15 248 317
16 338 917
18 481 002
Female
R ' 000
430 489
548 653
711 734
1 032 332
1 396 651
Note:
*
Average number of employees in service, including contractors
Projects and other developments
In April, 2010, Gold One International Limited announced that it had made a binding offer to
acquire 100 percent of Rand Uranium for R1.68 billion.
Pan African Resources increased gold production by 3 percent to 97 483 oz at its Barberton
mines in the first two quarters of 2010. The company plans to increase gold output at Barberton
by 25 000 oz over the next five years. By early 2011, Pan African Resources estimated that its
security-related expenditure would normalize at around R20 million at its Fairview mine.
On 1 August 2010, Simmer and Jack acquired the Tau Lekoa mine from AngloGold Ashanti,
resulting in two months of production in the third quarter of 2010. Gold output rose to 36 608 oz,
in September from 17 599 oz, in August, while revenue increased to R327 million, up from R158
million.
On 5 August 2010, Gold Fields announced that the Department of Mineral Resources (DMR)
executed the new order mining right for its South Deep mine. Quarterly production increased by
21 percent from 1 801kg in the first quarter (57 000 oz) to 2 178 kg (70 000 oz) at the end of the
second quarter of the year.
During the third quarter of 2010, DRD South African operations raised R108 million for the
previously announced R300 million Crown/Ergo pipeline under a R500 million Domestic Medium
Term Note Programme (DMTN). In the beginning of 2011, DRDGold announced that it was
separating its surface and underground operations, and expressed interest to sell the
Blyvooruitzicht underground mine, in North West, to allow it to focus on surface reclamation
activities. The company has appointed the Royal Bank of Canada and Beijing-axis as advisors
for guidance on the disposal.
On 15 November 2010, Witwatersrand Consolidated Gold Resources raised R120 million
through the issue of 2.22 million shares at 5 400 cents each.
Great Basin Gold ramped up production at its Burnstone mine, in Mpumalanga, which is
expected to have a twenty five year life. In 2011, the focus changed from construction to
production while its metallurgical plant processed an estimated 199 878t of ore in the first quarter
of 2011. To date, 50 direct jobs have been created at Burnstone mine, with an additional 170
indirect jobs.
During the first quarter of 2011, Gold One produced 565 kg of gold, at its Modder East Mine
which had been the first mine to be built in South Africa‟s East Rand goldfield for the past 28
37
years. To date, Modder East mine has provided direct employment opportunities for more than 1
500 employees.
In April 2011, Witwatersrand Consolidated Resources was seeking to expand its scoping study at
its De-Bron-Merriespruit project (DBM), in the southern Free State, which the company planned
as a shallow and low-cost operation. The expansion of the scoping study delayed results for
three months, until June, 2011. The DBM project is in the southern Free State goldfields and has
a shallow gold reef that begins at 500 metres of depth, with cut-off grades of 6 g/t.
Rand Uranium had considered expanding from a pure gold producer to a larger scale uranium
and gold producer. This plan comprises the construction of a uranium processing plant and
expansion of underground mining to recover high grade uranium.
AngloGold has announced a breakthrough in new technology through utilising machines intended
to replace workers at stope face. The replacement of blasting in underground operations is the
primary aim of AngloGold Ashanti‟s Technology and Innovation Consortium (CAGATIC), which
also aims to conduct surface mining within the next ten years, through the use of a new leaching
process.
According to Jeremy Green of the Council for Scientific and Industrial Research (CSIR), the
objective is to deliver a prototype robot by March 2013, will dramatically improve drilling and
blasting. The application of this robot is intended to improve the drilling and blasting cycle of mine
stope faces, by smoothing these cycles.
Beneficiation
Gold beneficiation in South Africa is conducted mainly by the jewellery industry and to a lesser
extent by recycling companies. The jewellery industry employs both skilled and unskilled labour.
In 2010, only 3.9 percent of total gold production was sold locally, amounting to R2 billion.
According to statistics released by the Jewellery Council of South Africa, jewellery pieces
containing precious metals (including gold), increased by 14.3 percent from R9.7 billion in 2009
to R11.1 billion in 2010.
DEVELOPMENTS OUTSIDE SOUTH AFRICA
During its first financial year, Norton Goldfields Ltd rebounded from a difficult start in 2010, to
deliver production in excess of 140 000 ounces (oz) from its open cast and underground
operations at Paddington, Western Australia.
London listed African Barrick Gold (ABG), which produced gold from four mines in Tanzania,
missed its 2010 production target with output falling to 700 934 oz of gold during the year. This
was a 2 percent decline on its production of 2009 and short of its 716 000 oz target. Barrick Gold
recently completed a buyout of a 75 percent stake of Cerro Casale in Chile during March, for
$1.28 billion. The deal included the acquisition of Canada‟s gold junior, Canada‟ Arizona Star
Resource. Lagunas Norte in Peru, is Barrick‟s lowest cost producer and produced 808 000 oz in
2010.
Great Basin Gold‟s revenue declined to $6.8 million Canadian dollar (C$6.8 million). The net
attributable loss for the period narrowed to C$6.5 million.
In February 2011, Canada‟s Exeter Resources Corporation exercised an option to buy a gold and
copper project in Chile‟s Maricunga‟s district from Anglo American.
Teck Resources and Nova Gold Resources completed a pre-feasibility study on their Galore
Creeck copper and gold project in British Columbia by the end of July, 2010. The partners
approved a $350 million budget for the rest of 2011.
38
TSX-listed Sulliden Gold, which owns a gold deposit in the Peruvian Andes, would make a likely
takeover-target for companies like Barrick Gold and Newmont, which own mines nearby.
In June 2011, Australian miner, Newcrest mining adjusted its full-year expected gold production
by 0.12 million oz to 2.8 million oz, after a power failure disrupted production at its Lihir mine in
Papua New Guinea.
OUTLOOK
Total world gold supply is expected to increase in 2011, as mine production is expected to
increase due to Australia, China, Argentina, United States and Berkina Faso‟s capacity and
access to new ore bodies. Scrap supply is expected to be slightly lower, due to anticipation of
further price gains and due to the market adjusting to a higher gold price. Central Bank
purchases are expected to increase due to increasing portfolio diversifications and geopolitical
risks.
Global demand for investment purposes is forecast to grow in 2011, firstly due to the potential
inflationary pressures resulting from governments‟ and central banks‟ fiscal and monetary
policies in many countries and secondly due to the safe haven properties of gold as the
economic environment becomes more unstable. Net producer de-hedging is expected to
increase while the demand for Jewellery fabrication is likely to drop markedly as the high price
hits off-take.
South African gold production is expected to decline to some 179t during 2011, due to continued
mining of lower grade ores made economic by higher rand gold prices, the enforcement of safety
procedures and a production interruption in the second quarter of 2011, affecting production
levels. The price in rand terms is forecast at an average of R356 195/kg in 2011, representing an
increase of 24.4 percent over the 2010 average price of R288 579/kg.
REFERENCES
1.
2.
3.
4.
5.
6.
DMR, Directorate Mineral Economics statistics
Klapwijk P, Walker P, et al, 2011. Gold Survey 2011: GFMS Ltd, London, 121 pp
London Bullion Market Association, 2011. Internet Website:
http://www.lbma.org.uk/?area=stats&page=gold/2001monthlygold
South African Reserve Bank, 2010, 2011. Internet Website: http://www.reservebank.co.za/internet/publication.nsf/
US Geological Survey, 2011. Mineral Commodity Summaries, 2011: Internet Website:
http://minerals.usgs.gov/minerals/pubs/commodity/gold/mcs-2011-gold.pdf
The Jewellery Council of South Africa, 2006 - 2010
39
PLATINUM-GROUP METALS
Donald O Moumakwa
WORLD SUPPLY
Global supplies of platinum, palladium and rhodium increased by 2.3 percent from 390.9 tonnes (t) in 2009
to 399.8t in 2010. South Africa (SA) remained the world‟s leading platinum group metals (PGMs) supplier
in 2010, accounting for 55.7 percent of the total world supply of platinum, palladium and rhodium, followed
by Russia with 32.7 percent (Table1). North America, comprising Canada and the United States of
America (USA), accounted for 5.8 percent, while Zimbabwe contributed 3.7 percent.
TABLE 2: WORLD PGMs RESERVES AND SUPPLY, 2010.
#
RESERVES*
COUNTRY
SUPPLY
t
%
t
%
North America
2 390
3.0
23.0
5.8
Russian Federation
6 600
8.3
130.8
32.7
70 000
87.7
222.6
55.7
Zimbabwe
N/A
N/A
14.9
3.7
Others
850
1.1
8.4
2.1
TOTAL
79 840
100.0
Sources: Platinum 2010
*USGS, 2010
#
Note: platinum, palladium and rhodium only.
399.8
100.0
South Africa
Global platinum supplies increased by 2.4 percent from 167.8t in 2009 to 171.8t in 2010, with 76.5 percent
of the supplies coming from SA (Fig 1), which increased refined production by 2 percent to 131.4t.
Supplies from Russia increased by 5 percent to 23.4t, due to increased production from Norilsk Nickel‟s
mines, a result of greater processing of PGM-bearing materials from the smelters. North American
platinum supplies fell by 19.2 percent to 5.9t mainly due to a year-long strike at Vale‟s Sudbury operations
and the decline in production from Stillwater due to mining of lower PGMs grades as well as reduced mill
throughput. Platinum supplies from Zimbabwe increased by 22 percent to 7.9t in 2010 following a ramp-up
of expansion projects.
FIGURE 1: GLOBAL SUPPLIES OF PGMs, 2010.
240
200
tonnes
160
120
80
40
0
Platinum
Palladium
SA
Russia
North America
Zimbabwe
Rhodium
Others
Source: Platinum 2010
Global palladium supplies amounted to 206.7t in 2010, an increase of 2.1 percent over the 2009 figure.
Total supplies of palladium were once again boosted by sales of material from Russia‟s palladium stocks,
which amounted to 28.4t, while production from mining operations increased marginally to 77.1t. SA
supplies rose by 8.6 percent to 73.0t, while North American production decreased due to strike action in
40
the nickel industry, in which PGMs are produced as by-products. Supplies of palladium from Zimbabwe
increased by 22.4 percent to 6.2t as expansion programmes continued at operating mines on the Great
Dyke.
Global rhodium supplies decreased by 2.3 percent to 21.3t in 2010, with 85.4 percent of the metal coming
from SA. Output from SA mines was almost constant, but supplies decreased due to a build-up of pipeline
and refined metal stocks. Supplies of other PGMs, iridium and ruthenium, were sufficient for the market in
2010, with the stockpiles counteracting shortfalls from mined output. Small amounts of PGMs were
produced as by-products of mining other metals from other countries such as China and Colombia, and
these amounted to 3.1t of platinum and 5.2t of palladium.
WORLD DEMAND
Gross platinum demand increased by 16.0 percent to 223.4t in 2010, largely due to an increase in
automotive and industrial purchasing (Table 2). Total worldwide vehicle production improved by 25
percent as a result of stronger consumer and fleet sales, which in turn were driven by improved economic
conditions. Overall, gross purchases of platinum for autocatalysts improved by 43 percent to 88.6t in
2010.
Demand from the jewellery sector decreased by 14 percent to 68.5t as Chinese manufacturing
demand softened. Physical investment demand remained almost flat at 18.4t. Although the weight of
platinum recovered from open loop recycling increased by 30.5 percent to 52.2t, the platinum market was
close to balance in 2010, with a surplus of just 0.6t.
TABLE 2: PGMs DEMAND BY APPLICATION, 2010.
Tonnes (t)
Platinum
Total Supplies
Palladium
Rhodium
171.8
206.7
21.3
Autocatalysts
88.6
154.5
20.5
Chemical
12.6
11.2
1.9
Electrical
6.2
40.0
0.1
Investment
18.4
30.8
-
Jewellery
68.5
17.6
-
Other
29.1
18.9
2.2
223.4
272.9
24.7
30.8
37.6
6.7
Electrical
0.3
12.5
-
Jewellery
21.1
2.3
-
52.2
52.3
6.7
171.2
220.6
18.1
0.6
-13.9
3.2
Gross Demand
Total Gross Demand
Recycling
Autocatalysts
Total Recycling
Total Net Demand (total gross demand –
total recycling)
Oversupply (total supply – total net
demand)
Source: Platinum 2010.
Gross palladium demand also rose, increasing by 23 percent to 272.9t, its highest ever level. Gross
automotive sector demand for palladium rose by 34.6 percent to 154.5t, the highest since 1999 as
economic recovery drove vehicle production higher in all regions. Gross demand from the jewellery sector
declined further by 23.8 percent to 17.6t as weaker Chinese demand persisted. Net annual identifiable
physical investment demand for the metal increased by 74 percent in 2010 as a result of heavy buying of
exchange traded funds. Supplies from total recycling of the metal improved by 29.1 percent to 52.3t, but
these were outweighed by demand from the automotive sector and physical investment, resulting in a
palladium market deficit of 13.9t.
Despite strong recovery in purchasing of rhodium by the metal‟s largest sector, the automotive market, the
rhodium market remained oversupplied by 3.2t. Demand from the automotive sector increased by
17.1percent to 20.5t. Other PGMs, iridium and ruthenium, showed significant demand improvements in
41
2010 due to technology changes, stock building in certain sectors and better economic conditions.
Demand for iridium increased more than fourfold, reaching 9.5t on the back of strong purchases of iridium
crucibles, while ruthenium demand rose by 79 percent to 29.2t due to strong purchasing by the electrical
and electrochemical sectors. Both markets remained adequately supplied in 2010.
PRICES
Following a recovery in 2009 from a sharp decline in the second half of 2008, PGMs prices were driven
higher in January 2010 by the launch of US-based Exchange Traded Funds (ETFs), which generated
significant buying through the first half of the month. The recovery of automotive and industrial demand
ensured average price increases in 2010 for PGMs. The platinum price per ounce averaged $1 610.94 in
2010, a 33.2 percent increase from $1 209.00 in 2009, while the average palladium price nearly doubled
from $265/oz in 2009 to $526.42/oz in 2010. The rhodium price averaged $2 427.79/oz in 2010, a 52.6
percent increase from the 2009 figure.
TABLE 3: PGMs MONTHLY HIGHS, LOWS AND AVERAGE PRICES ($/oz), 2010.
Platinum
Palladium
High
Low
Ave
Jan
1 641.00
1 496.00
Feb
1 586.00
Mar
Rhodium
High
Low
Ave
High
Low
Ave
1 563.28
462.00
418.00
434.16
2 775.00
2 450.00
2 673.75
1 475.00
1 520.68
446.00
387.00
424.98
2 575.00
2 375.00
2 500.00
1 645.00
1 548.00
1 599.74
479.00
437.00
461.33
2 575.00
2 425.00
2 530.22
Apr
1 752.00
1 659.00
1 716.53
571.00
489.00
533.50
2 975.00
2 600.00
2 487.50
May
1 731.00
1 492.00
1 626.37
543.00
416.00
489.66
2 850.00
2 675.00
2 770.24
June
1 605.00
1 495.00
1 552.84
502.00
421.00
461.84
2 675.00
2 425.00
2 488.64
July
1 560.00
1 499.00
1 526.18
491.00
429.00
455.90
2 500.00
2 150.00
2 357.95
Aug
1 590.00
1 494.00
1 541.11
514.00
465.00
488.17
2 225.00
2 125.00
2 152.27
Sep
1 662.00
1 528.00
1 591.56
573.00
508.00
538.69
2 350.00
2 125.00
2 195.45
Oct
1 723.00
1 661.00
1 688.61
640.00
565.00
591.74
2 300.00
2 250.00
2 279.76
Nov
1 786.00
1 636.00
1 694.51
730.00
638.00
683.07
2 475.00
2 275.00
2 342.05
Dec
Average
2010
2009
1 760.00
1 673.00
1 709.88
797.00
707.00
754.01
2 450.00
2 300.00
2 355.68
1 610.94
1 209.00
526.42
265.00
2 427.79
1 591.25
Source: Platinum 2010.
Both platinum and palladium prices gained overall during 2010 (Figure 2), reflecting solid demand from a
recovering automotive sector and strong investment for ETFs. During this period, rhodium prices were not
immune to sliding as fears around sovereign debt in Europe affected some industrial commodities. The
most remarkable month, however, was October, when platinum traded over $1 700/oz for the first time in
more than four months and palladium reached levels not seen in nine years. In the case of rhodium,
buying interest pushed prices up to progressively higher levels.
42
FIGURE 2: PGM MONTHLY AVERAGE PRICES, 2010.
3000.00
Price ($/oz)
2500.00
2000.00
1500.00
1000.00
500.00
0.00
Palladium
Rhodium
Platinum
Source: Johnson Matthey
st
With a slight price dip on the 31 December 2010, platinum ended the year at $1 731/oz, 16 percent higher
than the opening price in January 2010, while palladium ended at $791/oz, an increase of 88 percent since
the start of the year and its highest level in a decade. Rhodium prices softened overall in 2010, ending the
year at $2 425/oz, 4.9 percent lower than the opening price of $2 550/oz in January 2010. However, the
metal did attain a high of
$2 975/oz in April 2010, levels last seen in 2008.
Production and Sales
South Africa‟s PGM production increased by 5.9 percent to 287.2t in 2010 from 271.3t in 2009 (Table 4).
Production of platinum and palladium rose by 5.0 percent to 147.8t and by 9.5 percent to 82.2t,
respectively, while production of rhodium remained flat at 20.0t. The increase in production was attributed
to newer operations, the production of which outweighed losses due to closure of uneconomic shafts and
geological difficulties.
TABLE 4: SOUTH AFRICA'S PGM PRODUCTION AND SALES, 2010.
PRODUCTION
PGM's
EXPORT SALES
Tonnes
Tonnes
Value (R billion)
Unit Value (R million/t)
Platinum
147.8
130.0
46.8
360.0
Palladium
82.2
62.8
6.9
109.9
Rhodium
20.0
18.3
9.9
541.0
Iridium
6.4
9.0
1.2
133.3
Ruthenium
30.8
24.4
1.0
41.0
TOTAL
287.2
244.5
Source: DMR, Directorate Mineral Economics.
65.8
269.1
Despite a decrease of 2.6 percent to 244.5t in the PGMs export volumes, sales revenue increased by 23.0
percent to R65.8 billion, mainly due to the recovery in PGM prices.
Employment
Despite the significant recovery in the PGMs market in 2010, average employment in South Africa‟s sector
continued to decrease, falling by 1.2 percent to 182 003 in 2010 (Table 5), while total remuneration
increased by 6.8 percent, resulting in a 8.1 percent increase in the average remuneration per employee.
Average productivity per employee improved by 6.8 percent to 1.57 kg PGMs.
TABLE 5: EMPLOYMENT (INCLUDING CONTRACTORS) AND REMUNERATION IN SOUTH
AFRICA'S PGM MINES, 2010.
43
YEAR
AVERAGE NUMBER
OF EMPLOYEES
TOTAL REMUNERATION
(R'000)
AVERAGE
REMUNERATION
(R/employee)
2006
168 530
12 585 340
74 677
2007
186 411
18 341 043
98 390
2008
199 948
23 344 341
116 752
2009
184 163
24 879 139
135 093
2010
182 003
26 577 282
146 027
Downstream Value Addition
Downstream value addition of PGMs in SA is expected to grow in line with growth in the automotive
industry and fuel cell technology, both of which require PGMs as essential components.
Catalytic Converters
SA‟s catalytic converter industry is the major beneficiator of the country‟s PGMs at around R10 billion worth
of mined PGMs. The industry has a global significance, with 12-14 percent share of the market. Catalytic
converters are SA‟s biggest automotive component export segment, at 44 percent of all components
exported in 2009 by value, and employing over 4 000 people. The recession saw the local industry
exporting 9.9 million catalytic converters in 2009, 43 percent down from 17.3 million units exported in 2008,
with the export earnings dropping by 42.5 percent from R22.1 billion in 2008 to R12.7-billion in 2009.
The automotive sector has shown signs of recovery from the economic crisis and this has resulted in a
surge in demand for PGMs. As the number of vehicles on the road increases, further cuts in pollution per
vehicle are needed to keep improving air quality. Due to environmental concerns, some developed
countries continue to apply increasingly stricter emissions standards, providing SA with an opportunity of
increasing downstream value addition of PGMs.
Fuel Cells
Fuel cell technology is a pollution-free electricity generation technology that is expected to compete with
traditional fossil fuels and hydrocarbon combustion, thereby reducing the carbon footprint. It uses a variety
of feed streams such as hydrogen gas, ammonia and liquid petroleum gas to generate electricity, and uses
platinum as a catalyst for the conversion of hydrogen into electricity. Fuel cells are, therefore, seen as an
st
energy solution for the 21 century, providing alternative energy to energy-intensive industries, such as
mining, faced with challenges relating to security of energy supply.
A hydrogen fuel cell powered bicycle, Ahi Fambeni (meaning “let‟s go” in the Tsonga language), was
launched in August 2010, following a partnership between the SA government and the private sector to
promote hydrogen and fuel-cell technology. The bicycle, which was built by students from the Tshwane
University of Technology in Pretoria, is made from light and strong advanced technology materials. It is
intended to provide cheap powered transport for people living in rural villages, and is planned to be
followed by a hydrogen fuel cell powered tricycle and, ultimately, by a hydrogen fuel cell powered car. This
is in line with the National Hydrogen and Fuel Cells Research, Development and Innovation Strategy,
which is aimed at enabling South Africa to extract more value from its platinum resources, ultimately
supplying 25% of the world fuel cell demand by 2020.
Projects and Other Developments
The onset of the global financial meltdown in late 2008 resulted in a decrease in the number of PGMs
projects across the country as companies cut down on spending due to decreased demand and prices.
The effects of the financial crisis are still apparent as the current number of PGMs projects under way is
nowhere near pre-crisis levels, although it is steadily increasing on the back of surging demand for the
metals and increased prices.
Royal Bafokeng Platinum (RBPlat) confirmed in December 2010 that its board had approved the
R1.27 billion North Shaft Merensky Phase III project at the Bafokeng Rasimone Platinum Mine
(BRPM), in Rustenburg. RBPlat has a 67 percent participation interest in BRPM and Anglo
Platinum holds the 33 percent balance in the unincorporated joint venture. The project approval
followed the conclusion of the feasibility study and the development is expected to significantly
44
extend Merensky production levels at the shaft. Work on the project has commenced and would
continue for about seven years, to be concluded in the third quarter of 2017.
Anooraq Resources announced in October 2010 plans to increase production at its Bokoni mine to 240
000 oz/y PGMs by 2013. The first phase of the plan would cost around R600 million, of which Anooraq
would be responsible for 51 percent and Anglo Platinum for the rest. The company had already reduced
costs at the mine from R1 115/t to about R900/t and would aim to further reduce costs to R800/t. From
2016 onwards, Anooraq plans to increase production to about 570 000 oz/y, which would position the
company as one of the major platinum miners.
The Department of Mineral Resources (DMR) granted new order mining rights for Eastern Platinum‟s
(Eastplats‟) 75.5 percent-owned Mareesburg project, on the eastern limb of the Bushveld Complex. The
mining rights include all PGMs, base metals and chrome in the Upper-Group two (UG2) reef horizon. By
developing the Mareesburg openpit mine, Eastplats could increase its overall output by 325 000 oz/y of
PGMs by 2013. The company has also applied for 40-MVA of installed power capacity required to operate
the concentrator and for mining at the company‟s nearby Spitzkop mine. Both the Mareesburg and
Spitzkop developments are expected to create about 1 600 jobs in the Lydenburg and Steelpoort areas.
OUTLOOK
The global economy remains vulnerable to unpredictable external factors, which have the potential to
impact negatively on PGMs demand. A case in point is the Japan earthquake and tsunami in March 2011,
which had the immediate effect of slowing demand for the metals as vehicle and other industrial production
stopped for several days. Nevertheless, the platinum market is expected to be tight in 2011 as the
anticipated modest increase in supplies might struggle to satisfy increasing gross automotive and industrial
demand due to improving economic conditions. Most of global supplies are once more expected to come
from South Africa, which is expected to increase production through ramp-up from new or expanded
operations, improvement of underperforming operations and additional output from re-opened shafts. A
tight market is likely to push the platinum price to a year average of around $1 800, with the price having
already tested this mark for the first time in April 2011.
Although supplies of newly-mined palladium from South Africa are expected to increase in 2011, global
palladium supplies are expected to decrease slightly due to a reduction in the sales of Russian state
stocks. However, growth in the use of palladium in Europe is expected to be enhanced by further
substitution of the metal for platinum in diesel after-treatment formulations. With the automotive demand
for the metal set to increase in line with increased vehicle production, the palladium market is once again
anticipated to be in deficit in 2011, resulting in a repetition of impressive price gains observed in 2010.
Rhodium supplies are expected to increase in 2011 due to increased output from South African mines,
leading to another annual surplus as automakers continue to implement lower rhodium-loaded technology,
restricting growth in rhodium demand. This is likely to put a downward pressure on prices, as has already
been observed during the first six months of 2011. Both ruthenium and iridium are also expected to
experience lower demand in 2011 as a result of good stock building in 2010, despite continued growth in
demand from electrical and electrochemical sectors, as well as for iridium-tipped spark plugs.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
Johnson Matthey: www.platinum.matthey.com
Platinum 2011, Johnson Matthey plc.
Miningweekly.com, 10 January 2011.
Miningweekly.com, 06 December 2010.
Miningweekly.com, 04 November 2010.
Miningweekly.com, 07 October 2010.
Engineeringnews.co.za, 12 August 2010.
45
SILVER
PJ Perold
WORLD SUPPLY
Global silver supply increased by 14.6 percent from 922.2 million ounces (Moz) in 2009 to 1
056.6 Moz in 2010, with mine production and secondary supply contributing 69.6 percent and
30.4 percent respectively.
FIGURE 1: WORLD SILVER SUPPLY BY SOURCE, 2010.
61.1 Moz
215.0 Moz
735.9 Moz
44.8 Moz
Mine Production
Net Government Sales
Old Silver Scrap
Producer Hedging
Source: World Silver Survey, 2011
Global silver mine production amounted to 735 Moz in 2010, an increase of 2.5 percent from 2009.
Growth in supply was mainly driven by increases from the primary silver and lead/zinc sectors, due
to significant new production capacity. Mexico‟s silver production increased by 12.5 percent to
128.6 Moz in 2010, making it the world‟s largest silver producer overtaking Peru (Table 1). The
increase was due to the start of a sulphide (zinc) operation and the ramp-up of primary silver
production. Overall silver production in Latin America decreased by 4.1 Moz, due to declining
production from primary silver and gold mines. Argentina‟s production growth of 20 percent was
moderated by heavy declining production of 7.4 Moz in Peru, due to two mines recording lower
production. Russia recorded losses of 5.4 Moz, due to lower silver recoveries. Peru was the
second largest global producer of silver, followed by China, Australia and Chile. South Africa
remained 20th in the world, with its production accounting for 0.4 percent of total world output.
46
TABLE1: WORLD SILVER RESERVES AND MINE PRODUCTION, 2010.
COUNTRY
RESERVES#
Moz
%
2 218
13.7
707
4.4
2 251
13.9
1 383
8.5
1 190
7.3
3 858
23.8
2 218
13.7
804
5.0
1 608
9.9
16 236
100
Australia
Argentina
Bolivia
Chile
China
Mexico
Peru
Poland
Russia
South Africa
USA
Others
TOTAL: 2010
2009
PRODUCTION*
Moz
%
Rank
59.9
9.6
4
20.6
3.3
10
41.0
6.6
6
41
6.6
5
99.2
15.9
3
128.6
20.7
1
116.1
18.7
2
37.7
6.1
8
36.8
5.9
9
2.5
0.4
20
38.6
6.2
7
622.0
100.0
709.6
Rank
4
8
2
5
6
1
3
7
-
Sources: *World Silver Survey, 2011.
#USGS, Mineral Commodity Summaries, 2011.
Secondary supply, comprising of net government sales, old silver scrap and producer hedging
amounted to 320.9 Moz, an increase of 57.4 percent. The increase was driven mostly by the
increase in scrap supply and net government sales, which increased by 14 percent and 189
percent respectively. Net government sales increased to 44.8 Moz in 2010, due to a major rise in
disposals from Russia.
WORLD DEMAND
World silver demand amounted to 1 056.8 Moz, with the fabrication sector accounting 83.1
percent. Total fabrication demand increased by 12.7 percent to 878.8 Moz (Fig 2), mainly due to
recoveries in industrial demand. The demand for industrial applications increased by 20.7 percent
to 487.4 Moz with implied net silver investment increasing by 47 percent to 178 Moz in 2010.
FIGURE 2: WORLD SILVER CONSUMPTION (Moz) BY SECTOR, 2010
178 Moz
487.4 Moz
72.7 Moz
878.8 Moz
101.3 Moz
167.0 Moz
50.3 Moz
Industrial Applications
Silverware
Photography
Coins & Medals
Source: World Silver Survey, 2011
47
Jewellery
Total Fabrication
Overall jewellery demand increased by 5.1 percent to 167.0 Moz in 2010 due to gains in
emerging gross domestic markets, particularly in China and East Asia. Photographic demand
decreased by 8.3 percent to 72.7 Moz in 2010.This was attributed to a slight decrease in the
output of traditional-rays. Coins and Medals fabrication demand rose by 28 percent to a record
101.3 Moz, driven by strong global demand.
PRICES
Booming investment demand and a strong increase in industrial fabrication resulted in the
average silver price of $20.19 per ounce, in 2010, the second highest annual average since
1980. The average price was 27.3 percent higher than 2009‟s average of $14.67/oz. Silver‟s
price strength was primarily attributed to a boom in investment and to a lesser extent a rebound
in the industrial sector.
FIGURE 3: MONTHLY AVERAGE SILVER PRICES, 2010.
35
Silver Price ($/oz)
30
25
20
15
10
5
0
Source: Silver fixings, LBMA, 2011
Production and sales
South Africa does not have a primary silver mine and the metal is only produced as a by-product
of other minerals, mostly gold and platinum. South Africa‟s silver production remained at 2.5 Moz,
in 2010. Local sales volume stood at 0.2 Moz while export sales volume increased by 8 percent
from 2.3 Moz in 2009 to 2.5 Moz in 2010 despite strikes at two major platinum by-product
producers. However, revenue from local sales improved by 15.3 percent to R35.6 million, with
export sales increasing by 36 percent to R350.4 million in 2010, driven by investment demand
and higher prices.
48
TABLE 2 – SOUTH AFRICA‟S SILVER PRODUCTION AND TOTAL SALES VALUE, 2001 –
2010
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Production
3.5
3.6
2.8
2.3
2.8
2.8
2.2
2.4
2.5
2.5
Mass
MOZ
0.1
0.1
0.1
0.2
0.1
0.2
0.1
0.3
0.3
0.2
Local sales
Unit
Value
Value
R1 000
R/kg
4 767
1 182
6 663
1 620
4 659
1 300
7 483
1 556
5 660
1 504
11 026
2 329
10 895
2 951
28 272
3 592
30 906
3 830
35 639
4 548
Mass
MOZ
3.9
3.7
3.4
2.3
3.2
3.0
2.5
2.8
2.3
2.5
Export sales
Unit
Value value
R1 000
R/kg
136 956 1 118
162 012 1 419
114 555 1 094
93 995
1 309
137 844 1 399
239 595 2 532
224 146 2 916
318 573 3 663
256 198 3 653
350 439 4 442
Total Sales
Mass
MOZ
4.1
3.8
3.5
2.5
3.3
3.2
2.6
3.0
2.5
2.7
Value
R1 000
141 723
168 674
119 215
101 478
143 504
250 621
235 041
346 845
287 103
386 078
OUTLOOK
Global silver supply is expected to increase further into 2011, as mine production is expected to
record another annual increase. The bulk of the increase is expected from the gold and base
metals mining sectors. Fabrication demand has picked up as manufacturing globally has grown
but by far investment demand has been the main driver of silver metal prices. Scrap-supply will
continue to rise marginally in 2011, due to the ongoing decline in photographic applications being
offset by a sharp rise in scrap-receipts from the industrial sector. Government sales are expected
to increase, due to further anticipated disposals. In South Africa, silver output is expected to
increase marginally (despite a forecasted decline in gold production), as a result of the expected
increase in production from platinum operations, spurred on by improving economic conditions.
The metal is expected to rise to a range of $36/oz to $39/oz an ounce for the rest of 2011, as
fabrication hits off-take. Such higher prices are expected to be beneficial to producers.
REFERENCES
1.
2.
3.
4.
5.
6.
The Silver Institute, www.silverinstitute.org.
World Silver Survey, 2011.
Silver fixings, LBMA, 2011.
http://www.tradingnrg.com/gold-price
http://www.forecasts.org/gold.htm
49
ENERGY MINERALS OVERVIEW
K L Revombo
INTRODUCTION
South Africa is well endowed with both coal and uranium resources and is ranked amongst the top ten in
th
th
the world. South Africa has the 8 largest coal reserves in the world and is the 7 largest world producer of
th
th
coal. The country‟s uranium resources are the 5 largest in the world whereas uranium production is 10
largest globally. The country‟s coal reserves are located mainly in Mpumalanga, northern KwaZulu-Natal
and Limpopo. Nearly all the uranium is produced as a by-product of gold and the country has resource
estimated at 295 kt, the largest resources in Africa.
The country hosts only very small deposits of oil and gas, and thus imports more than 60 percent of the
feedstock required for liquid fuel production. The remainder of liquid fuel feedstock is derived from
synthetic fuels which are produced domestically from coal and natural gas.
In 2010, global primary energy consumption grew by 5.6 percent, the largest increase (in percentage
terms) since 1973, mainly driven by the economic recovery. Both OECD and non-OECD countries
experienced growths in energy consumption. All forms of energy grew strongly. Consumption in OECD
countries grew by 3.5 percent, the strongest growth rate since 1984. Non-OECD consumption grew by 7.5
percent.
Oil remained the world‟s leading fuel at 33.6 percent of global energy consumption. Global oil production
increased by 1.8 million barrels per day (mbbl/d) or 2.2 percent to 82 095 thousand barrels per day (tbbl/d)
supported by OPEC‟s increase of 2.5 percent (960 tb/d). OPEC‟s largest increases were in Nigeria (340
tb/d) and Qatar (220 tb/d). Outside OPEC, oil production grew by 1.8 percent (860 tbbl/d), where growth
was led by China.
Oil prices averaged $79.50 per barrel in 2010, an increase of 29 percent from 2009 on the back of global
economic recovery. Very strong consumption growth and continued OPEC production restraint helped
push prices high late in 2010 with prices reaching a peak at $90 per barrel at year-end.
World natural gas production grew by 7.3 percent to 3193.3 billion cubic metres. Russia led this growth
with an increase of 11.6 percent, the world‟s largest volumetric increase. Qatar recorded a 30.7 percent
growth whereas the US recorded a 4.7 percent growth and remained the world‟s largest producer. Global
natural gas consumption grew by 7.4 percent, growing in all regions except the Middle East which depends
mainly on oil. The US had the world‟s largest increase in consumption (in volume terms), rising by 5.6
percent to 683.4 billion cubic metres. Russia and China also registered large increases. Consumption in
other Asian countries also grew rapidly by 10.7 percent, led by a 21.5 percent increase in India.
Coal accounted for 29.6 percent of global energy consumption in 2010. Global coal production increased
by 6 percent to 7 228.7 Mt compared with 2009. China, with 3 162 Mt, accounting for two thirds of global
growth, was the global leader followed by the US (997 Mt) and India (570.7 Mt). Coal production also grew
in the US and Asia but dropped in the European Union. World coal consumption grew by
9.5
percent from 6 612 Mt to 7 233 Mt in 2010. China accounted for 48.2 percent of the world‟s coal
consumption followed by US (14.8 percent) and India (7.8 percent).
World uranium mine production increased by 5.7 percent in 2010 to 53.74 ktU compared with 2009.
Kazakhstan, at 33.2 percent, was the world‟s leading producer, followed by Canada (18.2 percent) and
Australia (11 percent). Namibia became the largest African producer, accounting for 8.4 percent of Africa‟s
production followed by Niger (7.8 percent) and South Africa (1.2 percent).
South Africa‟s annual uranium production increased by 6.4 percent to 655 tU3O8 in 2010 from 623 tU3O8 in
2009. All the uranium produced in the country was exported.
50
TABLE 1: SOUTH AFRICA‟S PRODUCTION AND SALES OF ENERGY COMMODITIES, 2010
COMMODITY
LOCAL SALES
EXPORT SALES
TOTAL SALES
kt
kt
R'000
kt
R'000
kt
R'000
2009
250 538
184 676
34 442 650
60 539
31 006 559
245 215
65 449 209
2010
254 521
188 110
36 455 545
66 395
36 746 983
254 505
73 202 528
Uranium
2009
0.62
*
*
*
*
*
*
Oxide
2010
0.66
*
*
*
*
*
*
2009
250 539
184 676
34 442 650
60 539
31 006 559
245 215
65 449 209
2010
254 522
188 110
36 455 545
66 395
36 746 983
254 505
73 202 528
2009
973
973
1 456 920
-
-
973
1 456 920
2010
1 222
1222
2 012 516
-
-
1 222
2 012 516
Natural Gas
2009
131
131
619 455
-
-
131
619 455
Condensate
2010
140
140
916 225
-
-
140
916 225
2009
1 104
1 104
2 076 375
*
*
1 104
2 076 375
2010
1 362
1 362
2 928 741
*
*
1 362
2 928 741
Coal
YEAR
PRODUCTION
Subtotal
Natural Gas
Subtotal
Source: DMR, Mineral Economics Directorate
* Information withheld.
Note: Coal export figures are under review and consolidation
South Africa‟s coal production rose by 1.5 percent to 254.5 Mt. Local sales amounted to 74 percent (188.1
Mt) while 66.4 Mt was exported (an increase of 9.8 percent). Total revenue generated from coal sales
amounted to R73.2 billion, an increase of 11.8 percent from the R65.5 billion in 2009. Natural gas
production increased by 25.6 percent to 1.2 Mt compared with 2009 while natural gas condensate output
rose by 6.9 percent to 140 kt.
.
EMPLOYMENT
Employment in the energy sector increased by 5.7 percent in 2010 to 75 021 from 70 970 in 2009 (Table
2). Over the same period, total remuneration increased by 10.9 percent to R 14.3 billion and the average
annual earnings rose by 4.9 percent to R191 319 per employee.
TABLE 2: SOUTH AFRICAN ENERGY SECTOR EMPLOYMENT AND GROSS REMUNERATION
2005 – 2010
YEAR
EMPLOYEES
REMUNERATION
Number
R'000
R'000/Employee
2005
57 185
6 558 129
114.7
2006
57 936
7 340 151
126.7
2007
60 698
8 778 627
144.6
2008
65 739
11 138 368
169.4
2009
70 970
12 947 469
182.4
2010
75 021
14 352 946
191.3
OUTLOOK
Energy demand from developing economies is expected to continue growing, driven mainly by the drive for
increased access to electricity, transportation and industrialization.
World oil production is forecast to grow by 2 percent to 83.7 mbbl/d in 2011. The International Energy
Agency (IEA) forecast that world oil consumption will increase by 1.4 mbbl/d in 2011 and 1.6 mbbl/d in
2012, underpinned by continued strong growth in demand in the transport and industrial sectors, and an
increase in Japan‟s oil-fired electricity generation to replace some nuclear and coal-fired power following
51
the March 2011 earthquake and tsunami. The oil price is projected to average $110 per barrel in 2011 and
$112 per barrel in 2012 owing to increased global demand and slow growth in supply.
World coal production is forecast to increase by about 4.2 percent to 7 580.3 Mt in 2011 supported mainly
by growth in Australia, China, Indonesia and South Africa. Global coal consumption is forecast to increase
in 2011 driven mainly by increased demand for electricity in developed economies and new generating
capacity in developing economies. China, India and the European Union are expected to account for most
of this growth. With the discovery of abundant shale natural gas in the US and the lower natural gas prices,
coal demand is expected to slow down in the US. Coal prices will be supported by global high demand.
Australian coal prices are to settle at around $130/t in 2011 whereas South Africa‟s coal prices are
expected to settle at around $120/t.
Global uranium production is expected to increase by 10 percent in 2011 to 59 400 tU 3O8, mainly
supported by an increase in production in Africa, Kazakhstan, US and Australia. Consumption is forecast
to grow by 6 percent to 86 800 tU3O8 driven by the increase in nuclear power generation capacity.
Natural gas contribution to electricity generation will increase due to its more favourable environmental and
practical attributes and the slow pace at which low-carbon energy technologies are being deployed. It is
forecast that global natural gas consumption will increase by 1.3 percent to 3 211 billion cubic metres in
2011. The price of natural gas is projected to average $159 /thousand cubic metres in 2011.
REFERENCES
1. BP Statistical Review of World Energy, June 2011
2. Department of Mineral Resources, Mineral Economics Directorate
3. Coal Information 2011, International Energy Agency – OECD/IEA, 2011
4. www.abare.com
52
COAL
K L Revombo
WORLD SUPPLY
In 2010, global coal proved reserves increased by 109 percent to 861 billion tons compared with 2009.
Several countries revised their reserves and, notably, Indonesia‟s reserves jumped by 221 percent to
5
529 million tons (Mt) compared with 2009, followed by Russia (220 percent), Ukraine (120 percent), United
States (118 percent) and Australia (107 percent), (Table 1). The United States accounts for 27.6 percent of
the total global reserves, followed by Russia (18.2 percent) and China (13.3 percent), a distant second and
third place, respectively.
Global coal production increased by 6 percent to 7 228.7 Mt compared with 2009 (Table 1). China, at
3 162 Mt, was the leading producer, followed by US‟ 997 Mt, India‟s 570.7 Mt and Australia‟s 420.3 Mt.
TABLE 1: WORLD COAL RESERVES, PRODUCTION AND EXPORTS, 2010
RESERVES
COUNTRY
1
2
PRODUCTION
EXPORTS
2
Mt
%
Rank
Mt
%
Rank
Mt
%
Rank
Australia
76 400
8.9
4
420.2
5.8
4
297.7
31.2
1
Canada
6 582
0.8
10
67.9
0.9
12
33.3
3.5
7
114 500
13.3
3
3 162
43.7
1
20.1
2.1
10
Colombia
6 746
0.8
9
74.4
1.0
10
68.5
7.2
5
India
60 600
7.0
5
570.7
7.9
3
-
-
-
Indonesia
5 529
0.6
12
336.1
4.6
6
161.9
17.0
2
Kazakhstan
33 600
3.9
7
105.2
1.5
9
32.8
3.4
8
Poland
5 709
0.7
11
133.2
1.8
8
10
1.0
11
Russia
157 010
18.2
2
323.9
4.5
5
108.8
11.4
3
South Africa*
30 156
3.5
8
254.5
3.5
7
66.4
7.0
6
Ukraine
33 873
3.9
6
54.4
0.8
11
-
-
-
USA
237 295
27.6
1
997.1
13.8
2
73.9
7.7
4
150
0.02
-
44.7
0.6
13
22.4
2.3
9
92 938
10.8
-
718
9.9
-
59.3
6.2
-
860 938
100
72 28.7
100
955.1
100
China
Vietnam
Other
Total
Source:
1
BP Statistical Review of World Energy, June 2010
Coal Information 2010, International Energy Agency – OECD/IEA
*DMR, Mineral Economics Directorate – production and exports figures
2
World hard coal production increased by 6.8 percent from 5 789.7 Mt in 2009 to 6 185.8 Mt in 2010. The
Organization for Economic Co-operation and Development (OECD) countries‟ coal production rose by 2.2
percent to 1 467 Mt in 2010 supported by Australia‟s 18.4 Mt increase, followed by the US‟ 10.5 Mt and
Canada‟s 5.7 Mt. Non-OECD countries‟ production rose by 8.4 percent (364.9 Mt) to 4 719 Mt in 2010
compared with 2009. Among the major producing non-OECD countries, production increased in China,
Russia, Indonesia, Kazakhstan, India, South Africa, Colombia and Vietnam.
World brown coal production increased by 1 percent to 1 043 Mt in 2010, the highest level since 1991.
Brown coal production is being driven by its increased use in electricity generation in countries such as
Germany, Greece, Serbia, Indonesia, Romania, India and Canada. The OECD brown coal output declined
to 598.5 Mt, its lowest level since 1974, whereas Non-OECD brown coal production rose to a record level
of 444.3 Mt in 2010, led by Indonesia, which accounted for over three quarters of the total increase.
53
CONSUMPTION
In 2010, coal accounted for 29.6 percent of global energy consumption, up from 25.6 percent 10 years
ago. World coal consumption grew by 9.5 percent from 6 612 Mt to 7 233 Mt in 2010. China accounted for
48 percent of the world‟s coal consumption, followed distantly by the US‟ 14.8 percent and India‟s 7.8
percent. Five countries, namely China, US, India, Russia and Japan accounted for 76.9 percent of world
coal consumption. If a second set of five countries is added to this list, - South Africa, Germany, Korea,
Poland and Australia, - this accounts for 86.7 percent of the world coal consumption.
TRADE
World hard coal trade rose by 13.4 percent to 1 083.1 Mt in 2010. This was composed of 955.1 Mt of hard
coal exports and 128 Mt of brown coal exports. Australia remained the largest coal exporter, increasing its
hard coal exports by 13.8 percent to 297.7 Mt in 2010. Indonesia followed Australia with an 8.4 percent
increase to 161.9 Mt in 2010, followed in third and fourth positions by Russia (108.8 Mt) and the US (73.9
Mt). South Africa‟s hard coal exports increased by 19 percent from 60.5 Mt in 2009 to 66.4 Mt in 2010.
In 2010, total hard coal imports increased by 14.5 percent to 1 048.1 Mt mainly driven by the world
economic recovery. Japan was the leading importer with 186.6 Mt followed by China with 177 Mt and
Korea with 118 Mt. China recorded the highest increase of 40.6 percent followed by India‟s 23 percent.
SOUTH AFRICA
South Africa‟s total run-of-mine (ROM) production decreased by 0.38 percent to 316.2 Mt in 2010
compared with 2009 due to heavy rainfall and flooding in January 2010. Opencast mining accounted for 58
percent, followed by bord and pillar (37 percent), longwall (3 percent) and stoping (2 percent). The amount
of coal discarded by coal mines decreased by 7.5 percent to 61.7 Mt while saleable coal production
increased by 1.6 percent to reach 254.5 Mt (Table 2).
TABLE 2: SOUTH AFRICA‟S PRODUCTION AND SALES OF SALEABLE COAL, 2000 – 2010
LOCAL SALES
YEAR
PRODUCTION
EXPORT SALES
MASS
VALUE (FOR)
MASS
VALUE (FOB)
Mt
Mt
R'000
R/t
Mt
R'000
R/t
2000
224.1
154.6
8 772 310
57
69.9
9 234 328
160
2001
223.5
152.2
9 564 521
63
69.2
11 185 460
245
2002
220.2
157.6
11 773 123
75
69.2
16 956 659
280
2003
239.3
168.0
13 212 837
79
71.5
19 366 998
189
2004
242.8
178.3
13 606 151
76
67.9
13 490 623
213
2005
245.0
173.4
14 878 140
86
71.4
14 472 904
296
2006
244.8
177.0
16 245 861
92
68.7
21 155 176
316
2007
247.7
182.8
19 718 642
108
67.7
21 745 322
361
2008
252.7
197.0
30 104 161
153
60.6
44 706 204
737
2009
250.6
184.7
34 463 054
187
60.5
30 934 920
512
2010
254.5
188.1
36 455 545
194
66.4
36 746 983
553
Source: Mineral Economics Directorate, DMR
Local coal sales volume amounted to 188.1 Mt (74 percent of total production) whereas 66.4 Mt (26
percent) was exported. Local sales value increased by 5.8 percent to R36.5 billion, while export sales
value increased by 18.8 percent to R37.7 billion, both due to a combination of higher unit values and
volumes. Overall, South Africa‟s total coal sales value increased by 11.8 percent to R73.2 billion in 2010.
54
TABLE 3: SOUTH AFRICA‟S PRODUCTION AND SALES OF ANTHRACITE, 2000 – 2010
LOCAL SALES
YEAR
EXPORT SALES
PRODUCTION
MASS
VALUE (FOR)
kt
kt
R'000
R/t
MASS
VALUE (FOB)
Kt
R'000
R/t
2000
1 618
515
130 438
253
1 125
224 747
200
2001
1 607
470
150 797
320
970
283 805
292
2002
1 305
392
148 953
379
759
286 970
378
2003
1 206
181
181 265
394
584
172 202
295
2004
1 247
545
224 882
412
917
235 667
257
2005
1 640
715
294 454
412
524
193 634
369
2006
1 584
821
374 113
455
672
258 063
384
2007
2 348
975
473 998
486
910
405 109
445
2008
2 207
961
581 207
604
1 265
762 064
602
2009
2010
1 658
2 074
786
1197
549 620
932 970
699
779
598
834
517 126
627 007
863
752
The country‟s anthracite production, which represented 0.8 percent of the country‟s total coal production,
surged by 25.1 percent to 2.1 Mt in 2010 compared with 2009 (Table 3). Anthracite local sales jumped 52.3
percent to 1.2 Mt whereas export sales mass increased by 39.5 to 834 kt. Accordingly, revenue from local
and export sales increased by 69.7 percent and 21.2 percent respectively.
