Positioning for mineral beneficiation
Opportunity knocks
In the state of the nation address, President Jacob Zuma said: “One of government’s priorities this year is also to finalise and adopt the beneficiation strategy as the official policy of government, so that we can start reaping the full benefits of our commodities.”
Beneficiation is largely attributed to the rise in resource nationalism, which is underpinned by higher commodity prices. Resource nationalism refers to government efforts to assert greater control over natural resources located on their territory.
In 2010, South Africa as a resource economy was estimated to posses approximately US$2.5 trillion in non-energy in situ mineral wealth, making it one of the wealthiest mining jurisdictions in the world. Despite this, South Africa continues to export most of its minerals as ores or semi-processed minerals rather than high value intermediate to finished products.
A mining company will typically be in one of the following assessment phases with respect to beneficiation:
- Strategic Assessment: an analysis of the strategic considerations as well as risks and opportunities for mineral beneficiation, particularly focusing on the business case and taking into consideration government incentives and social imperatives like job creation;
- Feasibility Assessment: the beneficiation opportunities have been identified and feasibility studies need to be undertaken to determine the viability of such initiatives; or
- Implementation: the feasibility of an initiative has been determined and an implementation plan and schedule needs to be developed.
This paper is the first in a series about beneficiation and will be updated as legislation and incentives come into effect, which assesses the merits of beneficiation.
Stages of mineral beneficiation
The value extraction of the ore and mineral can be broken down into four generic stages. A large portion of the value extraction process has traditionally taken place outside of resource rich countries. The majority of the value that is extracted occurs once the ore has been developed into a highly concentrated product and sold to the consumer. This part of the process is mineral beneficiation. The four stages are:
First
This involves the actual extraction of the ore, the concentration of the particular mineral into concentrates and the further beneficiation of the mineral into a saleable product typically defined by industry standards - examples include gold doré (22+ carats) and platinum bars (99,99% Pt).
Second
The mineral is enhanced by the addition of other metals to create a metal alloy. This is usually also done to meet defined industry standards.
Third
This involves including the mineral in the production process for a saleable product - examples include the production of vehicle exhaust systems and jewellery design and manufacturing. There may be more than one value enhancing step in this stage.
Fourth
This involves the sale of the product to the consumer for a margin.
To find out more on the challenges and benefits of mineral beneficiation, download the brochure.
Key Contacts
Suren Dharamlall
Director: Tax
Tel:- +27 (0)11 209 8569
Email:- sdharamlall@deloitte.co.za
Ebrahim Takolia
Executive Lead
Tel:- +27 (0)11 209 6493
Email:- etakolia@deloitte.co.za
