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DEPARTMENT: MINERALS AND ENERGY REPUBLIC OF SOUTH AFRICA Directorate: Mineral Economics

SOUTH AFRICAS MINERAL INDUSTRY 2004/2005

Cover picture: Underground mining at Kimberley ceased this year, after more than 100 years of mining operations. Recovery of diamonds from waste dumps continues. The cover pictures commemorates the end of a mining era, but not the end of diamond production from Kimberley.

Issued free by and obtainable from the Director: Mineral Economics, Mineralia Centre, 234 Visagie Street, Pretoria 0001, Private Bag X59, Pretoria 0001 Telephone (012) 317-8538, Telefax (012) 320-4327

Editing: (External) I Robinson (Internal) N Van Averbeke, A J Harding, J A G Duval, P Mwape, J W Perold

Statistics: M Khler

Co-ordinator: J A G Duval

First Published August 1984

This, the 22nd revised edition, published December 2005

Whereas the greatest care has been taken in the compilation of the contents of this publication, the Mineral Economics Directorate does not hold itself responsible for any errors or omissions

Copyright Reserved

ISBN 1 919927 - 07 - 7

ii

FOREWORD
The year 2004 will be remembered as the year South Africa finally reached a major milestone in the development of its new mineral legislation. On the 1st of May 2004, the Minerals Act, 1991 was repealed and replaced by the Mineral and Petroleum Resources Development Act of 2002. The Act enshrines a process of minerals and mining policy re-formulation that took some 10 years to complete and involved extensive consultation with a broad spectrum of role players in South Africas mineral industry. This publication for 2004/2005 is the 22nd edition that sees a return to its traditional format from the revised edition that carried advertising space and so characterized the 2003/2004 publication. Sustained high demand from Asia in particular, with few exceptions, encouraged increased production of mineral commodities in South Africa during 2004. In general there were also notable rises in domestic output. Although minings contribution to gross value added in the South African economy decreased from 7,4 percent in 2003 to 7,1 percent in 2004, the actual contribution in 2004 was 3,5 percent higher in 2004. Compared with 2003, total primary mineral sales increased by 6,0 percent while despite the strong rand total mineral export sales increased by 3,2 percent in 2004. In dollar terms, however, the increase in export sales was far more impressive, rising by a hefty 21 percent year-on-year. The contribution of export sales to total primary mineral sales decreased from 74 percent in 2003 to 72 percent in 2004. Output from gold mining continued to decline, falling another 7,6 percent to 347 tons in 2004. The average gold price received for South African gold production declined from R88 092 per kg in 2003 to R84 785 per kg in 2004 as a result of a slightly stronger average rand/dollar exchange rate in 2004. Another milepost could have been reached during 2004 with the fall of gold from the number one position as South Africas main mineral income generator. Processed minerals generated the highest income by commodity group accounting for 22 percent of total mineral processed plus primary mineral sales in 2004, followed by platinum-group metals (21,0 percent) and then gold (18,4 percent). I would like to take this opportunity to thank the staff of the Mineral Economics Directorate for their major contribution to the compilation of this publication as well as the many South African mining companies for their co-operation and support in submitting the statistics Special appreciation is given to Mr Ian Robinson for undertaking the onerous task of external editor for this publication.

N. VAN AVERBEKE DIRECTOR: Mineral Economics

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CONTENTS
Foreword Abbreviations and symbols Explanatory notes Page iii vi vii

PART ONE: GENERAL REVIEW (P Mwape, M Roberts, E Mokwena, T Tjatjie)


Introduction Structure of the industry South Africas mineral industry strengths Mineral exploration Communications, infrastructure and labour Role in the national economy Mineral production and sales Mineral benefication South Africas imports of mineral products Forecast of mineral exports for products 2003 to 2009 Mineral related investment in South Africa Regional cooperation (SADC) 1 1 4 6 8 12 15 17 18 20 21

PART TWO: REVIEW OF SELECTED COMMODITIES PRECIOUS METALS AND MINERALS Diamonds Gold Platinum-group Metals Silver ENERGY MINERALS Coal Hydrocarbon Fuels Uranium NONFERROUS METALS AND MINERALS Overview Aluminium Antimony Cobalt Copper Lead Nickel Titanium Zinc Zirconium FERROUS MINERALS Overview Chromium Iron Ore Manganese Silicon Vanadium

A A A A

K S S K

Damarupurshad Conradie Conradie Damarupurshad

24 30 34 38

X M Prevost L Musi A K Damarupurshad

43 51 54

J W Perold L A Themba L Maphango A J Harding J W Perold L Maphango A J Harding J W Perold L A Themba L A Themba

59 64 69 72 77 80 83 87 89 93

A J Harding N Kweyama M Bonga M Bonga M Bonga N Kweyama

97 101 106 110 115 118

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INDUSTRIAL MINERALS Overview Aggregate & sand Alumino-silicates Dimension Stone Fluorspar Limestone and Dolomite Phosphate Rock Special Clays Sulphur Vermiculite Statistics for other Industrial Minerals PART THREE: GENERAL INFORMATION

J A G Duval V N Agnello N Tshabalala D Naidoo D Naidoo V N Agnello D Naidoo V N Agnello D Naidoo V N Agnello V N Agnello, D Naidoo, N Tshabalala

121 126 130 133 136 139 144 148 155 159 163

RECENT DIRECTORATE: MINERAL ECONOMICS PUBLICATIONS USEFUL ADDRESSES: Department of Minerals and Energy Department of Trade and Industry Parastatal Organisations Other Mineral-related Organisations Selected South African Mining Companies Tertiary Institutions ORGANOGRAMS Organisational Structure of Mineral Policy and Promotion Branch Directorate: Mineral Economics

174 176 176 177 179 182

183 184

ABBREVIATIONS AND SYMBOLS


A$ bbl bbl/d BGS billion ct conc CIF CIS Australian dollar barrel barrels per day British Geological Survey thousand million carat concentrate cost, insurance, freight Commonwealth of Independent States. Part of the former Union of Soviet Socialist Republics (USSR) Consumer price index Peoples Republic of China Deutsche Mark Department of Minerals and Energy Democratic Republic of Congo Direct reduced iron estimate Electric-arc furnace European Economic Union free on board free on rail Former Union of Soviet Socialist Republics (USSR) gram giga year gram per ton gross as received net gigawatts electric International Lead & Zinc Study Group International Nickel Study Group thousand kilocalorie kilogram kilogram per metric ton kilometre kiloton kiloton per annum pound avoirdupois LME m M m3 mic Ma Mct Mozt Mozt/a Mt Mt/a MVA MWh na nar ns NW ozt pa PGMs ppm R SA S.ton t t/a UAE USA USBM USGS TCF w WBMS y y-o-y $ C$ % London Metal Exchange metre million cubic metre metal-in-concentrate million years million carats million ounces troy million ounces troy per annum megaton (million tons) million tons per annum megavolt ampere megawatt hour not available not as received not specified North West Europe troy ounce per annum platinum-group metals parts per million rand (South African currency) South Africa Short ton metric ton tons per annum United Arab Emirates United States of America United States Bureau of Mines United States Geological Survey trillion cubic feet withheld World Bureau of Metal Statistics year year-on-year US dollar, unless stated otherwise Canadian dollar British pound sterling percent

CPI China DM DME DRC DRI e EAF EU FOB FOR FSU g Ga g/t GAR GWe ILZSG INSG k kcal kg kg/t km kt kt/a lb

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EXPLANATORY NOTES
Reference Due to space limitations the sources of statistical information only are given. The absence of a source reference to statistical data indicates that such data was sourced from the Directorate: Mineral Economics database of mineral production, sales and labour in South Africa. A bibliography is presented in Part Three. Resources of which location, grade and quality are known, or estimated from specific geological evidence, and include economic, marginally economic and sub-economic components, also demonstrated and inferred subdivisions. In this publication RESERVE BASE is defined as that of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth. The RESERVE BASE is the in situ demonstrated resource from which reserves are estimated. It may encompass those parts of the resource that have a reasonable potential for becoming economically viable within planning horizons beyond those that assure proven technology and current economics. The RESERVE BASE includes those resources that are currently economic (DEMONSTRATED RESERVES) and marginally economic (DEMONSTRATED MARGINAL RESERVES). That part of the RESERVE BASE, which could be economically extracted at the time of determination.