TABLE 4: SOUTH AFRICA‟S BITUMINOUS COAL PRODUCTION AND SALES, 2000 – 2010
LOCAL SALES
YEAR
PRODUCTION
MASS
VALUE (FOR)
Mt
Mt
R'000
2000
222.5
154.1
2001
222.1
2002
2003
EXPORT SALES
MASS
VALUE (FOB)
R/t
Mt
R'000
R/t
8 319 975
56
68.8
10 960 713
160
152.1
9 413 724
62
69.2
16 956 659
244
218.9
157.2
11 624 170
74
69.2
19 080 028
279
238.1
167.6
13 031 572
78
71.0
13 318 421
188
2004
241.5
177.8
13 381 268
75
67.9
14 237 236
212
2005
243.3
172.7
14 583 685
84
70.9
20 961 542
296
2006
244.8
176.2
15 871 748
90
68.1
21 477 286
315
2007
245.3
181.8
19 244 643
106
66.7
24 042 564
360
2008
250.5
196.1
29 522 953
151
59.4
43 944 138
740
2009
2010
248.9
252.5
183.9
186.9
33 913 433
35 522 575
184
190
59.9
65.6
30 417 794
36 119 977
508
551
Bituminous coal accounted for 99.2 percent of South Africa‟s total saleable coal production. In 2010,
bituminous coal production increased by 1.5 percent to 252.5 Mt compared with 2009 (Table 4). Local
sales volume increased by 1.6 percent to 186.9 Mt resulting in a 5 percent increase in revenue generated
to R35.5 billion. Export revenue increased by 18.7 percent to R36.1 billion due to higher sales volumes
which increased from 59.9 Mt in 2009 to 65.6 Mt in 2010.
In 2010, 59 percent of South Africa‟s coal was exported to Asia, 25 percent to Europe, 6 percent to the
Middle East and 4 percent to Africa (Fig 1). Europe‟s coal imports decreased as large coal stockpiles and
cheap gas kept European demand for thermal coal soft all year. South Africa‟s major coal customers were
India, which accounted for 32 percent of the country‟s coal export sales and China (11 percent).
55
FIGURE 1: SOUTH AFRICA‟S EXPORT VOLUMES BY REGIONAL DESTINATION, 2010
6%
6%
25 %
59 %
4%
Asia
Africa
Europe
Middle East
Others
In 2010, the inland coal market recorded sales of 188.1 Mt, valued at R36.5 billion. Electricity consumed
123.3 Mt (65.6 percent) of local sales, followed by the synthetic fuels sector (22 percent), industry (5.3
percent) and metallurgy (4.2 percent), (Fig 2).
FIGURE 2: CONSUMPTION BY SECTOR, 2010
0.1%
0.3%
22.0%
5.3%
2.4%
65.6%
4.2%
0.1%
Electiricity
Merchants and Domestic
Mining
Industry
Metallurgy
Synthetic Fuels
DEVELOPMENTS IN SOUTH AFRICA IN 2010/2011
TSX-listed Homeland Energy received $4.8 million from its major shareholder, GMR Energy, to extend
production at the Kendal project to 180 kilotons per annum of run-of-mine coal.
56
ASX-listed Resource Generation Limited (Resgen), which is developing coal deposits in the Waterberg
coalfield in Limpopo, announced that it is on track to start production in 2013 following the lodging of a
mining rights application for the company‟s Boikarabelo mine. Resgen has an estimated indicated resource
of 551.7 Mt and inferred resources of 1.5 Bt at the Boikarabelo mine. The project which has a $552 million
capital expenditure budget, is expected to create 1 092 direct jobs. The mine will start by producing
between 3 Mt and 6 Mt of coal per year, ramping up to 18 Mt by 2018. Meanwhile, Resgen was also listed
on the Johannesburg Stock Exchange on 14 July 2010.
Continental Coal Limited began site work at the Vlakvarkfontein opencast coal mine in March 2010. The
mine is expected to supply 350 kt/a of A and B grade export quality coal and 1 Mt/a of domestic quality
coal over an estimated 10 years life of mine. Vlakvarkfontein started producing in June 2010 and it reached
its target of 1.2 Mt/a ROM in the second half of 2011. The mine currently employs 133 people. The
company has also started developing the underground Penumbra mine in the Mpumalanga province. The
R284 million project, which created 198 jobs, is expected to start producing coal in the fourth quarter of
2011 with full production forecast at 750 kt/a of ROM over its initial 13-year mine life.
In a joint venture (JV) with Sekoko Coal, Firestone Energy completed a Definitive Feasibility Study for the
Smitspan project. The study confirmed 120 Mt of coal reserves on the Smitspan farm situated in the
Waterberg coalfield. Production of 4 300 t/m at this open-cast operation is expected to start in April 2012,
ramping up to 83 000 t/m by April 2015. The Smitspan mine is expected to produce 18 Mt/a at full
production. The JV invested about $350 million in the project and is expected to create about 164 jobs.
The JV has also announced a significant upgrade of coal resources in the Waterberg region to 1.88 Bt in
indicated category across seven Waterberg region properties, Smitspan, Hooikraal, Minnasvlakte,
Massenburg, Vetleegte, Swanepoelpan and Duikerfontein. Towards the end of 2010 Sekoko sold 33
percent of its equity in the JV to the Industrial Development Corporation (IDC) for R250 million. IDC will
hold 20 percent of the coal mining project and 12 percent in the other JV partner, Firestone Energy, which
has a 60 percent equity in the JV.
Coal of Africa Limited (CoAL) finalised the R467 million purchase of 4.2 Mt/a thermal coal producer Nucoal
which owns two beneficiation plants as well as the 2.5 Mt/a Woestalleen Colliery and several new
development projects in South Africa. In another turn of events, in July 2010, CoAL was ordered to stop
development of its $288 million Vele Colliery in the Limpopo valley by South Africa‟s environmental
management inspectorate, the Green Scorpions, following allegations that it has flouted environmental
laws. The matter was resolved in July 2011 when the government granted the water licence to the Vele
project. The Vele project, which eventually will employ 500 people directly, is expected to produce around
1 Mt/a of coking coal, ramping up to 5 Mt/a in Phase 2.
Exxaro Resources started the expansion of its Grootegeluk mine in July 2010. The Grootegeluk mine
expansion project will cost around R9.5 billion and it will raise Grootegeluk‟s annual production from 18 Mt
to 33 Mt. The project will create 500 direct jobs. Production is expected to start in the second quarter of
2012 ramping up to full production in 2015. Current indications are that the project will be completed within
schedule and on budget.
PRICES
In 2010, the average Richards Bay FOB price of South African coal increased by 41 percent to $90.73/t
compared with 2009 driven by high demand from Asian bloc countries, especially, India and China. The
prices opened the year at $84.96/t and rose sharply to reach $108.50/t by December 2010 (Fig 3).
57
FIGURE 3: RBCT MONTHLY COAL PRICES, 2009 – 2010
Source: Richards Bay Coal Terminal (RBCT)
The prices reached a peak of $125.04/t in January 2011 and subsequently stabilized at an average of
$120.28/t over the following seven months as India and China were reluctant to buy at higher prices. By
May 2011 Indian coal imports from South Africa had declined by about 24 percent to 6.3 Mt compared with
the first five months of 2010.
OUTLOOK
In 2010, both coal production and consumption increased in all regions following the global economic
recovery. Global coal consumption is expected to increase in 2011 driven mainly by increased demand for
electricity in developed economies and new generating capacity in developing economies. China, India
and European Union are expected to account for most of this growth. With the discovery of abundant shale
natural gas in the US and the lower natural gas prices, coal demand is expected to slow down in the US.
World coal production is forecast to increase by about 4.2 percent to 7 580.3 Mt in 2011 driven mainly by
Australia, China, Indonesia and South Africa.
Coal prices are expected to be supported by high demand. Australian coal prices are expected to settle to
at around $130/t in 2011, an increase of 32 percent from 2010. These prices will be underpinned by strong
demand from Asia and a number of supply disruptions caused by floods in the beginning of the year.
South Africa‟s economic growth, which is not significantly different from the ten year average of 3.7
percent, is forecast at 3.4 percent in 2011. At this growth rate, South Africa‟s coal production has achieved
an average growth rate of 1.5 percent. This background suggests that the country‟s coal production will
grow by 1.5 percent to 258.3 Mt in 2011.
South Africa‟s coal prices are expected to settle at around $120/t and this will retain the Indian and
European buyers‟ interest. South Africa‟s exports are expected to reach 65 Mt in 2011, a slight decline
from last year‟s 66.4 Mt owing to disruptions on the Mpumalanga Richards Bay coal rail line.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Australian commodities, June Quarter 2011
Business Day, 01 August 2011
Coal Information (2011 Edition), International Energy Agency – OECD/IEA, 2011
Coal of Africa Limited, Fact Sheet, July 2011
http://www.globalCoal.com
http://www.nineam.co.za/BusinessPartners/10-08-09/stories/story1.html
http://www.proactiveinvestors.com.au
Social Impact assessment for the Boikarabelo Coal Mine, June 2010, prepared by Digby Wells and associates.
Various articles from the Mining Weekly
58
HYDROCARBON FUELS
K L Revombo
WORLD SUPPLY
World proven oil reserves increased by 0.5 percent from 1 376.6 billion barrels in 2009 to 1 383.2 billion
barrels in 2010 (Table 1). The Organisation of Petroleum Exporting Countries (OPEC) accounted for 76
percent of the world‟s oil reserves, dominated by the Middle East at 54.4 percent followed by South and
Central America (17.3 percent) and Europe and Eurasia (10.1 percent).
TABLE 1 – WORLD RESERVES AND PRODUCTION OF OIL AND NATURAL GAS, 2010
PROVED RESERVES
OIL
9
(bbl x10 )
%
12.2
0.9
GAS
3
(m x
12
10 )
PRODUCTION
OIL
+
*
GAS
3
9
%
(1000 bbl/d)
%
(m x 10 )
%
2.4
1 809
2.2
80.4
2.5
OPEC COUNTRIES
Algeria
Indonesia
4.5
4.2
0.3
3.1
1.7
986
1.2
82.0
2.6
Iran
137.0
9.9
29.6
15.8
4 245
5.2
138.5
4.3
Iraq
115.0
8.3
3.2
1.7
2 460
3.0
1.3
0.0
Kuwait
101.5
7.3
1.8
1.0
2 508
3.1
11.6
0.4
Libya
46.4
3.4
1.5
0.8
1 659
2.0
15.8
0.5
Nigeria
37.2
2.7
5.3
2.8
2 402
2.9
33.6
1.1
Qatar
25.9
1.9
25.3
13.5
1 569
1.9
116.7
3.7
Saudi Arabia
264.5
19.1
8.0
4.3
10 007
12.2
83.9
2.6
United Arab Emirates
97.8
7.1
6.0
3.2
2 849
3.5
51.0
1.6
Venezuela
211.2
15.3
5.5
2.9
2 471
3.0
28.5
0.9
Subtotal
1052.9
76.1
93.8
50.1
32 965
40.2
643.3
20.1
OTHER SELECTED
COUNTRIES
Argentina
2.5
0.2
0.3
0.2
651
0.8
40.1
1.3
Australia
4.1
0.3
2.9
1.5
562
0.7
50.4
1.6
Brazil
14.2
1.0
0.4
0.2
2 137
2.6
14.4
0.5
Brunei
1.1
0.1
0.3
0.2
172
0.2
12.2
0.4
Canada
32.1
2.3
1.7
0.9
3 336
4.1
159.8
5.0
China
14.8
1.1
2.8
1.5
4 071
5.0
96.8
3.0
Ecuador
6.2
0.4
-
0.0
495
0.6
-
0.0
Europe and Eurasia
139.7
10.1
63.1
33.7
17 661
21.5
1 043
32.7
India
9.0
0.7
1.5
0.8
826
1.0
50.9
1.6
Malaysia
5.8
0.4
2.4
1.3
716
0.9
66.5
2.1
Mexico
11.4
0.8
0.5
0.3
2 958
3.6
55.3
1.7
Oman
5.5
0.4
0.7
0.4
865
1.1
27.1
0.8
United States of America
30.9
2.2
7.7
4.1
7 513
9.2
611.0
19.1
Other
53.0
3.8
9.0
4.8
7 167
8.7
322.4
10.1
Subtotal
330.3
23.9
93.3
49.9
49 130
59.8
2 550
79.9
TOTAL
1 383
100
187.1
100
82 095
100
3 193
100
Source:
Notes:
+
Includes crude oil, shale oil, oil sands and natural gas liquids and excludes liquid fuels derived from other sources such
as coal
* Excludes gas flared or recycled
59
Saudi Arabia hosts the largest global oil reserves accounting for 19.1 percent of the global total, followed
by Venezuela (15.3 percent), Iran (9.9 percent) and Iraq (8.3 percent).
Global oil production increased by 2.3 percent to 82,1 million barrels per day (mbbl/d) in 2010 despite
OPEC‟s production cuts instituted during the global recession remaining in effect throughout 2010. Despite
cutting production, OPEC‟s oil output increased by 2.9 percent (960 000 bbl/d) from 32.0 million barrels per
day (mbbl/d) in 2009 to 33.0 mbbl/d in 2010. Oil production outside OPEC increased by 1.9 percent (860
000 bbl/d), the largest increase since 2002. The Organisation for Economic Co-operation and
1
Development‟s (OECD ) production increased by 0.2 percent whereas Non-OECD‟s production increased
by 2.7 percent. The Former Soviet Union‟s production increased by 2 percent while the European Union
(EU) was the only region that experienced a 6.5 percent decrease in oil production.
The world‟s largest increase in oil production by country was recorded by Colombia where output
increased by 16.9 percent, followed by Nigeria‟s 16.2 percent and Qatar‟s 13.5 percent. The biggest
declines were recorded by Uzbekistan (17.8 percent), followed by Equatorial Guinea (10.8 percent) and
Norway (9.4 percent).
3
The world‟s proven gas reserves increased by 0.3 percent to 187.1 trillion m in 2010. The Middle East
2
accounted for 40.5 percent of total reserves followed by Europe and Eurasia (EE) with 33.7 percent and in
distant third place was Asia Pacific with 8.7 percent.
3
Global gas production increased by 7.3 percent to 3 193.3 billion m in 2010 compared with 2009. Europe
and Eurasia accounted for 32.6 percent of the global production. North America and Middle East were
second and third with 26 percent and 14.4 percent, respectively. Production grew rapidly in Qatar (36.7
percent), Russia (11.6 percent) and the United States of America (USA (4.7 percent)). By country, the US
led world production, accounting for 19.3 percent, followed by the Russian Federation‟s 18.4 percent and
Canada‟s 5 percent.
WORLD DEMAND
th
Despite continuing to lose market share for the 11 consecutive year, oil remains the world‟s leading fuel,
at 33.6 percent of global energy consumption. Global oil consumption increased by 3.1 percent to 87.4
mbbl/d in 2010, the largest percentage increase since 2004 but still the lowest global growth rate among
fossil fuels. For the first time since 2005, OECD consumption grew by 0.9 percent (480 000 bbl/d). Outside
the OECD, consumption growth was a record 5.5 percent (2.2 mbbl/d). Growth remained robust in China
and Middle Eastern countries, with Chinese consumption growing by 10.4 percent (860 000 bbl/d).
3
Global natural gas consumption grew by 7.4 percent to 3 169 billion m in 2010, the biggest increase since
1984. All regions recorded consumption growth, with the highest growth recorded by Asia Pacific (12.6
percent) followed by South and Central America‟s 9.3 percent and EE‟s 7.2 percent, (Figure 1).
1
2
Europe; other countries: Australia, Canada, Japan, Mexico, New Zealand, South Korea and United States.
European countries and Former Soviet Union
60
Regional Natural Gas Consumption
Growth Rate (Percentage)
FIGURE 1: REGIONAL NATURAL GAS CONSUMPTION GROWTH RATE, 2010
14
12
10
8
6
4
2
0
North
America
South and
Central
America
Europe and Middle East
Eurasia
Africa
Asia Pacific
Source: BP Statistical Review of World Energy, June 2011.
CRUDE OIL PRICES
Price ($/bbl)
Brent crude oil prices averaged $79.1/bbl in 2010, an increase of 27.5 percent compared with 2009
(Figure 2). Prices started the year at $77/bbl and rose sharply reaching a peak of $84.9 /bbl in April. In
May, prices plummeted to $72.7 /bbl because of renewed concerns about Europe‟s sovereign debt crisis
hitting global stock markets. Starting in June, a very strong consumption growth and continuing OPEC
production restraint helped push prices up and by December 2010, crude oil price averaged $89.6 /bbl.
FIGURE 2: MONTHLY AVERAGE BRENT CRUDE PRICES, JANUARY 2009 – JUNE 2011
120.0
100.0
80.0
60.0
40.0
20.0
0.0
Date
Source: The New York Mercantile Exchange (http://www.nyse.tv/crude-oil-price)
NATURAL GAS PRICES
In 2010 natural gas prices started at $210 / thousand cubic metres (tcm), dropping to $145 /tcm in April
due to lower demand and increased natural gas stocks (Figure 3). In May prices started rising reaching
$173 /tcm in June, followed by a downward trend that started in July and bottomed at $124 /tcm in
October. Prices started to recover in November and in December natural gas was trading at $153 /tcm. In
the first quarter of 2011 gas prices averaged $150 /tcm before increasing to an average of $157 /tcm in the
second quarter of 2011.
61
FIGURE 3: MONTHLY AVERAGE NATURAL GAS PRICES, JULY 2009 – JULY 2011
US$ / 1000 cubic metres
250
200
150
100
50
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
Dec-09
Nov-09
Oct-09
Sep-09
Aug-09
Jul-09
0
Date
Source: indexmundi (www.indexmundi.com)
SOUTH AFRICA’S HYDROCARBON FUELS INDUSTRY
South Africa has proven oil reserves of about 15 million barrels, mostly situated off the coast of Mossel
Bay, in the Western Cape. Consequently, South Africa imports most of the feedstock used at its refineries.
In addition, South Africa has two Synfuel plants owned by Sasol that use Fischer-Tropsch technology to
convert coal and gas into liquid fuels.
PetroSA, which operates the FA-EM and South Coast gasfields, only has sufficient gas reserves to keep its
Mossel Bay gas-to-liquid facility operating until 2013 or 2014. The Environmental Affairs Department
approved PetroSA‟s environmental-impact assessment for the F-O Field exploration project (Project
Ikhwezi) in November 2011. It is expected that PetroSA will start drilling at the F-O field, off the southern
Cape coast, before the end of 2011, and production could start by the first quarter of 2013.
In 2010 South Africa‟s crude oil production increased by 26.8 percent to 1.4 million barrels compared with
2009. The Gas-to-Liquid and Coal-to-Liquid technologies produced 51.3 million barrels, which is 29
percent of the country‟s total consumption. The country imported 73 percent of its crude oil requirement
from various countries in 2010 (Figure 4).
For the first time, South Africa imported crude oil from Mozambique, Cỏte d‟Ivoire, Cuba and Spain with the
aim of diversifying its importing partners. Other African countries that the country can import from in future
include Ghana which joined the ranks of Africa‟s oil producers in late 2010, and Uganda, which is expected
to start pumping oil in mid-2011.
Million barrels
FIGURE 4: SOURCES OF CRUDE OIL IMPORTS FOR SOUTH AFRICA, 2010
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Source: SAPIA Annual report, 2010
62
The country‟s natural gas production increased by 25.6 percent to 1.2 Mt compared with 2009. Natural gas
condensate output increased by 6.9 percent to 140 kt.
DEVELOPMENTS
South Africa‟s government imposed a moratorium on the issuing of exploration licenses for shale gas in the
Karoo because of environmental concerns raised around fracking, the shale gas exploration method used.
An expert study is being carried out to investigate the impact of fracking on the environment.
Early in 2011, there were oil supply disruptions in Libya as well as Bahrain, Yemen, Iran and Algeria (which
between them supply a tenth of the world‟s oil). The political instability and security threats in the Middle
East and North Africa, together with an increase in Japan‟s oil-fired electricity generation to replace some
nuclear power following the earthquakes and tsunami, may result in oil prices stabilizing above the $110/
bbl mark for the remainder of 2011.
OUTLOOK
World oil production is forecast to grow by 2 percent to 83.7 mbbl/d in 2011 and 1.3 percent to 84.8 mbbl/d
in 2012. However, oil production will largely be determined by the political and security developments in the
Middle East and North Africa. By April 2011, the instability in Libya resulted in its oil production ceasing,
decreasing OPEC‟s spare production to 4.68 mbbl/d compared with 4.97 mbbl/d in January 2011. Other
OPEC members, such as Saudi Arabia, Kuwait, UAE and Angola are expected to increase their production
to offset the decline in Libyan output.
The International Energy Agency (IEA) forecast that world oil consumption will increase by 1.4 mbbl/d in
2011 and 1.6 mbbl/d in 2012, underpinned by continued strong growth in demand in the transport and
industrial sectors, and an increase in Japan‟s oil-fired electricity generation to replace some nuclear and
coal-fired power following the earthquake and tsunami.
Natural gas contribution will increase due its superior favorable environmental and practical attributes and
the slow pace at which low-carbon energy technologies are being deployed. It is forecast that global
natural gas consumption will increase by 1.3 percent to 3 211 billion cubic metres in 2011. As the natural
gas storage level is currently high in the US, the world‟s biggest producer, there should be only a limited
price rise in the near future. Also all the huge gas fields (estimated at 2 200 trillion cubic feet) found in
shales in the US in the last year, will help to keep the gas price below $160 /tcm. The price of natural gas is
projected to average $159 /tcm in 2011.
The oil price is projected to average $110 per barrel in 2011 and $112 per barrel in 2012 owing to
increased global demand and slow growth in supply. The developing countries‟ consumption will continue
to be above the world average as these countries continue to address lack of energy access to the majority
of their citizens. Growth in oil consumption will remain below that of natural gas as governments‟ efforts to
address issues of climate change intensify.
South Africa is experiencing a reservoir depletion of gas and oil producing fields. Oil and gas production is
predicted to remain at the current levels in 2011. Exploration activities by PetroSa discovered several gas
accumulations and prospects off the Cape‟s Southern Coast. These gas accumulations are being
evaluated for tie-back to existing offshore infrastructure and have the potential to extend the economic life
of the GTL Refinery beyond 2020.
REFERENCES
1.
2.
3.
4.
5.
Australian commodities, vol 18, no 2, June Quarter 2011.
BP Statistical Review of World Energy, June 2011.
http://www.nyse.tv/crude-oil-price
http://engineeringnews.co.za, 22 November 2011
Mineral Economics Directorate, DMR
6. PetroSA annual report, 2011
7. Real Economy Year Book, 2011
8. SAPIA annual report. 2010
9. www.iea.gov/sreo
10. www.sapia.co.za
63
URANIUM
Thomas Chili
WORLD RESOURCES
According to the World Nuclear Association (WNA), global uranium resources dropped by 1.2 percent to
5 404 ktU (6 358 ktU3O8) in 2010. Australia, at 1 673 ktU has the largest known recoverable uranium resource
followed by Kazakhstan‟s 651 ktU and Russia‟s 480 ktU (Table 1). Africa collectively accounted for 15 percent
(851 ktU) of world uranium resources. South Africa, at 295 ktU, has Africa‟s largest uranium resource with
Namibia‟s 284 ktU and Niger 272 ktU, at second and third place respectively. In 2010, 41 percent of world
uranium production was derived from in situ leach (ISL), 28 percent was derived from underground mines and
25 percent from opencast mines while 5 percent were recovered as a by-product.
TABLE 1 - WORLD URANIUM RESOURCES AND PRODUCTION, 2010
URANIUM RESOURCES*
RAR
COUNTRY
Australia
Brazil
Canada
#
PRODUCTION
Rank
ktU
1 673
279
%
31.0
5.2
1
2009
tU
7 982
7
345
148
tU
5 900
+
2010
%
11.0
Rank
3
0.3
12
485
9.0
3
10 173
9 783
18.2
2
171
3.2
9
750
827
1.5
9
80
1.5
12
290
400
0.7
11
Namibia
284
5.3
6
4 626
4 496
8.4
4
Niger
272
5.0
7
3 243
4 198
7.8
6
Kazakhstan
651
12.0
Russia
South Africa
e
Ukraine
480
295
105
8.9
5.5
1.9
USA
Uzbekistan
SUBTOTAL
207
111
5 093
3.8
2.1
-
2
4
5
11
8
10
1
5
10
8
8
7
311
5 404
5.8
17 803
3 562
655
850
850
2 400
51 872
1 791
33.2
6.6
1.2
1.6
1.6
4.5
Others
World Total
14 020
3 564
563
840
1 453
2 429
50 278
494
50 772
53 663
100
China
India
e
e
-
100
-
-
Sources:
OECD‟s NEA & IAEA, Uranium 2010: Resources, Production and Demand
+
World Nuclear Association, Market Report data, 2010
Notes:
#
Reasonably Assured Resources (RAR) plus Inferred Resources, to $130/kg U
e
Estimate
WORLD SUPPLY
World uranium mine production increased by 5.7 percent in 2010 to 53.7 ktU (68.4 ktU 3O8) compared with
2009 (Table 1). Kazakhstan, at 33.2 percent, was the world‟s leading producer, followed by Canada‟s 18.2
percent and Australia‟s 11.0 percent. These three countries collectively accounted for 62.4 percent of total world
output. Kazakhstan‟s output rose by 27 percent to 17.8 ktU, while the US‟, Australia‟s and Canada‟s production
dropped by 41.5 percent, 26.1 percent and 3.8 percent respectively. This was mainly attributed lower grades
compounded by other factors Namibia emerged as the largest producer in Africa accounting for 8.4 percent,
followed by Niger at 7.8 percent, and South Africa at 1.2 percent. Though South Africa has the largest uranium
resources in Africa, uranium is only produced as a by-product from gold mines. Primary uranium mines were
closed in 2010 due to depressed uranium prices compounded by high production costs and low uranium
grades. In 2010, South Africa‟s uranium production rose by 5.1 percent to 655 tU3O8 sourced as a by-product
from gold mines. The Nuclear Fuel Corporation (Nufcor) process all uranium oxide (U 3O8) produced in South
Africa through calcination of uranium slurry, all of which is exported.
64
WORLD DEMAND
Global uranium demand is mainly driven by nuclear power generation, which accounted for 13.8 percent of
world electricity generation in 2010 (Table 2). This nuclear power was generated from 441 nuclear reactors
globally. The USA, at 24 percent (104 reactors) has the highest number of reactors, followed by France‟s 13
percent (58 reactors) and Japan‟s 12 percent (51 reactors). The USA derived 20.2 percent of its electricity from
nuclear energy, while France and Japan drew 75.2 percent and 28.9 percent, respectively. South Africa
generates 5.5 percent of its electricity from two nuclear reactors. Uranium consumed in nuclear energy reactors
was 68.6 kt in 2010 globally.
TABLE 2: WORLD NUCLEAR POWER REACTORS AND URANIUM REQUIREMENTS, 2010-2011
NUCLEAR
ELECTRICITY
GENERATION
2010
COUNTRY
USA
France
Japan
Germany
Korea (South)
Russia
UK
China
Spain
Canada*
Sweden
Ukraine
Belgium
billion kWh
798.7
418.3
263.1
127.7
141.1
152.1
62.9
65.7
50.6
85.3
50.0
77.9
45.0
South Africa
11.6
SUBTOTAL
Others
2 350
210
World
2 560
Sources:
Notes:
% of elec:
MWe:
kWh:
*
% of
elec
20.2
75.2
28.9
26.1
34.8
17.8
17.9
1.9
17.5
14.8
34.7
48.6
51.7
5.5
14.5
REACTORS
OPERATIONAL
2010
URANIUM
URANIUM
REQUIRED
2010
REACTORS
OPERATIONAL
2011
No
104
59
53
17
20
31
19
11
8
18
10
15
7
2
MWe
101 229
63 473
46 236
20 339
17 716
21 743
11 035
8 587
7 448
12 652
9 016
13 168
5 728
1 842
(t U)
195 38
10 153
8 003
3 453
3 804
4 135
2 235
2 875
1 458
1 675
1 537
2 031
1 052
321
No
104
58
51
17
21
32
19
14
8
18
10
15
7
2
MWe
101 229
63 130
44 642
20 339
18 716
23 084
10 942
11 271
7448
12 679
9 399
13 168
5 943
1 800
(t U)
19 427
9 221
8 195
3 453
3 586
3 757
2 235
4 402
1 458
1 884
1 537
2 037
1 052
321
374
62
340 102
32 118
62 270
6 376
376
65
343 790
32 657
62 565
6 406
436
372 220
68 646
441
376 447
68 971
REQUIRED
2011
World Nuclear Association, 2010-11
percent contribution to national electricity production
Megawatt net (electrical as distinct from thermal)
kilowatt-hour
estimate
PRICES
Uranium markets started recovering in 2010, following the global economic recession of 2008. Uranium
prices started trading at $44.01/Ib at the beginning of the year and remained stable for the first half of
2010, averaging $41.8/Ib (Fig.2) In September 2010, prices started picking up and reached $65/Ib in
February 2011 due to an undersupplied market. The earthquake and tsunami that occurred in Japan which
led to a meltdown of the Fukushima Nuclear Power Plant reactors in March 2011 resulted in global concern
about nuclear power generation safety, which pushed uranium prices down to $55/Ib in June 2011.
65
FIGURE 2: NUEXCO SPOT URANIUM PRICES, 2008-2011 (MONTHLY AVERAGES)
100
90
80
70
$/Ib
60
50
40
30
20
10
0
Month-Year
Source: Metal Bulletin, 2011
DEVELOPMENTS IN AFRICA AND SOUTH AFRICA
A Chinese Nuclear Energy company, China National Nuclear Corp (CNNC) is planning to commence
production at Azelik in Niger. In 2011, the company tested processing circuits for ore from the Arlit rift
located in the Tim Mersoi Basin. Also in Niger, a French company, Areva, which operates the Somair mine
in the Arlit region and the Cominak mine in Akouta is expected to bring the Imouraren project into
production by 2013.
An Australian-based company, Paladin Energy, which owns the Kayelekera project in Malawi and Langer
Heinrich in Namibia, is expected to raise production in both countries. Combined annual mine production
from both the Namibian and Malawi projects is expected to reach 7 million pounds.
AngloGold Ashanti is the major producer of uranium, in South Africa as a by-product of gold. The company
is planning to expand the Vaal River uranium recovery project by 28 percent from 635 kt to 816.5 kt of
uranium contained; the initial investment is estimated at R500 million. The project is expected to reach full
capacity in 2013.The project will include an infrastructure upgrade which will include an increase in rail
capacity and modification of trains loading facilities. The project forms part of the government initiatives to
sustain about 50 000 to 100 000 jobs in construction, infrastructure development and industrial
development before 2015 when R860 billion public investment is expected to be committed.
First Uranium, a subsidiary of Simmer and Jack, is expected to postpone the commissioning of Mine Waste
Solutions (MWS) tailings recovery project in North West to 2012, (which was planned to be commissioned
in September 2011) due to falling uranium prices. This was mainly attributed to the suspension of nuclear
energy in response to the Fukushima disaster in Japan. The construction of the pressure leach circuit of
the uranium plant is expected to commence in April 2013. MWS owns 15 tailings dams from gold and
uranium mines. The gold resource is estimated at 146 Mt million containing 24 Mt of U 3O8. An investment
of R3.2 billion is expected to be committed. This project is expected to create about 5 000 jobs directly and
indirectly.
According to the Integrated Resources Plan 2010 (IRP2010), South Africa is planning to restart a nuclear
building programme that will generate 9 600 MW from a nuclear power station fleet by 2030. An investment
estimated between R10-billion and R15-billion is expected to be committed. The country was also planning
to enrich uranium to satisfy its future nuclear energy requirements in order to reduce reliance on coal as
the major energy source.
66
OUTLOOK
In 2011, world uranium mine production is forecast to increase by 10 percent to 59 400 tU3O8. This is
expected to be mainly driven by increased production in Africa, Kazakhstan, the United States and
Australia. Production is expected to increase relatively more slowly from 2012 until 2016 as a result of long
lead times for uranium mine developments. In 2016, however, world uranium production is projected to
increase by 9 percent to 90 200 tU3O8 due to mine developments in Africa, Kazakhstan and Canada.
Kazakhstan uranium production is projected to grow at an average rate of 5 percent per annum to reach
25 400 tU3O8 by 2016. Large-scale uranium mines commissioned in Kazakhstan over the past three years
are expected to reach full capacity in 2016.
In the United States, uranium production is forecast to increase at an average rate of 14 percent per
annum to reach 4 100 tU3O8 in 2016. Supporting this growth in production is the start-up of several new
mines, including Nichols Ranch/Hank (annual capacity of 500 tU 3O8), Hobson (annual capacity of 900
tU3O8) and Moore Ranch (annual capacity of 1 000 tU3O8).
Uranium production in Africa is anticipated to grow at an average rate of 12 percent per annum to reach
21 200 tU3O8 by 2016. This growth is expected to be underpinned by the start-up of new mines, including
Azelik (annual capacity of 770 tU3O8) and Imouraren (annual capacity of 3 000 tU3O8) in Niger, Trekkopje
(annual capacity of 1 900 tU3O8) and Rossing South (annual capacity of 2 000 tU 3O8) in Namibia, and Vaal
River expansion (annual capacity of 200 tU3O8) in South Africa. An expansion at the Rossing mine (annual
capacity of 600 tU3O8 in Namibia is also expected to contribute to increasing uranium production.
In 2011, world uranium consumption is forecast to increase by 6 percent to 86 800 tU 3O8, supported by the
start-up of nuclear energy reactors to add 13.3 gigawatts electricity of nuclear-generating capacity This
includes the restart of Bruce units 1 and 2 in Canada (total net capacity of 1 500 megawatts electric),
Kalinin unit 4 in the Russian Federation (net capacity of 1 000 megawatts electric) and Kudankulam units 1
and 2 in India (total net capacity of 2 000 megawatts electric).
In the first half of 2011, the uranium price is expected to continue to be supported by stock building in
China. However, since stock building is expected to ease in the second half of 2011, prices may decline.
For 2011 as a whole, uranium prices are forecast to average $62/Ib, an increase of 34.8 percent compared
with $46 1/Ib in 2010.
However, nuclear concerns resulting from the Fukushima Nuclear Power Plant accident that occurred in
March 2011, which led to Germany‟s cancellation of its nuclear power programme, could impede the
growth of the nuclear power industry and uranium mine developments owing to weaker/stagnant demand.
Nonetheless, South Africa‟s implementation of the IRP2010, which calls for higher contribution of nuclear
energy to the country‟s energy basket is expected to raise the level of local uranium demand. This is likely
to lead to an intensification of local uranium exploration activity as local producers or new entrants attempt
to position themselves for the anticipated higher demand, when it materialises. Consequently, South
Africa‟s uranium production is forecast to rise by 6.9 percent to 700.2 ktU3O8 by 2013, when new uranium
plants are expected to come on stream.
REFERENCES
1. Africa Mining Intelligence, 30 March 2011
2. Department of Mineral Resources: South Africa
3. Engineering News: Project in Progress, 2011
4. http:// www.wise-uranium.org
5. World Nuclear Association, Information papers
6. Nuclear Energy Agency (NEA) and the International Atomic Energy Agency (IAEA)
7. Metal Bulletin
67
NON-FERROUS METALS AND MINERALS OVERVIEW
Linda Maphango
INTRODUCTION
South Africa‟s non-ferrous minerals resources are rated amongst the top 10 largest in the world. The
country has vast resources of titanium and zirconium, which are mainly found in heavy mineral sands in
Kwa-Zulu Natal as well as the Eastern and Western Cape. Cobalt, copper and nickel are produced as byproducts of platinum mining in the Bushveld Complex. Copper occurs in the Palabora Complex in the
Limpopo Province with very small quantities of nickel and zirconium being produced as by-products of
copper mining. Lead and zinc deposits are found near Aggeneys, Northern Cape. Nickel deposits are
mined at Nkomati in the Uitkomit Complex near Badplass in the Mpumalanga Province. Antimony deposits
are found in the Limpopo Province.
In 2010, South Africa‟s production of non-ferrous metals and minerals, excluding titanium and zircon,
increased by 3.2 percent to 214.4 kt compared with 2009 (Table 1). Total sales volume of primary nonferrous metals and minerals, excluding titanium and zircon, increased by 3.6 percent to 212.5 kt. Domestic
sales volumes decreased by 4.6 percent to 94.9 kt, while export sales volume rose by 11.5 percent to
117.6 kt. Total sales revenue went up by 30.7 percent to R11.6 billion. Local sales revenue increased by
13.9 percent to R4.5 billion, while exports climbed by 44.3 percent to R7.1 billion.
South Africa‟s production of non-ferrous metals and minerals (primary and processed), excluding titanium
minerals, zircon minerals and aluminium declined by 1.7 percent to 1.1 Mt. However, South Africa‟s total
sales revenue of non-ferrous metals and minerals (primary and processed), excluding titanium minerals,
zircon minerals and aluminium increased by 28.6 percent to R13.1 billion in 2010 compared with 2009.
Domestic sales revenue rose by 13.9 percent to R6.0 billion, while export sales increased by 44.3 percent
to R7.1 billion. All the zinc metal produced in South Africa is consumed locally, mainly by the construction
sector in galvanized steel. The country consumes about 70 percent of its copper output and the demand is
derived from the electrical, construction, transport and industrial machinery sectors.
PRICES
In 2010 and well into 2011, the global recovery was slower than anticipated as a result of shocks such as
the supply disruptions from the earthquake and tsunami in Japan, the rise in oil prices, and political unrest
in the Middle East and North Africa. Even though the world economy is showing signs of recovery, the
developments in the Eurozone, particularly in Greece and now recently in Spain and Italy, and the
excruciatingly slow growth in the US are threatening to the global recovery. The Eurozone debt crises and
the associated decline in confidence have a negative impact on demand for base metals.
In 2010 and in the first half of 2011, prices of base metals recovered strongly from the global recession.
Copper prices soared by 31.6 percent to $9 147/t in 2010 compared with 2009. Aluminium prices went up
by 30 percent to $2 173/t, zinc increased by 30.3 percent to $2 161/t, lead declined by 17.3 percent to
$2 078/t, nickel climbed by 49 percent to $2 803/t, low-grade and high grade cobalt increased by 17.8
percent and 19.2 percent to $18.79/t and $20.56/t respectively. China, the world‟s second largest
economy, accounts for about 40 percent of the demand for base metals.
68
TABLE 1: SOUTH AFRICAN PRODUCTION OF NON-FERROUS METALS AND MINERALS, 2009 AND
2010
PRODUCTION
LOCAL SALES (FOR)
COMMODITY
Year
(t)
R'000
(t)
R'000
Antimony
(mic)
2010
3 239
9
575
2 460
101 992
2 469
102 567
2009
2 673
10
403
2 568
62 638
2 578
63 042
2010
840
58
16 110
493
135 424
551
151 534
2009
238
75
20 435
183
258
2010
83 640
56 682
3 160 029
24 822
81 505
2009
92 884
68 011
2 835 737
26 840
63 181
1 209
297
1 024
014
94 852
83 616
4 369
326
3 859
751
2010
50 625
Nil
Nil
53 094
696 737
53 094
696 737
2009
49 149
Nil
Nil
43 892
43 892
2010
39 960
7 293
1 073 290
33 069
2009
34 605
9 007
949 855
27 300
482 903
4 911
462
3 251
353
36 308
482 903
5 984
752
4 201
208
2010
***
***
***
***
***
***
***
2009
***
***
***
***
***
***
***
2010
36 142
30 905
279 821
3 649
43 393
34 554
323 214
2009
28 159
22 481
170 924
4 707
33 038
27 188
203 962
Zirconium
minerals
2010
***
***
***
***
***
***
***
2009
***
***
***
***
***
Primary
subtotals\
2010
214 446
94 947
4 529 825
117 587
212 535
2009
207 708
99 584
3 977 354
105 490
***
7 098
305
4 917
127
205 076
***
11 628
130
8 894
482
Antimony
trioxide
2010
Nil
Nil
Nil
Nil
Nil
Nil
Nil
2009
206
Nil
Nil
441
1 862
441
1 862
Aluminium
metal
2010
811 483
***
***
***
***
***
***
2009
836 833
***
***
***
***
***
***
2010
***
***
***
***
***
***
***
2009
***
***
***
***
***
***
2010
85 512
89 094
1 505 861
Nil
Nil
89 094
2009
86 373
93 133
1 317 995
Nil
Nil
93 133
2010
896 995
89 094
1 505 861
Nil
Nil
89 094
923 412
93 133
1 111
2010
441
184 041
Non-Ferrous
Totals
1 131
2009
120
192 717
*** Withheld
1 317 995
441
93 574
6 035 686
117 587
5 295 349
105 931
1 862
7 098
305
4 918
989
***
1 505
861
1 317
995
1 505
861
1 319
857
13 133
991
10 214
339
Copper
Lead
Nickel
Titanium
minerals
Zinc (mic)
Titanium slag
Zinc metal
Processed
subtotals
2009
R'000
TOTAL SALES
(t)
Cobalt
(t)
EXPORT SALES
(FOB)
69
40 362
301 629
298 650
EMPLOYMENT
Employment in South Africa‟s non-ferrous metals and minerals sector decreased slightly by 1.4 percent to
14 433 employees in 2010 compared with 2009 (Table 2). The decline in employment is mainly attributable
to retrenchments at Consolidated Murchison at the time when the mine was in distress. Remuneration
increased by 15.8 percent to R2.6 billion as a result of a 17.5 percent increase in average remuneration
per person to R185 487. The crude measure of average productivity per employee in terms of revenue
generated amounted to R2.3 million.
TABLE 2: SOUTH AFRICAN NON-FERROUS METALS MINERALS: EMPLOYMENT AND GROSS
REMUNERATION, 2006-2010
YEAR
EMPLOYEES
REMUNERATION
Number
R'000
R/employee
2006
13 068
1 416 874
108 423
2007
15 678
1 809 706
115 430
2008
15 935
2 223 167
139 515
2009
14 643
2 311 296
157 843
2 677 137
185 487
2010
14 433
Source: DMR, Directorate Minerals Economics
OUTLOOK
According to the International Monetary Fund (IMF), growth in the global economy is forecast to decrease
to about 4 percent in 2011 and 2012, from over 5 percent in 2010. The Eurozone debt crisis is posing the
biggest threat to the global economy and will continue to weigh on confidence. The world is closely
observing how the Greece situation unfolds, and uncertainty could put pressure on commodity markets,
including base metals. Italy, which has a bigger economy than Greece is regarded as too big to bail-out
and its swelling public debt could have a devastating effect on the global economy. Despite the Eurozone
rescue deal being expected to provide some relief, it is too early to be optimistic as downside risk to the
global economy is still lingering owing to ongoing sovereign debt crises in Europe. The deteriorating global
economic outlook will continue to dampen demand for base metals in 2011 and 2012.
Notwithstanding the global financial crisis, growth in emerging markets and developing economies remains
strong but will subside in 2011 compared with the previous year due to low activity in the advanced
economies and greater financial turbulence. China, India and other emerging economies are expected to
remain the major drivers of demand for non-ferrous metals and minerals. China, which is responsible for
more than 40 percent of global demand for base metals, is forecast to grow at approximately 9.6 percent in
2011 from 10.3 percent in 2010.
Copper prices are forecast to increase by 17 percent to $8 814/t in 2011 compared with 2010. Japanese
infrastructure rebuild will improve demand for copper and prices are expected to increase in 2012.
According to a UK-based consultancy firm, GFMS, the expected high deficit in the copper market will
prompt a series of all-time price highs in 2012. Aluminium prices are forecast to increase by 10 percent to
$2 390/t in 2011 and prices are expected to decline in 2012 owing to expected market supply excess
resulting from expansions in China, India and the Middle East.
Nickel prices are projected to increase by 4.6 percent to $22 871/t in 2011 and prices are forecast to
retreat in 2012 due to expected oversupply in the market. Cobalt prices are projected to decrease by 15
percent to $17/lb in 2011 as a result of supply additions, particularly in China and the DRC. Zinc prices are
forecast to increase by 1.4 percent to $2 191/t in 2011 and investment demand for zinc is expected to
sustain prices in 2012. Lead prices are forecast to go up by 11 percent to $2 390/t in 2011 and retreat in
2012 to mirror weaker demand.
REFERENCES
1. Mineral Economics Directorate, DMR
1. IMF, World Economic Outlook, http://www.imf.org, 2011
2. Metals Outlook 2011, http://www.BNamericas.com
70
ALUMINIUM
Thomas Chili
WORLD SUPPLY
World refined aluminium production rose by 9.9 percent to 40.8 Mt in 2010 compared with 2009 (Table 1)
driven by the restart of idled smelters from major producers which led to a build up of 3.5 Mt of inventories.
Major producers were China (16.2 Mt), Russia (3.9 Mt) and Canada (2.96 Mt), which collectively accounted
for 55.9 percent of total world production.
TABLE 1: WORLD ALUMINIUM SMELTER CAPACITY, PRODUCTION AND EXPORTS, 2010
COUNTRY
SMELTER
+
CAPACITY
PRODUCTION
EXPORTS
kt
kt
2 050
1 928
4.7
4
1 696
8.8
3
Bahrain
Brazil
Canada
China
India
Norway
Russia
South Africa*
USA
Other
880
1 700
3 020
18 400
2 300
1 230
4 280
900
3 190
11 050
858
1 536
2 963
16 195
1 610
1 090
3 871
807
1 727
8 226
2.1
3.8
7.3
39.7
3.9
2.7
8.9
2.0
4.2
20.2
9
7
3
1
6
8
2
10
5
-
na
606
2 523
755
248
1 496
4 876
594
449
6 092
0
3.1
13
3.9
1.3
7.7
25.2
3.1
2.3
31.5
na
6
2
5
9
4
1
7
8
TOTAL
2010
49 000
40 811
100.0
19 335
100.0
2009
48 800
37 127
Australia
%
Rank
kt
%
Rank
18 273
Sources: United States Geological Survey, 2011, p 17
World Bureau of Metal Statistics (WBMS)
*Department of Mineral Resources (DMR), Directorate Mineral Economics
Refined aluminium output rose in all regions except in America, where output fell by 3.7 percent to 6.99
Mt due to idled smelter capacity. Asia‟s output climbed by 21 percent followed by Africa‟s 3.7 percent,
Oceania‟s 2.6 percent and Europe‟s 1.7 percent. Asia, at 21Mt, dominated world refined aluminium output,
contributing 52 percent, followed by Europe‟s 8.5 Mt and Oceania‟s 2.2 Mt (Fig.1).
FIGURE 1: WORLD PRIMARY ALUMINIUM PRODUCTION BY REGION, 2010
America
17%
Oceania
6%
Europe
21%
Africa
4%
Asia
52%
Source: World Bureau of Metal Statistics (MBMS) 2011
71
CONSUMPTION
Global demand for the light metal increased by 3 percent to 35.7 Mt in 2010 (Fig. 2) compared with 34.7 Mt
in 2009, fuelled by Chinese demand for automobiles and the EU‟s requirements for lighter vehicles in a bid
to curb carbon dioxide emissions.
FIGURE 2: WORLD ALUMINIUM SUPPLY AND DEMAND 2001-2010
Supply
Consumption
45
40
35
Mass (Mt)
30
25
20
15
10
5
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Year
Source: World Bureau of Metal Statistics, 2011
Asia, at 56 percent, was the largest consumer followed by Europe‟s 23 percent and the Americas‟ 18
percent (Fig.3).
FIGURE 3: WORLD PRIMARY ALUMINIUM CONSUMPTION BY REGION, 2010
Oceania
America
Europe
1%
18%
23%
Africa
2%
Asia
56%
Source: World Bureau of Metal Statistics, 2011
72
The transport sector, accounted for 26 percent followed by the packaging sector (22 percent) and
construction (22 percent) of demand for refined aluminium (Fig. 4). The machinery and electrical industrial
sectors each contributed 8 percent and consumer durables 14 percent.
