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Beneficiation will increase returns

Beneficiation is one of the issues dealt with in the mining charter and is considered a viable avenue for increasing export earnings, creating employment and furthering black empowerment initiatives. Beneficiation can be offset against other black empowerment initiatives according to the Mining Charter scorecards.

The exact manner in which this can be done is expected to be dealt with in the Beneficiation Bill, which is expected to contain baseline levels of beneficiation against which companies can compare their own beneficiation levels.

Some progress has been made in the manufacture of bulk-tonnage intermediate products, but further beneficiation can be added and will lead to the export of sophisticated products and higher export earnings.

The four stages of beneficiation include: first, mining and production; secondly producing a bulk-tonnage intermediate product; third, a refined product; and fourthly, finished products.

South Africa is the world’s main producer of gold (400t/y) and ferrochromium, yet only 18t of gold is processed and the country produces only about five per cent of the world’s stainless steel.

Industry players are predicting that the jewellery industry will double its global market share by 2008, if the burning issues around high working capital, more assertive marketing and training has been resolved.

In line with this thinking and as part of a jewellery cluster manufacturing initiative, the Department of Trade and Industry (dti), in partnership with AngloGold and Rand Refinery have created the African Gold Zone. This 23 500m² factory will house independent manufacturers and the dti promised to find markets, bring buyers and attract investors at the launch in 2000, thus reducing export costs for each individual manufacturer.

The Jewellery Council of SA and its export arm – the Jewellery Joint Action Group (JJAG) intends to promote South African jewellery at overseas trade shows, such as the recent International Jewellery London pavilion and through foreign agents in European countries, as well as in the US and Japan. The JJAG is also considering obtaining retail space in international locations.

In addition, many companies are actively involved in creating markets for their products through investing in beneficiation initiatives and thus ensuring the sustainability of their business.

AngloGold has a 25% stake in OroAfrica, South Africa’s largest gold jewellery manufacturer, who has formed a joint venture with Filk Spa, the largest gold chain manufacturer in the world. In addition, AngloGold is assisting in developing an African gold jewellery brand through the establishment of a Jewellery Design Centre at OroAfrica.

Mintek and AngloGold created Project AuTek in 2000 to research and develop industrial uses for gold. This investment resulted in a prototype of an air purification unit, using a gold catalyst.

While De Beers sponsors the Harry Oppenheimer Diamond School, AngloGold sponsors the Atteridgeville Jewellery Project. These are among many other projects, such as the Imfundiso Development Project in Cullinan.

AngloGold has also created another marketing avenue for gold beneficiation through the Gold of Africa Museum in Cape Town.

The gold beneficiation industry certainly received a boost with the formation of the South African Royal Manufacturers (SARM) – an interesting mix of South African, American and Peruvian interests. SARM is based in Virginia in the Free State province and produces gold-rope-chain for export to the US, a $1,4 billion per annum market. Goods to the value of R24 million have already been exported, while it is expected that sales for 2003 will reach R120 million. It is further estimated that $100-million will be earned in export sales per year within the next five years, creating 15% more value than exporting unbeneficiated gold.

Also in the Free State, is the Public Private Partnership, Musuku Beneficiation Systems, involving Harmony Gold, Mintek and a 20% shareholding reserved for a black economic empowerment company. The company has world-class technology to refine gold quickly, at a lower cost and to the highest purity, and focuses on producing a variety of value-added products.

Beneficiation for silver is undertaken at Emthuthwini also in Virginia , where Lord of the Rings jewellery is produced for export. Lord of the Rings gold rings for export to the US are produced by Harmony Gold in Randfontein, after winning the contract through their unique gold casting method.

With the gold price leaping over the $390 level late in September and expectations that it will exceed $400, the physical gold market is anticipated to remain depressed into next year.

The market is likely to buy less or stop buying gold at the current high price. Especially the gold-jewellery manufacturers, which tend to be smaller companies, cannot carry the price of gold at high levels for extended periods. In the 1980’s, the market was devastated when the gold price skyrocketed to $800.

The World Gold Council (WGC), although restricted by a lack of funds and support, has initiated programmes to stimulate demand in several areas, not limited to the physical market.

Beneficiation of our mineral resources, especially in the jewellery industry can add immense value to the country’s exports. Networks and collaboration is required to make the most use of the competitive advantages South Africa enjoys: access to some of the world’s largest deposits of precious metals and stones, internationally competitive mining companies, technology, skills and craftsmen to create unique pieces of jewellery and an industry, with government support, geared to build the sector together.

Gold beneficiation is one way of ensuring that South Africa maximises its gold resources, increases export earnings and capitalizes on its leading position as a gold producer.

Sources and for more information: Department of Minerals and Energy www.dme.gov.za, Mining Weekly www.miningweekly.co.za; Chamber of Mines www.bullion.co.za