Identified Resource

Reserve Base

Reserves

In many cases the number of mines reported by the statistical division differs from those reported in commodity chapters by mineral economists. There are technical reasons for these differences mainly, that a single mining unit, as interpreted by a mineral economist, may for legal reasons, reflect as more than one production entity in the statistical returns.

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PART ONE: SOUTH AFRICAS MINERAL INDUSTRY GENERAL REVIEW


P Mwape, MJ Roberts, E Mokwena, T Tjatjie, M Phale

INTRODUCTION For more than a century, South Africas mineral industry, largely supported by gold, diamond, coal and platinum production, has made an important contribution to the national economy. It has provided the impetus for the development of an extensive and efficient physical infrastructure and has contributed greatly to the establishment of the countrys secondary industries. The mineral industry is a well-established and resourceful sector of the economy, has a high degree of technical expertise and the ability to mobilize capital for new development. Mining is South Africas largest industry sector, followed by manufacturing. Other sectors, which contribute significantly to the countrys economy, are oil and gas, chemicals, agriculture and tourism. The clothing and textiles, financial services and banking sectors have also had significant growth in recent years. South Africa is a leading world supplier of a range of minerals and mineral products of consistently high quality. In 2004, some 59 different minerals were produced from 993 mines and quarries, of which 49 produced gold, 28 produced platinum-group minerals, 64 produced coal and 145 produced diamonds. The increase in the number of operating mines and quarries recorded by the Department of Minerals and Energy (DME) can be attributed to the improvement in the quality and quantity of data from the mining industry, improved data collection methodology and new entrants especially in the Platinum Group Metals (PGM) sector. Mineral commodities were exported to 82 countries. STRUCTURE OF THE INDUSTRY Democratic change in South Africa during the 1990s resulted in the endorsement of the principles of private enterprise within a free-market system, offering equal opportunities for all the people. The States influence within the mineral industry is confined to orderly regulation and the promotion of equal opportunity for all citizens. Discriminatory policies excluded a large sector of the population from full participation in the South African minerals industry during the pre-1994 period, before democracy was realized. The new Minerals and Petroleum Resources Development Act, which came into effect on 1st May 2004, legislates the official policy concerning the exploitation of the countrys minerals. The restructuring of the South African economy and changing local and international circumstances were taken into consideration by the Department of Minerals and Energy, which drafted the new Act. The Act addresses many issues, including the following: Transformation of the minerals and mining industry; Promotion of equitable access to South Africas mineral resources; Promotion of investment in exploration, mining and mineral beneficiation; Socio-economic development of South Africa; and Environmental sustainability of the mining industry.

Previously in South Africa, mineral rights were owned either by the State or the private sector. This dual ownership system represented an entry barrier to potential new investors. Governments objective is for all mineral rights to be vested in the State within the next five years, with due regard to constitutional ownership rights and security of tenure.

Private Sector Corporate restructuring of the South African mining industry, which has been in progress for over a decade, continued throughout 2004. Mining houses were transformed into focused mining companies by shedding their non-core industrial holdings. The transformation included the consolidation of ownership through minority buy-outs, the transfer of primary listings (and corporate head offices) offshore, as well as the purchase of South African mining assets by foreign companies.
1

As the South African mining industry is still controlled predominantly by white males, emphasis is being placed on stimulating black and women economic empowerment in the industry. Several black-owned firms are now beginning to play an important role in the mining industry. The next few years will probably see the emergence of several empowerment companies of substantial size in South Africas mining and resources sector. Mining has thus become a focus of the Reconstruction and Development Programme in terms of entrepreneurial development, black economic empowerment and stimulating employment and growth. The broad-based socio-economic Empowerment Charter for the South African mining industry was promulgated in May 2004. Following careful negotiation, the Charter calls for Historically Disadvantaged South Africans (HDSAs) to control 15 percent of mines within five years, rising to 26 percent within 10 years. The Mining Empowerment Charter stresses commitment to pursue a shared vision of a globally competitive mining industry that draws on the human and financial resources of all South Africas people, and offers real benefits to all South Africans. The goal of the Charter is to create an industry that will proudly reflect the non-racial South Africa. In order to give effect to the provisions contained in the broad-based socio-economic Empowerment Charter for the mining and minerals industry, a scorecard was drawn up. The scorecard is designed to facilitate the application of the Charter in terms of the Minerals and Petroleum Resources Development Act requirements for the conversion of all the old order rights into new rights within a five-year conversion window period, but recognizing the full 10year period. During 2004, the DME drafted proposals for a Precious Metals and Diamond General Amendment Bill with the intention to improve access to rough diamonds and precious metals, for the purposeof local mineral beneficiation or value addition. During 2003, the South African government had drafted proposals for a royalty on mining revenues, known as the Minerals and Petroleum Royalty Bill. Black Economic Empowerment (BEE) mining deals worth about R6,5 billion were concluded in 2004, and new giants such as African Rainbow Minerals and Mvelaphanda Resources are shaping the new South African mining landscape. Most of the BEE deals are taking a form of mergers and acquisition. Prominent deals in 2004 include the purchase of 18 percent of Lonplats by Incwala Resources amounting to R3,187 billion, the JCI unbundling totalling R1,840 billion and the R1,276 billion merger of Pelawan Investments and Anooraq Resources Corporation. The Chamber of Mines of South Africa is a voluntary, private sector employers organisation founded in 1889 three years after gold was discovered on the Witwatersrand. The Chamber is an association of mining companies and mines operating in the gold, coal, diamond, platinum, lead, iron ore, manganese, antimony, zinc and copper mining sectors. In recent years, the Chambers role and functions have undergone substantial change in response to developments in the external environment. Today, the organisation acts as the principal advocate of the major policy positions endorsed by mining employers. The Chamber represents the formalised views of its membership to various organs of South Africas national and provincial governments, and to other relevant policy-making and opinion-forming entities, both in and outside of the country. The South African Mining Development Association (SAMDA) is a new organization established with a vision to be the vehicle for the development of a vibrant and sustainable junior mining sector. Numerous smaller groups and companies also carry out mining and beneficiation activities. Not only do they contribute towards the creation of employment opportunities, but they also exploit the relatively smaller mineral deposits which may not be considered economically attractive to the larger groups. The National Small-scale Mining Development Framework, established in 1999, is contributing to the development of the junior mining sector. The unique mechanism of the Framework was designed to assist first-time entrepreneurs in overcoming the many obstacles faced by small-scale miners. Many co-operative organisations protect and serve the interests of the smaller groups and independent operators, or specific sectors of the industry. These include the Aluminium Federation of South Africa, the South African Copper Development Association, the Ferro-Alloy 2

Producers Association, the Engineering Industries Federation of South Africa, the Southern Africa Stainless Steel Development Association and the Aggregate and Sand Producers Association of South Africa.