FIGURE 4: INDUSTRIAL DEMAND FOR HIGH GRADE PRIMARY ALUMINIUM, 2010
Source: London Metal Exchange, 2011
PRICES
In 2010, the London Metal Exchange (LME) cash settlement prices rose by 30 percent compared with
2009 to average $2 173/t. Rising operating costs, supply disruption and political instability in North Africa
and the Middle East, where new smelters are located, contributed to the rising aluminium prices. In
January 2010, prices commenced at $2 235/t and increased to reach $2 316/t in April before declining to
$1 931/t in June 2010 (Fig.5). In October 2010, prices rose back to $2 346/t and remained around this level
until December 2010 due to stagnant demand. Thereafter, prices started rising again reaching a maximum
of $2 666.67/t in April 2011. This was mainly attributed to strong growth in transportation and packaging in
the USA and Europe. The rising trend continued until June when prices peaked at around $2 235.41/t as
the EU debt crisis started to affect market confidence.
FIGURE 5: LONDON METAL EXCHANGE CASH SETTLEMENT PRICE (MONTHLY AVERAGES), 2008
TO 2011
3500.00
3000.00
$/t
2500.00
2000.00
1500.00
1000.00
500.00
0.00
Month-Year
Source:
Metal Bulletin, 2008-2011
73
GLOBAL DEVELOPMENTS
In 2010, Rio Tinto Alcan approved Phase 1 of the Jonquière smelter modernisation project, in Saguenay–
Lac-Saint-Jean, Quebec. The first phase is anticipated to have an annual production capacity of 60 kt of
aluminium by 2013. The smelter will utilise the latest AP60 aluminium reduction technology.
In India, new projects will be commissioned during 2011 and 2012. These include Vedanta Resources‟
Jharsuguda II smelter (capacity of 1.25 Mt/a), BALCO‟s Korba smelter (325 kt/a), Hindalco and Aditya‟s
Orissa smelter (359 kt/a), and Hindalco‟s Mahan MP smelter (359 kt/a).
In the Middle East, new capacity, including Norsk Hydro and Qatar Aluminium‟s Qatalum smelter (585 kt/a)
and DUBAL and Mubadala‟s EMAL smelter (750 kt/a) are expect to reach full capacity by 2011 and 2012.
The US is set to restart at five smelters viz, Century‟s Hawesville smelter (52 kt/a), Ormet‟s Hannibal
smelter‟s two potlines with a combined capacity of 80 kt/a, and Alcoa‟s Massena East, Ferndale and
Wenatchee Works smelters with a combined capacity of around 200 kt/a.
DEVELOPMENTS IN AFRICA
The Guinean government is set to reach an agreement with the state-owned China Power Investment to
develop a bauxite mine and construct an alumina refinery, deep water port and a power plant. The project
will be located in Boffa about 120 km west of the capital Conakry and is expected to commence in 2012
with an estimated investment of $5.8 billion with the production capacity estimated at 4 Mt/a. The Guinean
government has also reached an agreement with Rio Tinto to secure Simandou aluminium resources and
will form a joint venture with the Aluminium Corporation of China (Chalco). The government is expected to
own 35 percent of the shares.
SOUTH AFRICA
South Africa‟s primary aluminium production declined by 20.9 percent to 811 kt in 2010 compared with 1
024.8 kt in 2009, owing to the under-utilisation of Bayside smelter capacity, which fell by 20.3 percent
during 2010 as a result of a sharp decline in local demand, by the manufacturing industry.
In 2010, 36 percent of South Africa‟s aluminium output was exported to Japan followed by 20 percent to
South Korea and 8 percent to Netherlands (Fig.5).
FIGURE 5: SOUTH AFRICA‟S PRIMARY ALUMINIUM EXPORTS BY DESTINATION, 2010
Other
23%
Japan
36%
Kenya
6%
China
7%
Netherlands
8%
Source:
South Korea
20%
DMR, Directorate Mineral Economics, 2011
74
OUTLOOK
According to Australian Bureau of Statics, world aluminium production is expected to increase by 8 percent
to 43.9 Mt in 2011 and is expected to grow by a further 6 percent to 46.7 Mt in 2012. This growth result
from smelter restarts and the commissioning of new capacity in China, India, the Middle East and the
United States.
World aluminium consumption is projected to increase by 7 percent in 2011 to 42.6 Mt and by a further 8
percent in 2012 to 46.0 Mt. Consumption growth is expected to remain strong, particularly in the transport
sector, where aluminium is extensively used in the manufacture of automobiles. Also, the OECD
aluminium consumption is forecast to increase by 8 percent in 2012, reflecting higher economic growth,
and rebuilding efforts in Japan are expected to accelerate.
In 2011, LME aluminium cash settlement prices are forecast to range remain within the range between $2
400/t and $2 500/t as a result of the simmering Eurozone sovereign debt crisis. In 2012, aluminium prices
are forecast to decline by 10 percent to an average of $2 330/t owing to expected market supply excess.
However, rising production costs will limit the decline in aluminium prices over the forecast period.
South Africa‟s automobile industry is expected to increase production and exports which may fuel demand
for the light metal. Consequently, local aluminium production is expected to grow by 3.6 percent to 840 kt
in 2012.
REFERENCES
1. Department of Mineral Resources.
2. http://www.hydro.com/en/Press-room/News/Archive/Stock-exchange-announcements/2010/First-quarter-20103 http://www.abare.gov.au-Aluminum, June quarter 2010.
4. http://af.reuters.com/article/investingNews/idAFJOE77Q01B20110827 http://www stats.world-aluminium.org.
5. U.S Geological Survey, 2010. Mineral Commodity Summaries, January 2010: Internet website:
http://www.usgs.gov.
6. http://www.ame.com.au, AME Mineral Economics/Aluminium and Alumina
7. http://wwwmarketwire.com/press -release/Anglo-Aluminium-Discovers.
8. http://www.metalprices.com,al
9. http://aluminiumintransportation.org
10.. http://www.bloomberg//aluminium
11. http://www.refractories-worldforum.com/newsletter.html
12. FICC Research, Commodities: Base Metals Monthly, Standard Bank
13. http://www.worldal.com/news/australia/2009-04-27/126398701723647.shtml
75
ANTIMONY
L MAPHANGO
WORLD SUPPLY
The world antimony reserves were estimated at 1.8 Mt in 2010. At 0.95 Mt, China holds more than half of
the world‟s reserves, followed by Russia‟s 0.35 Mt, Bolivia‟s 0.31 Mt, Tajikistan‟s 0.5 Mt and South Africa‟s
0.21 Mt (Table 1). In 2010, world mine production of antimony decreased by 12.5 percent to 135.2 kt
compared with 2009, due to lower production in China. China, the largest producer, accounted for 88.7
percent of world output but its production declined by 14.3 percent to 120 kt during 2010. South Africa is
the second largest producer with an output of 3.2 kt, followed by Bolivia‟s 3 kt, Russia‟s 3 kt and
Tajikistan‟s 2 kt.
TABLE 1: WORLD RESERVES AND PRODUCTION OF ANTIMONY CONCENTRATES, 2010
COUNTRY
RESERVE
PRODUCTION
kt
%
Bolivia
310
17.2
China
950
Russia
South Africa
kt
%
Rank
3
3
2.2
3
52.8
1
120
88.7
1
350
19.4
2
3
2.2
3
21
1.2
5
*3.2
2.4
2
Tajikistan
50
2.8
4
2
1.5
5
Other
119
6.6
-
4
3.0
-
1 800
100.0
Total
2010
Rank
135.2
2009
Source:
100.0
154.6
USGS, Mineral Commodity Summaries, January 2011
*DMR Mineral Economics Directorate
Global output decreased during 2010 due to intermittent production interruptions in China, following
frequent environmental inspections. In March 2010, the Chinese government announced that it would not
approve any new projects for antimony until June 2011, and in the same month it closed about 100
antimony smelters in China‟s major antimony-producing region, with the aim of clamping down on illegal
mines and reducing pollution. This led to the decline in production.
WORLD DEMAND
The main use of antimony is in flame retardants as antimony trioxide, which consumes about 70 percent of
primary antimony production (Fig 1). Antimony trioxide is used in flame retardants as a synergist to
improve the performance of primary flame retardants. Flame retardants are used in various products,
including plastics, textiles, rubber, adhesives, toys, building materials, in seat covers of aircrafts and
automobiles, and as a filler and decolouriser in glass and ceramics. Construction products are the leading
market for flame retardants, contributing about 25 percent to total demand. Other applications of antimony
are in lead acid batteries, semiconductors, micro-electronics, copper alloys, magnetic steels, and
polyethylene terephthalate (PET) bottles. China dominates the global antimony consumption, accounting
for more than 50 percent.
76
FIGURE 1: GLOBAL ANTIMONY CONSUMPTION BY SECTOR, 2009
Ceramics and
Glass
6%
Chemicals
10%
Others
4%
Batteries
10%
Flame retardants
70%
Estimates from various sources
PRICES
Prices of antimony increased sharply during 2010, from $6 347/t in January to $12 166/t in December,
representing an almost twofold increase (Fig 2). Strong fundamentals supported prices as China continued
to strictly monitor environmental regulations by conducting inspections and closing down non-compliant
producers, which led to the reduction of global supply. The annual average price of antimony increased by
73.4 percent to $9 020/t in 2010 compared with the previous year. Prices continued to increase in 2011
reaching an all-time high monthly average price of $16 052/t in May. After a prolonged upward trend, prices
reached a maximum of $16 577/t in April 2011, and fell to $14 267/t in July 2011, representing a decline of
14 percent during the 3-month period. Prices dipped after the Chinese government approved mine
smelters to go back online. The smelters had been taken offline while the government assessed
environment standards from September 2010 to April 2011.
Months
Source: Metal Bulletin Free Market, 2010 - 2011
77
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
18000.00
16000.00
14000.00
12000.00
10000.00
8000.00
6000.00
4000.00
2000.00
0.00
Jan-10
$/t
FIGURE 2: ANTIMONY METAL BULLETIN, FREE MARKET PRICES, 2010 – 2011
Consolidated Murchison mine, the only antimony producer in South Africa, is located near Gravelotte in
Limpopo province. The mine produces antimony and gold as a by-product. Metorex, the former owner of
Consolidated Murchison mine took a decision to dispose of its non-core assets, which included antimony,
with the aim of focusing on base metals. To The Point Growth Specialist (TTP) took over the mine from
Metorex through a contract management agreement in November 2009. The mine was then subsequently
acquired by Village Main, the current owner, from TTP for the consideration of R30 million in March 2010.
Village owns 66.4 percent of the mine and the remaining 33.3 percent is owned by BBBEE partners
consisting of Consolidated Murchison Mine Employees Share Trust (23.6 percent) and an Independent
BEE Consortium (10 percent). Village also raised R22.5 million capital funding which was injected into the
mine for further expansion. The mine has a remaining life of 10 years with significant potential to expand
through deepening of current shafts. The mine, which was struggling during 2009 as a result of poor
recoveries and lower antimony prices, returned to profitability in 2010, after TTP introduced cost reduction
measures towards the end of 2009 and also due to record high prices of antimony during 2010. There
were 255 less employees in 2010 compared with 2009, mainly as the result of retrenchments when the
mine was in distress. About 25 of the lost jobs have since been recovered by September 2011.
Improved plant recoveries in 2010 following plant repairs and upgrades boosted the production of antimony
at the Consolidated Murchison mine. As a result, South Africa‟s antimony concentrate production increased
by 21.2 percent to 3 239 t in 2010 compared with 2 673 t in 2009. Local sales volumes decreased by 11.1
percent to 9 t in 2010, while exports declined by 4.2 percent to 2 460 t.
Antimony Products closed down its processing plant, located adjacent to Cons Murch mine, in early 2009
due to depressed prices during the global economic crises which had impaired its bottom line. The
company‟s processing plant used to convert antimony concentrate from Cons Murch mine to antimony
trioxide for the international markets.
The global market tightness, which helped to boost profits of antimony producers worldwide, is attracting
new investments in the industry.
United States Antimony Corporation (USAC), a mining and chemicals company based in the US, which
received final permits at the end of 2009, constructed an antimony mill at San Luis de la Paz in
Guanajuato, Mexico. The flotation mill supplies the company‟s smelters with feed, resulting in a fully
integrated operation that makes USAC independent of Chinese suppliers.
AMG Advanced Metallurgical Group NV, a Netherlands based company, has agreed to invest $20m to
acquire the antimony mining rights and adjacent antimony smelter of an operation in Turkey. The company
aims to secure feedstock supply for its antimony trioxide operation, which is the major producer in Europe.
At the beginning of 2010 Franklin Mining, a US based company, formed a joint venture with Planet
Resources Recovery Inc. of Texas, to develop and operate the San Antonio de Turiri mine in Bolivia. The
project will be in two phases. The first phase involves primary recovery of the high grade ore (60 - 67
percent antimony), with an estimated initial production of 50 tonnes per month, with increments of 50
tonnes per month. In the next phase, the secondary ore (5 – 10 percent antimony) will be recovered using
Planet‟s enhanced mining technology.
OUTLOOK
Global demand for antimony in the battery sector is expected to continue declining due to substitution by
other metals. However, the use of antimony in flame retardants is forecast to increase further in 2011 and
the years to come. Even though strong demand for antimony is expected to persist, future supply growth is
projected to keep pace with the growing demand.
Increasingly stringent safety and flammability standards coupled with increasing use of plastic products
instead of less flammable materials and rising demand for IT related products, will spur the consumption of
flame retardants and demand for antimony will consequently increase. Furthermore, increasing production
of electronic products in Europe and the developing world, will lead to more antimony being demanded for
electrical and electronic use.
78
The future demand of antimony will depend on the flame retardant sector, which is projected to grow at
about 4 percent per annum until 2014. The use of flame retardants in the emerging markets is expected to
gain momentum, with industry experts forecasting double digit growth figures in China and India. The Asia
Pacific region will continue to be the major and fastest growing market for flame retardants, and is
expected to account for about 50 percent of world demand by 2014.
Prices of antimony are expected to increase in 2011, due to the closure of smelters in Lengshilujang and a
crackdown on smuggling by the government of China. Increasing demand for antimony products and the
resilient tight market in China will continue to exert upward pressure on prices until 2012. It is expected that
prices will stabilize when the demand-supply balance is restored in the global antimony market from 2013.
REFERENCES:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Industrial Minerals various publications, 2010 -2011.
Metal Bulletin, Prices, 2010 – 2011.
U.S. Geological Survey, Mineral Commodity Summaries, Antimony 2011.
Market Research News, “China Antimony Industry Report 2010”, http://www.salisonline.org.
EPQW, “Study into the feasibility of protecting…in England”, http://www.environment-agency.gov.uk.
Business News Americas, “Metal outlook 2011”, http://www.BNamericas.com.
Reuters, “US Antimony Obtains Mexican Site Approval”, http://www.reuters.com.
Mining
Weekly,
“Village
to
acquire
Consolidated
Murchison
antimony
mine
for
http://www.miningweekly.com, October 2010.
th
Roskill, “The Economics of Antimony”, 10 edition 2007, http://www.roskill.co.uk.
Personal communication with Consolidated Murchison mine
79
R30m”,
COBALT
M Ikaneng and L Ramane
SUPPLY
World cobalt reserves are estimated at 7.3 million tons (Table 1). Most of these reserves occur in nickelbearing laterite deposits, with the rest associated with nickel-copper sulphide deposits hosted in mafic and
ultramafic rocks as well as in sedimentary copper deposits. Cobalt is produced as a by-product of other
metals because of its low concentrations in the earth‟s crust. Cobalt is mainly produced as a by-product of
nickel industry (55 percent), copper industry (35 percent) while primary cobalt operations account for
only10 percent of world supply.
TABLE 1 – WORLD RESERVES AND MINE PRODUCTION OF COBALT, 2010
COUNTRY
kt
Australia
RESERVES
%
Rank
t
MINE PRODUCTION
%
Rank
1 400
19.2
2
4 600
5.2
5
Brazil
89
1.2
8
1 500
1.7
9
Canada
150
2.1
7
2 500
2.8
7
China
80
1.1
9
6 200
7
3
Cuba
500
6.8
3
3 500
4
6
DR Congo
3 400
46.6
1
45 000
51
1
Morocco
20
0.3
10
1 500
1.7
10
New Caledonia
370
5.1
4
1 700
1.9
8
Russia
250
3.4
6
6 100
6.9
4
South Africa
±
13
0.2
11
840.3
1
11
Zambia
270
3.7
5
11 000
12.5
2
Other
725
9.9
3 859.7
4.4
7 300
100
88 300
100
TOTAL
Sources: USGS, January 2011, (for Reserves and Mine Production)
Notes: ±DMR, Mineral Economics Directorate (mine production)
e
Estimate
World cobalt mine production, increased by 42.4 percent to 88.3 kt in 2010, compared with
62 kt in 2009 (Table 1). The increase was mainly due to the re-opening of Chambishi Metals‟ smelter and
mining operations in Zambia in late 2009. The DRC was the world‟s largest producer of cobalt accounting
for 51 percent followed by Zambia (12 percent), China (7 percent) and Russia (6.9 percent).
Refined cobalt production increased by 28 percent to 76.4 kt, compared with 59.7 kt produced the previous
year (Table 2), representing the largest annual production increase ever recorded for cobalt. The largest
contribution came from the Chinese refining industry where output reached 33 Mt, as well as the restart
and subsequent ramp up of production at Chambishi metals in Zambia. Substantial increases in production
were evident in Zambia (226 percent), South Africa (253 percent), Japan (46 percent), China (43 percent),
DRC (42 percent) and Brazil (38 percent).
The Cobalt Development Institute (CDI) members increased their production by 23.1 percent to 30.9 kt in
2010 (Table 3). The increase was largely as a result of the re-opening of Chambishi Metals in Zambia,
resulting in an increase of 3.9 kt in 2010 from 0.2 kt in 2009. CDI members that recorded increases in
production were Chambishi (1 574 percent), Gécamines (80 percent), Sumitomo (45 percent),
BHPB/QNPL (26 percent) and Umicore (21 percent). Non-CDI producers increased their production by
31.5 percent to 45.5 kt in 2010 (Table 3).
80
TABLE 2 - REFINED COBALT PRODUCTION BY COUNTRY, 2009 AND 2010
COUNTRY
2009
t
4 050
2 150
1 012
4 914
23 138
2 950
8 850
368
1 001
1 332
1 600
3 510
2 350
238
673
1 535
Australia
Belgium
Brazil
Canada
China
D R of Congo
Finland
France
India
Japan
Morocco
Norway
Russia
South Africa*
Uganda
Zambia
TOTAL
Source:
Notes:
2010
t
4100
2600
1400
4700
33000
4200
9300
300
1200
1950
1550
3200
2450
840
600
5000
RANK
6
8
12
4
1
5
2
16
13
10
11
7
9
14
15
3
59 671
76 390
Cobalt facts, 2011. Cobalt supply & demand 2010
*DMR, Mineral Economics Directorate
TABLE 3 – CDI AND NON-CDI MEMBER COMPANIES‟ REFINED COBALT PRODUCTION, 2009 AND
2010
COMPANY
COUNTRY
2009
2010
RANK
t
t
CDI MEMBERS
BHPB/QNPL
Chambishi
CTT
CVRD / Vale Inco
Eramet
Gécamines
ICCI
OMG
Sumitomo
µ
Rubamin
Umicore
Xstrata
Subtotal
NON-CDI MEMBERS
Australia
Zambia
Morocco
Canada
France
DRC
Canada
Finland
Japan
India
Belgium*
+
Norway
1 700
235
1 600
1 193
368
415
3 721
8 850
1 332
0
2 150
3 510
25 074
2 141
3 934
1 545
940
302
745
3 706
9 299
1 935
517
2 600
3 208
30 872
6
2
8
9
12
10
3
1
7
11
5
4
Katanga Mining
Kasese
Minara
Mopani Copper
β
Norilsk
Various
Various
Various
Votorantim
Subtotal
Total
DRC
Uganda
Australia
Zambia
Russia
@
South Africa
#
China
India
Brazil
2 535
673
2 350
1 300
2 352
238
23 138
1 001
1 012
34 599
59 673
3437
624
1976
1200
2460
840
32930
670
1369
45 506
76 378
2
9
4
6
3
7
1
8
5
Source: Cobalt News, April, 2011,
81
Notes:
Cobalt Supply and Demand 2010 (Cobalt Facts, 2011, CDI)
* Includes UMICORE Chinese production
#
Excludes UMICORE‟s Chinese production
@ Directorate Mineral Economics, DMR
+ Refinery
µ Rubamin joined CDI in 2010
β Norilsk ceased to be a CDI member in 2009
DEMAND
Global cobalt demand has recovered to pre-crisis levels in various key consuming sectors. Structural
improvements in downstream demand, being supported by substantial restocking throughout the supply
chain is estimated to have driven 2010 demand back up to 61 Mt, up by 9 percent.
Global cobalt markets experienced a remarkably strong recovery during 2010, following the sharp
downturn seen in 2009. Global demand has recovered in various key consuming sectors. Rechargeable
batteries have overtaken superalloys as the main end-user market for cobalt, accounting for 27 percent of
global consumption (Fig. 1). This is a result of increasing demand for batteries, particularly for portable
devices and hybrid electric vehicles as well as all electric vehicles.
FIGURE 1: CONSUMPTION BY SECTOR, 2010
Source: Cobalt Facts, Supply and Demand, 2011 (The CDI)
PRICES
Cobalt prices made a volatile but solid recovery on the back of improved demand fundamentals. The
average price of low-grade and high-grade cobalt increased by 17.8 and 19.2 percent to $18.79/lb and
$20.56/lb respectively in 2010 from $15.96/lb and $17.25/lb in 2009. Prices opened the year at $21.50/lb
(HG cobalt) and $20.63/lb (LG cobalt), increasing to a high of $23.50/lb (HG cobalt) and $21.75/lb (LG
cobalt) in April. In May 2010, prices started declining, as a result of seasonal weaknesses in downstream
consumer demand. By the end 2010, prices had declined to a yearly low of $18.95/lb (HG cobalt) and
$17.25/lb (LG cobalt) (Fig.2).
82
FIGURE 2: COBALT PRICE, 2008 – 2010
Source: Metal Bulletin
SOUTH AFRICA AND AFRICA
In South Africa, cobalt is produced as a by-product of platinum-group metals (PGMs) and nickel mining.
Cobalt mine production increased by 253 percent to 840.3 t in 2010 compared with 238 t in 2009, as a
result of the ramp up in production at the Nkomati mine. More cobalt was extracted due to the reduced cutoff grade. Local sales value decreased by 21 percent to R16.1 million while the export sales value
increased by 114 percent to R135.4 million, due to increased export sales tonnages.
TABLE 4 – SOUTH AFRICA‟S LOCAL AND EXPORT SALES OF COBALT, 2001 – 2010
LOCAL SALES
EXPORT SALES
PRODUCTION
YEAR
Mass
Value (FOR)
Mass
Value (FOR)
Kg
kg
R‟ 000
R/kg
kg
R‟ 000
R/kg
2001
373 259
36 928
6 437
174
316 941
63 759
201
2002
352 000
33 790
5 996
177
311 591
55 225
177
2003
271 383
19 133
3 053
161
241 054
36 238
151
2004
308 929
18 517
5 671
306
309 848
83 232
269
2005
267 962
32 702
4 439
136
241 025
51 615
214
2006
266 875
44 320
8 882
200
220 921
46 975
213
2007
306 834
30 259
10 578
350
248 575
99 539
400
2008
244 407
43 134
26 231
608
261 494
167 774
642
2009
237 812
75 109
20 435
272
182 659
63 181
346
2010
840 285
57 988
16 110
278
493 098
135 424
275
Source: Directorate, Mineral Economics – DMR
Other African countries that produced both refined and mined cobalt include Zambia, Democratic Republic
of Congo (DRC), Uganda and Morocco (Tables 1 and 2). The decline in production from CTT in Morocco
(3.4 percent) and Uganda‟s Kasese (7.3 percent) were offset by production increases in Zambia‟s
Chambishi Mining which recorded a 1 574 percent increase to 3.9 kt in 2010 from 0.2 kt in 2009 in refined
cobalt production and Katanga mining in the DRC, which recorded a 35.6 percent increase to 3.4 kt from
2.5 kt during the same period.
GLOBAL DEVELOPMENTS
In 2010, growth in the cobalt sector strengthened due to relatively strong demand in key cobalt consuming
sectors, as well as a gradual yet solid increase in both production and prices for the metals of which cobalt
is a by-product; copper and nickel. This had a positive impact on both the mining and refining operations
worldwide where most producers have been looking to maximize output in light of more favourable trading
conditions.
The level of production of cobalt increased considerably in the DRC during 2010. It is estimated that the
DRC accounted for up to 57 percent of world refined cobalt output in 2010, from 36 percent in 2009.
Combined production by producers like Tenke Fungurume, Ruashi Mining, Chemaf and Somika has
83
doubled to 17.1 Mt in 2010 from approximately 8 Mt in 2009. This is in line with the DRC government‟s
initiative aimed at creating more downstream cobalt refining capacity within the DRC and raising the level
of value added exports.
Central African Mining & Exploration Corporation (CAMEC) is estimated to have produced
7.8 Mt of cobalt in concentrate form during 2010, a significant increase from 2009 production levels. This
reflects the planned ramp up in production, improved plant availability and higher ore grades from
Mukondo Pit. Operations at this mine and Luita plant were briefly suspended until 2009 due to the global
slump in cobalt prices.
Katanga Mining increased its production of cobalt metal at its Luilu Processing Plant to
3.4 Mt in 2010 from approximately 2.5 Mt in 2009. This happened after its announcement in September
2009 that the company intended to accelerate the ramp-up of its cobalt/copper project by almost two years.
This project is progressing as scheduled, with an additional mill and associated infrastructure increasing
the throughput of the concentrator and new equipment increasing capacity of the Luilu processing plant.
The copper and cobalt grades are expected to significantly increase as higher grade reserves are
exploited.
Chambishi Metals of Zambia resumed production following a suspension of its smelter and mining
operations in December 2008. However, following the restart by the end of 2009, production was ramped
up substantially; as a result output was expected to reach 3.7 Mt in 2010. This is the highest output level
recorded at Chambishi since 2004, making it the largest African cobalt metal producer and second largest
in the world.
New projects – progress update
A significant share of the incremental global cobalt production that was initially scheduled for 2010 has
been further delayed into 2011 and beyond.
The Ambatovy Project in Madagascar, owned and operated by Sherritt International
(40 percent), Sumitomo Corp, Korea Resources Corp (both 27 percent) and SNC-Lavalin Group (5
percent), continued increasing project expenditures to $4.16 billion by the end of the third quarter of 2011.
This mine is expected to become the world‟s largest lateric mine by 2013; it is scheduled to produce 60 kt
of nickel and 5.6 kt of cobalt per annum. However, this level of output is not expected until 2012.
Development costs for this project are estimated at $4.7 billion, and 2 300 people would be employed in its
operational phase.
Vale New Caledonia nickel mine is concluding its commissioning phase of the project, following repairs and
design changes to the refinery. Start-up has been extended on numerous occasions due to process
complications and environmental opposition, putting the project two years behind schedule and $2 billion
over budget. Upon completion of the project, the refinery is scheduled to have a nominal annual production
capacity of 60 kt of nickel and 4.3 to 5 kt of cobalt in carbonate form. Vale Inco, which owns the mine, aims
to reach full production by 2013; however, there are concerns that there could be further delays in reaching
production targets. This is as a result of the technology used, which could result in further technical
complications.
The Ramu Nickel and Cobalt Project near Madang in Papua New Guinea, owned by the Chinese State
Corporation MCC and Australian Highlands Pacific was delayed by legal proceedings over its intended
marine dumping of mine tailings. However, The National Court in Madang refused to grant a permanent
restriction and removed the existing ban placed on the project. Construction of the mine and processing
operations are complete and production started in September 2011. This project is earmarked to produce
3.3 Mt of cobalt and 31.2 Mt of nickel per annum and will presumably feed refinery operations of the
Jinchuan Group and Jinlin Ji‟en Nickel Industry Corporation, both 13 percent shareholders in the project.
OUTLOOK
In 2010, global economic conditions continued to improve, which led to increased cobalt demand and
supply. World production is anticipated to increase from 2012 as expected expansions projects come on
stream. In the short term, global supply from existing producers and new projects is forecast to outpace
increases in consumption. If an oversupply of cobalt takes place, it could lead to a downward trend in
prices.
Global demand for cobalt is expected to increase by 10.8 percent in 2012 and 8.9 percent in 2013. The
increase in demand will be driven by growth in demand for hybrid electric vehicles and electric vehicles in
84
the automotive sector. The shift towards Hybrid Electric Vehicles (HEV‟s) and Electric Vehicles (EV‟s) is
driven by environmental issues and the ever increasing price of oil.
In South Africa the production of cobalt is expected to rise, in line with the increase in nickel production,
which is expected to increase from 9.6 kt in 2010 to 20.5 kt by 2013 as a result of the Nkomati Expansion
Project.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
Cobalt Market review, December 2010, Darton Commodities Limited
Cobalt News, October, 2011, London,
Cobalt Supply & Demand 2010. Cobalt Facts 2010, CDI
Darton Commodities Limited. cobalt market review 2010-2011 (projects)
http://ambatovy.com/docs
http://asopa.typepad.com
http://nickel.vale.com
Personal communication with Mark Davidson, Nkomati
U.S. Geological Survey, Mineral Commodity Summaries, January 2011
85
COPPER
Thomas Chili
WORLD SUPPLY
According to the International Copper Study Group (ICSG), global copper mine production increased by 2.0 percent
to 16.1 Mt in 2010 when compared with 15.8 Mt in 2009 (Table 1) fuelled by an increased end user demand. Chile
continued to be the world‟s largest copper mine producer, contributing 5.4 Mt followed by Peru‟s 1.2 Mt and China‟s
1.15 Mt. In Africa, Zambia, Democratic Republic of Congo (DRC) and South Africa collectively accounted for 93.6
percent of the continent‟s copper mine output driven by strong growth in DRC in 2010.
TABLE 1: WORLD RESERVES, MINE PRODUCTION AND EXPORTS, 2010
COUNTRY
RESERVES
Mt
%
Australia
80
Canada
8
Chile
PRODUCTION
EXPORTS
Rank
kt
%
Rank
kt
%
Rank
12.7
3
849
5.3
7
315
4.2
5
1.3
12
525
3.3
8
184
2.5
7
150
23.6
1
5 419
33.6
1
3 173
42.7
1
China
30
4.8
5
1 156
7.2
3
39
0.5
10
Indonesia
30
4.8
5
854
2.6
6
161
2.2
8
Kazakhstan
18
2.9
10
412
7.7
10
272
3.7
6
Peru
90
14.3
2
1 247
2.6
2
364
4.9
4
Poland
26
4.1
8
425
4.5
9
315
4.2
5
Russia
30
4.8
5
728
0.7
7
443
6
3
South Africa*
11
1.7
11
113
7
11
29
0.4
11
USA
35
5.6
4
1 127
11
4
80
1.1
9
Zambia
20
3
9
734
4
8
675
9.1
2
102
16.2
2 438
8
1 380
18.6
Other
TOTAL
Sources
Notes:
2010
16 118
2009
15 804
-
100
7429
8644
USGS, 2011, p49
WBMS
* Department of Mineral Resources (DMR), Directorate Mineral Economics: Copper concentrates,
blister anode, and refined copper
In 2010, regional copper mine production was dominated by America, which accounted for 55.2 percent
of world output followed by Asia‟s 21.4 percent and Europe‟s 9.1 percent at distant second and third
places respectively (Fig.1). Africa recorded a 20.3 percent increase followed by Asia‟s 3.34 percent and
Europe‟s 1.5 percent. Output from Oceania and the Americas mine production declined by 0.3 percent
and 1.3 percent, respectively as a result of technical problems (plant refurbishments), floods, and falling
copper grades suppressed copper production in these regions.
FIGURE 1: REGIONAL MINE COPPER PRODUCTION, 2010
Oceania
6.2%
Europe
Africa
9.1%
8.1%
Asia
21.4%
Americas
55.2%
Sources: World Bureau of Metal Statistics (WBMS), 2011
86
World refined copper output rose by 2.8 percent to 19.2 Mt in 2010 compared with 2009. Production
increased in all regions except the Americas and Oceania, where production dropped by 2.0 percent and
6.5 percent respectively. Asia‟s production rose by 5.8 percent followed by Africa‟s 5.7 percent and
Europe‟s 4.0 percent.
CONSUMPTION
In 2010, world refined copper consumption rose by 4.9 percent to 19.1 Mt compared with 2009, driven by
strong industrial demand. Consumption was dominated by strong demand from Asia, which accounted for
63 percent followed by Europe‟s 21 percent and America‟s 15 percent (Fig.2). Oceania and Africa
accounted for 1. 0 percent and 0. 6 percent, respectively.
FIGURE 2: REGIONAL REFINED COPPER CONSUMPTION, 2010
Oceania
1%
America
15%
Europe
21%
Africa
0.6%
Asia
63%
Source: World Bureau of Metal Statistics (WBMS), 2011
The refined copper market was slightly oversupplied in 2010, with supply exceeding demand by 32.1 kt
(Fig.3).
FIGURE 3: GLOBAL REFINED COPPER PRODUCTION AND CONSUMPTION, 2006-2010
Supply
Demand
19.5
19.0
Mass (Mt)
18.5
18.0
17.5
17.0
16.5
16.0
15.5
2006
2007
2008
2009
2010
Year
Source: World Bureau of Metal Statistics (WBMS), 2011
Demand for refined copper was still dominated by electrical wiring and infrastructure, which accounted for
24 percent and 12 percent of global consumption, respectively, followed by transport and industrial
87
manufacturing each consuming 12 percent (Fig.4). The balance of demand was from consumer durables,
cooling equipments and other.
FIGURE 4: WORLD INDUSTRIAL REFINED COPPER DEMAND BY SECTOR, 2010
Other
manufacturing
14%
Other consumption
12%
Electrical wiring
24%
Electrical
infrastructure
12%
Cooling equipment
6%
Consumer durables
manufacturing
8%
Transport
manufacturing
12%
Industrial
manufacturing
12%
Source: London Metal Exchange (LME), 2010
TRADE
In 2010, world refined copper exports declined by 16.4 percent compared with 2009 to 7.4 Mt. Exports of
all major exporting countries dropped. Chile, whose exports amounted to 3.17 Mt in 2010, remained by far
the largest exporter despite a 0.5 percent decline in its exports. Exports from Peru, the second largest
copper miner, plunged by 17 percent to 0.36 Mt and Indonesia‟s exports went down by 18.6 percent to
0.53 Mt.
World refined copper imports were 2.5 percent lower in 2010 when compared with 2009. China continued
to dominate world refined copper imports accounting for 37.6 percent followed by Germany and Italy at 9.6
percent and 8.1 percent, respectively.
PRICES
In January 2010, copper was sold for an average of $7 386/t on the LME and continued to rise to reach an
average of $7 747.20/t in May 2010. In June 2010, the EU sovereign debt crisis exerted downward
pressure on the copper prices, which reached a low level of $6 486.89/t. In July 2010, prices started
recovering and by December 2010, the average monthly price had risen to $9 147/t. The average annual
LME cash settlement copper price for 2010 was $5 113/t, 31.6 percent higher than in 2009 (Fig. 5).
FIGURE 5: LME CASH SETTLEMENT COPPER PRICES (MONTHLY AVERAGES), 2009-2010
12000
Price ($/t)
10000
8000
6000
4000
2000
0
Month
Sources:
Metal Bulletin, 2010
88
Demand growth from the Organisation for Economic Co-operation and Development (OECD) economy
and China led to steep upward trend as a result of falling copper inventories and a record high price of
$9 867.67/t was achieved in February 2011. Following the earthquake and tsunami in Japan, LME
copper prices slid to $9 533.67/t in March 2011.
SOUTH AFRICA
South Africa‟s copper production (cathode, copper in concentrate) decreased by 9.7 percent to 84 kt in
2010 (Table 2). Lower copper output was mainly attributed to the plant refurbishment of Palabora the
only primary producer. However, by-product copper production from Platinum Group Metal (PGM)
mines rose by 16.4 percent to 24.40 kt. Local consumption slumped by 16.2 percent to 57 kt while
exports fell by 7.4 percent to 25 kt due to weaker copper markets. However, local unit sales values
rose by 33.7 percent to R55 750/t while export unit sales values went up by 27.7 percent to R48 718/t.
Also, local sales revenue climbed by 11.4 percent to R3.16 billion while revenue from export sales rose
by 18.2 percent to R1.21 billion as a result of higher copper prices, despite lower sales volumes.
TABLE 2: SOUTH AFRICA'S PRODUCTION, LOCAL SALES AND EXPORTS OF COPPER, 2001–2010
YEAR
PRODUCTION
Mass
kt
141
130
121
103
99
110
113
97
93
84
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Notes:
Mass
kt
70
80
76
84
82
84
77
68
68
57
LOCAL SALES
Value (FOR)
R'000
R/t
966 874
13 751
1 381 519
17 197
1 073 734
14 114
1 542 829
18 381
1 926 378
23 496
3 892 035
46 452
4 025 725
52 242
4 120 564
60 168
2 835 737
41 695
3 160 029
55 750
EXPORT SALES
Mass
Value (FOR)
kt
R'000
R/t
63
13 043
827 874
51
14 909
761 829
46
12 229
567 502
29
16 495
583 293
30
21 882
656 721
24 1 064 092
43 598
36 1 772 305
49 683
33 1 507 356
45 860
27 1 022 782
38 152
25 1 209 297
48 718
Exports include cathode, blister and concentrates. The mass shown is that of metal and contained metal
DEVELOPMENTS IN AFRICA
In the Democratic Republic of Congo (DRC), Anvil Mining is set to complete the $400 million Kinsevere Stage II
Project Solvent Extraction and Electro-Winning (SX-EW) plant which is expected to produce 60 kt/a of LME-grade
copper cathode. The company will be seeking LME registration for its Kinsevere cathode. Also in DRC, Tiger
Resources developed the Kipoi project located to the northwest of Lubumbashi at the central part of Katanga
Copperbelt. The project hosts five known copper deposits, the Kipoi Central, Kipoi North, Kileba, Judeira and
Kaminafitwe. In May 2010, Tiger increased its copper resources at Kipoi Central from 439 kt Cu to 637 kt Cu and the
company is on track to reach full production capacity of 75 kt/a by 2012.
Konkola Copper Mines (KCM), a subsidiary of Vedanta Resource, a London-based company, is set to invest $172
million in a new copper treatment plant with the capacity to produce 50 kt/a of refined copper. The project is located
at the Nchanga mine on the Zambian Copperbelt at Chingola. The lifespan of the mine was estimated at 13 years.
OUTLOOK
In 2011, world copper mine production is forecast to increase by 4 percent to 16.8 Mt supported by expanding
production in Africa, Chile, Peru and Brazil. In 2012, world copper mine production is forecast to increase by 7 per
cent to 17.9 Mt underpinned by higher production in Chile, Indonesia and Peru.
Copper production in Africa is expected to increase by 14 percent in 2011 to 1.5 Mt, underpinned by the
expansion at Anvil Mining‟s Kinsevere operation (60 kt/a) and the commissioning of Tiger Resources‟ Kipoi
project (35 kt/a), both in the DRC. Copper mine production is forecast to increase by a further 7 percent to 1.6 Mt
in 2012 as these operations approach full capacity. In South Africa, copper production is expected to remain
stable.
89
In Chile, copper mine production in 2011 is projected to increase by 6 percent to 5.8 Mt. Two new mines,
Antofagasta‟s Esperanza project (195 kt/a) and Vale‟s Tres Valles project (18, 5 kt/a) are scheduled to start up in
2011. In addition, several expansions are expected at existing mines, including Codelco‟s Andina (70 kt/a),
Xstrata‟s Collahuasi (350 kt/a), Codelco‟s Gabriela Mistral (20 kt/a) and Vale‟s Saloba (520 kt). In 2012, Chile‟s
copper mine production is forecast to increase by 5 percent to 6.1 Mt, as the expansions and new mines mature to
full capacity.
Also, Peru‟s copper mine production is forecast to increase by 4 percent to 1.3 Mt supported by an expansion at
the Antamina operation (45 kt/a). Peru‟s copper mine production is forecast to increase by a further 11 percent to
1.5 Mt in 2012. This reflects the commissioning of Southern Copper‟s Rio Blanco project (191 kt/a) and an
expansion at their Cuajone operation (72 kt/a).
World refined copper production is forecast to increase by 2 percent to 19.6 Mt in 2011 and by a further 4 percent
to 20.4 Mt in 2012. Over the next two years, most new projects will be based on solvent extraction –
electrowinning (SX–EW) technology.
In 2011, world copper consumption is expected to increase by 4 percent to 19.8 Mt. This will be mainly due to an
increase in demand in both developed and developing economies as manufacturing and housing construction
expand in particular in China and OECD economies. World copper consumption is forecast to increase by a
further 3 percent in 2012 to 20.4 Mt, as manufacturing activity and housing construction continue to grow.
LME copper prices are expected to rise to an average of $8 814/t in 2011. In 2012, the copper price is forecast to
increase by 5 percent to an average of $9 271/t as the market is expected to be in deficit fuelled by the Japanese
rebuild.
REFERENCES
1. http://www.abareconomics.com: Australian commodities, June quarter 2011.
2. International Copper Study Group: Press Release.
3. London Metal Exchange (LME).
4. U.S Geological Survey, 2010. Mineral Commodity Summaries, January 2010, pages 48 and 49.
5. http://www zambian-economist.com
6. http://www.commodities-now.com/reports/metals-and-mining/1832-2009-base-metals
7. World Bureau of Metal Statistics, Yearbook 2011
90
LEAD
L E Pitso
WORLD SUPPLY
Global lead mine output increased by 7.8 percent to 4 140 kt in 2010 compared with 2009 (Table 1), owing
mainly to an increase in production in China as a result of new mines coming on stream. China remained
the world‟s largest producer, accounting for 44.7 percent of the world‟s total output in 2010, followed by
th
Australia‟s 14.1 percent, USA‟s 9 percent and Peru‟s 6.3 percent. South Africa was ranked 24 , accounting
for 1.2 percent.
TABLE 1: WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF LEAD, 2010
RESERVES¹
COUNTRY
Mt
Australia
Canada
China
India
Ireland
Mexico
Morocco
Peru
South Africa*
Sweden
USA
Other
TOTAL
28
9
36
X
2
1
4
3
1
20
36
140
%
PRODUCTION
Rank
20
6.4
25.7
1.4
0.7
2.9
2.1
0.7
14.3
25.7
100
2
1
4
7
8
5
6
8
3
-
kt
%
583
65
1 851
97
38
182
30
260
751
73
372
538
4140
14.1
1.6
44.7
2.3
0.9
4.4
0.7
6.3
1.2
1.8
9.0
12.9
100
2
EXPORTS
Rank
2
9
1
7
10
5
14
4
10
8
3
-
kt
464
133
24
41
192
48
304
37
72
77
1127
2519
2
%
18.4
5.3
0.9
1.6
7.6
1.9
12.1
1.5
2.9
3.1
44.7
100
Rank
1
5
25
11
24
13
2
14
12
15
-
Sources: 1. USGS, April 2011
2. ILZSG, July 2011
Note: X Not specified, but estimates have been included in Other
Similarly, world refined lead production increased by 6.5 percent to 9 577 kt in 2010, according to the
International Lead and Zinc Study Group. China continued to be the dominant lead metal producer,
recording an increase of 11.3 percent to 4 199 kt. Regional lead metal production was dominated by Asia,
which accounted for 57.9 percent, followed by the Americas‟ 21 percent and Europe‟s 17.7 percent,
(Figure 1). Africa accounted for 1.1 percent, with South Africa leading at 56 kt, 3.4 percent lower than in
2009, due to an increase in export sales of lead in concentrates.
FIGURE 1: REFINED LEAD PRODUCTION BY REGION IN 2010
Other
Europe
3%
18%
Asia
58%
Americas
21%
Sources: USGS, April 2011
ILZSG, July 2011
91
WORLD DEMAND
Eighty percent of lead is consumed in lead batteries which are used in automobiles, emergency systems
such as hospitals, as well as in industrial batteries found in computers and fork lift trucks. Rolled and
extruded products account for 6 percent of consumption, alloys for 5 percent, pigments and other lead
compounds and ammunition for 3 percent each, while cable sheathing accounts for one percent, (Fig 2).
FIGURE 2: END USES OF LEAD
Batteries
3%
2%
5%
3%
Cable sheathing
6%
1%
Rolled and Extruded Products
Shot/Ammunition
Alloys
80%
Pigments and other
compounds
Sources: ILZSG
Global lead metal consumption increased by 7.1 percent from 8 932 kt in 2009 to 9 563 kt in 2010. China,
at 4 213 kt, which was 7.3 percent higher than in 2009 remained the dominant consumer. Regionally Asia
remained the leading lead metal consumer, with a 7.7 percent increase to 5 837 kt recorded in 2010, (Fig
3). Asia was followed by the Americas at 20.6 percent and Europe at 17.2 percent. China showed a strong
recovery after a relatively subdued performance in 2009, recording a 34 percent growth in the automotive
original equipment sector and a 23 percent growth in the replacement sector. In addition, e-bikes batteries
sales grew by 9.5 percent and battery exports increased by 37 percent.
FIGURE 3: REGIONAL LEAD METAL CONSUMPTION IN 2010.
Europe
17%
Other
1%
Americas
21%
Sources:
Asia
61%
ILZSG, July 2011
USGS, April 2011
92
Xstrata‟s Mount Isa Mine has announced plans to sustain the future of its operations through expanded
mining and concentrate production, while phasing out copper smelting at Mount Isa and copper refining
operations in Townsville by the end of 2016.
Xstrata plans to expand existing mining operations in north Queensland and potentially develop new mines
at Mount Isa and the broader region in the future. This would include the continuation of lead smelting and
the expansion of port facilities in Townsville. Xstrata holds large mineral resources at Mount Isa, which
includes 587 Mt of zinc and 416 Mt of copper (measured, indicated and inferred). These resources are
potentially accessible through expanded underground and open pit operations, and concept studies into
development of these substantial known mineral resources are progressing.
Xstrata is currently investing A$463 million to expand its Mount Isa zinc-lead mining operations with four
significant development projects currently under construction, and a further A$300 million of potential
expansions under evaluation. This includes the A$274 million George Fisher Mine expansion that will
increase production by 1 Mt to 4.5 Mt by 2013, and the A$113 million Black Star Deeps open pit expansion
to extend its life of mine to 2016
PRICES
The average lead cash settlement price in 2010 was $2 165.10/t, an increase of 0.8 percent compared with
2009. The minimum lead cash settlement price was recorded in June at $1 704.17/t and then rose slowly
to reach the maximum of $2 411.85/t in December (Fig 4).The rise in price during the second half of 2010
was stimulated by growth in the gap between the three months price and cash price on the LME (cotango)
which encouraged companies holding lead stocks to deliver to the LME.. Despite the rise in stocks, prices
were firmer throughout the last quarter of 2010 and beginning of 2011. In March 2011 prices were at their
highest level of $2 720.06/t since April 2008.
FIGURE 4: LEAD CASH SETTLEMENT PRICES (MONTHLY AVERAGE) IN 2010-2011
3000
2500
Prices
2000
1500
1000
500
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
0
Month
Sources:
Metal Bulletin, Jan 2011 – Dec 2011
Fry‟s Metals, 2011
International Lead and Zinc Study Group
SOUTH AFRICA
South Africa‟s lead mine production increased by 4.1 percent to 51kt in 2010 compared with 49 kt in 2009,
principally because of the higher grade of ore mined. Export sales increased by 20.1 percent to 53 kt
(Table 2). No local sales were recorded as all lead concentrate output is exported.
93
TABLE 2: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF LEAD, 2001–
YEAR
PRODUCTION
LOCAL SALES
EXPORT SALES
Mass
Mass
kt
51
50
40
37
42
48
42
46
49
51
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
5 949
4 882
339
-
Value (FOR)
R‟000
22 147
22 923
1 284
-
R/t
3 716
4 782
3 789
-
kt
50
41
44
31
47
46
37
50
44
53
2010
Value (FOB)
R‟000
92 825
88 833
108 600
120 599
211 458
313 232
492 678
612 042
482 903
696 738
R/t
1 862
2 214
2 470
3 895
4 497
6 809
13 315
12 180
11 002
13 123
Notes:
- No local sales recorded
OUTLOOK
According to the International Lead and Zinc Study Group (ILZSG), world lead mine production is expected
to rise by 7.8 percent in 2011 and a further 6.2 percent in 2012 driven by increased output from China,
India and Mexico as well as new capacity from mines being opened in Tajikistan and Uzbekistan. Global
refined lead metal production is forecast to increase by 7.3 percent to 10.34 Mt in 2011, largely because of
commissioning of new plants in China as well as increased capacity from India, Korea, Germany and
Australia. China will add a total of 360 kt of new capacity, with Chinese output anticipated to grow by 8.6
percent in 2011. In 2012, global refined lead metal production is expected to increase by 3.1 percent to
10.7 Mt, driven by capacity increases in a number of countries including China and India.
Global demand for refined lead metal is expected to increase by 5.5 percent in 2011 to exceed 10 Mt for
the first time. The main drivers behind a rise in world demand for refined lead metal will be an increase in
Chinese apparent usage, while Japan reductions will be compensated by a consequence of increases in
Australia, China, Germany, the Republic of Korea the United States after sharp reductions in 2009. It is
expected that global supply of refined lead metal will exceed demand by 123 kt in 2011.
