Enterprise around Mining by Dr Sven Renner

Enterprise around Mining

potential for business & developmentin southern Africa

Dr. Sven RennerProgram Manager ‐ Extractives & Development

backgroundmarkets business partnerships

Enterprise around Mining – potential for business & development

backgroundmarkets business partnerships

Enterprise around Mining – potential for business & development

ca. 85% of global mineral value production

> 30 bn USD / year> 10 bn USD / year> 5 bn USD / year

background

global mining production value

mining products >20% of Exports

background

economic dependency on mining

„The primary orientation of the strategy is the necessity for thestructural transformation of the SADC region by way ofindustrialization, modernization, upgrading and closer regional integration.The essence of transformation is diversification via upgrading andclimbing the technology ladder. Successful industrialization will beachieved (…) by doing different things, implying industrialization isachieved through diversification.“

*SADC Industrialisation Strategy and Roadmap

background

diversification ‐ a political priority

background

marketsbusiness Partnerships

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

11.000

12.000

500

700

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1100

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1900

2100

2300

2500

01.01.2006 01.01.2008 01.01.2010 01.01.2012 01.01.2014Cu prod. In Africa (t) Cu price US$/t

*data: SNL, 2016

markets

price and production

copper price and production in Africa*price (US$/t)production (kt)

0

20

40

60

80

100

120

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0

10

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01.01.1996 01.01.2000 01.01.2004 01.01.2008 01.01.2012Fe‐ore production in Africa (mio.t) Fe‐ore price (US$/t)*

*data: SNL, 2016,  China import iron ore fines 62 % Fe, spot (cfr Tianjin port) 

price (US$/t)production (mio t)

iron ore price and production in Africa*

markets

price and production

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

400

450

500

550

600

650

700

01.01.2006 01.01.2008 01.01.2010 01.01.2012 01.01.2014Au prod. In Africa (t) Au price US$/oz.

price (US$/oz.)production (t)

*data: SNL, 2016

gold price and production in Africa*

markets

price and production

S‐UG M‐UG L‐UG S‐OP M‐OP L‐OP Total

South Africa  785 3.926 14.135 524 1.571 5.235 26.175

Zambia  160 481 1,890 64 128 481 3.204

Mozambique 11 76 133 8 38 114 379

Madagascar 27 27 ‐ 54 432 ‐ 540

Total 984 4.510 16,158 649 2.169 5.829 30.298

*incl. costs for labour and energy – ca. 40 % of the total value

potential for development

market size

OPEX* 2014 in million USD – Study Focus

small markets require a regional approach

South Africa $M

Expenditure Category S‐UG M‐UG L‐UG S‐OP M‐OP L‐OP Total

Geological and exploration services 20,6 97,2 300,2 10,0 28,7 89,5 546,3

Geological equipment and supplies 2,1 11,4 37,5 1,5 5,1 15,8 73,4

Analysis and testing 12,4 68,6 238,4 9,0 30,4 100,4 459,2

Supply chain services 1,4 8,4 34,0 1,0 3,7 15,0 63,5

Environmental services 13,7 76,3 294,4 10,0 33,8 123,9 552,0

Feasibility, design and engineering 3,4 19,1 73,6 2,5 8,4 31,0 138,0

Construction, and related materials and services 5,1 24,3 79,8 3,0 8,6 26,9 147,7

Contract mining 0,0 0,0 0,0 0,0 0,0 0,0 0,0

Equipment & Plant maintenance & repair 34,3 162,0 531,7 24,9 71,7 223,9 1048,6

Equipment rental 2,7 13,0 42,5 2,0 5,7 17,9 83,9

Drilling equipment and services 3,4 19,1 73,6 2,5 8,4 31,0 138,0

Plant and equipment ‐mining / general 6,9 38,1 147,2 5,0 16,9 62,0 276,0

Heavy transport equipment 1,4 7,6 29,4 1,0 3,4 12,4 55,2

¬ estimation of market size¬ 36 product categories¬ 6 mining categories¬ variable level of detail –

from a single mine to the regional level

potential for development

market analysis

Bindura Nickel Mine, Zimbabwe / image credit BGR, VDMA 2015 

¬ cheap products / high logistics costs¬ low‐medium tech¬ high wear¬ critical factor in the production flow

potential for development

case: light machinery / spares

backgroundpotential for development

business partnerships

business partnerships

constraints and opportunities

international companiesfind themselves confronted with new challenges:

¬ cost pressure¬ trend to outsourcing in mining companies¬ local content requirements (regulation)

business partnerships

constraints and opportunities

local companies in need for an upgrade in southern Africa, SMEs hardly participate in the extractivesector. they usually lack

¬ technology¬ investment capital¬ reputation¬ product certification

business partnerships

constraints and opportunities

Local SME Constraints

¬ technology¬ investment capital¬ reputation¬ product certification

int. SME challenges

¬ cost pressure¬ local content

requirements ¬ trend to outsourcing

Mutual BenefitsthroughBusiness

Partnerships

outlook

while the sector remains in a price downturn

¬ increased selling of less profitable assets to smallercompanies. operations continue producing

¬ potential for local local SME supply industry throughpartnerships is not affected

thank you