Government The States involvement in the mineral industry is of a complementary and supportive nature, and seeks to provide and maintain: A legal and fiscal environment which will allow unimpeded exploration for, as well as mining, beneficiation and marketing of the countrys minerals, and An efficient physical infrastructure including road, rail, air and harbour facilities, communications and health services, and the supply of electricity and water.
The Department of Minerals and Energy (DME) is responsible for the administration of the Minerals and Petroleum Resources Development Act, 28 of 2002, which came into effect on 1st May 2004. This Act replaces the Minerals Act, 50 of 1991 and regulates the prospecting for, and optimal exploitation, processing and utilisation of minerals, provides for safety and health in the mining industry, and controls the rehabilitation of land disturbed by exploration and mining. Various specialised divisions of the DME and associated institutions are responsible for the administration of the mining laws (Table 1) and for promoting the development of the industry. The office of the Director-General, the permanent head of the Department of Minerals and Energy, is located in Pretoria. The Mine Health and Safety Inspectorate of the Department ensures the safe mining of minerals under healthy working conditions and is represented in the various provinces by Principal Inspectors. The Energy branch promotes the optimum and sustainable utilisation of energy resources. The Minerals Development Branch (MDB) promotes the orderly and optimal mining and utilisation of mineral resources and is represented in the provinces by Regional Directors. The MDB consists of a Mineral Resource Management Chief Directorate to control mineral resource management, a Mineral Development and Administration Chief Directorate to direct and administer regional offices and a Mineral Policy and Investment Chief Directorate to promote minerals development and advise on trends in the mining industry (see Annexure A, page vi, for related directorates). The Directorate Mineral Economics promotes mineral exploitation and beneficiation in South Africa: it collects, classifies and analyses mineral data in order to advise both Government and the private sector on local and international developments in the mineral industry. The Directorate also disseminates mineral-related information through publications and by participating in local and international conferences. The Council for Geoscience undertakes geological mapping and carries out studies relevant to the identification, nature, extent and genesis of ore deposits and also maintains national databases of the countrys geoscientific data and information. Minteks aim is to enable the minerals industry to operate more effectively by developing and making available the most appropriate and cost-effective technology. It is engaged in the full spectrum of minerals research, from the mineralogical examination of ores to the development of extraction and refining technologies, the manufacturing of end products, and feasibility and economic studies. Much of this work is carried out in close liaison with the minerals and metallurgical industries, both locally and internationally. The South African Nuclear Energy Corporation (NECSA) undertakes and promotes research and development in the field of nuclear energy and radiation sciences and technology in order to process source material, special nuclear material and restricted material; and to co-operate with persons in these fields. The Council for Scientific and Industrial Research (CSIR) conducts, inter alia, research related to specific minerals, brownfields mineral exploration, air quality, water pollution and purification, and mining and mineral processing. The CSIRs Division of Mining Technology serves, primarily, the local gold and coal-mining industries, but increasingly also other mining sectors and international markets. Major research activity focuses on the most crucial problems threatening the health and safety of the underground workforce and overcoming a variety of technological problems that impact on profitability in the mining industry. Services range from fundamental research, technology development and general advice and assistance, and cover the areas of 3

improving the underground environment, strata control, reducing the hazardous conditions associated with rock pressure in mining operations and developing new or improved mining systems and equipment. Most of South Africas institutions of higher education (universities and technikons) undertake mineral and/or mining research and are responsible for the training of professional and technical personnel required by the mineral industry. TABLE 1: SUMMARY OF SOUTH AFRICAS ADMINISTRATION OF MINERAL AND MINING LAWS

ADMINISTRATION OF LAWS

Mines and Works Act, 1956 (Act No. 27 of 1956) Section 9 Mining Rights Act, 1956 (Act No. 20 of 1967) (Chapter XVI)

Mining Titles Registration Act, 1967 (Act No. 16 of 1967) (Latest amendments in Act 24 of 2003)

Central Energy Fund Act, 1977 (Act No. 58 of 1977)

Petroleum Products Act, 1977 (Act No. 120 of 1977)

Diamonds Act, 1986 (Act No. 56 of 1986)

Electricity Act, 1987 (Act No. 41 of 1987)

Mineral Technology Act, 1989 (Act No. 30 of 1989)

Geoscience Act, 1993 (Act No. 100 of 1993)

Mine Health and Safety Act, 1996 (Act No. 29 of 1996)

Nuclear Energy Act, 1999 (Act No. 47 of 1999) Section 9 Abolition of the Lebowa Minerals Trust Act, 2000 (Act No. 67 of 2000)

National Nuclear Regulator Act, 1999 (Act No. 47 of 1999)

Minerals and Petroleum Resources Development Act (Act No. 28 of 2002)

SOUTH AFRICAS MINERAL INDUSTRY STRENGTHS South Africas mineral wealth is found in diverse geological formations, some of which are unique and extensive by world standards: The best-known geological formation is the unique and extensive Witwatersrand Basin, hosting a considerable portion of the worlds gold reserves, as well as uranium, silver, pyrite, and osmiridium and yields some 98 percent of South Africas gold output; The Transvaal Supergroup contains enormous resources of manganese and iron ore; The Bushveld Complex, contains more than half of the worlds reserves of chrome ore and platinum-group metals. Additionally, the Complex hosts ores of vanadium, iron, titanium, copper, nickel and fluorspar;

The coal and anthracite beds of the Karoo basins in Mpumalanga, KwaZulu-Natal and Limpopo; The Phalaborwa Igneous Complex, which hosts extensive deposits of copper, phosphate, titanium, iron, vermiculite and zirconium ores; Diamond (kimberlitic, alluvial and marine) deposits Heavy mineral sand occurrences containing titanium minerals, iron and zircon; Large deposits of lead/zinc ores with associated copper and silver in the Northern Cape.

South Africa holds the worlds largest reserves of ores of platinum-group metals (PGMs, 87,7 percent), manganese (some 80 percent of the total world reserves), chromium (72,4 percent), gold (40,1 percent), and alumino-silicates (37,4 percent) (Table 2 and Figure 1). It is also prominent in terms of reserves of: titanium, vanadium, zirconium, vermiculite, and fluorspar. TABLE 2: SOUTH AFRICAS ROLE IN WORLD MINERAL RESERVES, PRODUCTION AND EXPORTS, 2004
RESERVE BASE Mass % Rank Unit * * * kt 51 37,4 1 kt 250 6,4 4 t 5 500 72,4 1 kt 28 559 6,0 6 Mt 13 1,4 14 kt * * * kt * * 16,7 40,1 0,9 2,0 80,0 8,4 87,7 5,0 * * 29,8 9,6 27,0 40,0 3,3 19,4 * kt 2 1 9 7 1 5 1 4 kt * 2 4 2 2 8 2 PRODUCTION Mass % Rank 866 2,9 8 235 38,0 2 4 967 3,2 3 7 645 44,5 1 243 5,2 5 103 0,8 15 2 965 46,0 1 7,2 5 5,0 13,8 3,3 1,3 14,8 3,1 57,8 1,9 7 0,4 * 2,1 48,0 41,0 0,4 * 3 kt 3 1 7 12 1 8 1 9 kt 20 * 10 1 1 22 * EXPORTS % Rank 3,0 8 44,0 1 * * 11,4 4 8,9 4 0,5 18 54,0 1 15,9 4 9,6 * 3,9 1,6 20,2 * * 0,8 5 * * * * 95,0 0,2 * 3 3 * 5 12 2 * * 9 * * * * 1 24 *