Prices have remained highly volatile reflecting swings in investor sentiment and risk for assets. The
average lead cash settlement price is expected to reach $2 690/t in 2011 and it is believed that this trend
will continue until the first quarter of 2012. This is mainly because, since the economic recovery, investors
are looking to invest in other metals, because of the lead price trends that indicate conflicting signals in the
market, and are therefore, unpredictable However prices are forecast to increase further by 2013, owing to
expectations of an improving macroeconomic climate and a more significant deficit in the lead market.
South Africa‟s lead mine is expected to increase by 5.2 percent mainly due to expansion program at Black
Mountain, including the sinking and equipping of a vertical shaft down to 1750 m and is anticipated to
extend the life of Black Mountain to past 2013.
REFERENCES
1.
International Lead and Zinc Study Group, Monthly Bulletin on Lead and Zinc Statistics, July 2011
2.
International Lead and Zinc Study Group, Session/Forecast, April 2011
3.
International Lead and Zinc Study Group, October Session, Press Release
4.
htt://www.metalbulletin.com
5.
U.S. Geological Survey, 2011 Mineral Commodity Summaries, April 2011: Internet Website, htt://www.usgs.gov
6.
www.basemetals.com
7.
CRU Group March 2011
94
NICKEL
M Ikaneng and L Ramane
WORLD SUPPLY
World nickel reserves amounted to 76.14 Mt in 2010. Australia has the world‟s largest nickel reserves
accounting for 31.5 percent, followed by Brazil‟s 11.4 percent, New Caledonia‟s 9.3 percent and Russia‟s
th
7.9 percent. South Africa accounts for 4.9 percent of world reserves and is ranked in 8 position (Table 1).
TABLE 1: WORLD NICKEL RESERVES AND MINE PRODUCTION, 2010
Country
kt
Australia
Botswana
Brazil
Canada
China
Colombia
Cuba
Dominican Rep
FYROM
Greece
Indonesia
Madagascar
New Caledonia
Phillippines
Russia
*
South Africa
Venuzuela
Other
Total
Source:
FYROM:
Na:
2010
2009
24000
490
8700
3800
3000
1600
5500
960
Na
Na
3900
1300
7100
1100
6000
3700
490
4500
76 140
Reserve
percent
31.52
0.64
11.43
4.99
3.94
2.10
7.22
1.26
0.00
0.00
5.12
1.71
9.32
1.44
7.88
4.86
0.64
5.91
100
#
Rank
1
14
2
7
9
10
5
13
6
11
3
12
4
8
14
kt
Mine Production
percent
Rank
170
22.1
52.5
158.4
79.6
49.4
65.4
0
22.3
16.1
203.3
0
129.9
186.4
274.1
*39.96
11.7
56.74
1 537.9
1 364.3
11.1
1.4
3.4
10.3
5.2
3.2
4.3
0.0
1.5
1.0
13.2
0.0
8.4
12.1
17.8
2.6
0.8
3.7
100.0
4
13
9
5
7
10
8
Na
12
14
2
Na
6
3
1
11
15
#
World Metal Statistics Yearbook 2011
* DMR, Mineral Economics Directorate
Former Yugoslav Republic of Macedonia
not available / not applicable
According to the World Metal Statistics Yearbook, world nickel mine output increased by
13 percent to 1.54 Mt in 2010 compared with 1.36 Mt in 2009, driven by higher demand (Table 1). Russia
was the largest producer accounting for 17.8 percent of world output, followed by Indonesia‟s 13.2 percent,
Philippines‟s 12.1 percent and Canada‟s 10.3 percent.
Global refined nickel production increased by 14.5 percent to 1.52 Mt in 2010, compared with 1.33 Mt in
2009 (Table 2). China, at 25.4 percent, was the world‟s largest producer of refined nickel, followed by
Russia‟s 16.4 percent and Japan‟s 10.9 percent. South Africa contributed 2.6 percent to the global refined
nickel production.
95
TABLE 2: WORLD REFINED NICKEL PRODUCTION, 2010
Country
Refined production
kt
percent
Australia
Brazil
Canada
China
Colombia
Cuba
Finland
Japan
New Caledonia
Norway
Russia
#
South Africa
UK
Other
2010
2009
TOTAL
Source:
#
108
28.7
105.4
386.5
49.4
31.4
49.2
166.1
40
92.2
249.2
39.96
28.9
144.1
1 519.1
1 326.9
7.1
1.9
6.9
25.4
3.3
2.1
3.2
10.9
2.6
6.1
16.4
2.6
1.9
9.5
100.0
Rank
4
12
5
1
7
11
8
3
9
6
2
10
12
DMR, Mineral Economics Directorate
WORLD DEMAND
The stainless steel industry is the largest nickel consumer, accounting for 66 percent of the global nickel
output. The demand for nickel is directly associated with the stainless steel industry, since nickel is an
essential component in its hardening. World crude stainless steel output increased by 24.8 percent to 30.7
Mt in 2010, compared with 24.6 Mt in 2009. China accounted for 36 percent of crude stainless steel
production, followed by Asia excluding China while Western Europe and Africa accounted for 25 percent
(Fig 1).
FIGURE 1: REGIONAL STAINLESS STEEL PRODUCTION, 2010
Western Europe
and Africa
25%
China
36%
The Americas
9%
Central and
Eastern Europe
1%
Source:
Asia excluding
China
29%
International Stainless Steel Forum, 2010
World demand for nickel increased by 15.8 percent to 1.51 Mt in 2010 compared with 1.31 Mt in 2009,
owing to higher demand from the stainless steel industry and the automotive industry for the manufacture
of electric and hybrid vehicles batteries. China, at 37 percent, remains the largest consumer of nickel,
followed by Japan and the United States at 11.7 and 7.9 percent respectively.
PRICES
Nickel prices started increasing early in the year reaching its highest level since the first half of 2008 in
April. The average annual price of nickel increased by 49 percent to $21 803.8/t in 2010, compared with
$14 633.2/t in 2009, on the back of stronger demand.
96
FIGURE 2: MONTHLY AVERAGE NICKEL PRICES, 2009 – 2010
30000
25000
$/t
20000
15000
10000
5000
0
Prices started increasing from March 2009 reaching $22.454/t by March 2010, 132 percent higher than the
previous year (Fig.2). The rising trend continued until April 2010 when prices peaked at
$26 025/t; thereafter prices dropped until June 2010 when they fell to $19 383/t, in response to soaring
inventories in China and other major consuming countries. Prices then rebounded and gradually increased
in the third and fourth quarters, reaching $24 107/t in December 2010, following the completion of destocking activities by major consuming countries.
GLOBAL PROJECTS / DEVELOPMENTS
The Goro Project in New Caledonia was acquired by Brazilian iron ore and nickel giant CVRD after a
successful $19 billion takeover of Vale Inco last year. Vale Inco had a 69 percent stake in the Goro Project,
while Sumic Nickel Netherlands and the three provinces of New Caledonia own 21 and 10 percent
respectively. The project was scheduled to commence in 2008 but it was re-scheduled to January 2010,
with production expected to start by April. It was, however, delayed yet again after a problem occurred with
an autoclave used in high-pressure acid leaching. The project has been extended three times due to
environmental opposition and mounting costs. Consequently the project is nearly $2 billion over budget
and two years behind schedule. The expected annual capacity of the Goro Nickel project is 60 kt of nickel
and no timelines for commissioning have been set and full production is not expected before 2013.
Vale has opened its first nickel operation in Brazil at Onça Puma, in the southeast of Pará State. The plant
is one of the largest ferronickel production plants in the world, with an annual production capacity of 220 kt
of ferronickel, containing 53 kt of nickel. Total estimated investment in Onça Puma is approximately $2.84
billion.
Ravensthorpe mine in Western Australia was closed down by BHP Billiton in January 2009, due to
difficulties in exploiting the nickel laterite deposit and the plunging prices of the metal following the
economic recession. However, First Quantum Minerals hopes to get the troubled Ravensthorpe nickel
mine operating within 18 months, after formally taking control of the site. The Canadian copper miner took
control of the mine in February 2010, after receiving government approvals. Over the next year the
company will work on modifying the plant and spend approximately six months to commission and ramp-up
the mine at a cost of $190 million. Annual average production for the first five years is expected to be 39 kt.
In Africa URU Metals, the exploration and development company has established a joint venture with
Southern African Nickel (SAN), which is developing a portfolio of large scale nickel projects in southern
Africa. The first drilling results on two of its nickel targets have confirmed the presence of potentially large
disseminated nickel resources in South Africa. URU Metals has agreed to provide funding of up to US$3.6
million to facilitate project development activities to earn an initial effective interest of 50 percent in the joint
exploration venture. Its exploration has mainly focused on the Zebediela and Burgersfort nickel projects in
South Africa. The results of the first phase of drilling are satisfactory and the drilling campaign is still in
progress.
97
Nkomati Nickel Mine has completed its upgrading of the 100 kt/m plant to a 250 kt/m plant. This is part of
the Phase Two Nkomati Nickel Large Scale Project. The project commenced in July 2010 and was
commissioned at the end of October 2010, two months ahead of schedule. The total funds already
committed to this expansion project amount to R3.3 million and the overall budget is R3.7 million. This
roject has created 593 new jobs over the period of four years.
SOUTH AFRICA
About 72 percent of South Africa‟s nickel output is produced as a by-product of platinum-group metals
(PGMs) and copper mining. The balance is produced at Nkomati Nickel mine in Mpumalanga, the only
primary nickel producer. South African nickel production increased by 15.5 percent to 40 kt in 2010
compared to 34.6 kt in 2009, as a result of increasing output at the Nkomati Nickel mine (Table 3).
TABLE 3: SOUTH AFRICA‟S PRODUCTION AND SALES OF NICKEL, 2001 – 2010
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Production
Mass
kt
36.4
38.5
40.8
39.9
42.4
41.8
37.9
31.7
34.6
40.0
Mass
kt
22.2
22.6
24.0
25.0
20.3
25.6
15.5
6.7
9.0
7. 3
Local sales
Value
Unit Value
R‟000
R/t
1 102 557
49 648
1 579 025
69 868
1 647 992
68 666
2 139 682
85 587
1 909 468
94 062
4 154 730
162 294
3 724 689
240 303
1 151 894
171 924
949 855
105 539
1 073 290
147 168
Mass
Kt
14.3
15.9
16.1
17.8
22.2
18.2
21.4
23.5
27.3
33.1
Export sales
Value
R‟000
707 130
1 060 113
1 081 275
1 513 381
2 013 553
2 620 855
5 599 739
4 103 711
3 251 353
4 911 462
Unit value
R/t
49 466
66 674
67 160
85 021
90 701
144 003
261 670
174 626
119 097
148 522
The local sales volume decreased by 18.9 percent to 7.3 kt, while revenues generated from local sales
rose by 13 percent to R1.07 billion compared to 2009, despite lower sales volumes. Export volumes and
revenues increased by 21.2 and 51.1 percent to 33.1 kt and R4.9 billion respectively. The boost in both
local and export revenues can be attributed to higher nickel prices.
OUTLOOK
World mine nickel production is expected to rise by 10 percent in 2011, which could lead to an over
supplied market for the next two years. The world refined nickel production is forecast to increase by 10.4
percent in 2011 and 9.6 percent in 2012, as new projects begin to come on stream. Higher nickel
production is expected from Canada, Brazil and the Asia–Pacific region, while increased refined output is
expected from Canada and China.
After three years of decline, world nickel demand is forecast to remain strong, increasing by 9.5 percent by
2012. This growth will be supported by the manufacture of stainless steel for use in infrastructure
development and consumer durables, particularly in developing economies. Stainless steel output is
expected to increase by 5 to 6 percent by 2012, based on strong end-user demand. World nickel
consumption is forecast to increase by 8 percent to 1.6 Mt and increase by a further 5 percent in 2012. The
forecast growth will be driven by strong growth in stainless steel production in China, and in developed
economies such as the Unites States, European Union and Japan.
The global economy recovered slowly in 2010, creating concerns over a double-dip recession. Nickel
prices also fluctuated owing to the volatile global economy. In the first half of 2011, nickel prices averaged
at $26 283/t, but the high production from Canada‟s operations and Brazil‟s Onca Puma mine could place
a downward pressure on nickel prices for the remainder of 2011. The expected market excess could put a
downward pressure on prices, which could decline by 7 percent to $22 895/t in 2012. However, prices are
expected to recover by 2013 when the market would have been brought back to equilibrium.
Consequently, South Africa‟s production of nickel is expected to rise due to the Nkomati Nickel Expansion
Project, which plans to increase its production from 9.7kt to 20.5 kt by 2013. Since South Africa‟s nickel
industry is dominated by exports, this will boost revenue.
98
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
African Rainbow Minerals Annual Report, 2010
http://bloomberg.com
International Stainless Steel Forum, 2011
Metal Bulletin
The International Nickel Study Group
Australian Commodities, June quarter 2011
99
TITANIUM
L Maphango
WORLD SUPPLY
In 2010, global titanium mineral concentrates production, commonly referred to as titanium dioxide
feedstock, increased by 8.6 percent to 6.3 Mt compared with 2009, as producers ramped up output to
respond to increasing demand (Table 1). The world‟s largest feedstock producer in 2010 was Australia with
an output of 1.35 Mt, followed by South Africa‟s 1.25 Mt, Canada‟s 0.70 Mt and China‟s 0.60 Mt. Although
titanium dioxide feedstock production growth has been robust and close to capacity during 2010, it has not
been sufficient to satisfy increasing demand.
TABLE 1 – WORLD RESERVES AND MINE PRODUCTION OF TITANIUM CONCENTRATES, 2010
COUNTRY
Australia
Canada
China
India
Mozambique
Norway
South Africa
Ukraine
USA
Vietnam
Other
TOTAL 2010
2009
Mt
118.0
31.0
200.0
92.4
16.4
37.0
71.3
8.4
2.0
1.6
111.9
690.0
730.0
RESERVES
%
17.1
4.5
29.0
13.4
2.4
5.4
10.3
1.2
0.3
0.2
16.2
100.0
Rank
2
8
1
3
9
7
4
10
12
13
-
PRODUCTION*
kt
%
1 350
21.4
700
11.1
600
9.5
440
7.0
352
5.6
320
5.1
1 250
19.8
357
5.7
200
3.2
410
6.5
321
5.1
6 300
100.0
5 800
Rank
1
3
4
5
8
9
2
7
10
6
-
Sources: USGS, January 2011, p 175
Notes: *TiO2 content of ilmenite and rutile
In early 2010, titanium dioxide pigment inventory levels were at record lows as a result of destocking during
the recession and post recession periods. As the year progressed producers ramped up production in an
attempt to satisfy increasing demand and restocking to normal and seasonal levels. Nonetheless, market
demand proved resilient as it has been stronger than envisaged and, therefore, inventory levels still
remained lower than anticipated. To take advantage of the bullish market fundamentals in the titanium
minerals industry, producers are entering into short-term supply contracts.
The world economic slowdown which intensified in the last quarter of 2008 together with derailments in the
production of high-titanium content aircrafts such as A380 and B786 resulted in a sudden drop in titanium
sponge metal demand and consequently production. Global titanium sponge production decreased by 2.9
percent to 132 kt in 2010 compared with 2009, due mainly to delays in aircraft construction triggered by
sluggish economic conditions. Titanium sponge capacity greatly exceeded demand in 2009 and 2010
causing prices to fall and prompting producers to delay further expansions, idle some of the plants and
close smaller marginal plants.
WORLD DEMAND
The production of TiO2 white pigment is the main driver of titanium dioxide feedstock consumption,
accounting for about 91 percent of total consumption followed by titanium metal (5 percent) and the
remaining 4 percent for other uses. The stronger than anticipated demand led to market tightness, which
supported higher prices for feedstock.
The paint and coatings industry is the largest consuming market for titanium dioxide pigment, contributing
56 percent to global consumption, followed by plastics (24 percent), paper (9 percent), specialties (9
percent) and rubber (2 percent), (Figure 1).
100
Titanium dioxide pigment production capacity has been lagging behind the rebound in demand, creating a
supply deficit. Titanium dioxide pigment prices were largely depressed in 2010 due to a weakness in
automotive markets and other TiO2 pigment end user products. The TiO2 pigment market has been in
deficit since the end of 2010 on the back of strong growth in consumption and supply which is struggling to
keep pace with the demand. TZMI, an Australian consultancy, describes the global TiO 2 sector as more
buoyant than at any other time in the last ten years. High TiO 2 pigment prices are also supported by low
pigment inventory levels and current production capacity which is very close to market demand. The strong
demand for titanium minerals is driven mainly by the growth in emerging economies, led by China.
FIGURE 1: GLOBAL CONSUMPTION OF TITANIUM DIOXIDE PIGMENT BY SECTOR
Rubber, 2%
Specialities, 9%
Paper, 9%
Coatings, 56%
Plastics, 24%
Source: Industrial Minerals No.520 Jan 2011
Titanium metal is still not used in the entire spectrum of potential applications, mainly due to its high cost of
production relative to other metals such as aluminium and steel. The high cost inhibits titanium from
competing with other metals in applications, such as the automotive, construction, maritime and defence
industries. Industry experts estimate that the market for titanium metal is limited to about 5 percent of its
potential size, which equates to about 200 kt per annum. However, there is promising research that is
currently being undertaken by various countries to find a more efficient metallurgical solution to convert
enriched ilmenite or rutile into titanium metal.
PRICES
Titanium dioxide feedstock prices were almost stable during 2010 (Fig. 2). The annual average price of
ilmenite (min 54% TiO2) was A$74/t in 2010, representing a decline of 14 percent compared with 2009,
while rutile (min 54% TiO2) averaged A$756/t in 2010, 2 percent more than the previous year. A rebound in
the titanium mineral industry from the beginning of 2011 has seen both rutile and ilmenite prices
skyrocketing to unprecedented levels, due to strong demand that has been outstripping supply. Ilmenite
prices surged from a monthly average of A$70/t in December 2010 to A$130/t in July 2011, representing
an increase of 85.7 percent. Rutile climbed by 14.8 percent from A$762 in December 2010 to A$875/t in
July 2011.
101
FIGURE 2: METAL BULLETIN PRICES FOR RUTILE AND ILMENITE, 2009 - 2011
135.00
900.00
125.00
860.00
740.00
95.00
700.00
85.00
660.00
75.00
620.00
65.00
580.00
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Ilmenite Price (A$/t)
780.00
105.00
Rutile Price (A$/t)
820.00
115.00
Month-Year
Ilmenite concentrate (min 54% TiO2)
Rutile concentrate (min 95% TiO2)
DEVELOPMENTS IN SOUTH AFRICA AND AFRICA
Exxaro Resources has given a go-head to its Fairbreeze mineral sands project in Richards Bay, KwaZuluNatal. The project had been put on hold in 2009 due to lower prices as a result of the financial turmoil. The
mine will cost about R2.4 billion and construction is expected to begin as soon as the environmental and
water licenses are approved. The mine, which is expected to produce approximately 500 kt of ilmenite and
60 kt of zircon per annum, will start producing in the third quarter of 2013. Fairbreeze mine will replace
Exxaro‟s Hillendale mine in KwaZulu-Natal, which is expected to close by the end of 2013. During the
construction phase about 1 000 temporary jobs and more than 50 permanent jobs will be created, in
addition to the employees who will be absorbed from the Hillendale mine. The commissioning of
Fairbreeze mine will save about 1 000 jobs, which would otherwise be lost.
In September 2011, Exxaro Resources announced its plans to amalgamate its heavy mineral sands
operations with that of Tronox, a US-based pigment company, to form an integrated mine-to-processing-topigment producer. Exxaro would own 38.5 percent of the shares in the newly formed Australian holding
company, New Tronox, through its disposal of Namakwa Sands and KZN Sands mines and smelters, as
well as its 50 percent stake in the Tiwest joint venture in Australia. This transaction would make Exxaro the
major shareholder in New Tronox. According to Exxaro CEO, Mr Sipho Nkosi, the transaction could bring
investment in a new greenfield pigment plant to South Africa as market conditions in the titanium industry
improve further. The establishment of a pigment facility in South Africa should be seriously investigated in
order for the country to reap maximum benefits from the exploitation of its titanium resources, considering
that the pigment industry consumes about 95 percent of global mine output of titanium-bearing minerals.
This would be in line with the Beneficiation Strategy of South Africa to beneficiate its mineral resources.
The South African government, through the Industrial Development Corporation (IDC) and National
Empowerment Fund together with Magnesium and Metals, an American and Russian consortium, and
Rare Earth Metals Industry (RMI) have completed a R40 million pre-feasibility study of the titaniumzirconium plant which would be the world‟s first integrated metals plant that would produce titanium,
zirconium, vanadium, magnesium and silicon. According to RMI, part of the pre-feasibility study was aimed
at identifying alternative sources of power supply to Eskom. The company indicated to Mining Weekly that
the construction of a cogeneration plant to feed the plant‟s electricity requirements is under consideration.
102
The entire project will require an investment of R15,3 billion and 4 500 jobs could be created during the
construction of the plant and about 2 500 permanent employees will be employed. A decision to proceed
with the project is expected to be taken by the first quarter of 2012. The Bankable Feasibility Study (BFS)
is the next phase of the project and will cost about R320 million with the projected completion date of
around the end of 2012. It is expected that the titanium-zirconium plant will produce its first metals in the
second quarter of 2015. When operating at full capacity it will produce an estimated 15 000 t/y of titanium,
2 000 t/y of zirconium, 8 000 t/y of silicon plus derivative products.
The South African government has identified the development of the titanium metal industry as a strategic
economic driver. The Department of Science and Technology (DST) has established the Advanced Metals
Initiative (AMI) and the Advanced Manufacturing Technology Strategy (AMTS) with the aim of developing
an internationally competitive titanium metal industry in South Africa, through extensive research
innovation and commercialisation. The titanium initiative focuses on both the primary titanium metal
production and further downstream fabrication of the metal. The Council for Scientific and Industrial
Research (CSIR), tasked by the DST, is currently conducting research and development of the CSIR-Ti
process, which is a cost-effective alternative to the industrial Kroll batch-process.
The CSIR-Ti process will produce titanium metal powder in a continuous process from titanium
tetrachloride. This process substantially reduces the energy requirements and costs of production. Further
cost reduction would also result from powder metallurgy, which allows the use of near-net-shape (NNS)
technology in downstream fabrication of titanium metal. Industry experts have estimated a 50 percent
reduction in manufacture and processing costs. The CSIR-Ti process is being scaled-up, with the ultimate
goal of commercialisation by 2014. Other research initiatives at the CSIR include titanium investment
castings, powder metallurgy and selective laser sintering.
Kenmare Resources of Ireland is currently expanding its existing Mamo mineral sands mine in
Mozambique, which is located in the northern province of Nampula. Expansion of Mamo includes the
upgrading of the main process plant, which is expected to significantly improve efficiency in production
capacity. The expansion, when completed, will increase current ilmenite production capacity by 50 percent
to about 1.2 Mt per annum, with associated increases in rutile and zircon production. Construction, which is
currently under way, is expected to be completed by the end of 2011.
Base Resources is developing the Kwale mineral sands project in Kenya, 40 km south of Mombasa, with
an estimated development cost of $256 million. An enhanced definitive feasibility study was completed in
April 2011, which projected that Kwale could operate for 13 years. Construction of the mine is planned to
commence in the fourth quarter of 2011 and commissioning is expected in the last quarter of 2013. The
mine has planned annual capacity of 330 kt of ilmenite, 80 kt of rutile and 40 kt of zircon. The mine is
expected to become one of the world‟s leading producers of ilmenite and rutile, and it is estimated that its
production could reach 10 percent and 14 percent, respectively, of the total world output.
Mineral Deposit Limited (MDL) has raised A$137 million in equity in a joint venture with Eramet Titanium &
Iron to develop its Grande Cote mineral sands project in Senegal, 50 km north of Dakar. The mine, which
is projected to have a mine life of at least 20 years, is expected to produce about 85 kt per year of zircon
and 575 kt of ilmenite, as well as small amounts of rutile and leucoxene. Confirmation of whether
construction, which was expected to commence in the third quarter of 2011, has indeed commenced could
not be secured at the time of writing. The first production is expected in late 2012 or early 2013.
OUTLOOK
Prices of rutile and ilmenite are expected to increase significantly before peaking in late 2012 and early
2013. Strengthening demand for titanium dioxide pigment together with supply constraints could lead to
feedstock producers gradually increasing prices over the next two years, as they are shying away from
long-term contracts. Bulk prices for titanium dioxide feedstock rutile are forecast to increase by 13 percent
from an annual average price of A$756/t in 2010 to an average of A$855/t in 2011, and reach an average
of A$1 000/t in 2012. Average price of titanium dioxide feedstock ilmenite is expected to increase by 50
percent to A$111/t in 2011 compared with A$74/t in 2010.
Sustained low inventory levels of titanium dioxide pigment and increasing demand would lead to another
tight market in 2011 with prices expected to increase further. Higher prices of feedstock and titanium
dioxide pigment are expected to support investment in greenfield projects that would bring new sources of
raw material supply. Future investments are expected in Asia-Pacific, the Middle East and North America.
103
Expected increase in aircraft production will encourage growth in consumption of titanium metal from the
aerospace sector, with increasing titanium content per aircraft being the main driver of demand. Industrial
demand for titanium metal outside the USA and North America will increase at about 9 percent per annum
and the commercial aerospace market in North America and Europe will rise at about 8 percent per
annum, on condition that the delayed development of A380, B787 and A350 aircrafts are brought up to
speed and the pace of manufacturing the B737 is increased. The realisation of a technological
breakthrough in low-cost production of titanium metal would trigger a greater demand for titanium in
existing applications and also open up opportunities for a quantum of new applications.
Successful commercialisation of South Africa‟s CSIR-process, which is a cost-effective alternative to the
industrial Kroll batch-process, would add impetus and encourage further development of the local titanium
industry across the entire spectrum of titanium value chain.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
Industrial Minerals publications, 2010 -2011.
Metal Bulletin, Prices, 2009 – 2011.
U.S. Geological Survey, Mineral Commodity Summaries, Titanium, 2011.
Mining Weekly, “Moma project advancing timeously””, http://miningweekly.com, March 2011.
“Grand Cote Mineral Sands Project in Senegal”, http://www.mineraldepostit.com, June 2010.
Mining Weekly, “Sand Storm”, http://www.miningweekly, March 2011.
Mining Weekly, “Enhanced study show stronger Kenya mineral sands project”, http://www.miningweekly.com, May 2010.
Mining Weekly, “Decision on $2.1bn titanium, zirconium project pending”, http://www.miningweekly.com, March 2010.
Mining Weekly, “Exxaro in new mineral sands transaction”, http://www.miningweekly.com, September 2011.
104
Zinc
L. E. PITSO
WORLD SUPPLY
In 2010 world zinc mine production rose by 6.2 percent to 12 273 kt compared with 11 352 kt in 2009
(Table 1). China at 3 700 kt remained the dominant world zinc producer, followed by Peru at 1 469 kt and
Australia‟s 1 458 kt.
TABLE 1:
WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF ZINC, 2010
RESERVES¹
COUNTRY
Mt
%
China
Peru
Australia
USA
Canada
India
Kazakhstan
Mexico
Ireland
Namibia
South Africa*
Other
Total
92
20
80
90
31
x
35
25
x
x
15
72
460
20.0
4.3
17.4
19.6
6.7
7.6
5.4
3.3
15.7
100
Sources:
Notes:
PRODUCTION
Rank
kt
1
3
7
2
5
4
6
8
-
%
3 700
1 469
1 458
751
649
740
459
570
343
209
36
1 889
12 273
2
EXPORTS
Rank
30.1
11.9
11.9
6.1
5.3
6.0
3.7
4.6
2.8
1.7
0.3
15.4
100
kt
1
2
3
4
6
5
8
7
9
10
25
-
43
1 258
1 532
764
737
435
314
206
07
3004
8 300
%
0.5
15.2
18.5
9.2
8.9
5.2
3.8
2.5
0.1
36.2
100,0
2
Rank
14
2
1
4
3
7
5
21
24
-
1. USGS, February 2010
2. ILZSG, July 2011
*DMR, Directorate Mineral Economics
X
Not specified, but estimates have been included in Other
Similarly, world refined zinc production increased by 13.6 percent to 12 825 kt from 11 287 kt in 2009.
Refined zinc output increased in most of regions, except in Oceania and Africa where production declined
by 3.6 percent and 1.1 percent, respectively. Asia, at 7 862 kt, remained the dominant region, followed by
Europe‟s 1 992 kt and the America‟s 1 812 kt.
CONSUMPTION
In 2010, global refined zinc consumption was dominated by China, accounting for 42.6 percent. Total metal
consumption was up by 15.9 percent to 12 564 kt from 10 836 kt in 2009. Consumption increased in all
regions with Asia being the major consumer at 63.3 percent, followed by Europe‟s 20 percent and the
Americas‟ 13.6 percent (Fig 1). Africa accounted for 1.4 percent of world zinc production, with South Africa
still the largest consumer at 92 kt, representing an increase of 19.5 percent in 2010 compared with 2009.
South Africa‟s zinc usage increase was mainly driven by the Medupi Power Station in Lephalale. By June
2010, the project was already at construction phase, where zinc was used for galvanizing.
105
FIGURE 1: REGIONAL CONSUMPTION OF REFINED ZINC 2010
Others
3.1%
America
13.6%
Europe
20%
Asia
63.3%
Source: International Lead and Zinc Study Group Monthly Bulletin, Jan 2009-April 2010
USGS, February 2010
The principal use of zinc is protecting steel against corrosion by galvanising, which accounted for 50
percent of zinc consumption in 2010. Other important markets were: alloying (17 percent), brass and
bronze (17 percent), semi-manufacturers and chemicals industry (6 percent) each and in other minor
markets, which accounted for the remaining 4 percent, (Fig 2).
FIGURE 2: ZINC END USES, 2010
4%
6%
6%
Galvanising
17%
50%
Zinc alloying
Brass and bronze
Zinc semi-manufactures
Chemicals
17%
Other
Source: International Lead and Zinc Study Group
PRICES
In January 2010, prices commenced at monthly average of $2 376/t, prices then declined to a monthly
minimum of $1 741/t in June, then surged again to $2 280/t in December 2010 (Fig. 3). The average
London Metal Exchange (LME) zinc cash settlement price was $2 161/t in 2010, an increase of 30.3
percent compared with $1 506.22/t in 2009.
106
FIGURE 3: LME ZINC CASH SETTLEMENT PRICES (MONTHLY AVERAGES), 2010
3000
Prices US$/t
2500
2000
1500
1000
500
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
0
Month-Year
Sources: Zincor, 2010
International Lead and Zinc Study Group Monthly Bulletin, Jan 2010- August 2011
Inventories of refined zinc metal held in LME warehouses reached their highest level in seven years,
totalling approximately 740 kt in December 2010. The market was oversupplied and high stock levels were
recorded, particularly in China where stocks held in the Shanghai Future Exchange (SFE) totalled 374 kt,
the highest since the contract was launched four years ago. High stock levels affected prices during 2010,
as prices fell in accordance with rising stocks. However, prices recovered and in the last quarter of 2010
and the first quarter of 2011, traded within a tight range of between $2 400/t and $2 500/t, despite further
increase in inventories.
SOUTH AFRICA
South Africa‟s zinc mine production increased by 28.6 percent to 36 kt in 2010 compared with 2009 (Table
2), because of higher zinc grades mined in 2010, while refined zinc metal output decreased by 1.2 percent
to 85 kt. Due to the planned closure of the Zincor refinery, South Africa contained started exporting zinc in
concentrates. South Africa‟s exports of zinc contained in metal concentrates amounted to 3 649 kt in 2010.
Revenue from export sales amounted to R43.4 billion.
TABLE 2: SOUTH AFRICA‟S PRODUCTION AND SALES OF ZINC METAL IN CONCENTRATE 2001–
2010
LOCAL SALES
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources:
Notes:
PRODUCTION
Mass
kt
t
56
58
40
31
31
33
30
27
22
31
61
64
41
32
32
34
31
29
28
36
Value (FOR)
R‟000
278 101
290 799
121 906
107 630
144 752
133 500
428 959
221 725
170 925
279 821
R/t
4 943
4 985
3 050
3 415
4 640
4 444
14 114
8 150
7 603
9 054
DME, Directorate Mineral Economics
- No export sales recorded
107
EXPORT SALES
Mass
kt
3 649
Value (FOB)
R‟000
43 392 898
R/t
11 892
Refined zinc metal sales volumes also declined by 4.3 percent in 2010 to 89 kt compared with 93 kt in
2009, because of the planned closure of Zincor refinery (Table 3). Revenues generated from refined zinc
sales increased by 14 percent to R 1.5 billion due to the increased local average unit value, which
increased by 20 percent to R 17 000 driven by higher LME prices.
TABLE 3:
SOUTH AFRICA‟S PRODUCTION AND SALES OF REFINED ZINC 2001- 2010
LOCAL SALES
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Sources:
Notes:
PRODUCTION
kt
109
111
113
105
104
90
101
82
86
85
Mass
t
89
95
86
91
103
99
98
97
93
89
Value (FOR)
R‟000
667 062
797 929
596 361
627 081
895 122
2 134 192
2 492 122
1 651 370
1 317 995
1 505 861
R/t
7 495
8 399
6 934
6 900
8 643
21 558
25 430
17 024
14 152
17 000
EXPORT SALES
Mass
kt
23,0
18,3
27,6
16,1
1,7
-
Value (FOB)
R‟000
173 627
149 914
164 948
108 550
12 506
-
R/t
7 517
8 192
5 976
6 711
7 485
-
DME, Directorate Mineral Economics
Include imported refined zinc
FOR Gauteng
- No export sales recorded
Sterlite Industries (India) Limited a subsidiary of Vedanta Resources plc, a diversified and integrated
metals and mining group, completed the acquisition of a 74 percent interest in Black Mountain Mining from
Anglo Operations Limited, for a share value of $260 million. Sterlite also replaced the shareholder loan of
$88 million, taking the total consideration paid for Black Mountain to $348 million. The acquisition included
the Black Mountain zinc mine and the Gamsberg zinc project.
Vedanta announced the proposed acquisition of Anglo American's global zinc assets for a cash
consideration of $1.34 billion, on an attributable, debt and cash free basis. Anglo American‟s global zinc
assets consisted of Skorpion mine in Namibia (100 percent), Lisheen mine in Ireland (100 percent) and
Black Mountain Mines (74 percent), which included the Black Mountain mine and the Gamsberg project in
South Africa. Vedata acquired the Skorpion zinc mine in December 2010, for a cash consideration of
approximately $707 million. The process of acquiring the Lisheen mine is in progress.
Tight conditions in credit markets have made funding for the re-opening of the Pering mine, situated 140
km north of Kimberley near Reivilo, difficult. BHP Billiton closed the mine in 2002 and Minero opted to buy
it in 2007. Minero carried out a feasibility study and planned to build a 5 Mt/a dense media separation
(DMS) plant and a 1.5 Mt/a concentrator plant in two phases. The plan was to commission the process
plant which will also produce 28 000 t/a lead and 32 000 t/a in the second quarter of 2012.
Exxaro Resources announced the closure of the Zincor refinery by the end of September 2011 because
the company could not find a potential investor to buy the assets. This followed an announcement that the
company made in 2009 to strip its zinc assets, which also included a 50.04 percent stake in the Rosh
Pinah mine, a 26 percent stake in the Black Mountain and Gamsberg projects, as well as a 22 percent
interest in a zinc smelter in China. The Zincor refinery continued to operate under financial losses despite
interventions to get it onto a sustainable financial performance level. The closure of the Zincor will affect
employment and Exxaro announced that it would try to accommodate approximately 800 affected workers
at other Exxaro operations. The company will consider retrenchment in November, if it cannot
accommodate all the affected employees. The company started the consultation process as required by
the labour law in July 2011.
108
Xstrata Zinc announced the commencement of construction to develop the high grade zinc-lead-silver Lady
Loretta deposit in north-west Queensland, Australia, as a new greenfield underground mine. Work has
already commenced to develop the decline, underground services and surface infrastructure at the value
of A$246 million ($239 million). The mine, which is 140 km north-west of Xstrata Zinc‟s Mount Isa
operations, is planned to be operational by the end of 2013. Xstrata Zinc acquired the remaining 25
percent stake in the project in April 2011 and assumed sole ownership of the project. Lady Loretta contains
a total mineral resource estimated at 13.7 Mt, with 17 percent zinc and 6 percent lead grade. Lady Loretta
will produce 1 Mt/a of zinc-lead-silver ore and an annual average of 126 kt of zinc in concentrate and 40 kt
of lead in concentrate over its 10 year mine life. Ore will be treated at Mount Isa‟s processing facilities.
Xstrata Zinc recently approved an incremental expansion of the Handlebar Hill open cut zinc-lead mine 20
km north of Mount Isa. The expansion will extend the current open pit to access an additional reserve of
2.4 Mt of ore, extending the life of the mine until 2013. The mine will produce an additional 88 kt of zinc
and 22 kt of lead from this expansion.
OUTLOOK
According to the International Lead and Zinc Study Group (ILZSG), global zinc mine production is
anticipated to increase by 4.3 percent to 12.77 Mt in 2011, driven mainly by increases in China, India,
Kazakhstan, Mexico and Russia, which will offset declines in Peru and Australia. In 2012, world mine
production is anticipated to increase by a further 4.8 percent to 13.37 Mt. This growth will be driven by the
expected continued growth in China, India and Russia as well as a recovery in Peru and projected
additional capacity in Burkina Faso, Canada, Saudi Arabia and Uzbekistan.
Global refined zinc metal production is forecast to increase by 2.7 percent to 13.16 Mt in 2011 and a
further 2.4 percent in 2012 primarily driven by increases in India, China and Korea. Additional refining
capacity is expected from Shaanxi, Hunan, Sichuan, Jiangxi, and Yunnan provinces and are forecast to
result in a 9.2 percent increase in Chinese production. In India, additional output will come from large new
refineries at Rajpura Dariba. ILZSG expects the supply of world refined zinc metal to exceed demand in
both 2011 and 2012. A surplus of 317 kt is forecast in 2011, and an excess of 135 kt is expected in 2012.
Global zinc consumption is expected to increase by 7 percent to 13.4 Mt in 2011 and by a further 5 percent
in 2012. This growth will be driven by increased consumption in China, and to a lesser extent, India and
the developed economies.
Zinc prices are anticipated to increase by 11 percent to average $2 385/t in 2011, supported by strong
consumption growth and the emergence of a zinc carry trade. In 2012, zinc prices are forecast to increase
by a further 5 percent to $2 513/t sustained by growing consumption which is set to surpass production.
Considering Exxaro Resource‟s decisions to permanently close Zincor refinery will result in no production
of refined zinc in South Africa in 2012. South Africa has already started to export its zinc concentrates,
mainly to the Far East. This will have a negative impact on the South African government drive to create
jobs as well as plans to beneficiate the county‟s minerals.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
International Lead and Zinc Study Group, Monthly Bulletin on Lead and Zinc Statistics, July 2011
International Lead and Zinc Study Group, October Session/Forecast, 2010
International Lead and Zinc Study Group; April session/Forecast; April 2011
International Lead and Zinc Study Group, October Session/ Press Release, September 2011
U.S. Geological Survey, 2010 Mineral Commodity Summaries, July 2011: Internet Website, htt://www.usgs.gov
www.xstrata.com/annual/report/2010
http://www.miningweekly.com/article/exxaro-warns-of-job-losses-as-it-shuts-zincor-refinery-2011-07-29
http://www.businesswire.com/news/home/20110207007120/en/Sterlite-Industries-India-Limited-Announces-Completion-Acquisition
109
ZIRCON
L Maphango
WORLD SUPPLY
In 2010, world production of zircon increased by 1.8 percent to 1 185 kt compared with 2009 (Table 1).
Zircon supply could have been higher but was affected by China‟s clampdown on substandard practices at
zircon processing plants. Australia and South Africa were the leading producers of zircon, with outputs of
481 kt and 390 kt, respectively. The two countries together contributed about 73.5 percent to global
production.
TABLE 1 – WORLD RESERVES AND MINE PRODUCTION OF ZIRCON CONCENTRATES, 2010
RESERVES
COUNTRY
Australia
Brazil
China
India
Indonesia
South Africa
Ukraine
USA
Other
TOTAL 2010
2009
Source:
Mt
23.0
2.2
0.5
3.4
na
14.0
4.0
3.4
5.0
55.5
56.0
PRODUCTION
%
41.5
4.0
0.9
6.1
na
25.2
7.2
6.1
9.0
100.0
Rank
1
6
7
4
na
2
3
4
kt
481
18
140
31
60
390
35
na
30
1 185
1 164
%
40.6
1.5
11.8
2.6
5.1
32.9
3.0
na
2.5
100.0
Rank
1
7
3
6
4
2
5
na
USGS, 2011, p 191
WORLD DEMAND
According to Roskill, global consumption of zircon rebounded strongly to 1.33 Mt in 2010. The growth in
ceramics output, particularly in China but also in other emerging economies such as Brazil, India and Iran,
was the main driver of demand. A significant proportion of zircon consumed in 2010 was supplied from
inventory that was stockpiled by heavy mineral sands mines during the 2008/9 recession and also from the
run-down of inventories by consumers. Various sources estimated China‟s zircon consumption at between
600 Mt and 650 Mt in 2010.
FIGURE 1: ZIRCON CONSUMPTION BY SECTOR
Foundry
12%
TV glassOther
3% 2%
Refractory
13%
Ceramics
54%
Zirconia & Zr
Chemical
16%
Source: Industrial Minerals May 2011
110
The principal use of zircon is in ceramics as an opacifier in floor tiles, sanitaryware, and tableware.
Ceramics remained the largest consuming sector of zircon (Fig. 1), accounting for 54 percent of global
consumption, followed by zirconia and zirconium chemicals (16 percent), refractory (13 percent), foundry
(12 percent), TV glass (3 percent), and other uses (2 percent).
PRICES
In 2010, the annual average price of zircon decreased by 1.8 percent to A$839/t compared with 2009. After
declining from a monthly average of A$887/t in January 2010 to A$830/t in February, zircon prices
remained constant at this level until August (Fig. 2). Zircon prices began rising in the second half of 2010,
reaching A$845/t in December, due to zircon demand outstripping supply as Chinese imports rose by more
than 50 percent to 0.7 Mt in 2010 compared with 2009. The rising trend continued in 2011 and prices
reached an all-time high of A$1 650/t in June.
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
1800.00
1600.00
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
Jan-10
A$/t
FIGURE 2: PRICE FOR FOUNDRY GRADE ZIRCON, FREE ON BOARD AUSTRALIA, 2010 – 2011
Months
Source: Metal Bulletin, 2010 - 2011
RECENT DEVELOPMENTS
In South Africa, Exxaro Resources has taken a decision to proceed with its Fairbreeze mineral sands
project near Richards Bay, KwaZulu-Natal. The mine will cost about R2.4 billion and construction is
expected to begin as soon as the environmental and water licences are approved. The mine, which is
expected to produce approximately 60 kt of zircon and 500 kt of ilmenite per annum, will start producing in
the third quarter of 2013. During the construction phase about 1 000 jobs will be created. More than 50
permanent jobs will be created post construction, in addition to the employees who will be absorbed from
the Hillendale mine.
The South African government through the Industrial Development Corporation (IDC) and National
Empowerment Fund together with Magnesium and Metals, an American and Russian consortium are
planning to develop a titanium-zirconium plant, which will be the world‟s first integrated metals plant that
will beneficiate titanium, zirconium, vanadium, magnesium and silicon. The entire project will require an
investment of R15,3 billion and 7 000 jobs could be created in the construction and in the operation of the
plant.
Kenmare Resources of Ireland is currently expanding its existing Mamo mineral sand mine in Mozambique.
Construction, which is currently under way, is expected to be completed by the end of 2011. The
expansion, when completed, will increase current ilmenite production capacity by 50 percent to about 1.2
Mt per annum, with associated increases in rutile and zircon production. Base Resources is developing the
Kwale mineral sands project in Kenya. Production is expected to commence in the third quarter of 2013.
The mine has a projected annual capacity of 40 kt of zircon, 330 kt of ilmenite and 80 kt of rutile. Mineral
Deposit Limited (MDL) and Eramet Titanium & Iron are developing Grande Cote mineral sands project in
111
Senegal. The mine which is expected to produce about 85 kt per year of zircon and 575 kt of ilmenite will
commence production in early 2013.
In Australia, Sheffield Resources has appointed TZMI, a leading mineral sands consultancy, to undertake
scoping studies on its North Perth Basin HMS projects. The studies are expected to commence towards
the end of 2011. Iluka Resources has announced its plans to resume its mothballed HMS mining and
processing operations at Eneabba in the North Perth Basin. Mining at Eneabba is expected to resume at
the end of 2011 and processing will commence in the first quarter of 2012. The mine is expected to
produce about 25 Mt per year each of zircon and rutile.
OUTLOOK
According to Roskill, demand for zircon is projected to increase by 5.4 percent per annum from 2011 until
2015. Chinese demand for zircon is expected to increase by approximately 125 Mt in 2011. Development
of mineral sands deposits with higher zircon contents such as those in Victoria and South Australia, will
receive greater attention going forward, as demand for zircon has outpaced that for titanium over the last
decade.
New production from mining projects, which have completed feasibility studies and have secured funding,
are not expected to contribute to new supply for another two or three years. According to Industrial
Minerals, new zircon production capacity will only offset declining production from existing mining
operations. Therefore, production of zircon is forecast to remain almost unchanged for the foreseeable
future. Consequently, prices are expected to remain strong until 2014.
The high prices of zircon will attract more investment in the heavy mineral sands sector. The outlook for
South Africa‟s heavy mineral sands industry is very positive as it stands to benefit immensely from the
buoyant market conditions. Therefore, the economic viability of South Africa‟s Fairbreeze mineral sands
project will be greatly enhanced.
REFERENCES
1.
2.
3.
4.
5.
IM International Mining, “Project News (129), July 2008
Industrial Minerals, “Zircon substitution: myth or reality”, May, 2011
Metal Bulletin, various articles, 2010 -2011.
Roskill, “Zirconium: Global Industry markets and outlook, 13th edition 2011”, http://www.roskill.com
U.S. Geological Survey, Mineral Commodity Summaries, Zircon, January 2011
112
FERROUS METALS AND MINERALS - OVERVIEW
Mpumzi Bonga & Mokgadi Mashale
INTRODUCTION
South Africa is the world‟s largest producer of chromium and vanadium ores and the 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 metals. Sales of primary ferrous minerals contributed
R60.7 billion (20.1 percent) to total South African mineral sales (primary & processed)-(Table- 1). Sales of
processed and primary ferrous minerals contributed R86.9 billion (38.7 percent) to total mineral exports in
2010 and the combined sales revenue of primary and processed ferrous minerals amounted to R100.2
billion, representing 33.2 percent of the total value of all primary and processed minerals sold.
Ferrous mineral ores were produced at some 40 mines and as value added ferro-alloys at 23 metallurgical
works during 2010. Over the last decade, increasing proportions of the production of chromium,
manganese and vanadium ores have been processed to value-added alloys whereas the bulk of the
growth in iron ore production has been exported.
Demand for ferrous minerals depends on the steel production where over 80 percent is consumed.
According to the World Steel Association (WSA), world crude steel production amounted to 1 414 Mt in
2010, an increase of 16 percent compared with 1 220 Mt in 2009. China continued to dominate steel
output, recording an increase of 11 percent to 626.7 Mt in 2010.
After a sharp decline in production since the last quarter of 2008, world crude steel output started to
improve from April 2009 and has continued to increase since then (Fig 1). Production for the first and
second quarters (Q1 & Q2) of 2010 increased by 29 and 27 percent respectively, when compared to the
same period in 2009. The main growth occurred in Asia, with China and Japan increasing their output by
11 and 25.2 percent respectively. South Africa‟s annual output increased by 0.01 percent to 7.6 Mt almost
unchanged when compared with the 7.5 Mt produced in 2009.
China continued to increase its imports of ferrous ores in 2010. Vanadium and ferrovanadium prices
increased significantly owing to recovery in demand. In 2010, the ferrovanadium prices increased by 20
percent to $29.4/kg and vanadium pentoxide prices increased by 8.7 percent to $6.6 /lb. Ferrochrome
prices rose by 41 percent to $1.2/lb compared with $0.85/lb in 2009, owing to stainless steel manufacturing
recovery. Prices increased rapidly in the second half of 2010. After a sharp decline in 2009, manganese
prices increased by 38 percent to $7.33/mtu in 2010 compared with $5.32/mtu in 2009, while prices of
manganese alloys increased by 25.6 percent to $5 035.8/t compared with $4 009.58/t in 2009.
