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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
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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
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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
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1.000
1.200
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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