COMMODITY Unit Aluminium+ Alumino-silicates Antimony Chrome Coal Copper Ferrochromium Ferro-alloys of manganese Ferrosilicon Fluorspar Gold Iron Ore Lead Manganese Nickel PGMs Phosphate Rock Silicon Metal Silver Titanium Minerals Uranium Vanadium Vermiculite Zinc Zirconium
Notes:

Mt kt Mt Mt Mt

Unit kt kt t kt Mt kt kt kt 58 kt t Mt kt kt kt kg kt 46 t

Mass 611 168 4 762 513 68 29 2 618 754 5,9 211 343 25 32 2 403 18 259 716 268 7,6 72 * * 11 178 16 *

* * Mt t Mt kt Mt Mt t Mt * kt Mt kt kt Mt Mt Mt

36 1 3 4 70 2

12

* 80 000 500 000 000 12 000 500 * 10 244 298 000 80 15 14

kt 985 141 4,4 Kt 365 t 341 Mt 39,3 kt 38 kt 4 282 kt 40 kg 286 157 Kt 2 735 51 4,9 t 72 * t 887 kt 23 kt 197 kt 32 *

kt kt kt

Full details given in respective commodity chapters + Figure under Reserve Base refers to metal production capacity * Confidential or information not available

As a result of its large reserve base, South Africa is the leading producer and produces over 40 percent of world production of the following mineral commodities: chrome ore, ferrochromium, platinum-group metals, vanadium and vermiculite (Table 2 and Figure 2). South Africa is also the leading world producer of manganese and gold and is one of the top three producers of aluminosilicates, antimony, manganese, ferro-alloys and fluorspar. The domestic market for most of the mineral commodities produced is relatively small. Hence, South Africas mineral industry is export-orientated (Table 2 and Figure 3); it contributes 95,0 percent of world vermiculite exports, 54,0 percent of ferrochromium and 44,0 percent of aluminosilicates. It is also probably the worlds largest exporter of PGMs, gold and vanadium, but the unavailability of export data from other producing countries makes it impossible to confirm this rating. Other important export commodities include manganese ore, ferro-alloys and fluorspar.

MINERAL EXPLORATION Although the existence of large reserves of a variety of minerals has been proven in South Africa, the country cannot be considered over-explored. Experts generally agree that there remains considerable potential for the discovery of other world-class deposits in areas that have not yet been exhaustively explored. There is, therefore, still ample potential for exploration programmes in certain areas. Expenditure on exploration is subject to many decision variables tied to ongoing results and business, economic and political factors and, therefore, may vary considerably from the projected investment. Exploration success in South Africa has made substantial investments in exploration for gold, platinum, diamonds, heavy minerals and base metals. Several major South African mining companies have also adopted aggressive exploration strategies beyond the borders of the country, which has resulted in the internationalisation of these companies. Although exploration expenditure has been increasing since 2002, South Africa is losing out in the race for international exploration dollars. By contrast Australia and Canada continue to attract new investments in exploration. A total amount of R5,412 million was spent on exploration in South Africa between 1998 and 2003. Of this amount, R768,9 million was laid out in 2001, R669,7 million in 2002 and R1,201 million in 2003. The preliminary figure for 2004, indicates that R1,052 million was spent on exploration in South Africa. The Limpopo, Northern Cape, Gauteng, Northwest and Mpumalanga provinces figured prominently in terms of exploration. Most of the exploration activities took place in the Bushveld Complex. The northern limb of the Complex has become the focus of recent exploration activities by both junior and senior mining companies, domestic and international. Exploration for diamonds in South Africa continues to draw worldwide attention. South Africas major diamond companies spend substantial amounts on exploration. Six kimberlites, which account for over 80 percent of De Beers and Debswanas diamond production (equivalent to 30 percent of world output by value) were discovered in the past by De Beers in-house exploration teams in South Africa and Botswana. COMMUNICATION, INFRASTRUCTURE AND LABOUR The South African communication system is well developed with 5,1 million installed telephones and 4,3 million installed exchange lines. The network is almost entirely digitised with digital microwave and fibre optics serving as the main transmission media. The countrys transport infrastructure is highly developed with extensive road and rail networks. For many years this efficient transport infrastructure has been utilised by other countries in southern Africa, to as far north as the Democratic Republic of Congo. The Department of Transport is responsible for the maintenance of roads comprising approximately 63 027 km of paved and 471 104 km of unpaved roads. The rail nexus that links major centres and is extensively used by heavy industry for freight transport extends over more than 30 000 km. This includes dedicated railway lines; one of them for iron ore from Sishen, in the Northern Cape to Saldanha Bay on the west coast, and another for transporting coal from the coal fields of Mpumalanga to the port of Richards Bay on the east coast. Of the five major ports through which most of South Africas minerals are shipped, the largest are Richards Bay (capacity 81,0 Mt, mainly for coal and other minerals), Saldanha Bay (30,9 Mt, chiefly for iron ore) and Durban (29,7 Mt, mainly for liquids, containers and break bulk cargoes). Electric power is largely generated by the countrys giant electricity utility, Eskom, and is among the cheapest electricity available anywhere in the world. This low electricity cost has contributed to the establishment of sizeable ferro-alloys, stainless steel and aluminium beneficiation industries, and also to the exploitation of the countrys deep gold reserves. Most importantly, the country enjoys political stability and has a fundamentally sound economy. Its banking and finance infrastructure is excellent and is on par with those in most developed countries, which assists global trade through a network of international links. 6

South Africa has a sizable labour pool, although to a large extent, unskilled. The Government is, therefore, actively pursuing a higher level of education, training and productivity in the nation. The labour force, whilst unionised, welcomes the inflow of foreign investment. It is envisaged that implementation of the new minerals policy will lead to increased investment in South Africas mineral industry by ensuring a competitive business environment and the lowering of barriers to entry. This, and the creation of a national mineral promotion system (onestop shop), furthermore, will stimulate small-scale mining and job creation. Other measures will be proposed to intensify mineral beneficiation. The whole of the subcontinent will also benefit from anticipated improved regional co-operation. FIGURE 1: SOUTH AFRICAS ROLE IN WORLD MINERAL RESERVES, 2004

Note:

Full details given in respective commodity chapters

FIGURE 2:

SOUTH AFRICAS ROLE IN WORLD MINERAL PRODUCTION, 2004

Note:

Full details given in respective commodity chapters

FIGURE 3:

SOUTH AFRICAS ROLE IN WORLD MINERAL EXPORTS, 2004

Notes:

Gold and PGMs omitted as there is no comparative data Full details given in respective commodity chapters

ROLE IN THE NATIONAL ECONOMY In 2004, mining contributed R87,1 billion (US$13,5 billion) or 7,1 percent to gross value added (Figure 4 and Table 3); this contribution increased by R2,93 billion from that of the previous year. The contribution as a percentage of the total has ranged between 6,5 in 1997 and 8,7 in 2002 over the last decade, largely due to the growth experienced in the secondary and tertiary sectors of the economy and the contraction in the gold-mining industry. However, if the gross valueadded contribution of processed minerals (presently included in the manufacturing sectors figures) were added to that of mining and quarrying, the impact on the national accounts would be significantly higher. During 2004, mining and quarrying contributed 9,9 percent to Total Fixed Capital Formation (Figure 4 and Table 3). This sum of R22,3 billion is equal to 25,6 percent of the sectors gross value-added contribution. FIGURE 4: CONTRIBUTION OF MINING AND QUARRYING TO GROSS VALUE ADDED AND TOTAL FIXED CAPITAL FORMATION OF SOUTH AFRICA, 1995 2004 (Current Rand Prices)