Iron ore prices determination changed from an annual benchmark system to a quarterly system in 2010,
which is believed to have caused iron ore prices to fluctuate, causing a great concern to steel producers.
The new price system is said to take various factors into account including the spot market price, ore
quality and adjustment for freight rate differentials.
A confluence of factors including world economic recovery in steel manufacturing resulting from stronger
demand, higher commodity prices continued to accelerate growth of South Africa‟s primary and processed
mineral industry. Local sales volumes of processed minerals decreased by 5.4 percent while local sales
revenues increased by 17.7 percent as a result of higher local unit values and despite the stagnant growth
in steel production.
113
FIGURE 1: WORLD MONTHLY CRUDE STEEL PRODUCTION, 2004-2011
140000
Growth=0.01%pa
130000
PRODUCTION (TONS)
120000
Recovery
110000
World Financial Crisis
100000
90000
Strong Chinese Demand
80000
US Recession
Jun-11
Mar-11
Dec-10
Sep-10
Jun-10
Mar-10
Dec-09
Sep-09
Jun-09
Mar-09
Dec-08
Sep-08
Jun-08
Mar-08
Dec-07
Sep-07
Jun-07
Mar-07
Dec-06
Sep-06
Jun-06
Mar-06
Dec-05
Sep-05
Jun-05
Mar-05
Dec-04
Sep-04
70000
MONTH-YEAR
Source: World Steel Association, monthly statistics; Website, http//wolrdsteel.org
In order to retain market share in the rapidly expanding market for ferrous minerals in the Far East, South
Africa‟s two largest iron ore producers have expanded their operations. The expansions have seen iron ore
output increasing from 55.3 Mt/a to 61 Mt/a in 2010 to meet the growing global demand. Transnet is going
ahead with its plans to upgrade the Orex rail line and port infrastructure at Saldanha Bay. Capacity was
expected to increase to more than 60 Mt by 2010/2011. The construction of the port of Ngqura, near Port
Elizabeth remains on track, while the state and industry are exploring the possibility of using the port as an
alternative to accommodate the extra iron ore tonnages that may exceed the capacity of the upgraded
Orex-Saldanha route. Consideration is also being given to move manganese ore exports from the terminal
at Port Elizabeth to Ngqura due to limited capacity.
114
TABLE 1: SOUTH AFRICA‟S PRODUCTION AND SALES OF PRIMARY AND PROCESSED FERROUS
MINERALS, 2009-2010
COMMODITY
PRODUCTION
Year
Iron ore
Chrome ore
Manganese
Ore
Ore Subtotals
Chrome alloys
Manganese
Alloys
Silicon Alloys
Vanadium
Alloy
Subtotals
Ferrous
Totals
kt
LOCAL SALES
kt
R'000
EXPORT SALES
kt
R'000
TOTAL SALES
kt
R'000
2010
58 709
10 561
3 270 326
47 493
40 148 279
58 053
43 418 606
2009
55 313
8 369
1 888 801
44 550
25 242 934
52 919
27 131 735
2010
10 871
7 267
4 159 308
1 929
2 459 743
9 196
6 619 051
2009
6 865
4 855
2 066 278
1 035
1 196 051
5 890
3 262 329
2010
7 172
W
1 320 564
5 986
9 340 026
W
10 660 590
2009
4 576
W
583 602
3 976
5 003 011
W
5 586 613
2010
76 752
W
8 750 199
55 408
51 948 048
W
60 698 247
2009
66 754
W
4 538 681
49 561
31 441 996
W
35 980 676
2010
3 607
397
2 851 837
3 116
24 216 069
3 513
27 067 906
2009
2 346
432
2 252 973
2 621
15 881 599
3 053
18 134 572
2010
790
65
599 033
759
7 072 797
824
7 671 830
2009
393
68
597 822
413
3 624 742
481
4 222 564
2010
174
74
816 349
122
1 454 171
196
2 270 520
2009
149
67
751 442
82
1 101 314
149
1 852 756
2010
23
2
286 233
17
2 182 163
19
2 468 396
2009
14
2
266 968
12
1 360 352
14
1 627 320
2010
4 593
538
4 553 452
4 013
34 925 200
4 551
39 478 652
2009
2 902
569
3 869 205
3 128
21 998 007
3 697
25 867 212
2010
81 346
W
13 303 651
59 421
86 873 247
W
100 176 898
2009
69 656
W
8 407 886
52 689
53 440 003
W
61 847 889
SOURCE: DMR, Directorate Mineral Economics
W: Withheld
EMPLOYMENT
Employment in the ferrous mines continues to increase despite the economic crisis experienced during
2008 and early 2009. In 2010, employment increased by 27 percent to 39 448 from 31 003 in 2009 while
total remuneration increased by 37 percent to R6.5 billion and the average annual earnings increased by 7
percent to R165 382 per employee (Table 2) while productivity per employee was 2.1 kt, a decrease of 4
percent compared with 2009. Each employee generated about R2.5 million to the total revenue, a 25
percent increase compared with R2 million in 2009.
TABLE 2: SOUTH AFRICA‟S FERROUS MINES: EMPLOYMENT AND GROSS REMUNERATION 20062010
REMUNERATION
YEAR
EMPLOYEE
R'000
R'000/employee
2006
Number
22 016
1 919 137
87.17
2007
28 044
2 888 492
103.00
2008
30 726
3 923 861
128.70
2009
31 003
4 745 558
153.10
2010
39 448
6 523 971
165.38
115
OUTLOOK
Rampant inflation resulting from food and oil prices, volatile currencies and unstable markets flowing from
the seemingly intractable EU sovereign debt crisis and the stagnant US economy are expected to draw the
world closer to an economic Armageddon. However, such a situation can be averted if ongoing efforts to
resolve the EU debt crisis bear fruit and the pace of the US economic recovery improves. World ferrous
minerals markets, which have improved despite the aforementioned, are likely to improve further in the
near to mid- term, driven by rising demand for these commodities, particularly from emerging markets.
According to the World Steel Association, the world steel use is projected to increase by 6.5 percent in
2011, following a 15.1 percent increase in 2010. Furthermore, global steel demand is expected to grow by
5.5 percent in 2012.
Export volumes of ferrous ores are expected to be dominated by iron ore, which will account for 85 percent
of the total followed by manganese ore at 12 percent for the forecast period. Similarly, at 78 percent, iron
ore is expected to account for the largest share of total ferrous ore revenues between 2010 and 2016.
Total ferrous ore exports are projected to grow at 9 percent per annum over the forecast period, should
Transnet‟s plan to expand its rail and port infrastructure materialize.
According to processed minerals exports forecasts to 2016, exports revenues will be dominated by chrome
alloys, accounting for 88 percent of the share of the total earnings while vanadium alloys are expected to
contribute 8 percent. Exports of these alloys are projected to grow at 5 percent per annum over the
forecast period. However, the severity of the global economic slowdown is the key determinant to South
Africa‟s minerals exports and economic outlook as it is likely to determine the extent of the country‟s growth
slowdown, the rand‟s trajectory and the direction the interest and inflation rates are likely to follow. Despite
the fact that the central bank has forecast economic growth of 3.4 percent for 2011/2012, analysts are of
the view that this rate is far too optimistic, ignores the currently deteriorating world economic conditions
and feel it should be lowered to about 2.8 percent. Such conditions are likely to moderate the expected
ferrous minerals export growth rates.
Reference
1. Steel Guru report (2011)
2. The Tex report (2010-2011)
3. World Steel Association,2010
116
CHROMIUM
MC Mosiane & MD Mashale
INTRODUCTION
Chromium (chrome) is sourced exclusively from the mineral chromite (FeO.Cr2O3) which may contain
varying amounts of magnesium and aluminium which substitute the iron and chromium in the mineral‟s
spinel structure. South Africa‟s known chromite deposits occur in the Bushveld Complex which runs across
the provinces of North West, Limpopo and Mpumalanga. Chromium is the essential ingredient in the
production of stainless steel where more than 90 percent of global production is consumed in form of the
ferrochrome. The balance of consumption is spread across its use in the chemical, refractory and foundry
industries.
SUPPLY
The world‟s known chrome resources exceed 11 billion tons. South Africa‟s Bushveld Complex has the
largest resource amounting to 72.4 percent while the Great Dyke Zimbabwe is a distant second with 12.2
percent. At 4.2 percent, Kazakhstan the third largest chrome has resources, is the only country with
significant chromium resources outside of Africa (Table 1).
TABLE 3: WORLD CHROME ORE RESERVES, PRODUCTION AND EXPORTS, 2010
COUNTRY
RESERVES+
PRODUCTION+
EXPORTS+
Mt
%
Rank
kt
%
Rank
kt
% Rank
Australia
187
0.7
10
201
2.3
6
Brazil
14
0.4
6
762
2.9
5
77
0.9
8
China
280
1.1
9
3
0.0
9
Finland
41
1.1
4
583
2.2
6
India
27
0.7
5
3 800
14.5
2
476
5.5
4
Iran
351
1.3
8
351
4.1
5
Kazakhstan
320
8.7
2
3 703
14.1
3
765
8.9
3
Russia
0
0.0
10
South Africa*
3 100
84.6
1
10 871
41.5
1
1 929
22.3
2
‡
Turkey
2 207
8.4
4
2 230
25.8
1
Zimbabwe
140
3. 8
3
543
2.1
7
160
1.9
7
Other
24
0.7
2 888
11.0
2 448
28.3
TOTAL: 2010
3686
100
26 173
100
8 639
100
2009
18 497
5 956
Sources: + ICDA Statistical Bulletin, 2010 Edition
* DMR, Mineral Economics
‡
Reserves not available
Note: South African production and export data excludes chromite tailings accumulated over several years after extraction of
platinum-group metals from the UG2 reef.
Global production of chrome ore reached a record 26.2 Mt in 2010, an increase of 41.5 percent compared
with 2009, due to higher demand resulting from recovery in stainless steel manufacturing. South Africa
continued to dominate production, accounting for 41.5 percent of world chrome production (ore and
concentrates). India‟s 14.5 percent and Kazakhstan‟s 14.1 percent were a distant second and third place
respectively, followed by Turkey‟s 8.4 percent. Global exports of primary chrome ore increased by 45
percent to 8.6 Mt in 2010, and were dominated by Turkey which accounted for 25.8 percent, followed by
South Africa‟s 22.3 percent and Kazakhstan‟s 8.9 percent.
However, according to the South African Customs statistics, exports of chrome ore and concentrates
increased to 4.9 Mt in 2010, more than 200 percent higher than what has been reported to the Department
of Mineral Resources by licensed chrome miners in accordance with section 28 of the Minerals and
Petroleum Resources Development Act 28 of 2002. Total revenue from these exports increased to R8.2
117
billion, on the back of 53.6 percent higher unit values brought about by higher global additional chrome
prices. These Upper Group Two (UG2) ore exports were associated with recovery of chrome ore as a byproduct from the tailings of UG2 reef that is mined and processed for the recovery of Platinum Group
Metals (PGMs). This adjustment brings global chrome ore trade to 11.7 Mt, and South Africa accounts for
close to half of that figure.
World ferrochrome production reached 8.8 Mt in 2010, 47.9 percent higher than in 2009, due to higher
demand from stainless steel. South Africa continued to dominate world ferrochrome output in 2010 (Table
2). However, South Africa‟s share of world ferrochrome output declined to 40.8 percent while China and
Kazakhstan accounted for 25 percent (2 212 kt) and 12.1 percent (1 073 kt), respectively. Global
ferrochrome exports amounted to 5 595 kt, a 20.5 percent increase from the previous year. South Africa, at
55.7 percent, dominated global ferrochrome exports.
TABLE 4: WORLD FERROCHROME PRODUCTION AND SALES, 2010
COUNTRY
PRODUCTION+
EXPORTS+
kt
%
Rank
kt
%
Albania
23
0.3
12
24
0.4
Brazil
166
1.9
7
7
0.1
China
2 212
25.0
2
10
0.2
Finland
238
2.7
6
79
1.4
Germany
31
0.6
India
1 006
11.4
4
538
9.6
Kazakhstan
1 073
12.1
3
1 010
18.1
Russia
241
2.7
5
141
2.5
South Africa*
3 607
40.8
1
3 116
55.7
Sweden
71
0.8
9
45
0.8
Turkey
51
0.6
10
53
1.0
Zimbabwe
156
1.8
8
159
2.8
Other
3
0.0
381
6.8
TOTAL: 2010
8 847
100
5 595
100.0
2009
5 981
4 642
Rank
10
12
11
6
9
3
2
5
1
8
7
4
Sources: + ICDA Statistical Bulletin, 2010 Edition
* DMR, Mineral Economics
DEMAND
The International Stainless Steel Forum (ISSF) reported that the 2010 global stainless steel production
increased by 24.8 percent to a new record high of 30.7 Mt, compared with 24.6 Mt in 2009. This follows
three years of consecutive decline in stainless steel output mainly driven by a combination of stock cycles
and global economic crisis. Consequently, global ferrochrome consumption reached 8.3 Mt, exceeding the
previous record high of 7.6 Mt achieved in 2007. The recovery of the global stainless steel production is
associated with economic recovery, higher end-use demand, restocking by fabricators and also the refilling
of the internal supply chain in the stainless steel mills which alone is said to account for half a million tons.
Higher stainless steel production was driven by higher Asian production, which increased by 20.8 percent
to 8.6 Mt. Japan increased its stainless production by 31.5 percent to 3.4 Mt. Korea (22.1 percent) and
India (17.6 percent) also reached two digit growth rates while Taiwan‟s 3.2 percent remained flat. China‟s
output rose by 27.8 percent to 11.3 Mt in 2010. Asia including China now accounts for 65 percent of the
global stainless steel production (Figure 1). America‟s stainless steel production increased by 34.4 percent
to 2.6 Mt. South Africa accounted for 1.6 percent of global stainless steel production.
118
FIGURE1: REGIONAL STAINLESS STEEL PRODUCTION: 2010
Western
Europe/Africa
25%
China
36%
The Americas
9%
Asia excluding China,
29%
Central + Eastern
Europe
1%
Source: International Stainless Steel Forum
Chromium is consumed to produce three classes of stainless steel: martensistic , ferrictic and austenitic .
In contrast to the first two classes which contain little or no nickel, nickel is an essential ingredient of
austenitic grades.
PRICES
Ferrochrome prices averaged $1.2 per pound (50-55% Cr, US imported), 45 percent higher when
compared with $0.85/lb in 2009, mainly due to recovery in the stainless steel manufacturing. Prices started
rising in the second half of 2009 and peaked at $1.32/lb in second quarter of 2010 (Figure 3). During the
third quarter, ferrochrome prices declined to $1.22/lb and closed at $1.24/ lb in the last quarter of 2010.
FIGURE 3: QUATERLY FERROCHROME PRICES, 2009-2010
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Q1
Q2
2009
119
2010
Q3
Q4
GLOBAL DEVELOPMENTS IN 2009
The UG2 tailings treatment plant of Xstrata-Merafe and Lonmin is on track to be commissioned by 2013.
The joint venture has further approved the construction of Project Tswelopele, a new 600 kt per annum
chrome ore pelletising and sintering plant. Project Tswelopele will be constructed at the Rustenburg plant
and is also expected to be fully operational in 2013. The plant will agglomerate a potion of the UG2 tailings
from the Lonmin operations, significantly improving operational efficiencies and costs and delivering
environmental improvements. The expansion is expected to create 1 000 permanent jobs and employ 1
800 jobs during the construction phase.
Commissioning and first production is expected from the Lion Ferrochrome phase two projects by the first
half of 2013. The R700 million Magareng mine was opened in Steelpoort during the first quarter of 2011 to
ensure consistent supply of chrome to the new smelter.
The International Ferrometals (IFM)-Anglo Platinum treatment plant at Anglo Platinum‟s operations is
running three months behind schedule after a late start and delays at the site. IFM expects the first feed of
chrome concentrate from Anglo American Platinum in January 2012, to boost its own limited chrome ore
production.
European headquartered Tharisa plans to build a ferrochrome smelter in China using chrome ore from its
Rustenburg mine. A joint venture is said to have been formed with Faguan Chen‟s stainless steel company
Fujian Wuhang. The new $400-million smelter will receive its feed from Tharisa‟s chrome mine which is
expected to produce 140 kt of metallurgical grade chrome concentrate in the fourth quarter of 2012.
A ferrochrome project in India involving an initial investment of $35 million will be developed by Al Tamman
Indsil Ferrochrome; a 50:50 joint venture of India‟s Indsil Group and Oman‟s Muscat Overseas Group. The
150 kt per annum capacity ferrochrome facility will be established in two phases. In the first phase, two
smelters will be constructed with a total capacity of around 75 kt ferrochrome. Construction work on this
phase will commence at the end of 2011, and commissioning will take place sometime in 2013. The
company plans to double its capacity to 150 kt with the planned installation of two more smelters at an
additional cost of between $45 and $50 million.
South Africa‟s Assmang Limited is in a process of converting two of its ferrochrome furnaces to
ferromanganese furnaces. The ferromanganese conversion is expected to start during the first quarter of
2012. The decision was motivated by less attractive ferrochrome markets relative to the ferromanganese
markets.
SOUTH AFRICA
South Africa‟s chrome ore production amounted to 10.9 Mt in 2010, 58.4 percent higher compared with
2009 owing to recovery in demand (Table 3). At 9.2 Mt, total sales volumes of chrome ore were 56.2
percent higher compared with 2009. Total sales revenues amounted to R6.6 billion, increasing by 102.9
percent compared with 2009, on the back of higher volumes and market prices. Local sales volumes,
which were 49.7 percent higher than in 2009, accounted for 66.9 percent of total chrome ore sales
volumes, indicating higher levels of local ferrochrome production. However, this level of local sales was 10
percent lower than the average sales recorded in the five years preceding economic crisis. Revenue from
local sales doubled to R4.2 billion in 2010. Export sales volumes reported by primary chrome ore
producers were 86.4 percent higher, reaching 1 929 kt, while revenue increased by 56.3 percent to R2.5
billion.
120
TABLE 5: SOUTH AFRICA‟S CHROME ORE PRODUCTION AND SALES, 2001 – 2010
YEAR
PRODUCTION
kt
5 502
6 436
7 405
7 677
7 552
7 418
9 665
9 683
6 865
10 871
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
Mass
Value
kt
R' 000
4 598
625 023
5 300
786 979
6 334
976 690
6 743
1 368 846
6 128
1 468 521
6 384
1 802 385
7 389
2 346 982
7 116
4 131 019
4 855
2 066 278
7 267
4 159 308
Unit Value
R/t
136
148
154
203
240
282
315
581
426
572
Mass
kt
931
651
502
513
657
735
904
762
1035
1 929
EXPORT SALES
Value
Unit Value
R' 000
R/t
377 286
405
314 380
483
177 808
354
318 893
622
442 045
673
499 519
679
675 901
747
1 267 931
1 664
1 196 051
1 155
2 459 473
1 275
Source: DMR, Mineral Economics
South Africa‟s ferrochrome production increased by 53.8 percent to 3 607 kt in 2010 compared with 2009
(Table 4). However, local sales volumes decreased by 8.1 percent to 397 kt despite recovery in stainless
steel manufacturing, while export sales volumes increased by 18.9 percent to 3 116 kt. Local sales
revenues increased by 26.6 percent to R2.8 billion while revenue from export sales improved by 52.5
percent to R24.2 billion, owing to higher unit values resulting from higher market prices.
TABLE 6: SOUTH AFRICA‟S FERROCHROME PRODUCTION AND SALES, 2001 – 2010
YEAR
PRODUCTION
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
kt
2 141
2 351
2 813
3 032
2 802
3 030
3 561
3 269
2 346
3 607
LOCAL SALES
Mass
kt
169
211
301
484
358
353
395
334
432
397
EXPORT SALES
Value
R' 000
396 954
594 717
886 219
1 856 496
1 421 676
1 352 224
1 995 161
3 415 822
2 252 973
2 851 837
Unit Value
R/t
2 348
2 820
2 945
3 836
3 968
3 832
5 047
10 227
5 215
7 183
Mass
kt
1 944
2 199
2 640
2 646
2 480
2 581
2 972
2 525
2 621
3 116
Value
R' 000
4 630 104
6 117 255
7 658 552
10 109 639
9 923 290
10 370 421
15 534 184
28 355 767
15 881 599
24 216 069
Unit
Value
R/t
2 381
2 782
2 901
3 821
4 001
4 017
5 227
11 230
6 059
7 772
EMPLOYMENT
Employment in South Africa‟s chrome industry increased by 27.4 percent to 13 971 in 2010 (Table 5). The
total remuneration grew by 42.9 percent to R2.1 billion while average annual earnings per employee
increased by 12.1 percent to R149 011. Productivity per employee increased by 26.1 percent to 778 tons
while each employee generated an average of R2.7 million, 38.3 percent higher when compared with
2009.
121
TABLE 7: EMPLOYMENT IN SOUTH AFRICA‟S CHROME INDUSTRY, 2006 – 2010
YEAR
EMPLOYEES
2006
2007
2008
2009
2010
7 901
9 757
12 279
10 966
13 971
TOTAL REMUNERATION
R' 000
637 236
876 699
1 297 315
1 457 367
2 081 837
OUTLOOK
According to the International Stainless Steel Forum, demand is expected to grow by between 5 and 6
percent in 2012. Chrome ore and ferrochrome production volumes are expected to grow in tandem.
However, in order to meet anticipated growth in demand to avoid potential market tightness, and a possible
deficit beyond 2012, global ferrochrome production should grow at a much higher rate.
The global leader of ferrochrome supply, South Africa, is expected to have raised ferrochrome capacity by
360 kt per annum by 2013. However, this capacity and a few other ferrochrome projects from China and
India may not be enough to close the potential global supply deficit. Assmang‟s suspension of ferrochrome
capacity will further reduce South Africa‟s ferrochrome market share. South Africa must strive towards
recapturing its ferrochrome market share by raising capacity and reducing chrome ore exports, ore exports
reduce the potential for increased local value addition to ferrochrome to exploit the additional power supply
that is likely to arise from Eskom‟s expansion programme.
Global ferrochrome prices are forecast to trade at higher levels in 2011 due to the higher cost of sourcing
the required supplies to meet the demands from the expected increase in stainless steel production.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
International Chromium Development Association, News and Statistical Bulletin 2011
USGS Mineral Commodity Summaries, Chromium, January 2009
DMR Mineral Economics
www.dti.gov.za, Custom Statistics, accessed July 2010
www.worldsteel.org; accessed July 2010
www.sassda.co.za; accessed July 2010
International Stainless Steel Forum, August 2011
http://www.meraferesources.co.za/?page_id=90
http://main.omanobserver.om/node/64987
122
IRON ORE
MC Mosiane& K Ratshomo
INTRODUCTION
Iron ore is the key ingredient in crude steel manufacturing where nearly all of its production is consumed.
The recovery of the steel market during 2010 had a positive impact on iron ore demand. Global crude steel
production amounted to 1 414 million tons (Mt), 16 percent higher compared with 2009, marking another
world record since 2007, according to the World Steel Association.
GLOBAL SUPPLY
Global iron ore reserves are estimated at 87.4 billion tons (Bt). South Africa hosts 650 Mt of these
reserves, contributing 0.7 percent to the global reserves, according to the USGS. World iron ore production
reached a record 1.83 Bt in 2010, a 15 percent rise compared with 2009, on the back of higher crude steel
output (Table 1). An increase in iron ore production was recorded in almost all the major producing
countries, except in India, where output declined by 17.4 percent. Australia, at 432.8 Mt, led world iron ore
production accounting for 23.7 percent, followed by China‟s 315.8 Mt and Brazil‟s 315.4 Mt at second and
third place, respectively. South Africa, whose iron ore production amounted to 58.7 Mt, accounted for 3.2
percent of the total world output in 2010. The country‟s 47.7 Mt of exports contributed 4.4 percent to total
world iron ore exports. The “Big Three”, which represents the three world‟s largest iron ore producers, i.e.
Vale, Rio Tinto and BHP Billiton, together accounted for 35 percent of world production.
TABLE 8: WORLD IRON ORE RESERVES, PRODUCTION AND EXPORTS, 2010
COUNTRY
Australia
Brazil
Canada
China
India
CIS
South Africa*
Sweden
United States
Venezuela
Other
TOTAL: 2010
2009
RESERVE#
Mt
%
15 000
17.2
16 000
18.3
2 300
2.6
7 200
8.2
4 500
5.2
26 300
30.1
650
0.7
2 200
2.5
2 100
2.4
2 400
2.7
8 700
10.0
87 350
100
Rank
3
2
7
4
5
1
10
8
9
6
PRODUCTION+
Mt
% Rank
432.8
23.7
1
315.4
17.2
3
33
1.8
8
315.8
17.3
2
212.6
11.6
4
203
11.1
5
58.7
3.2
6
25.3
1.4
9
49.5
2.7
7
14
0.8
10
169
9.2
1 829
100
1 588
EXPORTS+
Mt
%
402.9
37.7
310.9
29.1
32.6
3.0
95.9
9.0
73
6.8
47.4
4.4
21
2.0
10.8
1.0
8.1
0.8
67.3
6.3
1070
100
955
Rank
1
2
6
3
4
5
7
8
9
Sources: + UNCTAD Trust Fund on Iron Ore, 2010 (production and exports)
# USGS, 2010 (Reserve – Iron content)
*DMR, Directorate Mineral Economics (except for Reserve Base)
- No exports
GLOBAL TRADE
The international iron ore trade reached a new record of 1 053 Mt in 2010, an increase of 12 percent from
2009 levels, due to higher demand driven by the recovery in the global economy. The iron ore seaborne
trade is estimated to have increased by 10.5 percent to 989 Mt percent in 2010, compared with 2009. The
increase was driven by increased steel production. Due to its bulk nature, iron ore is a major contributor to
dry bulk trade. The beginning of 2010 saw increased bulk trade and subsequently increased freight rates,
on the back of a recovery in commodity demand. The end of 2010 was characterised by an oversupply of
bulk commodities, surpassing the capacity of the existing fleet of vessels.
Iron ore exports grew by 11.4 percent to a record of 1.07 Bt, due to higher demand (Fig. 1). Australia and
Brazil were the leading exporters of iron ore at 402.9 Mt and 310.9 Mt, respectively, while India‟s 95.9 Mt
maintained the third spot despite a 17 percent decline compared with 2009.
123
FIGURE 1: GLOBAL IRON ORE EXPORTS BY REGION, 2010
450
400
Export Mass (Mt)
350
300
250
200
150
100
50
Africa
Asia
Year
Europe
Oceania
CIS
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
Americas
Source: Various
Global iron ore imports also reached a record level in 2010, growing by 6.3 percent to 1.67 Bt against 1.57
Bt recorded in 2009. Imports of iron ore rose in all importing regions, led by Asia, where imports grew by 6
percent to reach record levels of 864 Mt (Fig. 2). China was the leading importer at 619 Mt, despite a 1.8
percent decline compared with 2009. Korea‟s 56 Mt and Japan‟s 134 Mt imports increased by 34 percent
and 27 percent, respectively. European imports with the exclusion of the CIS increased by 40 percent,
reaching 134 Mt in 2010. Germany, France, Italy and the United Kingdom were the largest iron ore
importers in the Eurozone. America‟s iron ore imports amounted to 28 Mt, slightly more than twice the 13
Mt seen in 2009. At 6 Mt, Oceania was the smallest importer of iron ore, despite a 400 percent increase in
the region‟s imports in 2010. Developing countries accounted for almost two thirds of total iron ore imports
in 2010.
FIGURE 2: GLOBAL IRON ORE IMPORTS BY REGION, 2001-2010
1000
900
Import Mass (Mt)
800
700
600
500
400
300
200
100
Year
Africa
Asia
China
Oceania
Source: Various
124
Europe
CIS
Americas
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
GLOBAL PRICES
The year 2010 marked the end of the annual benchmark pricing system and the start of the new quarterly
pricing. Although some of the small mining companies maintained the annual pricing model, larger
companies such as Vale are said to have adopted the quarterly system, the details of which have not been
revealed. The introduction of the iron ore price index by Metal Bulletin and two other indexing institutions is
said to have brought some level of transparency in the benchmarking of global iron ore prices. China‟s iron
ore spot prices averaged $153/ton (CIF) in 2010, 82 percent higher than in 2009 (Fig. 3). Prices ranged
between $123/ton and $186/ton in 2010, improving against a range of $64 and $108 seen in 2009. Prices
of most different iron ore grades were 70 – 90 percent higher than 2009 prices.
FIGURE 3: IRON ORE SPOT PRICES, 2009 – 2010
210
190
Prices ($/t)
170
150
130
110
90
70
50
Month-Year
Source: CRU, 2008 – 2011
GLOBAL DEVELOPMENTS IN 2010
Additional iron ore mining capacity reached almost 90 Mt, 21 percent higher than new capacity brought on
stream in 2009 and almost equal to 2008 levels. There is a growing trend of backwards integration into iron
ore mining in the developing countries such as China and India. The trend is associated with the drive to
reduce the risk associated with lack of direct access to key input raw materials at reasonable costs.
In its quest to ensure long term security of supply, China is involved in a number of mergers and
acquisitions including exploration activities across the world. In Africa, Chinese iron ore exploration
activities have been reported from Algeria, Gabon and Liberia amongst others. Chinalco will acquire a 47
percent interest in a new joint venture with Rio Tinto, operating as Chinalco Rio Tinto Exploration Co Ltd
(CRTX), by providing $1.35 billion through sole funding of ongoing development work over the next two to
three years. In Madagascar, the Guangdong Foreign Trade Group and Jinxing International Holdings have
jointly acquired the Sulala project. Wugang has also acquired 21.5 percent of the MMX Group, which has
extensive iron ore assets in Brazil. Another Brazilian project with Chinese interests is the SAM project in
Minas Gerais. In Indonesia, Qingdao Luyang Xinda Trade Company has invested into an iron ore project.
Chinese investors are also said to have been studying Swedish projects.
Indian industry leaders are planning to reach production capacity of 400 Mt/a by 2020 to be able to support
the rapidly growing domestic demand from steel manufacturing. Expansion projects highlights include
NMDC‟s Kumaraswamy Blocks B&C, Donimalay, Bailadila Deposit 11B and Bailadila Deposit 13 mines
which will increase iron ore capacity by 27 Mt. SAIL‟s expansion projects will bring in additional capacity of
around 16 Mt of iron ore and 2 Mt of pellets capacity. Tisco‟s expansions will result in additional capacity of
11.5 Mt. The Indian government raised export taxes, from 15 percent to 20 percent on iron ore lumps and
to 5 percent on fines in 2010, in order to curb exports in support of domestic supply.
The Japanese government supported access of Japanese companies to overseas iron ore resources
through Japan Oil, Gas and Metals National Corporation (Jogmec). The Corporation will provide loans to
the value of 1.09 billion Japanese Yen to carry out a feasibility study of the Southdown magnetite project
125
on the southern coast of Western Australia and conclude a resource estimate of the Roper Bar project in
Northern Australia.
SOUTH AFRICA
South Africa‟s iron ore output increased by 6.1 percent to 58.7 Mt (Table 2).Total sales value grew by 60
percent to R43.4 billion on the back of higher volumes and prices. Local and export sales volumes grew by
26 percent and 7 percent to 10.6 Mt and 47.5 Mt, respectively. The corresponding revenues increased by
73 percent and 59 percent to R3.3 billion and R40.1 billion, respectively.
TABLE 2: SOUTH AFRICA‟S PRODUCTION AND SALES OF IRON ORE, 2001-2010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PRODUCTION
kt
34 757
36 484
38 085
39 322
39 542
41 326
42 083
48 983
55 313
58 709
Mass
kt
11 373
11 057
12 079
12 430
12 009
11 989
12 407
11 258
8 369
10 561
LOCAL SALES
Value
Unit Value
R' 000
R/t
684 202
60
1 009 107
91
1 060 635
88
1 145 600
92
1 272 795
106
1 395 219
116
1 749 498
141
1 974 628
175
1 888 801
226
3 270 326
310
Mass
kt
23 519
24 303
24 076
27 745
26 628
27 370
29 724
32 766
44 550
47 493
EXPORT SALES
Value Unit Value
R' 000
R/t
3 444 701
146
4 304 611
177
3 130 436
130
3 439 885
124
6 246 776
235
8 532 277
312
11 680 793
393
20 267 206
619
25 242 934
567
40 148 279
845
Source: DMR Mineral Economics
Kumba‟s long term strategy to produce 70 Mt of ore a year by 2019 is on track. Kolomela mine is
scheduled to start production by the end of 2012 and to ramp up to 9 Mt in 2013 and will provide
permanent employment for more than 800 people when it reaches full production in 2013. A total capital of
R8.5 billion has been invested in the project.
Project Phoenix will be replacing production at Thabazimbi mine, with a potential of 3.4 Mt capacity and the
Zandrivierspoort project could bring additional capacity of between 1 and 2.5 Mt. Sishen B Grade Project
will upgrade lower quality ore fines in a jig plant but implementation of this strategy is dependent upon
market conditions and expansion of rail and port capacity. There are talks to expand the Sishen-Saldanha
iron ore export channel from 47 Mt to 60 Mt. It is reported that the iron ore industry can more than double
output in the next ten years, creating 14,000 new jobs and uplifting Limpopo and the Northern Cape.
EMPLOYMENT
Employment in South Africa‟s iron ore industry was 32.7 percent higher than in 2009, while compensation
of employees was 39.5 percent higher (Table 3). However, productivity in terms of tons per employee,
declined by 20 percent to 3 223 t per employee but each employee generated R2.4 million in 2010, 20.6
percent higher compared with 2009 due to higher volumes and prices.
TABLE 3: SOUTH AFRICAN IRON ORE INDUSTRY‟S EMPLOYMENT AND REMUNERATION, 2006 –
2010
YEAR
2006
2007
2008
2009
2010
EMPLOYEES
8 848
13 858
13 256
13 727
18 216
Source: DMR Mineral Economics
126
TOTAL REMUNERATION*
R' 000
683 582
1 362 392
1 667 836
2 178 041
3 037 418
OUTLOOK
The International Monetary Fund (IMF) predicts a global economic growth of 4.3 percent in 2011 increasing
to 4.5 percent in 2012. Steel consumption is expected to grow more slowly in 2011 and 2012, increasing
by no more than 6 percent in both years, due to the expected lower steel production in China. Iron ore use
is expected to rise from 1.83 Bt in 2010 to about 1.91 Bt and 1.99 Bt in 2011 and 2012, respectively.
Growth in China‟s domestic ore supply is expected to slow down due to anticipated declining ore output.
The iron ore market has been moving towards a supply-demand balance with equilibrium only expected to
be reached in 2013. The market is expected to remain tight in 2011 and 2012, characterised by a gradual
rise in supply and demand. Prices are expected to decline slowly but, stay relatively high at a minimum of
$110-120/ton. The expected infrastructure development plans as well as the capacity expansion plans in
South Africa could lead to an increase in local iron ore output and further local beneficiation of the ore
through increasing steel production.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
USGS Mineral Commodity Summaries, Iron Ore, January 2009
DMR Mineral Economics, 2010
www.worldsteel0.org; accessed July 2010
The Iron Ore Market 2009 -2011, UNCTAD June 2010
Tex report, 2010
Steel guru, 2010
CRU Monthly Steel Raw Material
127
MANGANESE
Keneilwe Ratshomo
WORLD DEMAND
Over 90 percent of manganese ore and alloys is consumed in the steelmaking industry. Growth in
infrastructure activities across the world has been largely increasing the demand for steel, which in turn is
boosting the demand for manganese. World crude steel output increased by 16 percent to 1 414 Mt in
2010 compared with 2009, with all the steel producing regions experiencing an increase in production,
according to the Worldsteel Association (WSA). Asia‟s steel production increased by 12 percent compared
with 2009 driven mainly by China, which raised output by 9 percent. America‟s production increased by 28
percent, Europe‟s increased by 19 percent and Africa‟s increased by 16 percent.
Although Asia‟s contribution to the world steel production declined to 64 percent from 68.5 percent, the
region still dominated, followed by Europe‟s 22 percent and the Americas‟ 11 percent (Fig. 1).
FIGURE 1: WORLD STEEL PRODUCTION, 2001 – 2009
700
Production (Mt)
600
500
400
300
200
100
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
Year
Europe
Americas
Africa
Asia excl. China
China
Oceania
Source: WSA, 2001 – 2010
WORLD SUPPLY
Reacting to a substantial decline in demand for manganese ore, manganese mines reduced ore production
considerably in 2009. However, stronger demand resulting from the improving world economic conditions
forced producers to raise production in 2010. Consequently, world manganese ore production increased by
30 percent to 45.9 Mt in 2010 (Table 1), while ore exports increased by 33 percent compared with 2009.
China, at 37 percent, dominated ore production, followed by South Africa and Australia at 15.6 percent and
14.5 percent, respectively.
128
TABLE 1: WORLD MANGANESE ORE RESERVES, MINE PRODUCTION AND EXPORTS, 2010
RESERVES
COUNTRY
Mt
%
Australia
93
14.8
110
Brazil
China
PRODUCTION
Rank
EXPORTS
kt
%
4
6 649
14.5
17.5
3
2 600
Rank
kt
%
Rank
3
4 700
23.8
2
5.7
6
2 502
12.6
3
44
7.0
7
17 020
37.1
1
-
-
-
140
22.2
1
2 570
5.6
7
500
2.5
6
Gabon
52
8.3
6
3 101
6.8
4
2 400
12.1
4
Ghana
*
*
*
1 520
3.3
8
840
4.2
5
56
8.9
5
2 802
6.1
5
200
1.0
7
4
0.6
8
466
1.0
9
100
0.5
8
120
19.0
2
7 172
15.6
2
5 986
30.3
1
11
1.7
2 011
4.4
2 560
12.9
630
100
45 911
19 788
35 308
14 916
CIS
India
Mexico
South Africa+
Others
TOTAL
2010
2009
Sources: USGS 2011 (reserves)
Data estimated from information supplied by various bureaux (production and exports)
+ DMR, Mineral Economics
* Included under others
- No exports
World manganese ore production capacity increased by 5 percent to 56.7 Mt while capacity utilisation
increased to 83 percent in 2010 from 72 percent in 2009 on the back of recovery in the manganese
demand markets (Fig. 2).
FIGURE 2: WORLD MANGANESE PRODUCTION CAPACITY AND CAPACITY UTILISATION, 2001 –
2010
60
Capacity (Mt)
50
40
30
20
10
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
0
Year
Capacity
Utilisation
Source: Data estimated from information supplied by various bureaux
South Africa‟s share of manganese ore exports increased to 30.3 percent in 2010 from 25.1 percent in
2009, ranking first, followed by Australia and Brazil at second and third place, respectively (Table 1). South
Africa‟s share of high carbon ferromanganese (HCFeMn) exports rose from 26.3 percent in 2009 to 27.7
percent in 2010, followed by Norway‟s 11 percent and France‟s 10 percent (Fig. 3).
129
FIGURE 3: WORLD EXPORTS OF HC FERROMANGANESE BY COUNTRY, 2010
Others
9.4%
SA
27.7%
Asia
10.8%
CIS
15.5%
Norway
11.2%
Australia
7.5%
EU
17.8%
The CIS, at 28 percent, were the biggest suppliers of silicomanganese (SiMn) in 2010, followed by India
and Norway (Fig. 4). South Africa, which is ranked fourth, increased its share of SiMn exports from 6.9
percent in 2009 to 7.6 percent in 2010.
FIGURE 4: WORLD EXPORTS OF SILICOMANGANESE BY COUNTRY, 2010
Others
22.2%
SA
7.6%
China
3.5%
EU
19.8%
India
15.9%
Australia
3.2%
CIS
27.8%
WORLD PRICES
The recovery of the steel market during the second half of 2009 had a positive impact on demand for
manganese ore resulting in prices averaging $5.50/mtu and $6.43/mtu during the third and fourth quarters
of 2009, respectively (Fig. 5). The buoyant market persisted into the first half of 2010, with prices
increasing by 18 percent to $7.60/mtu during the first quarter and 7 percent to $8.20/mtu during the second
quarter. However, the global overproduction of manganese ore during the third and fourth quarters of the
year resulted in prices declining by 13 percent to $7.15/mtu and 11 percent to $6.38/mtu, respectively. The
bearish market conditions continued into the first quarter of 2011.
130
FIGURE 5: MONTHLY MANGANESE ORE PRICES, 2007 – 2011
Prices ($/mtu)
20
16
12
8
4
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
0
Month-Year
Source: CRU, 2007-2011
Medium carbon ferromanganese (MCFeMn) prices rose by 23 percent to $2 215/t during the first quarter of
2010 driven by the higher demand from the steel industry and increased by a further 12 percent to $2 489/t
during the second quarter of the year (Fig. 6). However, prices declined by 11 percent and 4.5 percent
during the third and fourth quarters, respectively, ending the year at $2 119/t. HCFeMn and SiMn prices
declined during the first and third quarters of the year compared with preceding quarters; however prices
increased during the last quarter to end the year at $1 337/t and $1 363/t, respectively.
FIGURE 6: MONTHLY AVERAGE PRICES OF MANGANESE ALLOYS, 2007 – 2010
5000
Prices ($/t)
4000
3000
2000
1000
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
0
Month-Year
HCFeMn
MCFeMn
SiMn
Source: CRU, 2007-2011
SOUTH AFRICA
South Africa‟s manganese ore production increased by 57 percent to 7 172 kt in 2010 compared to 2009
driven by higher demand (Table 2). Local sales volume grew by 125 percent while exports sales volume
increased by 51 percent to 5 986 kt. Local sales value went up by 126 percent to R1.3 billion while export
sales value increased by 87 percent to R9.3 billion. Local and export unit values rose by 1 percent and 24
percent, respectively.
131
TABLE 2: SOUTH AFRICA‟S PRODUCTION, LOCAL AND EXPORTS SALES OF MANGANESE ORE,
2001 – 2010
YEAR
PRODUCTION
LOCAL SALES
EXPORT SALES
Mass
Mass
Value
Mass
kt
kt
R'000
R/t
kt
2001
3 266
W
423 621
W
2002
3 322
W
583 603
2003
3 501
W
614 393
2004
4 282
W
2005
4 612
2006
2007
Value
R'000
R/t
1 528
877 819
575
W
1 539
1 042 952
678
W
1 956
852 983
436
656 435
W
2 403
1 082 285
450
W
681 860
W
2 119
1 518 965
717
5 213
W
727 182
W
2 846
1 518 652
534
5 996
W
934 901
W
3 691
2 636 526
697
2008
6 807
W
1 761 848
W
4 689
15 581 560
3 323
2009
4 575
W
583 601
W
3 975
5 003 011
1 258
2010
7 172
W
1 320 564
W
5 986
9 340 026
1 560
Note: W = Withheld
South Africa‟s production of HCFeMn and MCFeMn, which accounted for 60 percent of the total
manganese alloys production in 2010, increased by 72 percent to 473 kt in 2010 compared with 2009
(Table 3). Local sales volumes declined by 10 percent despite a 22 percent growth in local steel production
while exports sales volumes increased by 86 percent. Revenues from local sales declined by 13 percent to
R185.8 million while export sales revenues increased by 125 percent to R4.1 billion, driven by higher
exports sales volumes and unit values.
TABLE 3: SOUTH AFRICA‟S PRODUCTION, LOCAL AND EXPORT SALES OF HIGH AND MEDIUMCARBON FERROMANGANESE, 2001-2010
YEAR
PRODUCTION
LOCAL SALES
Mass
Mass
t
t
EXPORT SALES
Value
R'000
Mass
R/t
Value
t
R'000
R/t
2001
523 844
131 009
329 750
2 517
405 876
1 232 009
3 035
2002
618 954
161 639
530 166
3 280
475 645
1 805 324
3 795
2003
607 362
150 843
493 599
3 272
437 181
1 352 433
3 093
2004
611 914
152 914
783 993
5 127
445 683
2 495 947
5 600
2005
570 574
140 172
601 143
4 289
374 786
1 710 953
4 565
2006
656 235
127 962
450 813
3 543
555 866
2 302 936
4 143
2007
698 654
150 633
835 398
5 546
565 189
3 702 763
6 551
2008
502 631
79 144
1 114 751
14 085
499 806
8 883 344
17 774
2009
274 923
22 862
212 856
9 310
262 223
1 819 877
6 940
2010
473 232
20 750
187 475
9 036
487 540
4 093 641
8 397
Production of other manganese alloys increased by 169 percent to 316.7 kt in 2010 (Table 4). Local sales
volumes declined by 1 percent while export sales volumes increased by 80 percent. However, revenues
from local sales increased by 7 percent to R413.3 million due to higher unit values while export sales
revenues rose by 65 percent to R2.98 billion, driven by higher sales volumes despite lower unit values.
132
TABLE 4: SOUTH AFRICA‟S PRODUCTION, LOCAL AND EXPORT SALES OF OTHER MANGANESE
ALLOYS, 2001-2010
YEAR
PRODUCTION
LOCAL SALES
Mass
Mass
t
t
Value
R'000
EXPORT SALES
Mass
R/t
t
Value
R'000
R/t
2001
259 176
37 705
121 337
3 218
210 359
1 099 792
5 228
2002
315 802
35 293
122 736
3 495
215 259
1 256 592
5 840
2003
313 152
41 860
140 054
3 346
270 225
1 181 787
4 373
2004
373 928
38 971
148 026
3 798
307 821
1 833 313
5 956
2005
275 324
25 071
120 621
4 811
184 151
1 080 123
5 865
2006
277 703
30 508
130 136
4 266
148 605
812 582
5 468
2007
327 794
35 378
216 335
6 115
223 296
1 700 188
7 614
2008
259 014
46 799
653 236
13 958
182 341
3 020 947
16 568
2009
117 683
44 766
384 966
8 600
150 978
1 804 864
11 955
2010
316 652
44 097
413 282
9 372
271 470
2 979 156
10 974
Employment in the manganese mining industry increased by 18 percent to 5 879 (Table 5). Productivity
amounted to 1 220 t per employee per year and each employee generated R1.81 million in 2010, 62
percent higher compared with 2009 due to higher volumes and prices.
TABLE 5: SOUTH AFRICA‟S MANGANESE MINES EMPLOYMENT AND REMUNERATION, 2006-2010
YEAR
EMPLOYEES
TOTAL REMUNERATION
R'000
2006
3 340
319 841
2007
3 240
405 313
2008
3 934
666 356
2009
4 988
731 618
2010
5 879
946 139
OUTLOOK
In 2010, a steady recovery of steel demand which began in the second half of 2009, persisted, driven by a
combination of economic stimulus packages globally, the resilience of emerging economies and an overall
market recovery.
According to Management Engineering & Production Services (MEPS) International Ltd, world steel output
is expected to grow by 11 percent to 1 568 Mt in 2011. The Worldsteel Association forecasts that apparent
steel consumption will increase by 5.9 percent to 1 359 Mt in 2011, following a 13.2 percent growth in
2010. In 2012, it is forecast that world steel consumption will grow by a further 6 percent to reach a new
record of 1 441 Mt. A significant proportion of the improvement in output will be driven by the developing
nations. China will continue to be the driving force behind growth in world steel production, providing more
than half of the additional output.
World manganese ore demand is forecast to grow as a result of both increasing crude steel production and
greater intensity of manganese use in steelmaking, which could lead to market tightness and higher prices.
South Africa‟s expected increase in value addition capacity due to Assmang‟s conversion of two
ferrochrome furnaces into ferromanganese furnaces, is expected to raise local demand for manganese ore
and increase South Africa‟s share of the world‟s manganese alloys production, which, in turn, is likely to
put some further upward pressure on ore prices. The planned infrastructure developments in the country,
driven by the government‟s sustainable economic growth policies, could result in investment opportunities
in the Kalahari Manganese Field, increasing capacity and production.
133
REFERENCES
1.
2.
3.
4.
The Tex Report
WSA, www.worldsteel.org
CRU, Bulk Ferroalloys Monitor, www.crumonitor.com
134
SILICON
Keneilwe Ratshomo
WORLD DEMAND
Silicon, which does not occur in nature in its pure form but as quartz (silicon dioxide), is processed into two
intermediate products, silicon metal and ferrosilicon. The main markets for silicon metal are as an alloying
element with aluminium (45%) and in chemical industries (35%). The market of ferrosilicon is largely in
steel (85%) and cast iron (15%) with very small amounts used in non-ferrous alloys. China, with a 67
percent share, was the biggest producer of silicon products in 2010 (Fig. 1), followed by Russia at 9
percent and Norway at 5 percent.
