Africa’s quest to add value to its raw materials has been around for almost as long as the continent’s first independent nations and their dreams of building industries in place of the commodity export oriented economies they inherited from their colonizers. And yet, in the past five decades, there is little to show for the effort with most of the gold, iron ore, oil and coffee that the continent exports coming back at as much as ten times the value of the original export, according to some economic estimates.
The tide may be turning.
At a regional level, the Southern Africa Development Community (SADC) industrialization strategy, announced in 2014, seeks to add value to mineral exports as part of a plan to diversify its economies, and increase linkages with the mining sectors. International Trade Centre data shows that SADC mineral exports constituted as much as three fifths of all merchandise exports in 2013.
Africa’s quest to add value to its raw materials has been around for almost as long as the continent’s first independent nations and their dreams of building industries in place of the commodity export oriented economies they inherited from their colonizers.
``The fundamental issue that faces resource-rich countries in Africa is the lack of an established and efficient manufacturing sector,’’ says Zamanzima Mazibuko, a researcher at the Mapungubwe Institute for Strategic Reflection (MISTRA). `` For beneficiation to effectively take place, suitably skilled human capital and considerable investment in infrastructure for the development of downstream industrial linkages need to take priority.’’
A start would be for each African country to conduct an accurate analysis and understanding of all resources that would be required to embark on beneficiation. ``Thus, a triple helix approach in which government, private sector, and research institutions collaborate is essential in ensuring efficient policy development and implementation for a successful process of beneficiation,’’ she said.
Individually, most of the governments have reviewed their mining laws and tweaked their fiscal and industrial policies to promote beneficiation. Botswana is often cited as the best example of the benefits of beneficiation through its diamond processing plants. Zambia has similarly taken steps to promote processing of copper exports in the country through increased taxation.
South Africa, the region’s largest and most industrialized economy got its own ball rolling in 2012, when it adopted its ``Beneficiation Strategy for the Minerals of South Africa’’ plan. The country’s platinum miners have for years been researching fuel cell technology, supported by the Department of Trade and Industry while the success of the Krugerrand remains a hopeful sign it can be done.
More recently, Arkein Capital Partners’s Nyanza Light Minerals announced it was pushing ahead with a plan to produce titanium dioxide pigment (TiO2) from a waste steel dump owned by the now defunct Evraz Highveld & Vanadium in a project that may cost as much as $300 million when complete.
``Beneficiation makes economic sense,’’ says Nyanza CEO and GIBS MBA, Donovan Chimhandamba, whose company is also looking at similar projects in Rwanda, Zimbabwe and Zambia. ``If we can trap most of the value at source, the value chain becomes more profitable and that makes resources that were deemed unviable, viable.’’
The plant could be a game changer for manufacturing as titanium dioxide pigment is used in everything from paint and food to clothing. Nyanza projects construction will begin next year with production set for the final quarter of 2019.
``These things take time and sometimes you get shareholder fatigue. Some of our initial shareholders left,’’ Chimhandamba said. ``But you need government support to get these things off the ground and sometimes you just need to shut your ears to the political noise.’’
There are also other challenges as Arkein and its partners and the Botswana example show. Skills training, technology and a favourable business environment including government support, were also key metrics in building successful beneficiation projects, researchers say.