TABLE 3:

CONTRIBUTIONS OF MINING AND QUARRYING TO VALUE ADDED, FIXED CAPITAL FORMATION (at current prices) AND TOTAL NATIONAL EXPORTS OF GOODS, 19952004
CONTRIBUTION TO CONTRIBUTION TO NATIONAL FIXED CAPITAL FORMATION TOTAL EXPORT OF GOODS TOTAL FROM TOTAL FROM FIXED MINING EXPORT MINING CAPITAL OF GOODS FORMATION % Rmillion Rmillion % Rmillion Rmillion % 7,0 87 042 7 397 8,5 109 118 44 145 40,5 6,9 100 632 8 003 8,0 130 206 50 691 38,9 6,5 113 221 9 638 8,5 143 830 51 708 36,0 6,8 126 913 11 317 8,9 160 763 55 295 34,4 7,1 126 754 11 635 9,2 174 319 58 303 33,4 7,6 139 647 13 847 9,9 222 061 76 304 34,4 8,3 153 525 15 871 10,3 265 832 89 943 33,8 8,7 175 592 19 802 11,3 333 251 109 357 32,8 7,4 200 290 20 816 10,4 290 544 86 747 29,9 7,1 226 118 22 303 9,9 311 762 89 546 28,7

YEAR

CONTRIBUTION TO VALUE ADDED GROSS FROM VALUE MINING ADDED Rmillion 500 354 565 470 627 167 674 874 738 873 838 218 928 215 1 059 789 1 134 585 1 230 409 Rmillion 34 830 38 768 40 524 45 879 52 173 63 391 77 214 92 113 84 128 87 058

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Sources: Department of Minerals and Energy: Mineral Economics South African Reserve Bank, 2005, pS113

TABLE 4:

CONTRIBUTIONS OF MINING AND QUARRYING TO STATE REVENUE, 19952004


CONTRIBUTIONS TO STATE REVENUE State Share of Profits* Total Revenue and Diamond Exports R000 259 521 217 078 146 427 157 620 57 715 120 083 452 903 169 313 1 041 860 466 338 R000 769 422 825 553 995 680 839 470 190 452 192 130 952 151 055 026 815 640 407 429

YEAR Ended 31 Mar 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

MINING TAXATION R 000 509 901 608 455 849 253 681 851 134 737 072 047 499 248 885 713 773 780 941 091

1 1 1 1 2 1 4 8 6 2

1 1 1 1 2 1 4 9 7 3

As Percentage STATE AID# Duties of Total State Revenue % R000 1,6 22 726 1,4 43 239 1,4 36 404 1,1 29 999 1,2 29 499 0,6 27 990 2,3 34 939 3,5 28 914 2,6 20 349 1,0 32 530

Sources: RSA, Department of Finance, South African Revenue Service Department of Minerals and Energy: Financial Planning and Management Accounting Notes: * # In respect of leased mines Aid to marginal mines In 2002, R28 914 000 from State Aid budget was directed to Council for Geoscience for technical investigation on the mines that required State Aid.

Sales of primary mineral products accounted for 28,7 percent of South Africas total export revenue during 2004, while golds contribution decreased to 9,3 percent from 11,2 percent in 2003 (Figure 5 and Table 3). The declining trend over the last two decades in both these indicators has been the result of the contraction in the gold-mining industry, increased local beneficiation and relatively lower commodity rand prices across the board. However, the inclusion of various processed mineral products, such as ferro-alloys, aluminium and carbon and stainless steel, would raise the contribution of the minerals sector to above 35 percent.

FIGURE 5:

CONTRIBUTION OF PRIMARY MINERALS TO SOUTH AFRICAS EXPORTS#, 19952004

Sources: Mineral Economics Notes: + # Includes gold Total exports of goods only, including gold

During 2004, the mining industry employed 2,9 percent of South Africas economically active population (Table 5), or some 5,3 percent of all workers in the non-agricultural formal sectors of the economy. The average number of workers employed in the mining industry increased by 16 139, or 3,7 percent, from 434 859 in 2003. This increase can be attributed to the improvements in the quality and quantity of data from the mining industry, the DMEs data collection methodology and new entrants and expansions especially in the PGM sector. A total of 147 125 mineworkers lost their jobs over the ten-year period from 1995 to 2004 as a result of, inter alia, the shrinking gold sector and improvements in productivity in the domestic minerals industry. Nevertheless, taking into account the multiplying effect with regard to the supply and consuming industries, as well as the related dependants, many millions of people still rely on the mining industry for their livelihood. Wage income amounted to R33,81 billion in 2004, or 27,0 percent of total mining revenue, an increase in nominal terms of 9,8 percent when compared with that of 2003. The average annual income per worker was R74 958 in 2004, registering an increase in real rand terms in excess of 4,4 percent year-on-year TABLE 5: EMPLOYMENT AND WAGES IN SOUTH AFRICAS MINING INDUSTRY, 19952004
EMPLOYMENT As % of total economically active population WAGES Per worker

YEAR

Average number employed

Total per annum Nominal Real+ R million 15 485 26 477 16 885 26 886 18 644 27 343 19 240 26 398 20 138 26 271 22 127 27 407 24 409 28 595 26 406 28 339 30 801 33 056 33 806 33 806

As % of total mining revenue#

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

598 569 553 466 437 418 407 416 434 450

123 069 116 663 028 294 154 925 859 998

4,3 4,1 3,8 3,4 3,0 2,6 2,7 2,6 2,7 2,9

Nominal R 25 889 29 672 33 708 41 228 46 079 52 898 59 979 63 335 70 830 74 958

Real+ R 44 266 47 245 49 435 59 567 60 113 65 522 70 265 67 972 71 815 74 958

28,1 26,8 27,9 27,0 26,3 22,5 21,2 19,3 26,0 27,0

Sources: Labour Force Survey (Stats SA), 2004 Notes: # + Export plus local commodity sales Deflated by means of the CPI with 2004 as base year

10

TABLE 6:

SOUTH AFRICAS MINING INDUSTRY: EMPLOYMENT AND REMUNERATION BY PROVINCE, 2004


EMPLOYEES Number % 148 260 32,9 92 951 20,6 57 236 12,7 53 013 11,8 61 014 13,5 26 434 5,9 7 692 1,7 3 164 0,7 1 234 0,3 450 998 100,0 TOTAL REMUNERATION R million % 9 077 26,9 6 563 19,4 6 194 18,3 4 105 12,1 4 299 12,7 2 476 7,3 730 2,2 286 0,8 76 0,2 33 806 100,0

PROVINCE North West Gauteng Mpumalanga Free State Limpopo Northern Cape KwaZulu-Natal Western Cape Eastern Cape TOTAL

Sources: Directorate Mineral Economics

Provincial employment distribution was distinctly lopsided with five provinces (North West, Gauteng, Mpumalanga, Free State and the Limpopo) employing 91,5 percent of the mining workforce, which, in turn, earned 89,4 percent of the total remuneration (Table 6 and Figure 6). FIGURE 6: SOUTH AFRICAS MINING INDUSTRY: EMPLOYMENT BY PROVINCE, 2004

Despite its declining economic contribution, the gold-mining sector was the largest employer with some 40 percent of the total mining industrys labour force (Figure 7). The PGM industry employed 33 percent, with the coal industry in third place with 11 percent. The employment crisis caused by the low gold price resulted in the inception of the Gold Crisis Committee (GCC) during 1998. Through a concerted effort, job losses by gold mines were kept down to below 8 000 in 2004. The Mining Summit, an initiative born out of the GCC and hosted by the Department of Minerals and Energy in early 2000, had as its main objective to addressed key issues critical to the survival of the industry, amongst them being labour concerns.