FIGURE 1: REGIONAL CONTRIBUTION TO SILICON PRODUCTION, 2010
CIS
11%
EU
7%
China
67%
Others
4%
Africa
2%
America
8%
Asia
1%
Source: USGS Mineral Commodity Summaries, 2011
SILICON METAL
World silicon metal output increased by approximately 2.6 percent to 1 816 kt in 2010 (Table 1), with
Chinese production accounting for 43 percent, while South Africa contributed 2.5 percent. World primary
aluminium production increased by 11.6 percent to 41.4 Mt compared with 37.1 Mt in 2009, while
consumption increased by 12 percent to 40.3 Mt. World silicon metal exports grew by 4 percent to 1 364 kt
in 2010 compared with 2009, driven by the growing demand for aluminium.
TABLE 1: WORLD PRODUCTION AND EXPORTS OF SILICON METAL, 2010
COUNTRY
PRODUCTION
EXPORT
kt
%
kt
%
222
12.2
2
186
13.6
2
Canada
47
2.6
7
42
3.0
7
China+
780
42.9
1
633
46.4
1
CIS
199
11.0
3
181
13.3
3
France
135
7.4
6
-
-
-
Norway
190
10.5
4
177
13.0
4
46
2.5
8
62
4.5
6
143
7.9
5
42
3.1
5
53
2.9
42
3.0
Brazil
South Africa*
USA
Others
World Total
Rank
1 816
1 364
Sources: Data estimated (in silicon content) from information supplied by various bureaux
*DMR, Mineral Economics
+ USGS Mineral Commodity Summaries, 2011 (Production)
135
Rank
South Africa‟s production of silicon metal grew by 20 percent to 46.4 kt in 2010 compared with 38.6 kt in
2009 (Table 2). Local sales mass increased by 69 percent to 10.8 kt, while export sales mass increased by
62 percent to 62.4 kt, driven by the growing demand, following the global economic recovery. Despite
lower local and export unit values, which declined by 31 and 21 percent respectively, the local and exports
sales revenues increased significantly due to the higher volumes. Local sales revenues increased by 16
percent to R106 million, while export sales revenues increased by 28 percent to R822 million in 2010
compared to 2009.
TABLE 2: SOUTH AFRICA‟S PRODUCTION AND SALES OF SILICON METAL, 2001-2010
YEAR
PRODUCTION
LOCAL SALES
Mass
Mass
kt
EXPORT SALES
Value
Mass
Value
kt
R'000
R/t
kt
R'000
R/t
2001
39.4
2.2
15 215
7 002
39.4
313 627
7 956
2002
42.5
4.3
38 586
8 486
29.7
320 007
10 766
2003
48.5
5.7
49 713
8 739
40.8
392 582
9 630
2004
50.5
8.8
65 414
7 403
45.9
389 430
8 473
2005
53.5
5.5
47 881
8 716
41.6
450 200
9 556
2006
53.3
7.8
72 270
9 213
47.4
503 583
10 622
2007
50.3
8.9
101 794
11 498
46.3
570 763
12 319
2008
51.8
3.9
87 443
22 438
53.5
1 213 107
22 669
2009
38.6
6.4
91 586
14 310
38.4
640 413
16 677
2010
46.4
10.8
106 016
9 816
62.4
822 406
13 187
FERROSILICON
World ferrosilicon production is estimated to have increased by 33 percent to 5 369 kt in 2010 compared
with 2009 (Table 3). China contributed 73 percent to the world production, with South Africa contributing
2.4 percent in 2010. World exports of ferrosilicon increased by 2 percent to 1 893 kt in 2010 compared with
2009. Global crude steel production increased by 16 percent to 1 414 Mt in 2010 compared with 2009,
leading to thr higher demand for ferrosilicon.
TABLE 3: WORLD PRODUCTION AND EXPORTS OF FERROSILICON, 2010
COUNTRY
PRODUCTION
kt
Brazil
EXPORT
%
Rank
kt
%
Rank
153
2.8
5
103
5.4
4
3 900
72.6
1
842
44.5
1
686
12.8
2
322
17.0
2
79
1.5
7
44
2.3
6
Iceland
57
1.1
8
37
2.0
7
Norway
158
2.9
4
186
9.8
3
South Africa*
128
2.4
6
59
3.1
5
USA+
170
3.2
3
15
0.8
8
Others
38
0.7
286
15.1
China+
CIS
France
World Total
5 369
1 894
Sources: Data estimated (in silicon content) from information supplied by various bureaux
+ USGS Mineral Commodity Summaries, 2011 (Production)
South Africa‟s production of ferrosilicon grew by 16 percent to 127.7 kt in 2010 (Table 4). Local sales mass
increased by 4 percent to 63.6 kt in 2010 compared with 60.9 kt in 2009, while export sales mass grew by
36 percent to 59.2 kt in 2010 compared with 43.6 kt in 2009. Revenues from local sales increased by 8
percent to R710 million, while revenues from export sales increased by 37 percent to R632 million in 2010.
Local and export unit values increased by 3 percent and 1 percent, respectively.
136
TABLE 4: SOUTH AFRICA‟S PRODUCTION AND SALES OF FERROSILICON, 2001-2010
YEAR
PRODUCTION
LOCAL SALES
Mass
Mass
kt
kt
R'000
2001
107.6
65.9
245 946
2002
141.7
79.5
2003
135.3
79.0
2004
140.6
2005
EXPORT SALES
Value
Mass
R/t
Value
kt
R'000
R/t
3 733
31.4
110 771
3 733
325 226
4 092
73.0
306 851
4 203
364 716
4 618
65.7
280 285
4 267
84.3
436 095
5 174
57.8
268 786
4 648
127.0
73.4
388 446
5 293
41.3
223 216
5 401
2006
148.9
79.5
444 261
5 585
49.0
301 534
6 153
2007
139.6
91.7
616 444
6 724
54.7
395 352
7 222
2008
134.5
71.2
842 183
11 835
44.2
512 037
11 573
2009
110.4
60.9
659 855
10 835
43.6
460 901
10 571
2010
127.7
63.6
710 333
11 169
59.2
631 765
10 672
PRICES
Silicon metal and ferrosilicon prices, which started to recover during the second half of 2009 following the
global market recovery, continued to rise during 2010 (Fig. 2). Prices of silicon metal averaged $2 838/t
during the first half of 2010, a 7 percent increase compared with the same period in 2009, while the
average price of ferrosilicon, at
$1 503/t, was 46 percent higher. Silicon metal and ferrosilicon prices
continued to increase into the second half of 2010 averaging $3 285/t and $1 694/t respectively, as the
supply deficit continued to grow driven by higher demand. Furthermore, the Chinese government‟s
enforcement of stricter environmental policy, which included reduction of power supplies to energy
intensive industries from the end of September 2010, impacted negatively on the ferrosilicon production
and supply, pushing prices higher.
Month-Year
Silicon metal
Source: CRU
137
Ferrosilicon
Jan-11
Oct-10
Jul-10
Apr-10
Jan-10
Oct-09
Jul-09
Apr-09
Jan-09
Oct-08
Jul-08
Apr-08
Jan-08
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Apr-06
Prices ($/t)
FIGURE 2: SILICON METAL AND FERROSILICON SPOT PRICES IN THE US, 2006-2010
OUTLOOK
Mineral commodity markets continued to grow during 2010, following the market recovery that became
evident during the second half of 2009. The silicon industry was also on par with the growth trend, driven
by higher demand from the aluminium and steel industries.
World primary aluminium production is anticipated to increase by 7 percent to 41.7 Mt in 2011, driven by
planned developments in the Middle East and Canada, which are expected to increase their production
capacities by 4.1 Mt and 1 Mt, respectively, in 2011. Consequently, this bullish market will influence silicon
metal demand into further growth during 2011.
World crude steel demand is forecast to increase by 5.9 percent to 1 359 Mt in 2011 following a 13 percent
increase in 2010 and grow further by 6 percent in 2012, according to the Worldsteel Association.
Ferrosilicon demand is expected to follow a similar growth trend, which could result in higher production
and price increases during 2011.
South Africa‟s production of silicon and ferrosilicon is likely to follow a similar rising trend provided that
producers utilize their full capacity to take advantage of the buoyant international market as well as the
planned local infrastructure developments driven by the government‟s sustainable economic growth
policies.
REFERENCES
1.
2.
3.
4.
5.
The Tex Report
DMR, Mineral Economics
USGS Mineral Commodity Summaries, 2011
Metal Bulletin
Worldsteel Association, www.worldsteel.org
138
VANADIUM
MC Mosiane & MD Mashale
INTRODUCTION
Steels containing various combinations of alloying elements can be substituted for steels containing
vanadium. Certain metals, including manganese, molybdenum, niobium (columbium), titanium, and
tungsten, are to some extent interchangeable with vanadium as alloying elements in steel. Platinum and
nickel can replace vanadium compounds as catalysts in some chemical processes. However, there is
currently no acceptable substitute for vanadium in aerospace titanium alloys.
WORLD DEMAND
Vanadium demand is mainly driven by steel manufacturing where more than 90 percent of global vanadium
production is consumed in the form of ferrovanadium. About 5 percent of vanadium is used in the
production of aluminium master alloys which are used in the production of titanium alloys. The balance is
used in other applications including energy preservation.
The World Steel Association estimated global crude steel production at a record level of 1 414 million tons
(Mt) in 2010, 17 percent higher than the 2009 total of 1 211 Mt. This increase has created an increase in
the demand for vanadium as a key input into the production of high strength steel. The Asian region, with
China at the forefront, continued to lead global steel output which effectively makes it the largest consumer
of vanadium, despite the fact that vanadium consumption per ton of steel remains below the global
average in this region. By virtue of their significance in steel manufacturing coupled with good growth in
steel production, Europe, Americas and the Commonwealth Independent States (CIS) also contributed to
higher vanadium demand.
WORLD SUPPLY
World vanadium resources exceed 64 Mt while the vanadium reserves were estimated at 13.6 Mt in 2010,
5 percent higher than in 2009. China and Russia have the largest vanadium reserves at 37 percent each,
followed by South Africa, whose reserves have been revised upwards by 17 percent to reach 26 percent
(Fig. 1). Together, the three countries account for almost 100 percent of the world‟s known vanadium
reserves. The US has insignificant reserves of less than one percent. Globally, about 59 percent of
vanadium is sourced from vanadium slag produced as a by-product of steel production in pig iron derived
from magnetite ores processing, while 26 percent is sourced from vanadium ore and 15 percent from
catalyst recovery.
FIGURE 1: WORLD VANADIUM RESERVES, 2010
Russia
37%
US
0%
China
37%
South Africa
26%
Source:
Note:
13.6 Mt
USGS Mineral Yearbook, 2011
The USGS discontinued the reserves base estimates in 2009, the figures displayed represent the reserves.
139
Following a two year consecutive decline in global vanadium production, the 2010 production increased by
19 percent to 61 kt compared with 2009, on the back of higher steel output. At 38 percent each, South
Africa and China led the global vanadium production, while estimated production from Russia accounted
for 23 percent (Fig. 2). South Africa‟s vanadium production was up 59.7 percent compared with 2009, while
China‟s increased by 9.5 percent and Russia‟s production declined by 3.5 percent in 2010. Global
consumption of vanadium amounted to 64 kt in 2010, with the year‟s production of 61 kt potentially
complemented by unsold material from the previous two years.
FIGURE 2: WORLD VANADIUM PRODUCTION, 2010
Other
1%
Russia
23%
China
38%
South Africa*
38%
61 kt e
Source:
Note:
USGS Mineral Yearbook, 2010
e Estimates
PRICES
Ferrovanadium and vanadium pentoxide prices had fallen considerably in 2009 and recovered in 2010 due
to recovery in demand. The average annual price for ferrovanadium rose by 20 percent to $29.4 per
kilogram (kg) in 2010 while the vanadium pentoxide price increased by 8.7 percent to $6.6 per pound (lb).
Ferrovanadium prices ranged between $24 per kg in January and $30 per kg in December, while
vanadium pentoxide prices ranged between $7.5/lb and $6.4/lb, during the same period (Fig.3), a relatively
narrow range compared with 2009.
36
8
34
7.5
32
7
30
6.5
28
6
26
5.5
24
5
22
4.5
20
4
Jan
Feb
Mar
Apr
May
Jun
Jul
Ferrovanadium
Source:
USGS Monthly Mineral Commodity Reports, 2010
140
Aug
Sep
Pentoxide
Oct
Nov
Dec
Vanadium Pentoxide ($/lb)
Ferrovanadium ($/kg)
FIGURE 3: WORLD MONTHLY FERROVANADIUM AND VANADIUM PENTOXIDE PRICES, 2010
SOUTH AFRICA
Production and Sales
South Africa’s vanadium production was up by 59.7 percent to 22.6 kt in 2010. At 18.8 kt, total sales
volumes were 37 percent higher than in 2009 while the corresponding revenue reached R2.5 billion, an
increase of 52 percent, resulting from higher demand and prices (Table 1). Seventy percent of South
Africa’s annual production was sold while the remaining 30 percent is presumed to have been stockpiled.
Local sales volumes accounted for 10 percent of volumes sold in 2010, down from 13 percent in 2009
indicating lower levels of vanadium beneficiation in the country. Nonetheless, local sales volumes were 5.5
percent higher than in 2009, reaching 1.9 kt, while revenue from local sales increased by 7.2 percent to
around R300 million. Export sales volumes increased by 42 percent to 16.7 kt, while the corresponding
revenue grew by 61 percent to R2.2 billion, on the back of higher prices. Europe, at 72.7 percent is the
biggest consumer of South Africa’s vanadium followed by the Americas’ 17.22 percent and Asia’s 9
percent.
TABLE 9: SOUTH AFRICA‟S PRODUCTION AND SALES OF VANADIUM, 2001 – 2010
YEAR
PRODUCTION
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
kt
Mass
kt
18.2
25.2
27.2
23.3
22.6
23.8
23.5
20.3
14.0
22.6
0.3
0.4
1.1
2.6
2.8
2.0
2.3
2.3
1.8
1.9
EXPORT SALES
Value (FOB)
R‟000
R/kg
Mass
kt
Value (FOB)
R‟000
R/kg
20 121
36 015
108 666
415 915
1 153 896
451 664
446 429
892 766
266 968
286 233
17.3
20.0
18.8
16.3
15.3
15.6
14.3
12.1
11.9
16.9
886 248
1 145 036
1 072 477
1 674 785
3 758 189
2 652 870
2 318 974
3 089 547
1 360 352
2 182 163
75
91
97
158
406
222
191
391
149
152
51
57
57
103
246
170
163
256
116
129
Notes: Mass data is given in units of vanadium contained. Consumption of vanadium slag and fused pentoxide or trioxide in the
production of other downstream saleable products is eliminated from both production and sales to avoid double and triple counting.
These figures, therefore apply to production and sales of the final product which is sold after processing yield losses. The production
and export data include all exported slag and fused pentoxide, which may have a yield loss of 2 kt of vanadium during processing. In
world supply terms, these outputs might regularly be counted more than once as production, overestimating the figures.
Employment
Average annual employment in South Africa‟s vanadium industry increased by 5 percent to 1 382 in 2010
(Table 2), while the corresponding remuneration grew by 22 percent to R458.6 million. At 16.7 tons per
employee, productivity was back to 2008 levels, while each employee generated R332 000 compared with
R287 000 per employee in 2009. Remuneration has more than doubled in five years up to 2010, mainly
due to adjustments associated with rising cost of living, and a 30 percent increase in number of employees,
in the same period.
TABLE 2: EMPLOYMENT IN SOUTH AFRICA‟S VANADIUM INDUSTRY, 2006 – 2010
YEAR
EMPLOYEES
TOTAL REMUNERATION
R' 000
2006
1 088
207 072
2007
1 151
244 614
2008
1 253
291 857
2009
1 313
376 688
2010
1 382
458 577
141
Global Developments
Russia‟s Evraz Group S.A., which took over South Africa‟s Highveld Steel and Vanadium Corporation in
2008, ceased negotiations on the sale of its U.S. subsidiary, Stratcor Inc. acquired by Evraz in 2006.
Australia‟s Atlantic Ltd announced an acquisition of 100 percent stake of the Windimurra vanadium project
located about 600 km north of Perth. Production is expected to start in the third quarter of 2011. This
production will meet about 7 percent of global vanadium demand. In the Kimberley region of Western
Australia, significant vanadium resources in magnetite have been discovered. Feasibility studies for a
potential open pit and downstream processing facility are being explored.
Canadian based Largo Resources Ltd announced that it expects to begin vanadium production at its
Maracas project, in northeast Brazil, in early 2013. According to the company, Maracas was one of the
highest grade vanadium deposits in the world with estimated measured and indicated mineral resources of
22.5 Mt grading 1.26 percent vanadium pentoxide.
Metallurg Vanadium Corp. completed construction of a new 43 000 square foot raw material storage
facility, at its Cambridge facility in the US, as part of its long-term project to increase vanadium production
at the site. According to the company, the $6 million storage facility met all standards for safe containment
of spent refinery catalyst, a feed material used in the production of ferrovanadium. Metallurg Vanadium is a
subsidiary of AMG Advanced Metallurgical Group N.V., soon to be named AMG Vanadium, Inc.
(Metallurg).
OUTLOOK
World crude steel output grew by nearly 10 percent in the first quarter of 2011, after a slow-down in the
second half of 2010. After a strong rebound which recorded a 17 percent growth in 2010, the recovery in
global steel demand will be slower by the end 2011, in line with slower growth in the world economy.
Global demand is expected to increase by approximately 6 percent in 2011 and 2012. The OECD reports
that the first quarter of 2011 revealed that the impact of the earthquake on the Japanese industry, one of
the top steel producers in world, appears to be smaller than originally estimated. Japan‟s economic
recovery may be fragile; however, in the long-term, reconstruction work is expected to generate additional
demand for steel and vanadium.
In the medium term, vanadium consumption is expected to double by 2015, exceeding 120 kt compared
with 64 kt in 2010. In the long term, at the expected growth rate of 6 percent, or even at lower growth rate
of between 4 and 5 percent, the global consumption of vanadium is estimated to reach 132 kt per annum
by 2025, complemented by the new market in energy applications for the purpose of energy preservation.
The production of vanadium is dominated by the production of vanadium slag produced as a co-product of
steel through the smelting of magnetite. The prevailing market price of around $7 per pound of vanadium
pentoxide is still very low; however, prices may be expected to soar to exceed record levels seen prior to
the global economic crisis, due to the expected accelerated demand in the medium to long term. At these
price levels, more expansions can be expected from producers who produce vanadium as a primary
product.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
DMR, Mineral Economics
USGS Mineral Yearbook, Vanadium, 2011
USGS Monthly Mineral Commodity Reports Vanadium, 2010
www.worldsteel.org ,accessed May 2011
http://www.vanadiumsite.com/global-vanadium-consumption-market-report/, accessed May 2011
http://www.informationbible.com/article-summary-of-the-2010-international-vanadium-market-40511.html, accessed April 2011
Tex General review of vanadium in 2010 and outlook for 2011, accessed June 2011
142
INDUSTRIAL MINERALS OVERVIEW
PR Motsie
INTRODUCTION
Industrial minerals are generally high volume, low value commodities that will usually bear minimum costs
of underground exploitation since most deposits appear near surface. As a result, most industrial minerals
require less complicated mining techniques and, therefore, present opportunities for small-scale mining
development. Because of industrial minerals‟ low value, some companies mining these minerals have a
high degree of vertical integration, in that they mine raw materials and beneficiate them to the stage of final
product.
Industrial minerals play a vital role in many end-user markets with the main ones being the agriculture,
construction, chemical, metallurgical and pigment sectors, which account for the bulk of the local
purchases. Markets for industrial minerals are often diverse, highly technical and require unique marketing
and sales expertise.
There are approximately 926 producers of industrial minerals in South Africa, of which roughly 546 are in
the sand and aggregate sector followed by 157 producers in the clays (brickmaking and special) sector, 76
in
the
dimension
stone
sector
and
39
in
the
limestone
and
dolomite
sector
(Table 1).
TABLE 1: THE STRUCTURE OF THE INDUSTRIAL MINERALS SECTOR, 2010
COMMODITY
NUMBER OF OPERATIONS
Sand and aggregate
546
Clays (brickmaking and special)
157
Dimension stone
76
Limestone and dolomite
39
Other
108
SALES TRENDS
Industrial minerals contributed 3.6 percent of the total revenue from South Africa‟s mineral sales during
2010, of which R9.7 billion was from local sales and R1.1 billion from exports (Table 2). From 2006 to
2010, sales of primary industrial minerals have grown at an annualised compound rate of 9.4 percent (Fig
1). However, total revenue decreased from R11.2 billion in 2009 to R10.8 billion in 2010, owing to the
continued depressed economic conditions, which resulted in weak demand for commodities in most
sectors.
143
Sales in billion rands
FIGURE 1: INDUSTRIAL MINERAL SALES, 2006 – 2010
16
14
12
10
8
6
4
2
0
2006
2007
Local Sales
2008
Year
2009
Export Sales
2010
Total Sales
DOMESTIC SALES
The bulk consumption of industrial minerals is realised in the domestic market, as most are low priced
commodities and sold in bulk, making their economic exploitation highly dependent on transport costs and
distance to markets. Aggregate & sand and limestone & dolomite accounted for 63 percent of industrial
minerals local sales value with consumption driven mainly by activities in the construction sector (Fig 2).
The local sales value of industrial minerals decreased from R10.2 billion in 2009 to R9.7 billion in 2010
(Table 1 & 2), owing to the slower than anticipated recovery from the construction industry. Growth in the
real value added by the construction sector slowed from 0.8 percent in the third quarter of 2010 to 0.2 per
cent in the fourth quarter. The decrease in local sales was further exacerbated by the weak demand for
sulphuric acid in the local market. Even though demand was high globally, the high logistical costs
associated with exporting the product have made it uneconomical for export markets.
However, the decrease in local sales was offset by real value added by agriculture, which expanded at an
annualised rate of 12.5 percent in the final quarter of the year, driven by demand from horticultural and
livestock production. Furthermore, local sales value of bentonite, which is used in the pelletising market,
soared by 98.3 percent from R37.6 million to R74.5 million in 2010, as a result of increased demand from
the steel market and civil application.
FIGURE 2: LOCAL SALES VALUE OF INDUSTRIAL MINERALS, 2010
Aggregate and
sand
40%
Other
28%
Silica
5% Granite
2%
Limestone and
lime
23%
Sulphur
2%
144
EXPORT SALES
In 2010, export sales value of industrial minerals increased by 10 percent to R1.1 billion from
R1 billion in 2009, owing to increased demand of andalusite from export markets. The biggest contributors
to
export
sales
of
industrial
minerals
were
andalusite
(30
percent),
vermiculite
(20 percent), granite (11 percent) and fluorspar (data confidential) (Fig 3). Approximately 80 percent of
South Africa‟s primary industrial mineral exports, by value, were destined for Pacific Rim countries, with 15
percent sold to European countries.
FIGURE 3: EXPORT SALES OF INDUSTRIAL MINERALS, 2010
Other
34%
Andalusite
30%
Sulphur
5%
Vermiculite
20%
Granite
11%
IMPORTS
In 2010, expenditure on imports of primary industrial minerals decreased by 1.4 percent to R879 million
compared with 2009, as a result of weak demand in the primary minerals market (Table 3 and Fig 4).
Imports of a selection of manufactured industrial commodities (Table 4) – refractories, ceramic products
and glass & glassware improved by 11 percent to R6.97 billion in 2010 compared with R6.92 billion in
2009.
Imports in billion rands
FIGURE 4: IMPORTS OF PRIMARY AND MANUFACTURED INDUSTRIAL MINERALS, 2006 – 2010
9
8
7
6
5
4
3
2
1
0
2006
2007
2008
2009
Year
Imports Primary Minerals
Imports Manufactured
Source: RSA, Commissioner for South African Revenue Service, 2006 – 2010
145
2010
EMPLOYMENT
Employment in the industrial minerals sector grew at an annualised compound rate of 3.6 percent from
2006 to 2010 (Fig 5). The industrial minerals sector accounted for 3.6 percent of employees in the South
African mining industry. Average earnings per employee increased by 11.7 percent to
R105 712/employee in 2010 compared with 2009.
Number of employees
FIGURE 5: EMPLOYMENT IN THE INDUSTRIAL MINERALS SECTOR, 2006 – 2010
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
Growth = 3.6% pa
2006
2007
2008
2009
2010
Year
OUTLOOK
Demand of most industrial minerals in South Africa is driven by the construction and agricultural industries.
Growth in the construction industry is expected to remain slow in the short term following a subdued global
economic recovery. The construction industry is expected to experience softer growth rates in the medium
term, following the slowdown in private sector construction, a fall in investment from public corporations
and completion of mega projects. Total investment in construction is expected to steadily grow by an
annual rate of 2.8 percent to R206 billion (2005 prices) by 2014, as a result of softer investment growth in
civil works, coupled with an expected contraction in building construction. However, the lag in activity in the
construction industry will be offset by Government‟s commitment to spend over R800 billion on economic
and social infrastructure from 2011 to 2013, of which, R73 billion is budgeted for the expanded public
works programme.
Use of industrial minerals in the agricultural sector is expected to rise in the short to medium term on the
back of tight food supplies, changing weather patterns and increasing demand in emerging economies.
The use of chemical fertilizers has grown rapidly in recent years, owing to the rapid developments of the
agriculture and chemical industry. The oversupplied South African sulphuric acid market could be brought
back into balance by 2012, when demand from recommended plants and development of new projects is
expected to materialise.
As with most minerals, industrial mineral commodities are expected to slowly rebound in the long term on
the back of continued improving global economy.
146
TABLE 2: SOUTH AFRICA‟S PRIMARY INDUSTRIAL MINERAL PRODUCTION AND SALES 2009
COMMODITY
PRODUCTION
LOCAL SALES (FOR)
EXPORT SALES (FOB)
TOTAL SALES
Mass (t)
Mass (t)
Value (R)
Mass (t)
Value (R)
Mass (t)
Value (R)
165 217
52 799
97 918 113
109 006
253 553 786
161 805
351 471 899
General
Andalusite
Asbestos
*
*
*
*
*
*
*
Barytes
*
*
284
119 280
119 280
185
284 318
185
284 318
72 891
55 247 701
*
*
*
284
101 394
*
*
*
72 891
55 247 701
**
**
**
**
**
**
**
*
Calcite
Feldspar
Fluorspar
Gypsum
Kieselguhr
Limestone &
lime
Magnesite
Mica
Perlite
Pigments
minerals
Phosphate
rock
Pyrophyllite
Salt
Silica
Sulphur
Talc
Vermiculite
597 573
396 749
36 616 422
*
396 749
36 616 422
*
*
*
*
*
*
*
22 698 008
**
20 001 169
**
2 099 164 606
**
11 248
**
11 263 453
**
20 012 417
**
2 110 428 059
**
572
518
1 534 420
106
808 883
624
2 343 303
**
**
**
**
**
**
**
183
119
40 400
*
*
119
40 400
2 237 128
2 268 258
**
*
**
2 268 258
**
**
**
38 449 513
**
9 795 565
**
48 245 078
408 422
437 674
140 308 998
*
*
437 674
140 308 998
2 306 151
2 671 548
379 484 052
1 222
1 651 801
2 672 770
381 135 853
536 103
331 779
293 105 068
62 335
27 193 284
394 114
320 298 352
4 718
6 213
5 892 673
*
*
6 213
5 892 673
193 334
9 535
10 235 809
164 576
238 295 090
174 111
248 530 899
334 589
340 492 804
61 723
126 507 463
396 312
467 000 267
*
*
*
*
3 249
2 867 997
25 841
12 089 474
Dimension
and building
stone
Granite
Sandstone
Slate
3 249
2 867 997
25 841
12 089 474
Clays
Attapulgite
54 418
54 203
16 015 125
*
*
54 203
16 015 125
Bentonite
40 340
59 839
37 584 694
1 816
2 529 011
61 655
40 113 705
120 162
129 539
14 046 546
*
*
129 539
14 046 546
Flint clay
37 227
36 269
29 679 955
547
943 861
36 816
30 623 816
Kaolin
31 048
30 068
9 343 014
*
*
30 068
9 343 014
53 603 580
3 895 685 657
*
*
53 603 580
3 895 685 657
Plastic clays
Aggregate &
sand
Miscellaneous
TOTALS
Source:
Notes:
2 654 074 215
10 170 280 854
345 903 540
2 999 977 755
1 018 445 737
11 188 726 591
All quantities are in metric tons, unless otherwise specified
*
Nil
**
Classified, included under Miscellaneous
147
TABLE 3: SOUTH AFRICA‟S PRIMARY INDUSTRIAL MINERAL PRODUCTION AND SALES 2010
COMMODITY
PRODUCTION
LOCAL SALES (FOR)
EXPORT SALES (FOB)
TOTAL SALES
Mass (t)
Mass (t)
Value (R)
Mass (t)
Value (R)
Mass (t)
Value (R)
General
Andalusite
189 568
91 669
167 672 901
133 798
321 933 121
225 467
489 606 022
Asbestos
*
*
*
*
*
*
*
Barytes
*
319
133 980
*
*
319
133 980
Calcite
*
*
*
*
*
*
*
94 307
69 921
56 204 410
*
*
69 921
56 204 410
**
**
**
**
**
**
**
513 310
306 963
32 228 284
*
*
306 963
32 228 284
*
*
*
*
*
*
*
22 501 577
**
19 219 491
**
2 263 990 902
**
9 954
**
13 279 062
**
19 229 445
**
2 277 269 964
**
904
794
2 077 140
126
744 786
920
2 821 926
**
**
**
**
**
**
**
244
66
22 440
*
*
66
22 440
2 493 904
1 880 058
**
25 020
**
1 905 078
**
Feldspar
Fluorspar
Gypsum
Kieselguhr
Limestone &
lime
Magnesite
Mica
Perlite
Pigments
minerals
Phosphate
rock
Pyrophyllite
Salt
Silica
Sulphur
Talc
Vermiculite
**
**
49 566 092
**
16 762 469
**
66 328 561
394 493
423 156
126 305 541
*
*
423 156
126 305 541
2 904 818
3 078 613
482 860 807
980
1 522 831
3 079 593
484 383 638
457 237
255 965
168 834 993
95 571
48 794 652
351 536
217 629 645
3 150
5 370
5 572 676
*
*
5 370
5 572 676
199 285
10 413
12 926 929
166 465
216 305 068
176 878
229 231 997
272 531
217 065 394
65 429
120 406 539
337 960
337 471 933
7 776
4 530 250
*
*
7 776
4 530 250
48 114
13 299 953
*
*
48 114
13 299 953
Dimension
and building
stone
Granite
Sandstone
Slate
Clays
Attapulgite
85 336
85 315
25 090 035
*
*
85 315
25 090 035
Bentonite
54 311
96 554
74 539 706
1 290
1 667 366
97 844
76 207 072
Plastic clays
551 612
146 535
17 187 122
*
*
146 535
17 187 122
Flint clay
39 690
39 118
29 730 499
492
909 878
39 610
30 640 377
Kaolin
29 929
28 233
9 960 493
*
*
28 233
9 960 493
52 356 166
3 877 078 911
*
*
52 356 166
3 877 078 911
Aggregate &
sand
Miscellaneous
2 074 371 719
326 511 207
2 400 882 926
TOTALS
9 711 251 177
1 068 836 979
10 780 088 156
Source:
Notes:
All quantities are in metric tons, unless otherwise specified
*
Nil
**
Classified, included under Miscellaneous
148
TABLE 4: SOUTH AFRICA‟S
COMMODITIES, 2008-2010
COMMODITY
IMPORTS
OF
SELECTED
2008
2009
Mass (t)
Salt (25.01)
PRIMARY
Value (R)
INDUSTRIAL
MINERAL
2010
Mass (t)
Value (R)
Mass (t)
Value (R)
5 691
14 941 779
2 811
20 947 823
3 882
21 557 566
293
756 718
245
588 783
415
700 293
791 249
3 436 560 005
525 469
354 611 195
592 828
377 801 360
In powder or flakes (25.04.10)
842
16 827 326
772
7 560 778
1 046
12 447 936
Other (25.04.90)
161
3 273 697
150
1 096 698
62
443 318
Iron pyrites (25.02)
Sulphur (25.03)
Graphite natural (25.04)
Sand (25.05)
Silica and quartz sands (25.05.10)
1 493
9 263 896
725
4 192 437
769
4 567 576
14 656
5 896 918
5 302
7 218 295
6 125
7 448 823
Quartz (25.06)
223
1 999 374
57
599 741
227
2 388 420
Kaolin (25.07)
10 229
25 775 184
11 049
31 468 649
18 077
36 232 857
Bentonite (25.08.10)
19 648
38 440 351
17 447
44 928 483
22 822
50 358 356
49
5 477 913
28
906 021
31
1 100 398
2 564
10 205 114
2 121
9 941 765
15 810
496 509
181
407 172
147
406 390
166
323 825
Other (25.05.90)
Fuller‟s earth (25.08.20)
Fire clay (25.08.30)
Other clays (25.08.40)
Alumino-silicates (25.08.50)
Chalk (25.09)
3 536
6 128 190
1 825
3 674 704
652
1 549 958
255 438
641 130 028
49 277
85 422 787
130
453
Barytes (25.11.10)
3 568
14 106 065
2 822
13 804 735
4 105
17 199 971
Kieselguhr (25.12)
5 539
23 205 406
3 930
16 075 153
4 617
17 757 963
Natural abrasives (25.13)
1 182
5 197 571
1 208
7 419 355
451
2 258 532
Slate (25.14)
Phosphate rock (25.10)
3 811
9 894 350
2 056
5 860 897
2 945
6 117 287
Marble (25.15)
714
6 530 553
647
4 382 782
355
1 588 829
Granite (25.16)
9 902
19 147 300
7 970
9 953 527
8 663
12 867 732
Dolomite (25.18)
3 952
8 332 203
1 127
1 747 777
1 532
2 833 395
51 567
175 580 174
44 368
150 024 963
77 999
215 982 203
61
430 759
74
385 195
409
702 434
59 121
94 201 639
48 850
75 125 955
34 143
47 768 748
Asbestos (25.24)
759
3 401 577
0
0
172
796 262
Mica (25.25)
296
1 103 059
358
933 778
483
1 151 947
Steatite (25.26)
8 142
25 133 774
10 254
23 850 792
9 818
26 908 026
Cryolite (25.27)
0
0
0
0
0
0
13
206 627
116
870 479
25
100 684
453
1 846 150
378
1 910 592
439
2 052 746
4 741 565
10 235
5 400 068
13 406
Magnesite & magnesia (25.19)
Limestone (25.21)
Slaked, quick, hydraulic lime (25.22)
Sodium borates (25.28.10)
Feldspathoids (25.29.30)
Perlite (25.30.10)
TOTAL
Source:
10 153
4 610 153 538
891 310 597
RSA, Commissioner for South African Revenue Service, 2008 - 2010
149
5 812 622
879 317 029
TABLE 5: SOUTH AFRICA‟S
COMMODITIES, 2008-2010
IMPORTS
OF
Commodity
MANUFACTURED
INDUSTRIAL
MINERALS
2008
2009
2010
Value (FOB)
Value (FOB)
Value (FOB)
R
R
R
1 237 493 691
1 009 658 338
1 130 254 588
406 249 923
302 991 368
284 596 178
25 763 268
26 003 210
24 914 545
Millstones and grindstones (68.04)
117 590 731
99 337 903
99 466 862
Natural abrasive powders (68.05)
227 605 331
179 180 989
195 997 424
Slag wool, rock wool & similar mineral wools (68.06)
312 354 225
257 273 614
332 151 056
23 023 298
31 406 156
33 461 484
Articles of stone, plaster, cement, asbestos, mica or similar
materials
Building stone (68.02)
Worked slate & articles of slate (68.03)
Articles of asbestos-cement (68.11)
Fabricated asbestos fibres (68.12)
Friction material (68.13)
Worked mica & articles thereof (68.14)
Refractories
Of siliceous fossil meals (69.01)
Other bricks (69.02)
Other refractory ceramic goods (69.03)
Ceramic products
Ceramic building bricks (69.04)
Roofing tiles (69.05)
Ceramic pipes (69.06)
Unglazed ceramic (69.07)
Glazed ceramic (69.08)
5 680 245
4 330 868
41 248 079
106 282 567
91 113 244
100 965 464
12 844 103
18 020 986
17 453 496
1 186 239 495
940 536 488
1003933033
7 982 398
3 166 451
5575510
1 003 283 630
815 881 695
851513107
174 973 467
121 488 342
146844416
3 664 918 992
2 615 128 759
3039879634
376 589
738 325
417378
12 553 191
5 991 174
6389272
501 348
702 276
2097397
113 420 925
129 924 074
107759876
604 732 212
549 498 926
692581300
2 396 523 802
1 477 519 764
1699927499
Ceramic sinks (69.10)
121 760 351
103 085 549
111549981
Tableware (69.11)
185 312 607
167 771 123
187421119
Ceramic tableware (69.12)
Ceramic wares for laboratory (69.09)
156 458 972
135 406 928
168267899
Ceramic articles (69.13)
38 720 279
27 819 291
46444531
Other ceramic articles (69.14)
34 558 716
16 671 329
17023382
Glass and glassware (70.00)
2 019 230 516
1 708 053 194
1 797 039 345
TOTAL
8 107 882 694
6 273 376 779
6 971 106 600
Source:
Note:
RSA, Commissioner for South African Revenue Service, 2008 - 2010
Codes in brackets refer to subchapters of the Harmonised System
150
AGGREGATE AND SAND
PR Motsie
SUPPLY
In 2010, local sales mass of sand and aggregate in South Africa decreased by 2.3 percent to 52.4 Mt
compared with the previous year, as a result of the slowdown in construction activity in the country
(Table 1). The decline in construction activity was mainly due to the completion of various infrastructure
and development projects associated with the 2010 FIFA World Cup tournament. Local sales value slightly
decreased by 0.48 percent to R3,9 billion owing to a decline in sales in volume.
TABLE 1: SOUTH AFRICAN SALES OF SAND AND AGGREGATE BY MASS, 2001 – 2010
+
YEAR
COARSE
Mass
kt
FINE
Value (FOR)
R'000
R/t
Mass
kt
x
TOTAL
Value (FOR)
R'000
R/t
Mass
kt
Value (FOR)
R'000
R/t
2001
21 360
776 511
36.4
6 184
63 736
10.3
27 632
832 238
30.1
2002
22 106
880 469
39.1
6 810
78 249
11.5
28 916
958 718
33.2
2003
26 852
1 281 263
47.7
5 735
74 808
13.0
32 587
1 356 071
41.6
2004
39 035
1 948 642
49.9
8 347
136 721
16.4
47 381
2 085 364
44.0
2005
37 923
2 000 985
52.8
12 046
221 034
18.3
49 970
2 222 019
44.5
2006
47 144
2 549 709
54.1
11 419
239 846
21.0
58 563
2 789 555
48.0
2007
50 678
3 077 423
60.7
13 143
298 941
22.7
63 821
3 376 364
52.9
2008
45 218
3 358 639
74.3
13 391
416 364
31.1
58 609
3 775 003
64.4
2009
41 182
3 491 901
84.8
12 422
403 784
32.5
53 604
3 895 685
72.7
2010
39 078
3 419 386
87.5
13 279
457 693
34.5
52 357
3 877 079
74.1
Source:
Notes:
+
x
Includes crusher sand
Natural sand
DEMAND
The South African sand and aggregate sector consists of some 307 registered operating quarries with
growth driven by demand in the construction industry. The construction industry comprises residential
building, non residential building and civil construction. Demand for sand and aggregate products was
generally weak in all three sectors, but this was partially offset by higher demand in neighbouring countries
like Botswana for new infrastructure expenditure, especially roads.
CONSTRUCTION
Investment in the construction industry was slow in 2010, owing to infrastructure bottlenecks as well as the
completion of large projects including airports, stadiums and the Gautrain. In the residential market,
establishment of bulk infrastructure, such as water, sanitation, and electricity could moderate the rate of
rolling out government's social housing programme, but also act as a catalyst for demand for additional
units of aggregate and sand. The government has since addressed some of these challenges in the New
Growth Path framework.
According to Industry Insight, total investment in construction works (current prices) increased by
5 percent from R166 billion in 2009 to R175 billion in 2010. Investment by the public corporations
increased to an average of R45 billion per annum during the last five years, reaching R94 billion in 2010,
up 8.9 percent compared to 2009. Spending by general government averaged to R55 billion during 2009
and 2010, down 0.3 percent, while expenditure by the private sector increased by 3.6 percent in 2010 to
151
R25.3 billion. Total Gross Fixed Capital Formation (GFCF) decreased by 1.95 percent to R522 billion
compared with the previous year. Spending on construction was the main driver in total GFCF. Investment
in civil works contributed 33.5 percent to total GFCF in 2010 (current prices), while investment in buildings
contributed 20.8 percent.
PROJECTS IN THE CONSTRUCTION SECTOR IN 2010
The most important client for civil construction works is the state owned enterprises, as they spent more
money compared to all the other government departments. Public corporations funded 54 percent of the
value, of civil construction works in 2010 compared with 56 percent in 2009, followed by general
government‟s 31.5 percent of the projects and private businesses‟ 14.5 percent.
Demand for housing continued to be down in spite of the low interest rates. Although it was expected that
low interest rates would stimulate economic activity and have a positive impact on demand for houses, this
expectation failed to materialise. Financial markets have been under strict control following the introduction
of the National Credit Act contributing to a slow demand in housing as most consumers found it difficult to
qualify for mortgage financing. Construction of social housing by government decreased by 5.6 percent,
completing and maintaining 226 216 houses in the financial year 2009/2010 compared with the previous
financial year. Completed houses amounted to 161 845, while maintained sites amounted to 64 371.
Half of the total expected infrastructure expenditure of R800 billion committed by government over the next
three years is dedicated to state owned enterprises with a large portion directly aimed at Eskom. According
to Engineering News, Transnet plans to spend R110 billion over the next five years on rail, ports and
pipelines projects. The Rustenburg Local Municipality has launched the R3 billion Rustenburg Rapid
Transport (RRT) project, with construction planned to commence in 2012 and completion in 2015. Once
completed, the integrated transport system will provide quality transport service to some 200 000
passengers per day.
EMPLOYMENT
The sand and aggregate sector employed 7 001 staff in 2010, an increase of 3.4 percent compared with
2009 (Table 2). Higher employment levels were supported by activity in the non-residential and civil
construction sectors. Labour productivity decreased by 5.5 percent to 7.5 kt/employee, while revenue
generated per employee decreased by 3.7 percent to R553 789/employee.
TABLE 2 – SOUTH AFRICA‟S AGGREGATE AND SAND QUARRIES EMPLOYMENT AND
REMUNERATION, 2005 – 2010
YEAR
EMPLOYEES
TOTAL REMUNERATION
R'000
Source:
2005
5 210
312 073
2006
5 133
371 897
2007
5 970
463 528
2008
6 438
538 700
2009
6 773
604 730
2010
7 001
668 569
OUTLOOK
The future of the construction industry and ultimately demand for aggregate and sand is dependent on
large government driven projects. The construction industry is expected to experience softer growth rates
in the medium term, following the slowdown in private sector construction, a fall in investment from public
corporations and completion of mega projects. Total investment in construction is expected to modestly
grow by an annual rate of 2.8 percent to R206 billion (2005 prices) by 2014, as a result of softer investment
growth in civil works, coupled with an expected weak demand from building construction.
152
South Africa‟s property market, even though subdued at the moment, has generally weathered the impacts
of the global downturn quite well, mainly due to responsible banking practices. Investment in residential
buildings is expected to increase by an average annual rate of 4.2 percent between 2011 and 2014 while
non-residential investment is expected to decrease by an average annual rate of 1.4 percent over the
same period.
The long term prospect for the local construction industry is positive, underpinned by investment in
construction of key infrastructure projects such as electricity, water and roads, which will continue playing a
critical role in driving economic growth. Public Private Partnerships (PPPs) in the development of high
value projects could provide further opportunities which will ultimately result in increase in demand for
aggregate and sand.
REFERENCES
1.
2.
3.
4.
5.
Engineering News, Upturn in commercial rentals does not mean boom, July 2011
Industry Insight, The state of the South African Construction Industry, June 2011
PPC, Annual Report, 2010
Raubex, Annual Report, 2010
153
ALUMINO-SILICATES
Mphonyana Modiselle
WORLD SUPPLY
Global production of the three alumino-silicate minerals, namely: andalusite, kyanite and sillimanite,
increased by 15.2 percent from 375 kt in 2009 to 432 kt in 2010, due to recovery of the global economy
and especially steel production. South Africa remained the world‟s largest producer of alumino-silicates,
accounting for 61 percent of global output followed by the United States at 16 percent and France at 15
percent (Fig. 1).
FIGURE 1 – WORLD PRODUCTION OF ALUMINO-SILICATES BY COUNTRY, 2010
India
6%
Other
2%
France
15%
South Africa
61%
United States
16%
Sources: USGS, 2011
WORLD DEMAND
Demand for alumino-silicates is driven by the manufacture of refractories. In 2010, the total world
refractories market was estimated to be approximately 23 Mt of which crude steel production consumed
around 70 percent (Fig. 2). Global crude steel output rose by 15.6 percent year on year in 2010 to 1.4
billion tons, setting a new record. All major steel producing countries and regions showed double digit
growth in 2010 relative to 2009.
FIGURE 2 – WORLD REFRACTORIES MARKET BY END-USERS, 2010
Foundries 3%
Non-Ferrous 4%
Glass 4%
Cement & Lime 5%
Chemicals 5%
Ceramics 6%
Source: Andalusite Resources
154
Other 3%
Iron & Steel 70%
PRICES
According to Industrial Minerals, prices have remained stagnant in 2010. The South African market prices
(2 000 tonne bulk, FOB) for 57-58 percent aluminium trioxide (Al2O3) andalusite concentrate were static in
the range €225-€255/t. The European FOB prices for 57-59 percent Al2O3 andalusite remained unchanged
in the range €335-385/t. The US prices for raw and calcined 55-60 percent Al2O3 kyanite were also static in
the ranges $211-$301/t and $351-$414/t respectively. South African average local unit values decreased
slightly by 1.4 percent to
R1 829/t, while export unit values increased by 3.4 percent to R2 406/t, as
a result of stronger demand.
The steel industry, which is the main driver for the refractory industry, is growing, but prices are not rising
and producers are keeping their costs as low as possible. In response to the market conditions, producers
are not replacing furnace linings as frequently as before but instead are optimising their life span in order to
minimize downtimes and maximize output. The demand for andalusite, led to more competition for orders,
which in turn put pressure on the price levels.
TRADE
South Africa exported 134 kt of andalusite in 2010, an increase of 22.9 percent compared with 2009 due to
increased demand. The major consumers of South African andalusite were Belgium, which accounted for
37 percent of the total export sales followed by Japan at 21 percent and China at 11 percent (Fig. 3).
FIGURE 3 – SOUTH AFRICA‟S EXPORTS OF ANDALUSITE BY DESTINATION, 2010
Other
16%
Belgium
37%
Korea Rep
6%
Germany
9%
China
11%
Japan
21%
WORLD DEVELOPMENTS
Andalucita SA‟s new andalusite operation near Paita in Peru is reported to be on course to reach
production capacity levels of 55 kt/a by mid-2012. Picobello Andalucita SL‟s project in Spain is expected to
ramp up production after it was slowed by permits acquisition and funding. Initial funding was secured in
2007. According to Industrial Minerals, the Spanish company is targeting a capacity of 65 kt/a: 50 kt/a
refractory grade and 15 kt/a for two other applications, which remain confidential, including one in the
metallurgy sector.
SOUTH AFRICA
Andalusite Resources, owned by African Mineral Trading and Exploration, is the only other supplier of
South African andalusite outside the Imerys subsidiary Damrec group and operates near Thabazimbi.
Imerys South Africa produces almost 80 percent of andalusite production in the country.
155
Damrec (Imerys‟ overseas affiliate) has four mines in South Africa namely: the Annesley mine on the
outskirts of Burgersfort in Limpopo Province, the Havercroft mine in Sekhukhuneland in Limpopo and the
Rhino Andalusite mine near Thabazimbi in Limpopo Province. The fourth mine Krugerpost, owned by
Imerys‟ South Africa‟s subsidiary Samrec, is located near Lydenburg in the Mpumalanga province.
South Africa‟s production of andalusite was 190 kt in 2010, a 15.2 percent increase over 2009 (Table 1), to
meet rising demand. As the global economy recovered, global output of steel increased.
Andalusite Resources has expanded its andalusite production capacity by 30 percent since mid-2010 as
part of its programme to boost capacity over the next three years to 80-100 kt/a. The plant upgrade has
brought production capacity to around 70 kt/a. Damrec has concluded its capital investment to increase
capacity, which included debottlenecking at Thabazimbi and an extension to add 5-10 kt/a at Krugerpost,
for an investment of R70 million.