11

FIGURE 7:

SOUTH AFRICAS MINING INDUSTRY: EMPLOYMENT BY SECTOR, 2004

The gold industry was responsible for some 37 percent of the total remuneration and the PGMs industry for 27 percent (Figure 8). The higher degree of mechanisation in the coal sector is reflected by its contribution of 11 percent in terms of the labour force, but 18 percent in terms of remuneration. FIGURE 8: SOUTH AFRICAS MINING INDUSTRY: REMUNERATION BY SECTOR, 2004

MINERAL PRODUCTION AND SALES IN 2004 Most of the worlds economies entered a period of subdued growth in 2001 and 2002; however some economies, most notably that of China, continued to grow strongly and increased their demand for commodities. As the United States and, to a lesser extent, the rest of the world entered a period of stronger economic growth in 2003 and 2004, the demand for commodities outstripped supply and as a result commodity prices began to increase sharply. It seems unlikely that world commodity prices will be sustained at these levels indefinitely because the present high prices substantially exceed the cost of production. Both demand for minerals and prices showed positive movement from the low levels experienced during 2003. Despite the large increase in gold and platinum prices and moderate increases in those of most other mineral commodities, the strong rand/dollar exchange rate, resulted in only a moderate increase in South African sales revenue in rand terms during the year. South Africas total primary mineral sales revenue increased by 6,5 percent, from R117,6 billion in 2003 to R125,2 billion in 2004 (Tables 7 and 8). When the total sales and total export sales 12

are expressed in US dollars, the annual changes reflect increases of 26,0 percent (from US$15,4 billion to US$ 19,4 billion), and 20,9 percent (from US$11,5 billion to US$ 13,9 billion) respectively. The modest increase in revenues in rand terms was due to the strengthening value of the rand, which achieved an average of R6,4499 in 2004, compared with R7,5647 in 2003. The major foreign revenue earners in 2004 were platinum-group metals (33,0 percent), followed by gold (32,4 percent) and coal (16,1 percent). Domestic mineral sales proceeds increased in rand terms by 15,1 percent, and 32,7 percent in dollar terms. Improvements in local sales income were recorded for all the minerals that make a meaningful contribution to the total. Coal remained the major local income earner, accounting for 38,2 percent of total domestic mineral sales, followed by metallic commodities with 31,2 percent and miscellaneous mineral commodities with 16,5 percent. Industrial commodities accounted for 14,1 percent. Of South Africas nine provinces, North West, Gauteng, Mpumalanga, Limpopo, and Northern Cape they contributed the bulk of the totalmineral revenue, together generating 87,1 percent of the total primary mineral sales income (Table 9). The same five provinces accounted for 89,6 percent of export sales revenue, while Mpumalanga, North West and Limpopo accounted for 67,2 percent of local sales earnings in 2004. North West is mainly dependent on PGMs as the major contributor towards minerals revenue, Gauteng on gold, Mpumalanga on coal and the Limpopo on diamonds, copper and coal. The economies of North-West, Limpopo, the Northern Cape and Mpumalanga are particularly dependent on the contributions from their respective mining industries. TABLE 7: SOUTH AFRICAS MINERAL PRODUCTION AND SALES, 2003
EXPORT SALES (FOB) Quantity Value (R)
** **

COMMODITY PRODUCTION LOCAL SALES (FOR) Quantity Quantity Value (R)


1. Precious Diamonds ct Gold kg Platinum-group metals kg Silver kg 2. Semi-precious stones kg 3. Ferrous@ 48 4. Non-ferrous+@ 5. Energy Coal 239 Uranium oxidekg 6. Industrial@ 7. Miscellaneous TOTAL#
Notes:

TOTAL SALES Quantity Value (R)


** 375 595 ** 33 052 899 407

12 666 536 372 766

** 3 117

** 276 457 930

372 478 32 776 441 477

266 150 79 817

** 3 583 * * 159 833

3 270 364 832 4 656 419

241 262 25 553 564 539 97 536 106 556 129 * 4 161 298 955 1 857 264 968

** 101 119 * * 512 456

28 823 929 371 111 212 548 * 6 810 164 565 4 710 638 776 26 703 460 512 ** 5 684 612 363 11 852 990 518 117 749 908 060

991 884 248 504

* * 2 648 865 610 26 534 800 2 853 373 808 352 623

300 510 168 028 212 893 896 **

13 212 837 453 71 556 461 13 490 623 059 239 584 673 ** 4 305 812 084 4 368 103 550 30 940 471 686 ** ** 1 378 800 279 7 484 886 968 86 809 436 374 **

All quantities are in metric tons, unless otherwise specified ** Classified: where applicable, earnings are included under Miscellaneous @ Full details given in respective overview chapters + Excludes titanium and zirconium minerals which are included under Miscellaneous * Nil # Hydrocarbons were produced and sold at a value of R767 million locally

13

TABLE 8:

SOUTH AFRICAS MINERAL PRODUCTION AND SALES, 2004


EXPORT SALES (FOB) TOTAL SALES Quantity Value (R) Quantity Value (R)
** 343 118 259 716 93 995 154 * 27 661 307 392 619 ** 28 982 777 601 29 526 670 482 76 594 * 4 841 063 224 2 266 653 568 14 472 904 537 ** ** ** 346 976 29 329 870 842 ** 33 312 803 796 101 478 216 * * 551 791

COMMODITY PRODUCTION LOCAL SALES (FOR) Quantity Quantity Value (R)


1. Precious Diamonds ct 14 Gold kg Platinum-group metals kg Silver kg 2. Semi-precious stones kg * 3. Ferrous@ 51 4. Non-ferrous+@ 5. Energy Coal 242 Uranium oxide kg 6. Industrial@ 7. Miscellaneous TOTAL#
Notes:

450 173 340 506 286 157 71 643

** 3857 ** 4 810 * * 159 172

** 347 093 241 3 786 133 314 7 483 062 71 784 * 3 168 710 136 3 799 534 205

249 115 525 807

8 009 773 360 6 066 187 773

821 694 178 372 267 887 249 **

13 606 151 275 67 946 518 ** ** 5 033 229 192 1 052 163 016 5 862 879 562 35 611 213 987

246 318 785 28 079 055 812 ** ** 6 085 392 208 8 334 522 588 14 197 402 150 89 570 750 170 125 181 964 157

All quantities are in metric tons, unless otherwise specified ** Classified: where applicable, earnings are included under Miscellaneous @ Full details given in respective overview chapters + Excludes titanium and zirconium minerals which are included under Miscellaneous * Nil # Hydrocarbons were produced and sold at a value of R1 612,4 million locally

Exports of primary and processed minerals were made to 82 countries during 2004. The most important export destination for South Africas primary minerals remained Europe, with 89,8 percent, while Pacific Rim countries accounted for 36,9 percent of the selected processed minerals, exceeding all other destinations (Table10). When precious metals and minerals are excluded from primary mineral exports, Europe accounted for 63,0 percent and the Pacific Rim countries for 23,8 percent of the total value in 2004. TABLE 9:
PROVINCE North West Mpumalanga Limpopo Gauteng Northern Cape Free State Western Cape# KwaZulu-Natal Eastern Cape TOTAL#
Note: #