TABLE 1: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF ANDALUSITE, 2001–
2010
YEAR
PRODUCTION
Kt
193
165
165
235
228
221
265
217
165
190
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
EXPORTS
Mass
Mass
kt
46
46
44
50
47
47
51
75
53
92
Value (FOR)
R‟000
45 456
48 800
53 515
64 430
57 568
59 022
70 554
115 292
97 918
167 673
R/t
985
1 051
1 212
1 284
1 236
1 249
1 382
1 534
1 855
1 829
Kt
133
112
130
168
135
129
175
148
109
134
Value (FOB)
R‟000
130 089
118 064
166 736
211 719
186 229
183 581
282 164
289 175
253 554
321 933
R/t
798
1 056
1 282
1 263
1 380
1 421
1 612
1 954
2 326
2 406
Local consumption rose by 73.6 percent to 92 kt in 2010 compared with 2009, while export tonnages
increased by 22.9 percent to 134 kt due to the increase in demand for refractories driven by steel
production. The value of local sales rose by 71.2 percent to R167.7 million while the export sales value
increased by 27.0 percent to R321.9 million.
TABLE 2: SOUTH AFRICA‟S ALUMINO-SILICATE MINES: EMPLOYMENT, 2005–2010
YEAR
2005
2006
2007
2008
2009
2010
EMPLOYEES
441
501
567
742
765
472
TOTAL REMUNERATION
R‟000
33 008
38 776
48 581
62 956
68 471
65 953
Employment in the alumino-silicate industry decreased by 38.3 percent while remuneration also declined
by 3.7 percent in 2010 compared with 2009 (Table 2) due to the decrease in the number of employees.
The employees were not replaced as most plants were not running at full capacity. Productivity in terms of
average revenue earned amounted to R1 037 301 in 2010, a 125.8 percent increase from R459 441 in
2009. Production per employee amounted to 0.4 kt in 2010, a 90.5 percent increase from 0.21 kt in 2009.
OUTLOOK
The outlook for andalusite globally is healthy and the outlook for South African andalusite is positive due to
the expected growth in demand for alumino-silicates for the refractory industry. Pressure to produce longer
lasting, lower cost refractories is expected to stimulate the industry. Demand for higher quality refractories
156
from emerging economies in Asia is expected to keep boosting the industry, with a growing potential
coming from India, Indonesia, Vietnam, the Philippines and Turkey, in addition to Brazil.
The demand for andalusite will depend on the following: bauxite availability and pricing; other aluminasilicates minerals prices and availability; steel industry supply and demand, the main driver of the refractory
industry and ferrochrome and ceramic industry. These industries are growing, except for bauxite which is
stable (no major growth or decline) and it is uncertain when it will change. Andalusite and bauxite are used
in refractories industry and the bauxite supply is mainly controlled by China whereby its prices or stability is
insecure. Andalusite is attracting refractory opportunities as a substitute to bauxite and it is driven by
availability, price and strategic issues. Restrictions imposed by China on bauxite exports could have a
major impact on demand for andalusite.
The research and development (R&D) bauxite replacement project between South African andalusite
producers and technical consultants in Europe, which seeks to raise demand for andalusite, is still
progressing. The objective is, rather than competing for market share within the andalusite market, to
enlarge the total market, through taking share away from other raw materials. Initial results have been
positive and the final results will be known by the end of 2011.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
Industrial Minerals, 2010.
Stompie du Toit, Samrec Pty Ltd, Personal communication
Andreas Pabst, Andalusite Resources Pty Ltd, Personal communication
Arnold O. Tanner, Kyanite and Related Materials Review, USGS 2011
Steel Grips Online, accessed 29/06/2011,http://www.steel-grips.com/newsdesk/statistics
The Business of Mining, website: http://thebusinessofmining.com/2011/01/2011world-steel-association, accessed 29/06/2011
157
DIMENSION STONE
PR Motsie
WORLD SUPPLY
Supply still remained modest in 2010 (Fig1), as a result of weak demand in the construction industry in
most parts of the world compounded by the public debt crisis in Greece that is negatively impacting on the
financial institutions in the European Union (EU) region. Furthermore, the Chinese government induced a
slowdown in their GDP in order to create more sustainable and quality growth. Estimated world dimension
stone production was 107.3 Mt in 2010, an increase of 0.5 percent compared with 106.8 Mt in 2009. China
and India remained the world‟s largest producers collectively accounting for 42 percent of world total
output.
FIGURE 1: DIMENSION STONE PRODUCTION DURING 2006 – 2010
109000
Mass (kt)
108000
107000
106000
105000
104000
103000
102000
2006
2007
2008
2009
2010 *
Year
Source: IMM Carrara, 2010
*2010 figures were estimated from various data collection
In 2010, supply of major EU producers fell with the exception of Italy which recovered as an exporter of raw
materials. Total world exports of granite is estimated to have increased by 7.4 percent to
32.1 Mt in 2010, compared with 29.9 Mt in 2009. China continued to dominate exports, contributing
53 percent to total world exports, followed by India at 16 percent and Brazil at 9 percent (Fig. 2).
FIGURE 2: WORLD EXPORTS OF GRANITE BY COUNTRY, 2010
Brazil
9%
Italy
5%
Other
17%
India
16%
China
53%
Source: IMM Carrara, Italy, 2010
158
WORLD DEMAND
Demand for dimension stone is mainly driven by trends in the construction industry and real estate
markets, which account for over 80 percent of demand, followed by the funerary monumental industry with
approximately 15 percent while various special applications account for 5 percent
(Fig. 3).
FIGURE 3: WORLD CONSUMPTION OF DIMENSION STONE BY SECTOR
Funeral and
monumental
industry
15%
Other
5%
Construction
industry
80%
Source: South African Institute of Mining and Metallurgy, 2008
SOUTH AFRICA
The local granite industry is dominated by two companies, Kelgran Investments (Spain) and Marlin
Corporation (subsidiary of Finstone Srl, Luxembourg), which together account for approximately 72 percent
of South Africa‟s total granite production. Most of South Africa‟s granite production is gabbro from the
Bushveld Complex for which there is a strong demand because of its high quality grain structure and
consistent unique grey colour. Furthermore, South Africa has a well developed transport infrastructure that
is able to support a consistent supply of granite to the global industry.
In 2010, South Africa‟s local sales volume of granite declined by 18.6 percent to 272.5 kt resulting in a
revenue decrease of 36.3 percent to R217 million compared with 2009 (Table 1). The fall in local sales is
correlated to the subdued conditions in the local construction industry following the completion of major
projects for the 2010 FIFA World Cup, which provided the much needed stimulus during the economic
downturn. Export sales tonnages increased by 6 percent to 65.4 kt while revenue decreased by 4.8
percent to R120 million owing to weaker unit prices.
159
TABLE 1 – SOUTH AFRICA‟S GRANITE SALES, 2001–2010
LOCAL SALES
YEAR
EXPORTS
2001
Mass
kt
85,6
Value (FOR)
R‟000
R/t
39 836
465
Mass
kt
761,1
Value (FOB)
R‟000
R/t
677 698
890
2002
75,2
37 229
495
630,6
837 332
1 328
2003
78,5
47 824
609
384,7
718 746
1 868
2004
177,9
147 273
828
370,7
342 284
888
2005
302,5
165 783
548
305,0
260 493
854
2006
284,4
185 234
651
211,9
209 754
990
2007
394,8
319 455
809
159,3
156 810
984
2008
458.0
489 346
1 069
85.6
211 674
2 474
2009
334.6
340 493
1 018
61.7
126 508
2 050
2010
272.5
217 065
796
65.4
120 407
1 840
The international arbitration process in which a group of Italian investors, viz., the Foresti family, the Conti
family and Finstone, challenged South Africa's Mineral and Petroleum Resources Development Act
(MRPDA) of 2002 and the associated Mining Charter was concluded in August 2010 in favour of the
Department of Mineral Resources with costs to the claimants amounting to R3.8 million. The claimants
concerns were that the MPRDA and the Charter requirement to convert mineral rights to new order mining
licenses and the forced sale of a stake to black shareholders violated the bilateral investment treaties
entitling them to fair treatment and effectively amounted to unlawful expropriation.
OUTLOOK
According to the Organisation for Economic Cooperation and Development (OECD) and the World Bank,
the world economic recovery is expected to remain sluggish and slow in the short term. Of main concern is
the situation in the European Union (EU) and the United States, whose public debt has not been reduced
by any significant amount and is continuing to cause instability in the markets.
Global total output of dimension stone is expected to be moderate in the short term as the markets slowly
recover from the subdued economic conditions experienced in the past two years. The international
markets are becoming more and more competitive and highly selective in terms of their products and, in
order to remain competitive, countries will have to differentiate themselves from their counterparts.
Therefore, most countries producing raw materials are expected to integrate their production processes as
far as possible with high quality and specialised products in order to secure market share.
Domestic demand of granite is expected to rise on the back of forecast growth in the construction industry
coupled with increased usage of dimension stones as substitutes in applications such as tiles and flooring.
Granite and marble are more durable than ceramic tiles, with ceramic scratching and wearing more easily.
Uses of stone materials have become more specialized in recent times and rely on new processing
technology.
Local downstream beneficiation of the raw material will continue to present opportunities for investors as
markets recovers locally and internationally supported by Government‟s decision to adopt the mineral
beneficiation strategy as a policy in June 2011.
REFERENCES
1.
2.
3.
4.
5.
Directorate Mineral Economics, DMR
IMM Carrara, Stone Sector Report, 2010
Marlin, Annual Report, 2010
Mining weekly website, Arbitration battle ends as granite claimants withdraw, accessed 20/03/2011
The Journal of the Southern African Institute of Mining and Metallurgy
160
FLUORSPAR
Mphonyana Modiselle
WORLD SUPPLY
Total world production of fluorspar slightly decreased by 0.4 percent from 5.46 Mt in 2009 to 5.40 Mt in
2010 as a result of ongoing supply. China remained the world‟s leading fluorspar producer accounting for
55 percent of world production followed by Mexico‟s 18 percent, Mongolia‟s 8 percent, Russia‟s 4 percent
and South Africa‟s 3 percent (Fig.1). Some African fluorspar producers that were forced to shut down in
2009 because of low demand and low prices were able to resume production in 2010, although the market
recovery was fragile.
FIGURE 1: WORLD FLUORSPAR PRODUCTION, 2010
Spain
South Africa 2%
3%
Russia
4%
Other
10%
Mongolia
8%
Mexico
18%
China
55%
Source: USGS, 2011
WORLD DEVELOPMENTS
In Africa, Kenya Fluorspar Company (KFC), resumed mine production after fluorspar demand increased in
the second quarter of 2010. Maghreb Minerals (London) agreed to acquire Firebird‟s 20 percent
shareholding in KFC in return for 100.3 million Maghreb shares.
In Mexico, the second largest fluorspar producer a new fluorspar mining concession was being developed
that was expected to be in production by the end of 2010. The project is expected to increase annual acid
grade fluorspar (acid spar) capacity by between 30 kt to 40 kt. The resumption of the new mining
concessions, which was stopped due to the impact of Hurricane Alex in 2010, could not be confirmed at
the time of writing. The St Lawrence fluorspar mine in Canada has been re-opened with planned output of
120 kt to 180 kt per year.
The Chinese government has announced plans to restrict future production of fluorspar owing to
decreasing reserves and environmental pollution concerns. It is also continuing with its drive to close all
small and inefficient mining and flotation operations.
DEMAND
World consumption of fluorspar amounted to 5.6 Mt and the market value of fluorspar free on board (FOB)
was approximately $1.7 billion in 2010. Nearly two thirds of the world‟s fluorspar production is for the
manufacture of hydrofluoric acid (HF), a feedstock for many different chemical products. The phase out of
chlorofluorocarbons (CFCs) lowered demand for HF and also had a significant impact on the global
fluorochemical market. Approximately one third of fluorspar produced worldwide is of metallurgical grade
and is used primarily as a flux in steelmaking and in the production of aluminium. World fluorspar demand
161
showed some signs of recovery in 2010, but was still depressed compared to 2008. The continuing strong
demand in China resulted from its growing domestic consumption of refrigerants. Not only have China‟s
exports of fluorochemicals increased over the years, but it has also increased exports of fluorochemical
downstream products.
Higher steel production, where metallurgical grade fluorspar (metspar) is used primarily as a flux, led to
higher metspar consumption in 2010. Demand for metspar produced in Mongolia is strengthening resulting
from a recovery in the European and Japanese metallurgical and welding electrode markets.
TRADE
The dramatic decrease in fluorspar exports from China in recent years has resulted in companies outside
China attempting to replace lost Chinese export supplies by expanding capacity at their current mines and
by developing new fluorspar mining projects. The Chinese export restrictions together with the rising
interest in the commodity are likely to stimulate investment in countries that are rich in this resource. South
Africa‟s producers are currently planning to exploit this opportunity and are looking at securing long term
agreements with companies around the world.
Environmental concerns arising from the production of nine raw materials, including fluorspar, convinced
China to restrict its exports by introducing quotas, export duties, a minimum export price system, as well as
additional requirements and procedures for exports. The World Trade Organization (WTO) ruled against
China and called for the immediate lifting of all export restrictions on fluorspar and a number of other raw
materials. Buyers of Chinese fluorspar had hoped that the lifting of the export quota system for fluorspar
and a license fee would have helped to free up supply and make export prices more competitive. This,
however, has not materialised as export prices still remained significantly higher than domestic prices due
to a 15 percent export tax which is still in place. Consumers of Chinese fluorspar are still paying high prices
due to the taxes and freight rates.
PRICES
China has been the benchmark for fluorspar prices in recent decades as the dominant producer and
exporter. High Chinese fluorspar prices were supported by the country‟s domestic demand, as well as the
drive by the Chinese government to protect domestic mineral reserves and to cut down on environmental
pollution. The WTO panel ruled that the export restrictions and duties imposed by China were incompatible
with China‟s WTO Accession Protocol (which sets clear disciplines on export duties) or with the General
Agreement on Tariff and Trade (GATT 1994) rules that forbid unjustified export restrictions and China‟s
environmental; resource conservation and other arguments to justify the measures did not comply with
WTO rules (Fig. 2). The rising price trend is likely to lead to renewed investor interest and reopening of idle
fluorspar mining capacity.
FIGURE 2: WORLD ACID GRADE FLUORSPAR PRICES, 2006 – 2010
600
500
Price $/t
400
300
200
100
0
Jun '06 Dec '06 Jun '07 Dec '07 Jun '08 Dec '08 Jun '09 Dec '09 Jun '10 Dec '10
Chinese, CIF
South African,FOB
Source: Industrial Minerals, 2010
162
Mexican, CIF
SOUTH AFRICA
South Africa‟s fluorspar production declined by 36.3 percent from 204 kt in 2009 to 130 kt in 2010 (Table 1)
due to technical problems experienced in one of the local producer‟s plant.
TABLE 1 - SOUTH AFRICA‟S PRODUCTION OF FLUORSPAR, 2001 – 2010
YEAR
PRODUCTION
Kt
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
286
227
235
275
265
270
285
316
204
130
Source: USGS, 2011
Note: Sales figures withheld for reasons of confidentiality
Labour productivity decreased by 6.4 percent to 0.44 kt per employee in 2010 and average earnings
increased by 22.6 percent to R167 798 per employee (Table 2). Revenue generated per employee is
withheld due to confidentiality.
TABLE: SOUTH AFRICA‟S FLUORSPAR QUARRIES: EMPLOYMENT AND REMUNERATION, 2006 2010
YEAR
EMPLOYEES
TOTAL REMUNERATION
2006
2007
2008
2009
2010
441
490
605
432
297
R‟000
39 375
51 608
62 027
59 128
49 836
The South African Nuclear Energy Corporation (Necsa) subsidiary Pelchem beneficiates a small
percentage of locally mined fluorspar into higher value fluorochemicals as envisioned by the
Fluorochemical Expansion Initiative (FEI). The current production consumes around 10 kt/a of fluorspar
which is expected to remain the same for the next 3 years. FEI supports the Sephaku Project as well as
the Alfluorco project. Alfluorco, a consortium between Spanish fluorspar producer Minerales Y Productos
Derivados S.A (Minersa) and the Industrial Development Corporation (IDC) investigated the establishment
of a HF and aluminium trifluoride (AlF3) plant in Richards Bay, Kwazulu-Natal. Of the 32 kt per annum HF
planned, 22 kt was to be used in the AlF3 production and 8 kt would have been available for sale to other
downstream users. This project has been placed on hold by the consortium members due to the current
global economic climate. The fluorspar would have been supplied by the Vergenoeg mine. The main
objectives of this FEI are skills development, technology creation and international collaboration. To date
the project has supported 103 students and produced 133 published and conference papers and 7 patents.
Sephaku is a local company that is evaluating the establishment of a HF and AlF3 plant in South Africa.
The fluorspar required for this would be around 130 kt/a and all of this will be sourced locally.
The feasibility study, which initiated in these projects (HF/ AlF3), was jointly funded by the Department of
Trade and Industry (the dti) and Department of Science and Technology (DST). The dti, Pelchem and the
Industrial Development Corporation (IDC) are evaluating a multitude of new fluorochemical commercial
opportunities, aligned with strategic government programs of mineral beneficiation, Industrial Policy Action
Plan (IPAP), Integrated Resource Plan (IRP2).
Maghreb Minerals (London) had conditionally purchased a controlling interest in the South African
fluorspar producer Sallies in an all-shares deal. Maghreb Minerals was expected to purchase the 66.9
163
percent stake in Sallies held by Firebird Global Master Funds, giving it a total holding of 78.3 percent.
Maghreb raised $10 million in financing in a rights issue and would use the funds to restart fluorspar
production from Sallies Witkop Mine. After remodelling the geology and mining plans, Maghreb intended to
produce 125 kt of acid spar per year from Witkop for the export market and a small amount of metspar for
domestic markets. When Witkop mine closed down, the group was contractually bound to reimburse
Eskom the costs incurred by them in upgrading an electrical substation; the potential liability was R105
692. African Renaissance Holdings Limited (ARH), which is Sallies Black Economic Empowerment (BEE)
partner, has a 26 percent share holding in both the operating mines owned by Sallies, namely Buffalo
Fluorspar and Witkop Fluorspar. ARH has undertaken that 31 percent of any funds received by it from
Buffalo and Witkop mines will be distributed to the community in order to promote interests of employees
within the community.
Sallies‟ dispute with Honeywell was finally resolved during the period by the issue of 82 million company
shares in full and final settlement. Sallies and Witkop were involved in tax disputes for with the South
African Revenue Services (SARS) regarding the 2000 to 2003 years of assessment. These issues were
heard in the Tax Court in November 2010 and in a written judgment handed down in January 2011, the
judge ruled in Sallies` and Witkop`s favour in all material respects.
OUTLOOK
The global market for fluorspar is forecast to reach 5.2 Mt by the year 2015. Aluminum fluoride markets are
likely to spur demand for fluorspar in the coming few years. Demand for fluorspar in other areas such as
aluminium fluoride for aluminium smelters and electric arc furnaces, are also expected to grow robustly.
CFCs were phased out due to higher ozone depleting potential (ODP) and replaced by
hydrochlorofluorocarbons (HCFCs), which were also phased out due to lower ODP. The stringent
regulatory environment on the use of CFCs and HCFCs was the primary reason for the sluggish fluorspar
market and they were replaced by hydrofluorocarbons (HFCs), which has zero ODP but has global
warming potential (GWP). Demand for the mineral is expected to grow in the near-term driven by the
increasing use of fluorspar for manufacturing fluorocarbons. The international fluorochemical industry is
backing hydrofluoroolefins (HFO‟s) as HFC replacements, which are likely to consume similar amounts of
fluorspar as the compounds that they would replace. However, there are doubts about the safety of HFO,
as the compound is flammable and its fluoride content means that if ignited HF would be produced.
Rising prices for Chinese acid spar would exert an upward pressure on prices of acid spar from other major
exporting countries, such as Mexico and South Africa. The current market uncertainty about future
fluorspar supply itself is another factor that could raise prices further.
The major producers, including South Africa are likely to increase production to exploit the favourable
market conditions. One of the FEI objectives is to raise the level of local value addition of the commodity
from 5 to 25 percent of domestic production. Higher levels of local fluorspar beneficiation have the potential
to create 1 000 jobs and raise export revenue by R1 billion.
REFERENCES
1. Chairman‟s Statement, Sallies Limited Annual Report, 2010, page 2-4
2. Contigent liabilities & Litigation, Notes to the financial statements, Sallies Limited Annual Report, 2010, page 42
3. Dr Phil Mjwara, Department of Science and Technology, DST Strategic Plan 2010-2016,Presentation to the Portfolio
Committee,13 April 2011
4. Garvin Clarke, Sallies Limited, personal communication
5. Industrial Minerals, 2010
6. Kevin Dabinett, Vergenoeg Mining Co (Pty) Ltd, personal communication
7. Miller MM, Fluorspar Reviews, USGS
8. Mineral Economics Directorate, DMR
9. Mining Weekly Online
10. Rajen Naidoo, Pelchem Pty Ltd, NECSA, personal communication
11. Section 6.3, Fluorochemical and Collaborative research in Mineral Beneficiation, Research and Technology Review, Necsa
Annual Report, 2010, page 18
12. Section 9.3 Pelchem (Pty) Ltd: Group, Commercial Review, Necsa Annual Report, 2010, page 34
13. Sephaku Holdings Fluorspar Fact Sheet, September 2010
164
LIMESTONE AND DOLOMITE
PR Motsie
SUPPLY
In 2010, South Africa‟s total production of limestone and dolomite decreased slightly by 0.86 percent to
22.50 Mt compared with 2009, because of the decrease in demand for cement in the construction industry
(Table 1). Local sales volume decreased by 3.9 percent to 19.2 Mt, while revenue increased by 7.5
percent to R2.3 billion as a result of improved prices.
TABLE 1: SOUTH AFRICA‟S PRODUCTION AND LOCAL SALES OF LIMESTONE AND DOLOMITE
FOR NON-AGGREGATE USE, 2001 – 2010
YEAR
PRODUCTION
kt
18 946
20 738
21 267
22 031
24 813
27 366
23 941
23 495
22 698
22 502
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
Mass
kt
15 110
16 901
17 502
17 466
18 877
20 359
20 493
19 781
20 008
19 220
Value (FOR)
R‟000
901 551
1 055 733
1 198 800
1 227 322
1 306 527
1 517 661
1 698 586
1 899 279
2 105 297
2 263 991
R/t
59.7
62.5
68.5
70.3
69.2
75.0
83.0
96.0
105.0
118.0
DEMAND
Demand for limestone and dolomite products is mainly driven by the construction, agriculture and
manufacturing sectors. The principal use of limestone in South Africa is in the manufacture of cement,
followed by metallurgical applications (as a fluxing agent in steel making), and production of lime for
agricultural uses (Fig 1).
FIGURE 1: DEMAND FOR LIMESTONE BY SECTOR, 2010
Other
10%
Cement
75%
Agricultural
4%
Metallurgical
11%
Total = 18 kt
165
Cement manufacture accounted for 75 percent of limestone demand in 2010. Local sales volume of
limestone for the manufacture of cement decreased by 9.4 percent to 13.46 Mt, as growth in the
construction industry slowed down and the housing market remained weak (Table 2). Local sales mass of
metallurgical grade carbonates increased by 53.8 percent to 1.90 Mt, due to improved demand from the
steel manufacturing industry. Local sales mass of agricultural limestone and dolomite (aglime) dropped by
5 percent to 812 kt as a result of weak demand for various fertiliser applications.
TABLE 2: SOUTH AFRICA‟S LOCAL SALES OF LIMESTONE AND DOLOMITE BY APPLICATION,
2001 – 2010
YEAR
CEMENT
Mass
Kt
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
9 700
11 218
11 893
11 565
13 519
14 225
14 647
14 252
METALLURGICAL
Value (FOR) Mass
R‟000 R/t
Kt
156 639
188 653
216 148
225 433
279 474
313 038
350 922
403 215
16
17
18
19
21
22
24
28
2 038
2 088
1 972
2 041
1 964
2 183
1 569
1 372
14 860 462 122 31 1 237
13 458 443 978 33 1 902
AGRICULTURAL
Value (FOR)
R‟000
R/t
OTHER
Mass
Kt
Value (FOR)
R‟000
R/t
Mass
kt
44
47
53
53
58
60
75
87
799
993
935
948
604
707
860
879
36 497
49 281
53 732
48 404
35 948
51 779
59 304
72 263
974
1 017
1 110
1 139
1 328
1 533
1 774
1 646
117 632 95
189 353 100
855
812
81 762 96
88 168 109
90 442
98 690
104 861
107 887
114 205
131 284
117 847
120 083
46
50
57
51
60
73
69
82
Value (FOR)
R‟000
R/t
185 487
230 879
260 981
275 612
297 219
335 919
366 980
381 021
190
227
235
242
224
219
207
231
1 616 404 149
1 755 440 906
250
251
The market for cementitious products in South Africa is divided into civil engineering and building sectors.
South Africa‟s cementitious sales declined by 7.8 percent to 10.87 Mt in 2010, compared with the previous
year (Fig 2), owing to weaker demand resulting from the longer than anticipated delays in the
commencement of new construction projects. The government's infrastructure development plan has not
been the stable demand driver for cement-intensive projects it was expected to be, following the South
African government‟s commitment to infrastructural development. However, the decline in local cement
sales was partially offset by rising cement demand from Zimbabwe as a result of investment in
infrastructure projects to rebuild that country.
In the residential market, establishment of bulk infrastructure, such as water, sanitation, and electricity was
identified as a major obstacle for rolling out government's housing programme. The residential market has
been the major contributor to South Africa‟s cement demand in recent times. Lower market demand for
cementitious products has resulted in a more competitive market with cement producers looking for
creative ways to sell their products amid increasing input costs.
MILLION TONS CEMENT
FIGURE 2: SOUTH AFRICAN CEMENTITIOUS PRODUCT SALES, 2005 – 2010
16
14
12
10
8
6
4
2
0
2005
2006
2007
2008
YEAR
Source: Cement and Concrete Institute, 2010
166
2009
2010
EXPANSIONS IN THE CEMENT INDUSTRY
South Africa
Plans are still under way for the construction of a cement production plant next to Brits in the Limpopo
Province by a Joint Venture between Women Investment Portfolio Holdings group (Wiphold), Continental
Cement (Conticem), Chinese Jidong Development Group, and the China-Africa Development Fund
(CADFund). The initial project design will produce 2.8 kt/day of ordinary Portland cement by 2013, with
sufficient resources to substantially increase capacity in the future. The project will employ about 800
workers in the construction phase and 237 in the final operational stages.
Construction work on Sephaku Cement‟s Aganang project near Delmas has commenced, with completion
scheduled for the end of 2013. The plant will produce 900 kt per annum of cement. Investment in the new
project will amount to R1.8 billion and the project will create about 250 direct jobs and 600 indirect jobs.
Construction work commenced after Sephaku was issued with the Record of Decision (ROD) by the
Department of Mineral Resources following the approval of all other regulatory requirements. The project is
expected to create about 66 permanent jobs. Sephaku Cement will begin with the construction of a 36 kt
per annum clinker and cement production facility in 2013 near Dwaalboom in Limpopo after the completion
of the Aganang project, which will create about 200 jobs.
Southern Africa
Pretoria Portland Cement (PPC) is planning to invest $200 million in the construction of a cement factory in
the south of Mozambique, which is expected to begin in 2011. Whether the construction works had
commenced as scheduled could not be confirmed at the time of writing. The factory will produce 600 kt per
year of cement once completed. The PPC group is the biggest supplier of cement in Southern Africa, with
eight factories in South Africa, Botswana and Zimbabwe.
CEMENT IMPORTS
South Africa‟s imports of white cement and clinker decreased by 56 percent to 55.2 kt in 2010 compared
with the previous year (Fig 3). Clinker imports have continued on a steep downward trend since 2008,
recording a decline of 82 percent to 18.8 kt in 2010, compared with 2009. Low demand for cement in the
construction industry has led to an oversupplied market resulting in lower imports. White cement imports
increased by 71.7 percent to 36.4 kt, while aluminious cement increased by 31.3 percent to 4.2 kt.
FIGURE 3: SOUTH AFRICAN IMPORTS OF CEMENT PRODUCTS, 2008 – 2010
500
Mass (kt)
400
300
200
100
0
2008
Clinker
White cement
2009
Other
Aluminious cement
2010
Other hydraulic cement
Source: South African Revenue Service, 2010
LIME
Lime is an important raw material used in many industrial processes. Local sales volume of lime declined
by 5.8 percent to 1.29 Mt compared with the previous year, as demand from key customers in the steel and
alloys industries dropped owing to operational problems and extended shutdowns (Table 3). Total sales
volumes of quicklime for pyrometallurgical and chemical applications decreased by 6.4 percent to 1.18 Mt,
while revenue increased by 6.5 percent to R983 million compared with the previous year, resulting from
167
higher prices. Hydrated lime sales for water purification and chemicals increased by 14.3 percent to 56 kt
and 7.1 percent to 30 kt respectively.
TABLE 3: SOUTH AFRICA‟S LOCAL SALES OF LIME, 2009 – 2010
LIME PRODUCT,
BY SECTOR USE
Quicklime
Pyrometallurgical
Chemical
SUB-TOTAL
Hydrated lime
Water purification
Chemical
Other
SUB-TOTAL
TOTAL
Mass
Kt
2009
Value (FOR)
R‟000
R/t
2010
Value (FOR)
R‟000
R/t
Mass
Kt
688
576
1 264
488 177
434 612
922 789
710
754
730
598
581
1 179
503 990
479 129
983 119
843
825
834
49
28
27
104
1 368
44 432
29 455
29 771
103 658
1 026 447
902
1 059
1 087
997
750
56
30
27
113
1 292
53 990
32 102
32 269
118 361
1 101 480
974
1 085
1 180
1047
853
EMPLOYMENT
The limestone and dolomite industry employed 2 636 people in 2010, an increase of 5.9 percent compared
with 2009 (Table 4). Labour productivity decreased by 6.4 percent to 8.5 kt/employee, while revenue
generated per employee increased by 1.9 percent to R858 874/employee. Average annual earnings
increased by 7.6 percent to R155 529/employee.
TABLE 4: SOUTH AFRICA‟S LIMESTONE AND DOLOMITE QUARRIES: EMPLOYMENT AND
REMUNERATION, 2006 – 2010
YEAR
2006
2007
2008
2009
2010
EMPLOYEES
TOTAL REMUNERATION
R‟000
251 895
286 461
321 698
359 959
409 973
2 385
2 452
2 517
2 490
2 636
OUTLOOK
Although cement demand in the local building and construction industries has been subdued in 2010, low
lending rates together with the government‟s commitment to continue broadening public investment in
infrastructure development programmes should bring growth in the medium to long term. South Africa‟s
demand for cement is expected to grow by 6.5 percent per annum to reach 23.1 Mt by 2015, with the
development of low-cost housing expected to be the single largest demand driver.
Government has committed to spend over R800 billion on economic and social infrastructure from 2011 to
2013, of which, R73 billion is budgeted for the expanded public works programme. Activity in the
construction industry will be spurred on further by government‟s ongoing plans to deliver an estimated
630,000 housing units per annum by 2015, the achievement of which could be impeded by the delay in
developing bulk infrastructure. The additional infrastructural development will present an opportunity for
cement and limestone demand.
The cement market outlook seems positive, with more uses being explored in road construction because of
its durability compared to bitumen. South Africa‟s Council for Scientific and Industrial Research (CSIR) has
developed a new technology which could be an alternative to bitumen. It has developed an ultra-thin
concrete technology reinforced with a steel mesh, which requires less maintenance and more labour, thus
contributing to job creation. Rising oil prices, coupled with bitumen shortages, could make this option more
168
attractive. South Africa, as a major producer of cement, is likely to benefit from the commercialisation of
this technology.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
Afrisam, Build Trends monthly issues, 2010 – 2011
Cement and Concrete Institute, Cementitious Sales Statistics, 2010
PPC, Annual Report, 2010
Personal communication with Wipcapital, J Stockenstrom
Personal communication with Sephaku Cement, D Claassen
South African Revenue Services (SARS)
Spoortnet, Transnet frieght rail business
169
PHOSPHATE ROCK
Lerato Ramane
WORLD SUPPLY
World phosphate rock production increased by 6.0 percent to 176 Mt in 2010 compared with
166 Mt in 2009, due to the increase in demand for fertilizers. China was the world‟s largest producer of
phosphate rock in 2010, accounting for approximately 37 percent of production, followed by the United
States‟ and Morocco and Western Sahara both at 15 percent (Fig.1).
FIGURE 1: PHOSPHATE ROCK PRODUCTION BY COUNTRY, 2010
Jordan
3%
Brazil
3%
others
14%
China
37%
Egypt
3%
Tunisia
4%
Russia
6%
Morocco and
Western Sahara
15%
United States
15%
Source: USGS, 2011
World phosphoric acid (P2O5) production increased by 10.1 percent to 37 Mt in 2010, compared with 33.6
Mt in 2009, as the market recovered from the low levels of demand in 2008 and 2009. Production of
phosphate fertilizers amounted to 35.7 Mt in 2010, as a result of increased capacity in Brazil, China,
Morocco and Saudi Arabia.
WORLD DEMAND
Approximately 90 percent of world phosphate rock production is used to produce phosphoric acid for the
production of fertilisers. It is also consumed in industrial uses (chemical reagent, electro polishing, and
catalyst), medical uses (pharmaceutical, water treatment and dental) and retail uses (soap, carbonated
drinks and animal feed). The world phosphate market is currently tight due to strong demand. Phosphate
rock demand continues to increase particularly in China and India, where there is an enormous need for
fertilizers.
TRADE
Export volumes of phosphate rock increased by 50 percent to 30 Mt in 2010, compared to 20 Mt in 2009,
due to the growing demand from major consuming countries. World phosphoric acid trade increased by 9
percent to 4.8 Mt in 2010 compared with 4.37 Mt in 2009. The bulk of this volume went to India, which
accounted for half of global trade in commercial grade acid.
PRICES
Phosphate commodity prices are declining, returning to more realistic levels and bringing stability to
previously highly volatile markets. Phosphate rock prices declined by 65 percent to $100/t in 2010
compared to 2009. Phosphoric acid prices also declined by 76 percent to $450/t, while diammonium
phosphate (DAP) prices declined by 65 percent to $350/t and trisodium phosphate (TSP) prices declined
by 74 percent to $250/t (Fig. 2).
170
FIGURE 2: PRICES OF PHOSPHATE RESOURCES, 2006 – 2010
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2006
Phosphoric acid
2007
2008
Phosphate rock
2009
DAP bulk
2010
TSP bulk
Source: Fertilizer International, 2011
SOUTH AFRICA
South Africa‟s production of phosphate rock increased by 11.5 percent to 2 494 kt in 2010 compared to
2 237 kt in 2009, as a result of the expansion of Foskor‟s new South Pyroxenite Opencast Mine and
improved grades of phosphate ores. Local sales mass declined by 17.1 percent to 1 880 kt in 2010
compared with 2 268 kt in 2009, due to lower demand resulting from the closure of some phosphoric acid
plants (Table 1).
TABLE 1: SOUTH AFRICA'S PRODUCTION AND SALES OF PHOSPHATE ROCK, 2001– 2010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PRODUCTION
Mass
kt
2 420
2 803
2 643
2 735
2 577
2 629
2 556
2 287
2 237
2 494
LOCAL SALES
Mass
kt
2 591
2 532
2 665
2 484
2 498
2 252
2 523
2 687
2 268
1 880
EXPORTS
Mass
kt
555
349
250
268
91
0
36
0
0
25
Source: Foskor
Omnia Fertilizer, a division of the Omnia Group has mothballed its phosphoric acid plant located outside
Rustenburg. This plant produced phosphate based products, mainly phosphoric acid. Omnia Fertilizer has
been subsidizing the plant for several years in an attempt to keep it operating but high prices of raw
material and rail transport have impacted on the viability of the plant.
Farmers World Limpopo is a subsidiary of Meridian International Group, whose main focus is to
manufacture and distribute fertilizers. Farmers World will be taking ownership of the mothballed Sasol Nitro
plant in Phalaborwa. The company is currently in the process of finalizing the various transfers with Sasol
and
plans
to
bring
the
plant
back
to
its
full
production
of
approximately
300 kt P2O5. This company has invested R100 million in repairs, maintenance and salaries for the start-up
period. Eight hundred people will be employed including the 247 that were redeployed from Sasol.
In addition, this company plans to construct a new Mono-Ammonium Phosphate (MAP) plant in
Phalaborwa as soon as permission is obtained from Sasol. Approximately 50 percent of the company‟s
phosphoric acid will go into MAP production, while the balance will be sold to the animal feeds industry and
liquid fertilizer producers. The company has already committed R26 million to this project; however, it is
171
estimated that, by the end of the project, R50 million will have been spent. This project will create
approximately 400 new jobs.
OUTLOOK
The global phosphate industry is recovering well from the low level of demand experienced in 2008 and
2009. High consumption of phosphate rock products and raw material has pushed production to near
record levels. World production of phosphate rock is expected to increase to 228 Mt by 2015 through mine
expansion projects in Algeria, Brazil, China, Israel, Jordan, Syria and Tunisia, and development of new
mines in Australia, Kazakhstan, Namibia and Russia. World exports of phosphate rock are expected to
increase by 15 to 20 Mt between 2010 and 2015. In the medium term, no shortage of phosphate
concentrate is anticipated if all these mine projects proceed as planned.
Global phosphoric acid capacity is expected to increase by 9.2 Mt annually to 57.6 Mt P2O5 by 2015.
Expansions in China will account for one-third of this increase. World supply of phosphoric acid is expected
to reach 47.8 Mt P2O5 by 2015, while demand is expected to increase at an annual rate of 2.9 percent to
reach 44.9 Mt P2O5 by the same year.
World capacity for phosphate fertilizers is forecast to increase by 7.8 Mt P 2O5 annually to
44.4 Mt P2O5 by 2015. The main additions to capacity will occur in Brazil, China, Morocco and Saudi
Arabia, with the expansions of DAP capacity accounting for three-quarters of this increase.
South Africa‟s only producer of phosphate rock, Foskor, aims to increase its revenue to
R10 billion by 2016. This will be accomplished by raising the company‟s production of phosphate rock to 4
Mt per annum. In addition, the phosphoric acid and granulation plants capacities will each be increased to
1 Mt each per annum. The company also plans to locally beneficiate downstream products to produce
NPKs (Nitrogen-phosphate-kalium based fertilizers), defluorinated acid and water soluble fertilizers.
Furthermore, waste streams will also be beneficiated .These new products should comprise at least 5
percent of the company‟s revenue by 2013.
The industry fundamentals in South Africa are expected to remain strong in the short to medium term, as a
result of increasing growth in the agricultural sector, due to rising demand for food, feed and fuel.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
Fertilizer international magazine, Jan-Feb 2011
Foskor Annual Report 2011
Omnia Group Annual Report, 2010
Patrick Heffer and Michael Prud‟homme, Fertilizer Outlook 2011-2015. International Fertilizer Industry Association
Personal communication with Patric Reeves-Moore and Chris Alberts‟, Bosveld Fertilizer
Trevor Grant, FSSA Journal presidential report, 2010
United states Geological Survey, mineral commodity summaries, phosphate rock,
172
SPECIAL CLAYS
Mphonyana Modiselle
WORLD SUPPLY
Total world kaolin production increased by 3.0 percent from 33.0 Mt in 2009 to 34.0 Mt in 2010 owing to a
slight recovery in world paper markets and greater construction activity (Fig.1). The United States (US)
accounts for 17 percent of the total world production of kaolin, followed by Uzbekistan at 16 percent and
Germany at 10 percent. Bentonite production increased by 3.5 percent from 9.7 Mt in 2009 to 10.0 Mt in
2010 as a result of greater demand from the oil drilling, foundry and iron ore industries. The US accounts
for 39 percent of total world bentonite production, followed by Turkey‟s 10 percent, Greece‟s 8 percent and
Mexico‟s 5 percent. World attapulgite production increased by 9.4 percent from 3.2 Mt in 2009 to 3.5 Mt in
2010 due to stronger global demand. The US was the major primary producer accounting for 65 percent of
total world attapulgite production, followed by Spain‟s 24 percent and Mexico‟s 3 percent.
FIGURE 1: WORLD PRODUCTION OF SPECIAL CLAYS, 2010
45
40
Production (Mt)
35
30
25
20
15
10
5
0
2005
2006
Kaolin
2007
2008
Bentonite
2009
2010
Attapulgite
Source: USGS, 2011
WORLD DEMAND
Many markets for clays improved in 2010 as the US economy began to recover. Kaolin is tied to several
industries although its largest end use is in the paper industry, which accounts for 43 percent of the market.
Demand for paper and speciality grades showed signs of improvement as automotive, construction and
refractories markets returned to growth. Ceramics is the second largest market at 28 percent, with the
balance comprised of speciality markets, including fibreglass, refractories, rubber and paints, each
exceeding not more than about 5 percent (Fig. 2).
173
FIGURE 2: WORLD KAOLIN END MARKETS, 2010
Cement, 3%
Other, 8%
Rubber, 4%
Refractories, 4%
Paper , 43%
Paint, 5%
Fibreglass, 5%
Ceramics, 28%
Source: Industrial Minerals 2010
Overall consumption of bentonite has improved since the start of 2010. The increase in global steel
production raised demand for bentonite in iron ore pelletising. The foundries market demand has
rebounded driven by the automotive industry, its biggest end user. Higher global drilling activity has
increased demand for bentonite in drilling fluids, particularly in the oil sector driven by higher oil prices.
Consumption of bentonite for oilfield applications accounts for around 70-80 percent of the drilling grade
bentonite produced and around 20 percent of the total bentonite produced. The mineral has gained a
stronghold in this market owing to its viscosifying characteristics and effective sealing and filtration
properties. Demand for bentonite in absorbent markets including cat litter was also robust going into 2011.
Overall improvements in end markets and the weaker US dollar have boosted the export markets.
PRICES
Kaolin prices for No 1 and No 2 paper coating grade, ex-works USA remained stable for 2009 and 2010.
The prices for bentonite have also remained stable except for the foundry grade and the European cat litter
grade (Table 1). The foundry grade increased from the range of $70-90/s.ton in 2009 to $90-115/s.ton in
2010. The European cat litter grade decreased from €47-65 in 2009 to €42-60; in 2010. The Indian cat litter
grade remained constant for the period 2009 and 2010.
174
TABLE 1: WORLD PRICES OF KAOLIN AND BENTONITE, 2009-2010
KAOLIN
2009
2010
No 1 paper coating grade
$146-185/s.ton
$146-185/s.ton
No 2 paper coating grade
$95-147/s.ton
$95-147/s.ton
2009
2010
€47-65
€42-60
$34-38/s.ton
$34-38/s.ton
Oil Companies Materials Association (OCMA)/Foundry grade,
crude and dried, bulk, FOB Milos
€50-75
€50-75
American Petroleum Institute (API) grade, bagged rail, car, exworks Wyoming
$70-100/s.ton
$70-100/s.ton
Foundry grade, bagged, railcars, ex-works Wyoming
$70-90/s.ton
$90-115/s.ton
Iron Ore Pelletising (IOP) grade, crude, bulk, ex-works
Wyoming
$48-55/s.ton
$48-55/s.ton
BENTONITE
Cat litter, grade 1-5 mm, bulk, FOB Main European port
Indian, cat litter grade, crushed, dried, loose, in bulk, FOB
Kandla
Source: Industrial Minerals
SOUTH AFRICA
South Africa‟s production of kaolin declined by 3.5 percent from 31.0 kt in 2009 to 29.9 kt in 2010 due to
weaker local demand (Table 2). Local sales mass decreased by 6.3 percent to 28.2 kt owing to higher
prices. Local sales value increased by 3.6 percent to R10.0 million in 2010 compared with the previous
year owing to higher unit values. Kaolin imports rose by 64.5 percent as the market continued to be
flooded with cheap ceramic grades.
Exploration for kaolin continues, with a number of projects in the pipeline. South Africa‟s Seeland
Development Trust (which represents the St Helena Bay community) could start producing 20 kt/a kaolin at
its Langeklip deposit in the Western Cape Province from November 2011. The project aimed to create at
least 20 jobs. The deposit, a high quality kaolin and halloysite assemblage was acquired by Seeland in
2006. Exploration work is still continuing and Seeland is at present looking for a partner to exploit the
deposit which shows a very good potential for many markets. The kaolin is not suitable for paper coating
but shows very good potential for high quality porcelain and tableware. It is considered that this type of clay
will be suitable for paint and other uses.
TABLE 2: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND IMPORTS OF KAOLIN, 2001-2010
YEAR
PRODUCTION
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Kt
83.5
86.7
86.4
81.9
59.4
51.6
50.8
39.2
31.0
29.9
LOCAL SALES
Mass
Value (FOR)
Kt
R‟000
R/t
71.3
32 219
452
79.4
37 332
470
72.9
40 573
556
67.8
42 880
633
52.7
30 321
575
39.1
15 809
404
39.3
10 232
260
33.5
9 068
271
30.1
9 343
311
28.2
9 960
353
Source: # RSA, Commissioner for South African Revenue Services, 2001-2010
175
#
Mass
Kt
15.7
17.8
11.6
15.9
9.8
17.6
15.8
10.2
11.0
18.1
IMPORTS
Value (FOB)
R‟000
R/t
31 491
2 009
53 254
2 988
24 925
2 156
23 562
1 478
16 641
1 690
31 219
1 774
27 927
1 768
25 775
2 527
31 469
2 861
36 233
2 002
Notes: Import figures also include “other kaolinitic clays”
Bentonite production increased by 34.7 percent from 40.3 kt in 2009 to 54.3 kt in 2010, due to an increase
in demand for iron ore pelletising and civil applications as well as the recovery in other markets (Table 3).
The consistent demand for pelletising was driven by the ferrochrome industry demand and civil
applications driven by the demand from the Gautrain project. Local sales volume increased by 61.4 percent
from 59.8 kt in 2009 to 96.5 kt in 2010, while local sales value soared by 98.5 percent to R74.6 million in
2010 as a result of the increased demand for bentonite. Export sales volumes decreased by 27.8 percent
from 1.8 kt in 2009 to 1.3 kt in 2010, while export sales value decreased by 34.1 percent to R1.7 million in
2010 despite the increase in global drilling oil activity.
South Africa‟s largest bentonite producer, G & W Mineral Resources, a subsidiary of UK based Eco-Bat
Technologies, has designed the plant based in Koppies in the Free State in collaboration with German
processing group Birkenmayer Eirich at a cost of R42 million. The bentonite plant is the first in South Africa
to provide year round processing, reducing the impact of seasonal weather on the company‟s operations.
Wet weather can seriously impede clay processing facilities, as bentonite swells when in contact with
water, making it impossible to process through dry methods. The new plant will not only offer security of
supply, but also better quality and most importantly, greater consistency of products. Ecca Holdings is the
bentonite supplier for Eskom‟s Medupi project.
For several years G & W has been focusing on the development of bentonite-based environmental
products, such as those targeting acid mine drainage, with the latest of its product grades developed for
soil remediation and fertilisation applications. G & W‟s new product, SuperSoil, is a blend of bentonite and
manure that promotes soil fertility and enhances plant growth. G & W is not competing directly with fertiliser
manufacturers, but rather partnering with them in new growth projects. The trade-off for fertiliser suppliers
is that SuperSoil will enable otherwise infertile land to be cultivated, vastly extending the arable component
of available land for farming.
TABLE 3: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF BENTONITE, 20012010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PRODUCTION
Kt
108.3
101.1
145.1
55.9
139.8
32.9
45.8
44.1
40.3
54.3
Mass
Kt
51.8
67.8
74.4
75.5
75.9
75.1
87.3
96.1
59.8
96.5
LOCAL SALES
Value (FOR)
R‟000
R/t
19 793
382
32 916
485
31 210
420
35 662
473
35 738
471
39 005
520
49 749
570
64 670
673
37 585
628
74 594
772
Mass
Kt
0
10.0
11.0
10.5
6.9
4.0
3.2
3.4
1.8
1.3
EXPORTS
Value (FOB)
R‟000
R/t
4 065
408
3 728
338
5 956
566
4 778
688
2 887
715
2 434
761
4 399
1 294
2 529
1 393
1 667
1 293
South Africa‟s production of attapulgite increased by 56.8 percent to 85.3 kt in 2010 and local sales volume
increased by 57.4 percent to 85.3 kt in 2010 (Table 4). Local sales value increased by 56.7 percent to
R25.1 million in 2010 compared with 2009. The main demand for attapulgite is cat litter and as a carrier for
pesticides.
As with most industrial minerals, distance from the customer is a critical coit factor for attapulgite producers
and to compensate a producer needs to add value. In this regard one attapulgite producer has installed a
powder mill that is able to mill down to 10 micron particle size. This producer is also targeting a
ferrochrome smelter in the area as a substitute for bentonite used as a binder in the Ontokumpo
ferrochrome processing route. For attapulgite, since prices tend to be negotiated between supplier and
consumer, there is less opportunity to raise profitability through unilateral price increases and increases
have historically been mostly determined by inflation.
176
TABLE 4: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF ATTAPULGITE, 20012010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PRODUCTION
Mass
Kt
5.8
11.0
14.5
20.2
29.8
49.0
68.4
69.9
54.2
85.3
Kt
9.2
13.3
14.6
20.4
33.7
49.2
68.4
69.9
54.4
85.3
LOCAL SALES
Value (FOR)
R‟000
R/t
3 224
549
5 883
535
6 750
466
8 962
443
10 785
362
13 201
270
17 989
263
20 783
297
16 015
295
25 090
290
Mass
T
20
0
0
0
0
0
0
0
0
0
EXPORTS
Value (FOB)
R‟000
R/t
11
574
-
Productivity per employee in the production of special clays increased by 39.1 percent to 0.89 kt per
employee in 2010 compared with 0.64 kt per employee in 2009 as demand for bentonite and attapulgite
increased. Remuneration increased by 25.9 percent to R95 780 per employee in 2010 compared with R76
088 per employee in 2009 (Table 5). Overall employment declined by 5.2 percent from 249 employees in
2009 to 236 employees in 2010.
TABLE 5: SOUTH AFRICA‟S KAOLIN, BENTONITE, ATTAPULGITE AND FLINT CLAY QUARRIES:
EMPLOYMENT AND REMUNERATION, 2005-2010
YEAR
2005
2006
2007
2008
2009
2010
EMPLOYEES
388
340
324
344
249
236
TOTAL REMUNERATION
R‟000
20 338
19 332
19 229
22 711
18 946
22 604
REMUNERATON PER
EMPLOYEE
R
52 418
56 859
59 349
66 020
76 088
95 780
OUTLOOK
The kaolin industry, crucial to so many end user sectors, will continue to supply important markets,
particularly the paper and ceramics industries. Although the paper and fibreglass markets have improved,
the ceramics market is expected to remain weak. The current fragile economic recovery has led to a
decrease in the number of participants and applications such as sanitaryware. Although production
continues to decline due to the anaemic demand, South Africa‟s kaolin output is expected to rise from 2011
onwards as the world economy stabilises.
Global production of bentonite is expected to increase by approximately 2.5 percent pa to 17 Mt by 2016.
The US and China, which are expected to respectively account for 30 and 24 percent of global output by
2016, will remain the world‟s leading producers of bentonite. Prices of the US paper coating grade kaolin
are forecast to rise by 5 to 7 percent between 2011 and 2012. South African demand for bentonite is
forecast to increase until 2013 when demand will decline after the completion of Medupi project. The
continuing influx of imports is expected to put some downward pressure on prices, which are likely to be
stabilised by the increasing demand.
177
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Keith Holliman, G & W Base: Industrial Minerals, personal communication
Industrial Minerals magazine 2009,2010
Jan de Wet, Atlas Clay: Kaolin, personal communication
Mike Faure, Atta Clay: Attapulgite, personal communication
Noel Joubert, Ndebele Mining: Kaolin, personal communication
Roskill Information Services, Ltd.
The Freedonia Group Inc
MarketResearch.com
Verdine Donnelly, s Ecca Holdings/SAMREC: Bentonite and Attapulgite, personal communication
Virta L.R, Clays Review, USGS , personal communication
178
SULPHUR
M. Modiselle and L. Ramane
WORLD SUPPLY
World production of sulphur in all forms (SAF) increased by 100 kt to 68 Mt in 2010 compared with 67.9 Mt
in 2009. This resulted from the increased demand for sulphur for the processing of phosphate rock into
phosphate fertilizers. The United States (US) was the largest producer accounting for 15 percent, followed
by China at 14 percent and Canada and Russia at 10 percent each (Fig. 1). Elemental sulphur constitutes
more than 70 percent of sulphur in all forms. Global output of elemental sulphur increased by 7.7 percent
to 51.9 Mt in 2010, compared with 48.2 Mt in 2009.
FIGURE 1: WORLD PRODUCTION OF SULPHUR BY COUNTRY, 2010
US, 15%
Other
countries, 30%
Canada, 10%
United Arab
Emirates, 3%
Kazakhstan, 3%
China, 14%
Germany, 6%
Saudi Arabia, 5%
Japan, 5%
Russia, 10%
Source: USGS, 2011
WORLD DEMAND
World demand for elemental sulphur rose by 6.4 percent to 50.1 Mt in 2010 compared with 47.1 Mt in
2009, as a result of strong demand from end-user sectors including agrochemicals, petroleum refining and
metal mining. Approximately 65 percent of sulphuric acid is consumed in the agricultural sector, with
phosphoric acid being the primary component.
WORLD PRICES
The sulphur market was characterised by soaring prices in the first half of 2008 due to supply tightness,
which put upward pressure on prices throughout 2009. The spot price of sulphur, (FOB) Vancouver, which
was $80/t in November 2009, increased to $105/t in May 2010 and reached $115/t in November of the
same year, as the rising trend continued unabated (Fig. 2).
179
FIGURE 2: INTERNATIONAL SULPHUR PRICES, ($/TON SPOT, FOB VANCOUVER), 2007-2010
800
700
600
$/ton
500
400
300
200
100
Nov-10
Aug-10
May-10
Feb-10
Nov-09
Aug-09
May-09
Feb -09
Nov-08
Aug-08
May-08
Feb-08
Nov-07
Aug-07
May-07
Feb-07
0
Source: The Fertilizer Society of South Africa, 2011
SOUTH AFRICA
In South Africa, elemental sulphur is recovered from pyrite, sulphide smelter gasses, coal and crude oil.
Most elemental sulphur is converted to sulphuric acid. Sulphur was recovered as a by-product from one
synthetic fuels producer, one gold mine, seventeen platinum mines, two zinc mines and one copper mine.
South Africa‟s production of SAF decreased by 14.7 percent to 457 kt in 2010 compared with 536 kt in
2009 due to lower demand in the acid markets resulting from high stockpiles (Table 1). Sulphur recovery
from oil refineries registered a 1.4 percent decrease to 287 kt in 2010. The domestic market for sulphuric
acid is still subdued. As a result, some processing plants are disposing the acid for free in some instances,
owing to high logistical costs which tend to make exports of the product uneconomical.
Production of pyrite from gold mines decreased by 49.7 percent to 30 kt in 2010, due to the closure of acid
plants in August. Sulphuric acid production from Palabora Mining Company (PMC‟s) copper mine,
decreased by 46.6 percent to 49.2 kt in 2010. The decrease was directly related to the decline in
underground production due to hoist related issues and production winder drums breakdowns and acid
storage capacity. Sulphuric acid production from zinc mines increased slightly by 1.6 percent to 56.4 kt in
2010. Sulphuric acid production from PGM mines decreased by 7.7 percent to 34.1 kt in 2010, owing to
lower demand due to the closure of Omnia‟s Phokeng plant. The Impala sulphuric acid plant supplied the
remaining 45 kt/a of acid to Omnia phosphoric acid plant, after their own plant requirement of 1.5 kt/a.
TABLE 1- SOUTH AFRICA‟S PRODUCTION OF SULPHUR IN ALL FORMS, 2009-2010
SOURCE
Oil refineries / Synthetic fuels
Gold mines
Copper mines
Zinc mines
PGM mines
2009
Mass
t
291 222
60 244
92 240
55 441
36 956
%
54
11
17
10
7
100
536 103
2010
Mass
t
287 243
30 309
49 232
56 355
34 097
457 237
%
63
7
11
12
7
100
Local sales tonnage of SAF decreased by 22.9 percent to 256 kt in 2010, owing to less demand for
sulphuric acid and high logistic costs. This is due the closure of phosphoric acid plants in Phalaborwa
(Sasol Nitro) and in Phokeng, Rustenburg (Omnia). These were large consumers of sulphuric acid locally.
Sasol Nitro closed due to unsatisfactory financial performance and Omnia Fertilizer, a division of the
Omnia Group closed due to high transport costs.
180
Export sales mass rose by 53.2 percent to 95 kt in 2010 (Table 2). In order to avoid high international
prices, Zimbabwe Phosphate Company has been taking advantage of the current South African lower
prices to satisfy its fertiliser demand. Production mass, which amounted to 457 kt of SAF, was greater than
total sales mass of 351 kt, since sulphur used for internal purposes is not reflected in sales figures.
Local sales value declined by 42.4 percent to R169 million, while average annual local prices declined by
25.2 percent to R660/t. Revenue from export sales rose by 79.4 percent to R49 million, while average
annual export prices increased by 17.2 to R511/t, owing to the global acid market improvement, on the
back of the buoyant fertilizer and metals demand.
TABLE 2 – SOUTH AFRICA‟S PRODUCTION AND SALES OF SULPHUR IN ALL FORMS, 2001-2010
YEAR
PRODUCTION
Mass
kt
388
532
614
633
776
643
642
571
536
457
kt
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
Mass
Value
Kt
R'000
287
181 972
324
168 233
480
237 783
390
201 706
481
231 118
351
181 450
358
212 258
315
548 705
332
293 105
256
168 835
R/t
633
520
495
517
481
517
593
1 740
883
660
EXPORT SALES
Mass
Value
Kt
R'000
67
33 408
43
22 993
32
21 799
69
47 677
103
65 592
124
77 919
125
96 571
110
351 860
62
27 193
95
48 795
R/t
498
533
671
692
638
630
770
3 190
436
511
South Africa‟s imports of crude sulphur increased by 12.9 percent to 593 kt in 2010 compared with 525 kt
in 2009 (Table 3). South Africa imports crude sulphur mainly from Canada, United Arab Emirates, Saudi
Arabia, Kuwait and Iran.
TABLE 3 – SOUTH AFRICA‟S IMPORTS OF SULPHUR, 2006 – 2010
YEAR
CRUDE/UNREFINED
Mass Value (FOB)
kt
R‟000
R/t
2006
2007
2008
2009
2010
Source:
Notes:
681
599
791
525
593
+
r
295 453
365 921
3 436 560
354 611
377 801
434
610
4 344
675
637
SUBLIMED & OTHER
Mass Value (FOB)
kt
R‟000
R/t
41
78
173
46
63
50 178
87 705
754 037
10 141
51 396
+
TOTAL
Mass Value (FOB)
Kt
R‟000
R/t
1 224
1 124
4 358
220
816
722
677
964
571
656
345 631
453 626
4 190 597
364 752
429 197
479
670
4 347
639
654
RSA, Commissioner for South African Revenue Service, 2006 – 2010
All forms of sulphur other than those specifically referred to
Revised
OUTLOOK
World production of elemental sulphur is forecast to increase at an annual rate of 6.7 percent to 71.8 Mt by
2015. Approximately 60 percent of this growth is expected to come from the natural gas processing sector.
Global consumption is expected to grow at 5 percent per annum to reach 64 Mt by 2015, as a result of
sustained growth in the use of sulphuric acid in the manufacture of fertilizers and firm industrial demand,
particularly for ore leaching.
Global sulphuric acid and fertilizer consumption are projected to grow at an annual rate of 5 and 3 percent
respectively, in the short term. Approximately 50 percent of global sulphuric acid is used in the
manufacture of fertilizers. The market anticipates a supply deficit in 2011, tight conditions from 2012 to
2014 and moderate surplus in 2015.
Sulphur prices are expected to increase further, boosted by firm demand from China and India and tight
supply from Canada and Europe. Prices are expected to remain firm owing to the current supply deficit and
the anticipated market tightness from 2012 to 2014.
181
The oversupplied South African sulphuric acid market could be brought back into balance by 2012, when
demand from re-opened plants and development of new projects is expected to materialise.
REFERENCES
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Fertilizer Society of South Africa, www.fssa.org.za
FSSA Journal 2010, the Fertiliser Society of South Africa.
Industrial Minerals Magazine, April 2010-2011
Ober, J., 2010, Sulphur Review, USGS [pdf]. Internet. http://www.usgs.gov
Palabora Mining Company (PMC)
Sasol Oil Refinery
South African Revenue Services
Sulphur magazine, 2011
Sulphuric Acid Marketing Update, April 2011, Anglo American
Zincor Base Metals
182
VERMICULITE
L Ramane
WORLD SUPPLY
World vermiculite production increased by 5.2 percent to 526 kt in 2010 compared with 500 kt in 2009.
South Africa remained the dominant producer, accounting for 40 percent of total world output, followed by
China‟s 24 percent and the United States‟ 19 percent (Fig. 1). Supply was boosted by new projects, which
added 20 kt to the 2010 vermiculite production.
FIGURE 1: WORLD PRODUCTION OF VERMICULITE BY COUNTRY, 2010
Australia Brazil
3%
3%
Zimbabwe
1%
Russia
5%
Others
5%
South Africa
40%
United States
19%
China
24%
Source: USGS, 2011
Palabora Mining Company (PMC), a member of the Rio Tinto group, is South Africa‟s sole producer of
vermiculite, and the largest producer in the world. It is followed by the IMERYS group, a French company,
which controls mines in Australia, China and Zimbabwe.
DEMAND
Globally, vermiculite is mainly consumed by the agricultural sector for horticulture, soil conditioning and as
a packaging material or filler for plastics used in fertiliser applications. It is also used in the manufacture of
insulating material and light concrete aggregates in the construction sector (Fig. 2).
FIGURE 2: VERMICULITE CONSUMPTION BY SECTOR
lightweight
concrete
16%
other
6%
agriculture
55%
insulation
23%
Source: Industrial Minerals Magazine
183
TRADE
South Africa and China are the major exporters of vermiculite. South Africa‟s exports amounted to 166.5 kt
in 2010, compared with 164.6 kt in 2009. More than 80 percent of South Africa‟s output was exported to
North America, Japan, and Europe.
PRICES
Despite market tightness in the vermiculite industry, prices of South African vermiculite, bulk material, FOB
Rotterdam ranged between $280-450/t in 2010, similar to 2009. However, strong demand and shortage of
coarse-grained grades will push prices upwards. Market leader, PMC, which accounts for one third of the
global vermiculite market, will be the main driver behind this increase, owing to higher production costs.
SOUTH AFRICA
According to PMC‟s annual report, reserves at the Phalaborwa deposit amount to approximately 23.4 Mt,
at an average grade of 17.8 percent vermiculite.
South Africa‟s production of vermiculite increased by 3.1 percent to 199.3 kt in 2010 compared to 193.3 kt
the previous year (Table 1), owing to an increase in demand for finer grades of vermiculite in the absence
of sufficient supply of coarse-grained grades due to the geological composition of the ore body.
In 2010, local and export sales tonnages increased by 9.5 percent and 1.2 percent to 10.4 kt and 164.6 kt
respectively. Local sales revenue increased by 26.5 percent to R12.9 million while export revenue
decreased by 9.2 percent to R216.3 million in 2010, owing to the strengthening of the rand, which
appreciated by approximately 12 percent in 2010.
TABLE 1: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF VERMICULITE, 2001 –
2010
YEAR PRODUCTION
Mass
kt
2001
157.0
2002
210.0
2003
182.8
2004
196.9
2005
209.9
2006
197.8
2007
198.5
2008
199.8
2009
193.3
2010
199.3
Mass
kt
5.9
6.5
6.5
7.3
6.9
7.6
9.1
10.7
9.5
10.4
LOCAL SALES
Value (FOR)
R‟000
R/t
3 686
624
4 498
692
5 114
784
6 229
855
6 368
923
7 087
927
8 896
981
11 002
1 026
10 236
1 073
12 927
1 241
EXPORTS SALES
Mass
Value (FOB)
kt
R‟000
R/t
154.0
125 096
814
170.0
205 681
1 208
163.3
144 759
886
178.8
150 944
844
163.7
188 402
1 151
166.7
170 029
1 056
173.2
195 577
1 129
204.5
273 239
1 336
164.6
238 295
1 448
166.5
216 305
1 299
In South Africa, vermiculite is used in refractory bricks (15%), fire proofing (18%), agriculture (20%),
metallurgical (17%) and light concrete aggregates (12%). Smaller niche markets (18%) include: animal
feeds, brake linings, sanitation and packaging. Other opportunities exist in the manufacturing of insulating
material, and sound proofing industries.
OUTLOOK
The supply of coarse grades will continue to decrease as the leading global producer Palabora Mining Co,
struggles to produce sufficient amounts of coarse-grained grades from diminishing resources of vermiculite
in South Africa. The previously precariously balanced coarse grade market, which has recently swung into
deficit, has put an upward pressure on prices forcing consumers to move towards finer grades owing to
their cheaper prices.
Vermiculite prices are expected to increase by up to 30 percent in 2011, driven by higher demand and a
global shortage in coarse grades. However, industry sources are optimistic that new and previously closed
down suppliers will fill the gap, which could lead to a fall in prices in the long term.
South Africa‟s production of vermiculite is forecast to increase as the market continues to move towards
finer-grained grades of vermiculite. Demand in South Africa is driven by the construction industry, which is
184
expected to continue growing, following government‟s commitment to spend more than R800 billion on
infrastructural programmes and an additional R73 billion on the expanded public works programme
between 2011 and 2013.
REFERENCES
1. Department of Mineral Resources, Directorate Mineral Economics
2. USGS commodity summaries, 2011
3. Industrial Minerals magazine, 2011.
4. Palabora Mining Company annual report, 2010
185
STATISTICS FOR OTHER INDUSTRIAL MINERALS
L Ramane, M Modiselle and R Motsie
NOTE: The following applies to all tables.
** Withheld for reasons of company confidentiality
* Nil
1. NATURAL ABRASIVES
TABLE 1: SOUTH AFRICA‟S IMPORTS OF NATURAL ABRASIVES, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
1 090
1 590
1 750
1 554
1 706
1 311
1 282
1 183
1 208
1 919
Value (FOB)
R‟000
3 696
7 695
8 010
5 573
3 610
4 888
6 095
5 198
7 419
6 837
R/t
3 390
4 840
4 577
3 586
2 112
3 728
4 654
4 394
6 141
3 563
Source: RSA, Commissioner for South African Revenue Service, 2001–2010
2. BARYTES
TABLE 2.1: SOUTH AFRICA‟S PRODUCTION AND LOCAL SALES OF BARYTES, 2001–2010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
PRODUCTION
Mass
Mass
t
*
*
*
*
*
*
*
*
*
*
t
353
470
355
275
146
126
535
432
284
319
LOCAL SALES
Value (FOR)
R‟000
155
183
149
116
61
52
225
181
119
134
R/t
438
391
420
420
420
420
420
420
420
420
TABLE 2.2: SOUTH AFRICA‟S IMPORTS OF BARYTES, 2001–2010
YEAR
Mass
2001
t
2 254
R‟000
3 722
Value (FOB)
R/t
1 651
2002
2003
2004
2 925
3 245
3 056
5 329
4 352
7 008
1 822
1 341
2 293
2005
2006
2007
2008
2009
2010
2 013
2 736
3 114
3 568
2 823
4 105
7 748
7 908
14 921
14 106
13 805
17 200
3 849
2 890
4 792
3 953
4 890
4 190
186
3. DIATOMACEOUS EARTH (KIESELGUHR)
TABLE 3: SOUTH AFRICA‟S IMPORTS OF DIATOMACEOUS EARTH, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
3 772
4 788
5 002
4 594
5 318
5 032
4 828
5 539
3 930
4 580
Value (FOB)
R‟000
11 857
20 406
14 975
10 670
12 944
14 321
18 930
23 205
16 075
17 496
R/t
3 144
4 262
2 994
2 323
2 434
2 846
3 921
4 189
4 090
3 820
Note: Production statistics are not published because there is only one producer
4. FELDSPAR
TABLE 4.1: WORLD PRODUCTION OF FELDSPAR, 2010
COUNTRY
Mass
kt
%
Rank
China
France
Iran
Italy
Japan
Korea
Poland
Saudi Arabia
Spain
Thailand
Turkey
2 000
650
500
4 700
600
630
550
500
580
620
4 500
10
3
3
24
3
3
3
3
3
3
23
3
4
11
1
7
5
10
11
8
6
2
United States
570
3
9
Other
3 600
18
Total
20 000
Source: USGS Mineral Commodity Summaries, 2011: www.usgs.gov
Note: # Includes weathered granite, feldspar
TABLE 4.2: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF FELDSPAR,
2001–2010
YEAR PRODUCTION
2001
2002
2003
2004
2005
2006
2006
2007
2008
2009
2010
kt
66.1
66.6
57.7
53.7
57.5
75.4
75.4
90.2
105.8
101.4
94.3
LOCAL SALES
Mass
Value (FOR)
kt
70.6
61.0
57.4
66.4
75.2
85.2
85.2
106.8
70.1
72.9
69.9
R‟000
27 016
26 334
29 943
37 477
44 256
54 649
54 649
62 080
49 260
55 248
56 204
R/t
382
432
521
565
588
641
641
581
702
758
804
+
EXPORT SALES
Mass
Value (FOB)
kt
1.2
0.5
*
*
*
0.2
0.2
*
*
*
*
Note: + Exports are largely of the potassium type and consist almost entirely of ground material
187
R‟000
1 665
822
*
*
*
218
218
*
*
*
*
R/t
1 333
1 591
*
*
*
903
903
*
*
*
*
5. GRAPHITE
TABLE 5: SOUTH AFRICA‟S IMPORTS OF NATURAL GRAPHITE, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
1 940
1 533
1 447
1 427
1 270
1 220
1 008
1 003
921
1 108
Value (FOB)
R‟000
7 602
7 751
4 926
4 879
3 909
5 193
8 207
20 101
8 657
12 891
R/t
3 918
5 056
3 404
3 419
3 078
4 257
8 142
20 041
9 400
11 634
6. GYPSUM
TABLE 6.1: WORLD PRODUCTION OF GYPSUM, 2010
COUNTRY
Mass
kt
%
Australia
3 500
Canada
China
3 500
45 000
France
Iran
Italy
Japan
Mexico
Spain
Thailand
USA
2 300
13 000
4 100
5 800
5 800
11 500
8 500
9 000
Other
34 100
TOTAL
3
3
42
2
12
4
5
5
11
8
8
32
152 000
Rank
9
10
1
11
2
8
6
7
3
5
4
100
TABLE 6.2: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES, AND CONSUMPTION OF NATURAL
GYPSUM, 2001–2010
YEAR
PRODUCTION
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
kt
383
422
394
524
547
557
627
571
598
513
kt
381
438
427
459
503
370
388
393
397
307
LOCAL SALES
Value (FOR)
R‟000
17 651
20 014
20 832
18 783
18 690
30 605
33 517
33 666
36 616
32 228
Sources: Cement and Concrete Institute
Notes: + Based on cement sales and assuming 38,5t gypsum/1 000t cement.
#
Includes synthetic gypsum.
** Not available
188
CONSUMPTION
+#
FOR CEMENT
R/t
46
46
49
41
37
83
86
86
92
105
kt
369
369
410
452
500
550
543
519
**
**
TABLE 6.3: SOUTH AFRICA‟S IMPORTS OF GYPSUM AND GYPSUM PLASTERS, 2001–2010
YEAR
GYPSUM
Value (FOB)
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
R‟000
2 039
2 909
2 732
3 039
2 218
3 703
4 555
3 343
8 379
7 884
t
1 741
1 861
1 931
2 624
1 971
2 408
3 007
1 939
3 427
24 506
GYPSUM PLASTERS
Value (FOB)
Mass
R/t
1 171
1 564
1 415
1 158
1 125
1 537
1 515
1 724
2 445
322
R‟000
7 809
7 021
6 560
6 365
5 704
8 827
15 004
14 303
8 200
10 904
t
5 422
4 893
5 256
4 761
4 268
5 313
17 205
11 290
3 790
6 386
R/t
1 440
1 435
1 248
1 337
1 337
1 661
872
1 267
2 164
1 708
7. MAGNESITE
TABLE 7.1: SOUTH AFRICA‟S PRODUCTION AND LOCAL SALES OF MAGNESITE AND DERIVED
PRODUCTS, 2001–2010
YEAR
PRODUCTION
kt
36.5
87.2
86.1
65.9
54.8
73.3
80.7
83.9
47.6
27.7
2001
2002
#
2003
2004
2005
2006
2007
2008
2009
2010
Mass
LOCAL SALES
Value (FOR)
R‟000
26 979
25 379
33 165
25 513
31 327
35 104
42 323
51 864
43 234
63 982
kt
70.2
113.6
131.3
122.9
103.4
110.8
117.4
111.1
72.3
73.6
R/t
384
223
253
208
303
317
360
467
598
869
Note: # Exports amounting to 4 798 tons valued at R30 044 868 were recorded
TABLE 7.2: SOUTH AFRICA‟S IMPORTS OF MAGNESITE AND MAGNESIA, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
kt
2.9
13.4
15.3
11.6
13.4
11.2
24.9
15.3
25.5
12.3
MAGNESITE
Value (FOB)
R‟000
5 561
18 243
17 030
15 007
24 599
15 444
51 790
39 509
10 850
10 389
Mass
R /t
1 922
1 363
1 116
1 202
1 840
1 379
2 080
2 582
4 254
844.6
189
kt
50.8
46.4
40.0
42.1
38.6
36.2
48.0
36.2
41.8
65.7
MAGNESIA
Value (FOB)
R‟000
74 292
95 144
64 898
62 299
58 729
61 115
91 115
136 071
139 175
205 594
R/t
1 462
2 052
1 624
1 480
1 521
1 688
1 898
3 759
3 328
3 129
8. MICA
TABLE 8.1: WORLD PRODUCTION OF MICA, 2010
COUNTRY
Mass
kt
%
Rank
Canada
Finland
France
Korea
Russia
United States
Other
15
68
20
50
100
53
44
4
19
6
14
29
15
13
Total
350
100
6
2
5
4
1
3
TABLE 8.2: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF SCRAP AND FLAKE
MICA, 2001–2010
YEAR
PRODUCTION
LOCAL SALES
Value (FOR)
Mass
t
937
880
1 003
285
922
828
828
437
426
299
904
2001
2002
2003
2004
2005
2006
2006
2007
2008
2009
2010
R‟000
**
**
**
**
*
1 136.7
1 136.7
870 727
**
**
**
t
960
390
470
55
*
254
254
201
179
245
794
Mass
R/t
**
**
**
**
*
4 480
4 480
4 329
**
**
**
t
664
481
470
766
856
327
327
261
232
106
25
EXPORT SALES
Value (FOB)
R‟000
**
**
**
**
**
2 070.0
2 070.0
1 679.8
**
**
**
R/t
**
**
**
**
**
6 331
6 331
6 428
**
**
**
TABLE 8.3: SOUTH AFRICA‟S IMPORTS OF MICA, 2001–2010
YEAR
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Mass
Value (FOB)
t
313
R‟000
882.2
270
375
495
581
901
865
296
358
483
1 286.0
1 021.3
846.6
1 073.2
1 365.0
1 667.4
1 103.1
933.8
1 152
190
R/t
2 818
4 763
2 720
1 709
1 847
1 515
1 928
3 727
2 608
2 385
9. MINERAL PIGMENTS
TABLE 9: SOUTH AFRICA‟S PRODUCTION AND SALES OF MINERAL PIGMENTS, 2001–2010
YEAR
PRODUCTION
LOCAL SALES
Mass
EXPORT SALES
Value
Mass
Value
2001
t
852
t
2 116
R‟000
860
R/t
406
t
126
R‟000
180
R/t
1 430
2002
2003
2004
282
764
512
1 023
1 080
1 027
446
678
769
435
628
749
*
*
20
*
*
44
*
*
2 181
2005
2006
2007
510
590
232
801
811
737
554
751
769
692
927
1 043
226
*
*
472
*
*
2 091
*
*
2008
2009
2010
39
183
244
288
119
66
94
40
22
327
339
340
*
*
*
*
*
*
*
*
*
10. POTASH
TABLE 10.1: WORLD POTASH RESERVES AND PRODUCTION, 2010
COUNTRY
Mt K2O
Belarus
Brazil
Canada
Chile
China
Germany
Israel
Jordan
Russia
Spain
UK
USA
Other
Total
RESERVES
%
750
300
4400
70
210
150
40
40
3300
20
22
130
75
8%
3%
46%
1%
2%
2%
0%
0%
35%
0%
0%
1%
9500
100
Rank
kt K2O
3
4
1
7
4
5
8
8
2
10
9
6
5 000
400
9 500
700
3 000
3 000
2 100
1 200
6 800
400
400
900
12
33412
PRODUCTION
%
15
1
28
2
9
9
6
4
20
1
1
3
Rank
3
9
1
8
4
4
5
6
2
9
9
7
100
TABLE 10.2: SOUTH AFRICA‟S IMPORTS OF POTASH, 2001–2010
YEAR
POTASSIUM
CHLORIDE
kt
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
243.5
304.9
245.8
276.8
198.3
260.4
255.4
271.4
139.6
267.4
R‟000
231 835
362 295
197 952
253 155
241 859
381 811
409 632
1 546 452
618 360
697 166
POTASSIUM
SULPHATE
POTASSIUM
NITRATE
TOTAL
kt
R‟000
kt
R‟000
kt
R‟000
25.8
25.3
31.2
22.6
39.0
40.2
38.8
46.1
24.0
46.2
42 257
55 835
47 621
30 776
58 400
79 892
93 446
330 639
129 297
159 251
40.5
39.0
35.2
40.0
30.1
20.6
26.0
26.2
14.8
23.6
94 951
101 411
80 245
99 972
85 496
79 737
79 083
281 162
101 451
106 461
309.8
369.2
312.2
339.4
267.4
321.2
320.2
343.7
178.4
337.2
369 043
519 541
325 818
383 903
385 755
541 440
582 181
2 158 253
849 108
962 878
Note: Up to 10 percent of the imports were probably for non-fertiliser uses
191
11. PYROPHYLLITE
TABLE 11: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF PYROPHYLLITE,
2001–2010
YEAR
PRODUCTION
LOCAL SALES
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
EXPORT SALES
Value (FOR)
t
t
R‟000
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
**
18 098
22 965
24 541
34 824
34 798
34 576
39 962
42 230
38 449
49 566
Mass
R/t
Value (FOB)
R‟000
R/t
18 607
14 584
8 876
1 266
6 038
52 879
7 483
8 438
9 795
16 762
**
**
**
**
**
**
**
**
**
**
t
**
**
**
**
**
**
**
**
**
**
**
**
**
11 683
**
**
**
**
**
**
12. SALT
TABLE 12.1:SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF SALT,
2001–2010
YEAR
LOCAL SALES
PRODUCTION
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
EXPORTS
Value (FOR)
Mass
Value (FOB)
kt
kt
R‟000
R/t
kt
R‟000
R/t
355
429
441
332
399
405
411
430
408
394
420
450
467
349
436
425
450
437
438
423
75 445
82 770
84 113
65 730
79 306
89 583
101 951
123 537
104 309
126 306
180
184
180
188
182
211
227
282
321
298
1
<1
1,2
<1
*
*
*
*
*
*
76
23
140
70
*
*
*
*
*
*
70
860
114
168
*
*
*
*
*
*
TABLE 12.2: SOUTH AFRICA‟S LOCAL SALES AND EXPORTS OF COARSE SALT, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
LOCAL SALES
Value (FOR)
Mass
EXPORT SALES
Value (FOB)
kt
R‟000
R/t
kt
R‟000
299
315
386
349
348
326
354
340
331
344
31 161
36 132
43 222
65 730
42 323
42 540
51 221
55 910
59 471
60 776
104
115
112
188
122
131
164
164
180
177
1
<1
1
<1
*
*
*
*
*
*
76
23
70
*
*
*
*
*
*
*
192
R/t
70
86
114
*
*
*
*
*
*
*
13. SILICA
TABLE 13.1: SOUTH AFRICA‟S PRODUCTION, LOCAL SALES AND EXPORTS OF SILICA, 2001–2010
YEAR
PRODUCTION
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
kt
2 127
2 251
2 311
2 249
2 671
3 231
3 352
3 342
2 306
2 905
LOCAL SALES
Value (FOR)
Mass
R‟000
130 650
158 964
165 096
187 474
189 469
236 296
280 191
351 474
379 484
482 861
kt
2 211
2 253
2 070
1 996
2 290
2 884
2 726
3 059
2 672
3 079
EXPORT SALES
Mass
Value (FOB)
R/t
59
71
80
94
83
82
103
115
142
157
t
482
1 038
884
649
652
424
806
959
1 222
980
R‟000
636
1 742
1 199
1 007
1 017
896
1 541
1 486
1 652
1 523
R/t
1 320
1 679
1 356
1 551
1 560
2 113
1 913
1 550
1 352
1 554
14. TALC
TABLE 14.1: SOUTH AFRICA‟S PRODUCTION AND SALES OF TALC, 2001–2010
YEAR
PRODUCTION
Mass
t
3 030
2 511
6 719
8 141
8 469
10 966
14 281
5 145
4 718
3 150
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
9 024
12 395
7 286
8 094
7 439
7 134
7 326
6 591
6 213
5 370
LOCAL SALES
Value (FOR)
R‟000
4 081
4 552
4 051
4 163
4 319
4 957
5 639
5 606
5 893
5 573
R/t
452
367
542
514
581
695
770
851
948
1 038
Mass
t
16
*
*
*
*
*
*
*
*
*
EXPORT SALES
Value (FOB)
R‟000
10
*
*
*
*
*
*
*
*
*
R/t
610
*
*
*
*
*
*
*
*
*
TABLE 14.2: SOUTH AFRICA‟S IMPORTS OF TALC, 2001–2010
YEAR
Mass
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
t
4 114
5 522
6 000
5 480
10 541
9 565
11 721
8 142
10 254
9 818
Value (FOB)
R‟000
9 079
2 519
7 063
11 713
17 713
20 344
26 040
25 114
23 851
26 908
193
R/t
2 207
456
1 177
2 137
1 694
2 127
2 222
3 084
2 326
2 741
DIRECTORATE: MINERAL ECONOMICS
RECENT PUBLICATIONS
(Updated 15/11/2010)
REVIEWS
South Africa‟s Mineral Industry, 2009/2010
South Africa – Invest in an Intense and Diverse Mineral Industry (2010)
INFORMATION CIRCULAR
MB Bulletin (Tri-mester)
STATISTICS
Mineral Production and Sales Statistics (Monthly and Annually)
BULLETINS
B1/2010:
Minerals – South Africa: Statistical Tables 1988-2009
REPORTS
R39/2006:
Investment in South Africa‟s Mineral Sector
R40/2006:
Possible Financial Sources for Small-to- Junior Empowerment Mining Companies
R42/2003:
An Overview of South Africa‟s Primary Industrial Mineral Imports and Exports.
R43/2003:
A Review of the Dolomite and Limestone Industry in South Africa
R44/2004:
The Silica Industry in the Republic of South Africa
R45/2008:
An Overview of the South African Iron, Manganese and Steel Industry during the
period 1985-2004
R46/2005:
Bentonite, Pyrophyllite and Talc in SA
R47/2005:
The Kaolin Industry in South Africa
R48/2005:
South African Ferrous Minerals Production Trends, 1994-2003
R49/2005:
Dolomite and Limestone in SA: Supply and Demand, 2005
R50/2006:
South Africa„s Mineral Production and sales, 1985 - 2004
R51/2009:
An overview of Current Platinum – group metal exploration Project and New Mine
Developments in SA
194
R52/2006:
South African Ferroalloy Production trends, 1995 – 2004
R53/2006:
Review of the Dimension Stone industry
R54/2006:
An Analysis of the Impact of a Third Player on SA Manganese Industry
R55/2008:
An Overview of South Africa‟s Vanadium Industry during the period 1997-2006
R56/2007:
Provision of Export Facilities for BEE‟s at the Richard‟s Bay Coal Terminal
R57/2007:
Uranium: Future Sources (South Africa)
R58/2008:
Overview of the Sand & Aggregate Industry
R59/2007:
Mining‟s Contribution to the National Economy, 1996-2005
R60/2007:
The Impact of Chrome Ore Exports on the Local Ferrochrome Industry
R61/2007:
Historical Diamond Production (South Africa)
R62/2007:
Structure of the Salt Industry in South Africa
R63/2007:
An Overview of SA Zircon Industry and the role of BEE
R64/2007:
Mineral Abrasives in SA
R65/2007:
Nepheline Mineral Production in SA
R66/2007:
An Overview of Value Systems of Selected Ferrous Mineral Commodities, 2007
R68/2010:
An Overview of South African Gold Exploration Projects & new Mine Developments
in South Africa
R69/2008:
Overview of South African Mineral Based Fertilizer Industry
R71/2008:
An Overview of SA‟s Titanium Mineral Concentrate Industry
R73/2008:
An Overview of South Africa‟s Clay & Brick Industry
R74/2009:
Overview of the Nickel Industry in South Africa, 1997-2006
R75/2009:
Supply, Demand Dynamics of Base Metals versus prices, 1997-2006
R76/2009:
The future role of the Waterberg Coalfield in SA Coal Industry
R77/2009:
Growth Prospects of SA Coal exports and the effect on black economic
empowerment companies
R78/2009:
Developments in the Economic contribution of Hydrocarbons, Natural Gas and Coal
R80/2009:
Special Clays Industry in the Republic of South Africa
R81/2009:
Status of the Fluorspar Industry in the RSA, 2009
195
R82/2009:
Gypsum in South Africa
R83/2009:
Structure of the Andalusite Industry in SA
R84/2010:
Value Chain System of SA Heavy Minerals Industry
R85/2009:
Lime Industry in SA
R86/2009:
Chromium Industry Developments
H1/2007:
South African Ferroalloy Handbook, 2007
H2/2009:
Precious Metals Trade - General Information Handbook, 2006.
H3/2008:
South African Steel Producers Handbook
DIRECTORIES
D1/2010:
Operating Mines and Quarries and Mineral Processing Plants in the Republic of
South Africa
D2/2010:
Operating and Developing Coal Mines in the Republic of South Africa
D3/2010:
Operating Gold Mines and Recovery Plants in the RSA
D4/2010:
Salt Producers in the Republic of South Africa
D5/2010:
South African Mineral Beneficiators
D6/2009:
Platinum-group Metal Mines in South Africa
D7/2010:
South African Diamond Handbook and Operating Diamond Mines Directory
D8/2009:
Ferrous Mineral Commodities Produced in the Republic of South Africa
D9/2008:
Producers of Dimension Stone in South Africa
D10/2010:
Producers of Nonferrous Metal Commodities in South Africa
D11/2008:
Producers of Industrial Mineral Commodities in South Africa
D12/2009:
Operating and Developing Black Empowerment Mining Companies in the Republic of
South Africa
D13/2009:
African Mining – Mining Companies Government Department and Related
Organizations
D14/2009:
Producers of Sand and Aggregate in the RSA
196
USEFUL ADDRESSES
DEPARTMENT OF MINERAL RESOURCES
HEAD OFFICE
The Director-General
Private Bag X59
0001 Arcadia
Trevenna Campus
70 Meintjies Street
Sunnyside, Pretoria
www.dmr.gov.za
Tel:
(012) 444 8000
MINERAL DEVELOPMENT REGIONAL DIRECTORATES
Regional Manager: Mineral Regulation - Eastern Cape
Private Bag X6076
6000 Port Elizabeth
Corner of Mount Road and Diaz Road
Mount Croix
Port Elizabeth
Tel:
(041) 396 3900
Telefax: (041) 396 3945
Regional Manager: Mineral Regulation - Free State
Private Bag X33
9460 Welkom
The Strip
314 Stateway
Welkom
Regional Manager: Mineral Regulation – Gauteng
Private Bag X5
2017 Braamfontein
209 Smit Streets
Braamfontein
2017
Tel:
(011) 358 9700
Telefax: (011) 339 1858
Regional Manager: Mineral Regulation – KwaZulu/Natal
Private Bag X 54307
4000 Durban
Durban Bay House
333 Smith Street
Durban
Tel:
(031) 335 - 9600
Telefax: (031) 301 - 6950
197
Regional Manager: Mineral Regulation – Mpumalanga
Private Bag X7279
1035 Witbank
Receiver of Revenue Building
cnr Paul Kruger and Botha Avenue
Witbank
Tel:
(013) 656 1448
Telefax: (013) 690 3288
Regional Manager: Mineral Regulation - Northern Cape
Private Bag X6093
8300 Kimberley
Liberty Building
29-31 Currey Street
Kimberley
Tel:
(053) 807 1700
Telefax: (053) 832 5631
Regional Manager: Mineral Regulation – Limpopo
Private Bag X9467
0700 Polokwane
101 Dorp Streets
Polokwane
0699
Tel:
(015) 287 4700
Telefax: (015) 287 4729
Regional Manager: Mineral Regulation - North-West
Private Bag A1
2570 Klerksdorp
Vaal University of Technology building
Cnr Margaret Prinsloo & Voortrekker Str
Klerksdorp
Tel:
(018) 487 9830
Telefax: (018) 487 9831 / 9836
Regional Manager: Mineral Regulation - Western Cape
Private Bag X9
8012 Roggebaai
9 Atterbury House
Cnr Riebeeck & Lower Brug Str
Cape Town
Tel:
(021) 427 1000
Telefax: (021) 427 1046 / 1047
Regional Manager: Mineral Regulation – Rustenburg
PO Box 150
0309 Tlhabane
Tlabane House
Tlhabane Shopping Centre
Thlabane
Tel:
Telefax:
198
(014) 565 6417
(014) 565 6424
Regional Manager: Mineral Regulation – Springbok
Private Bag x14
8240 Springbok
Hopley Centre
Cnr of Van Der Stel and Van Reebuck Street
Springbok
Tel:
Telefax:
(027) 712 8160
(027) 712 1959
ASSOCIATED GOVERNMENT DEPARTMENTS
Department of Environmental Affairs
Private Bag X447
www.environment.gov.za
0001, Pretoria
Fedsure Forum Building
North Tower
Cnr van der Walt & Pretorius Street
Tel:
Fax:
Department of Rural Development and Land Reform
Private Bag X 833
www.ruraldevelopment.gov.za
0001, Pretoria
Cnr Jacob Mare & Paul Kruger Street
Pretoria
Tel:
Fax:
Department of Science and Technology
Private Bag X894
www.dst.gov.za
0001, Pretoria
+27 (0) 12 310 3911
+27 (0) 12 322 2682
+27 (0) 12 312 8911
+27 (0) 12 312 8066
CSIR Campus (Southgate Entrance)
Meiring Naude Road, Brummeria
Pretoria
Tel:
+27 (0) 12 843 6300 / 6671
DTI Campus – Block E
Cnr Esselen & Meintjies Streets 77
Sunnyside, Pretoria
Department of Trade and Industry
Private Bag X84
www.thedti.gov.za
0001 Pretoria
Tel:
+27 (0) 861 843 384
Telefax: +27 (0) 12) 394-4612 / 0517
Department of Water Affairs
Sedibeng Building
185 Schoeman Street
Pretoria
www.dwaf.co.za
Tel:
Fax:
199
+27 (0) 12 336 7500
+27 (0) 12 324 6592
Statistics South Africa
Private Bag X44
0001, Pretoria
170 Andries Street
De Bruyn Park
Pretoria
www.statssa.gov.za
Tel:
Fax:
+27 (0) 12 310 8911
+27 (0) 12 310 8500/8495
STATE OWNED ENTERPRISES
Council for Geoscience
Private Bag X112
0001 Pretoria
www.geoscience.org.za
280 Pretoria Road
Silverton
Pretoria
Tel:
+27 (0) 12 841 1911
Telefax: +27 (0) 12 841 1221
CSIR
P O Box 395
0001 Pretoria
www.csir.co.za
Meiring Naude Road
Brummeria
Pretoria, 0184
Tel:
+27 (0) 12 841 2911
Telefax +27 (0) 12 349 1153
Eskom
P O Box 1091
2000 Johannesburg
www.eskom.co.za
Megawatt Park
Maxwell Drive
Sunninghill Ext 1
Sandton
Tel:
+27 (0) 11 800 8111
Telefax: +27 (0) 11 800 4299
nd
Mine Health and Safety Council
Private Bag X63
www.mhsc.org.za
Braamfontein
2017
2 Floor Braamfontein Centre
23 Jorissen Street
Braamfontein
Johannesburg
Tel:
Fax:
Mining Qualifications Authority
Private Bag X 118
www.mqa.org.za
Marshalltown
2107
+27 (0) 11 358 9180
+27 (0) 11 403 1821
74-78 Marshall Street
Union Corporation Building
th
4 Floor
Marshalltown
Johannesburg
Tel:
Fax:
200
+27 (0) 11 832 1022
+27 (0) 11 832 1027
Mintek
Private Bag X3015
2125 Randburg
www.mintek.co.za
200 Malibongwe Drive
Randburg
Tel:
+27 (0) 11 709 4111
Telefax: +27 (0) 11 793 2413
Petro SA
Private Bag X5
Parow, Cape Town
7499
www.petrosa.co.za
151 Frans Conradie Drive
Cape Town 7500
Tel:
+27 (0) 21 929 - 3000
Telefax: +27 (0) 21 929 - 3144
NECSA
P O Box 582
0001 Pretoria
Church Street, West Extension
Pelindaba, Brits District
www.necsa.co.za
Tel:
+27 (0) 12 305 4911
Telefax: +27 (0) 12 305 3111
South African Agency for Promotion of
Petroleum Exploration and Exploitation (Pty) Ltd
Petroleum Agency SA
PO Box 1174
www.petroleumagencysa.com
Parow
7499
Tyger Poort Building
7 Mispel Street
Bellville, Cape Town
The Industrial Development Corporation of SA Ltd
(IDC)
www.idc.co.za
P O Box 784055
2146 Sandton
19 Fredman Drive
Sandton
Tel:
Fax:
+27 (0) 21 938 3500
+27 (0) 21 938 3520
Tel:
+27 (0) 11 269 3000
Telefax: +27 (0) 11 269 3116
South African Diamond and Precious Metals Regulator
P O Box 16001
www.sadpmr.co.za
2028 Doornfontein
5th Floor, Office 501
S A Diamond Centre
225 Corner Main & Phillip Street
Johannesburg
Tel:
+27 (0) 11 334 8980 / 6
Telefax: +27 (0) 11 334 8898
201
National Nuclear Regulator
PO Box 7106
0046 Centurion
www.nnr.co.za
State Diamond Trader
th
Suite 510, 5 Floor
SA Diamond Centre
225 Main Street
Johannesburg
www.statediamondtrader.gov.za Tel:
+27 (0) 11 334 2691
Telefax: +27 (0) 11 334 1540
Tel:
+27 (0) 12 674 7100
Telefax: +27 (0) 12 663 5513
OTHER MINERAL-RELATED ORGANISATIONS
Aggregate and Sand Producers Association of
South Africa (ASPASA)
www.aspasa.co.za
PO Box 1983
Ruimsig
Unit 8
Cornpark
Ferrero
Randpark Ridge
Tel:
+27 (0) 11 791 3327
Telefax: +27 (0)86 647 7967
Chamber of Mines of South Africa
PO Box 61809
www.bullion.org.za
2107 Marshalltown
Cnr Sauer & 71 Marshall Street
Marshalltown
Johannesburg
Tel:
+27 (0) 11 498 7100
Telefax: +27 (0) 11 834 1884
Copper Development Association (Pty) Ltd
P O Box 14785
www.copper.co.za
1422 Wadeville
53 Rendell Road
Wadeville
Germiston
Tel: +27 (0) 11 824 3712
Telefax: +27 (0) 11 824 3120
Federation of SA Gem & Mineralogical Societies
P O Box 17273
www.fosagams.co.za
0027 Groenkloof
584 Dune Street
Elarduspark
0181 Pretoria
Tel: +27 (0)86 677 4001
202
Ferro Alloy Producers Association (FAPA)
P O Box 1338
www.seissa.co.za
2000 Johannesburg
Metal Industries House
42 Anderson Street
Johannesburg
Tel: +27 (0) 11 298 9400
Telefax: +27 (0) 11 298 9500
South African Mining Development Association (SAMDA)
PO Box 2057
www.samda.co.za
2121, Parklands
The Riviera Road
606 Oxford corner North Avenue
Ground Floor, Block 3, Office 2
2196, Rosebank
Tel:
+27 (0) 11 486 0510
Telefax: +27 (0) 11 486 3194
Steel and Engineering Industries Federation of SA (Seifsa)
P O Box 1338
www.seifsa.co.za
2000 Johannesburg
Metal Industries House
42 Anderson Street
Johannesburg
Tel:
+27 (0) 11 298 - 9400
Telefax: +27 (0) 11 838 1522
The Institute of Mine Surveyors of SA
P O Box 62339
www.ims.org.za
2107 Marshalltown
Chamber of Mines Building, Room 509
5 Hollard Street
Marshalltown
Tel:
+27 (0) 11 498 7682
Telefax: +27 (0) 11 498 7681
th
The South African Institute of Mining and Metallurgy
P O Box 61127
www.saimm.co.za
2107 Marshalltown
Chamber of Mines Building, 5 Floor
5 Hollard Street
Marshalltown
Tel:
+27 (0) 11 834 1273
Telefax: +27 (0) 11 838 5923/ 833 8156
203
204

Untitled - Department of Mineral Resources

Transcription

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