SOUTH AFRICAS PRIMARY MINERAL SALES BY PROVINCE, 2004


LOCAL SALES (FOR) R000 % 6 941 646 19,5 11 523 434 32,4 5 432 366 15,3 1 523 034 4,3 3 373 844 9,5 1 270 596 3,6 3 951 531 11,1 1 115 875 3,1 469 888 1,3 35 611 214 100,0 EXPORT SALES (FOB) TOTAL SALES R000 % R000 % 27 950 167 31,2 34 891 813 27,9 12 662 349 14,1 24 185 783 19,3 7 540 277 8,4 12 972 643 10,4 25 051 393 28,0 26 583 427 21,2 7 067 437 7,9 10 441 281 8,3 5 475 141 6,1 6 746 737 5,4 959 913 1,1 4 911 444 3,9 2 863 073 3,2 3 978 948 3,2 0 0,0 469 888 0,4 89 570 750 100,0 125 181 964 100,0

Hydrocarbons were produced and sold at a value of R1 612,4 million locally

TABLE 10: SOUTH AFRICAS EXPORT VALUE OF PRIMARY AND SELECTED PROCESSED MINERAL PRODUCTS ACCORDING TO DESTINATION, 2004
REGION PRIMARY Including precious Excluding precious metals/minerals metals/minerals % % 2003 2004 2003 2004 Europe 89,7 89,8 61,2 63,0 Pacific Rim countries 6,7 6,5 25,3 23,8 Middle and Near East 1,9 2,1 7,0 7,5 North and Central America 0.9 0,7 3,4 2,6 South America 0,3 0,5 1,0 1,6 0,4 Africa 0,6 0,4 2,1 1,5 TOTAL 100,0 100,0 100,0 100,0 PROCESSED

% 2003 37,7 44,1 1,2 12,6 0,6 4,0 100,0 2004 36,4 36,9 3,3 16,1 6,7 100,0

14

MINERAL BENEFICIATION Beneficiation or value-added processing involves the transformation of primary material (produced by mining and extraction process), to a more finished product, which has a higher export sales value. Beneficiation involves a range of different activities including large-scale, capital-intensive activities, such as smelting, and sophisticated refining plants as well as labourintensive processes, such as craft jewellery and metal fabrication. Each successive level of processing permits the product to be sold at a higher price than the previous intermediate product or original raw material and adds value at each stage. The concept of beneficiation is not new in South Africa, but it took major steps forward during the 1990s. The key has been to establish South Africa as a base for adding value to raw material inputs from anywhere in the world, not only domestic resources. During this period, the South African mining sector has undergone a major transformation away from gold into higher valueadded mineral processing and manufacturing, becoming a world exporter of processed minerals as opposed to its previous role as a predomonantly primary commodity exporter. This transition has resulted from the construction of a number of large-scale, resource-based investment projects (such as Columbus Stainless, Hillside Aluminium, Namakwa Sands and Saldanha Steel) in addition to the continuing expansion of ferro-alloy production. Despite these developments, South Africa still has the potential to further raise the level of beneficiated mineral output. Table 11 shows South Africas first stage of beneficiation, which is characterised by capital-intensive plants with low employment levels engaged in the production of mass intermediate products. This first stage of beneficiation accounts for nearly 90 percent of the total minerals revenue with the other 10 percent coming from entirely beneficiated minerals, including partial commodities. Government is committed to the promotion of beneficiation and the Mineral and Petroleum Resources Development Act of 2002 includes provisions that will ensure that the Minister promotes the establishment of secondary and tertiary mineral-based industries, aimed at adding maximum value to mineral raw materials, where economically justifiable. The South African Mining Charter of 2004 specifically stipulates that mining companies will be able to offset the value of the level of beneficiation achieved by the company against its HDSA ownership commitments. Production and sales figures for a selected group of processed mineral products for 2003 and 2004 are shown in Tables 12 and 13, respectively. Export revenue comprised 74,8 percent of total sales of these processed minerals in 2004. Total sales revenue increased by 27,0 percent compared to 2003, from R27,8 billion to R35,3 billion. When expressed in dollar terms, an increase of 48,6 percent was recorded from $3,7 billion in 2003 to $5,5 billion in 2004. The biggest contributors to export sales were chromium alloys (37,5 percent), aluminium (24,1 percent) and manganese alloys (16,4 percent). The value of local sales of processed mineral products increased by 29,0 percent, from R6,9 billion in 2003 to R8,9 billion in 2004. Aluminium, with a 41,5 percent contribution, was the major revenue earner in 2004, with chrome alloys, manganese alloys, zinc metal and phosphoric acid also contributing substantially. Vanadium total sales increased by 75,0 percent from R1,2 billion in 2003 to R2,1 billion in 2004. Two provinces, KwaZulu-Natal and Mpumalanga contributed more than 67,0 percent of the total processed minerals sales revenue in 2004 (Table 14). Aluminium and titanium slag dominate the KwaZulu-Natal contribution, whilst more than two-thirds of Mpumalangas total sales were derived from chromium alloys. These two provinces dominated both the export and local sales revenues, with respective combined contributions of 70,4 and 66,3 percent. No beneficiation of the selected minerals occurred in the Eastern Cape, the Northern Cape and the Free State.

15

TABLE 11: FIRST STAGE OF BENEFICIATION WITHIN SOUTH AFRICAS MINERAL SECTOR, 2004 (Before manufacturing by alloying, working etc)
BENEFICIATION COMMENT MINERALS MINERALS RATIO BY REVENUE REVENUE VALUE (%) (RMillion) SHARE (%) GOLD 100 All is refined 29 330 20,3 COAL 100 Can be used for power generation and fuel manufacturing 28 071 19,4 PGMs 100 All is refined 33 313 23,1 ALUMINIUM 100 Imported raw materials to metal/alloys 10 105 7,0 CHROME 100 Ferro-alloys 11 753 8,1 COPPER 100 As refined metal 2 026 1,4 NICKEL 100 Nickel concentrate imports exceed exports. Beneficiation actually >100 3 653 2.5 LIMESTONE 100 For local consumption 1 240 0,9 AGGREGATE/SAND 100 For local consumption 1 901 1,3 SILICON 100 As metal, ferro-alloy and DMS product 1 160 0,8 ZINC 100 As refined metal. Concentrate also imported from Namibia. Beneficiation > 100% 782 0,5 IRON 100 As high grade pig iron co-product of titanium slag 945 0,7 MANGANESE 100 As metal and dioxide 1 739 1,2 Manganese Alloys 100 Alloys 4 699 3,3 PHOSPHATE 82 Concentrate applied locally 881 0,6 Phosphoric acid 100 Value of fully beneficiated acid 1 581 1,1 OTHER 100 Beneficiated to a degree immediately required by the export market 11 250 7,8 TOTAL 144 438 100,0 COMMODITY

TABLE 12: SOUTH AFRICAS PRODUCTION, LOCAL AND EXPORT SALES OF SELECTED PROCESSED MINERAL PRODUCTS, 2003
COMMODITY PRODUCTION t 2 812 595 920 514 184 206 734 787 27 172 2 422 360 LOCAL SALES Mass Value (FOR) t R000 300 954 886 219 2 192 704 633 653 84 659 414 429 1 934 301 299 303 3 320 629 1 119 108 667 497 297 1 536 944 1 6 900 542 20 EXPORT SALES Mass Value (FOB) t R000 640 137 7 658 552 707 407 2 534 220 106 449 672 867 10 865 639 497 892 4 981 081 18 816 1 072 477 850 935 3 971 391 890 588

Chromium alloys Manganese alloys Other: Classifiedx Subtotal: Ferroalloys Aluminium Vanadium+ Other: Classifiedx TOTAL
Notes: + x

Contained vanadium Comprises of titanium slag, zinc metal, low-manganese pig iron, silicon alloys and metal, phosphoric acid and antimony trioxide

16

TABLE 13: SOUTH AFRICAS PRODUCTION, LOCAL AND EXPORT SALES OF SELECTED PROCESSED MINERAL PRODUCTS, 2004
COMMODITY PRODUCTION t 2 965 296 985 842 191 097 LOCAL SALES EXPORT SALES Mass Value (FOR) Mass Value (FOB) t R000 t R000 486 306 1 849 169 2 617 505 9 903 486 191 885 932 019 753 504 4 329 260 93 134 501 509 3 282 697 3 724 359 415 916 2 119 661 8 887 407 103 790 14 6 1 3 26 658 216 890 380 674 471 418 963 404 788 928 080

Chromium alloys Manganese alloys Other: Classifiedx Subtotal: Ferroalloys Aluminium Vanadium+ Other: Classifiedx TOTAL
Notes: + x

866 074 23 303 2 668 633

341 747 2 637 574 221

610 702 16 276 1 750 629

Contained vanadium. Comprises of titanium slag, zinc metal, low-manganese pig iron, silicon alloys and metal, phosphoric acid, and antimony trioxide

TABLE 14: SOUTH AFRICAS LOCAL AND EXPORT SALES OF SELECTED PROCESSED MINERAL PRODUCTS BY PROVINCE, 2004
PROVINCE KwaZulu-Natal Mpumalanga North West and Western Cape@ Gauteng Limpopo Province TOTAL
Note:

LOCAL SALES (FOR) R000 % 4 040 565 45,5 2 210 980 24,9 613 1 504 517 8 887 893 404 566 407 6,9 16,9 5,8 100,0

EXPORT SALES (FOB) R000 % 10 032 861 38,0 7 471 784 28,3 5 485 792 2 482 765 944 878 26 418 080 20,8 9,4 3,6 100,0

TOTAL SALES R000 % 14 073 426 39,9 9 682 764 27,4 6 3 1 35 099 987 462 305 685 169 444 487 17,3 11,3 4,1 100,0

@ Values combined due to the confidentiality of the Western Cape figures

SOUTH AFRICAS IMPORTS OF MINERAL PRODUCTS As a result of its vast mineral resource base, South Africa is self-sufficient with respect to the supply of many minerals. However, some minerals and mineral products need to be imported due to the absence of economically viable mineral deposits; another factor is that certain specialised grades and products are not produced in South Africa. The value of the more significant imports during 2004 decreased by 9,3 percent from R17,2 billion to R15,6 billion (Table 15). Expressed in current dollars, the value of imports increased by 6,5 percent.

17

TABLE 15: SOUTH AFRICAS IMPORTS OF SELECTED PRIMARY AND PROCESSED MINERAL PRODUCTS, 2004
PRODUCT 2003** R000 VALUE (FOB) 2004 R000 4 319 651 411 131 661 806 Year on year % change -7,5 -15,4 8,3

Precious Diamonds Other precious and semi-precious stones * Precious metals + Ferrous@ Primary Processed Nonferrous@ Coking Coal Industrial@ Primary Processed Manufactured TOTAL#
Source: Notes:

4 670 569 485 876 611 190

190 700 379 136 30 144 1 281 125

159 628 780 073 76 158 1 540 532

-16,3 105,8 152,6 20,2

631 816 3 948 696 4 949 279 17 178 531

577 175 -8,6 4 702 584 19,1 2 378 707 15 607 445

-51,9 -9,1

South African Revenue Service, 2004 * + @ # ** Includes natural and synthetic precious or semi-precious stones and dust and powders of these stones Includes alloys containing base metals Full details given in respective overview chapters In addition, crude oil to the value of R38,0 billion was imported during 2004 (R34,3 billion in 2003) Revised figures

FORECAST OF MINERAL EXPORTS FOR 2004 TO 2009 South Africas mineral industry is primarily export driven, with 71,6 and 74,8 percent of primary and processed mineral sales during 2004 respectively, destined for world markets, respectively. Therefore, it is pertinent to estimate future earnings from mineral exports. Since gold, coal, the platinum-group metals and diamonds together contribute almost 90 percent to total primary mineral export revenue, forecasts in respect of these commodities are the most critical. For the purpose of forecasting South Africas mineral export revenue from 2005 to 2009, it was assumed that the major economies of the world would enjoy sustainable expansion over the medium term, providing a stable base for the smaller economies to achieve relatively high growth. This should filter through to mineral commodity markets, with volumes increasing moderately and significant price increase from 2004 to 2005. In 2006 and 2007 prices may again come under pressure as production of minerals is likely to start outpacing consumption. Based on these broad assumptions, as well as a detailed analysis of the supply and demand for each of the significant individual commodities, Table 16 presents the forecasts made in June 2005. Values are given in US dollars and kept constant at the average 2004 exchange rate of R6,4499 to the US dollar. The value of South Africas exports of primary minerals is forecast to increase by 6,8 percent per annum, which compounded from $13 607 million in 2004 will reach $19 965 million in 2009. The sectors with the highest expected growth rates are coal (11,4 percent), gold (8,8 percent) and ferrous (7,4 percent). Export earnings from gold are expected to decrease from $4 494 million in 2004 to $4 250 million in 2006 as a result of a continued drop in output, despite higher US dollar prices. A rise in US dollar prices should see the export revenue grow to $7 455 million by 2009, despite a possible decline in gold production. The export revenue from gold is forecast to increase by 8,8 percent per annum.

18

South Africas export earnings of platinum group metals (PGMs) are expected to increase from $4 578 million in 2004 to $5 429 million in 2005, as a result of a continued rise in output as well as higher US dollar prices of the constituent metals. Export revenue is forecast to decrease to $4 622 in 2007 mainly due to a lower platinum price, despite higher production, before climbing to $5 735 in 2009 on the back of a rising platinum price. The weighted average price for the basket of PGMs is expected to average $644/ozt in 2005. The export value of coal is expected to increase by 41,3 percent, to $3 169 million in 2005 from the $2 243 million recorded in 2004. Export revenue for coal is likely to show an increase of 11,4 percent per annum rising from $2 243 million in 2004 to $4 280 million in 2009. Europe and Middle East are still South Africas major customers and coal demand is rising in those regions. Furthermore, this increase in forecast export volumes is influenced mainly by the increasing number of exporting mines created as a result of the implementation of the Mineral and Petroleum Resources Development Act (MPRDA) and the willingness of the big coal companies to allow economic empowerment companies to mine coal blocks wits in their mining concession areas. Export earnings from ferrous minerals ($751 million in 2004) are foreseen to rise by 3,8 percent annually. By 2009 the value is expected to be almost $939 million. The sectors share of total primary mineral export earnings is expected to almost remain constant from 5,5 percent in 2004 to 4,7 percent in 2009. Primary nonferrous mineral export revenues are expected to increase from $355 million in 2004 to $373 million in 2005. Export income is also anticipated to increase to $386 million in 2009, reflecting a compound growth rate of 1,4 percent per annum. The forecast for primary industrial minerals export earnings indicates a possible increase of 1,8 percent from $163 million in 2004 to $166 million in 2005. The export revenue of these minerals is anticipated to increase by 3,1 percent per annum, to $196 million over the five-year period to 2009. The contribution of processed mineral products to foreign exchange earnings is expected to grow at a rate of 4,8 percent rate per annum, from $4 349 million in 2004 to $5 748 million in 2009, compared with a 6,8 percent per annum increase for primary minerals. The ratio of primary to processed minerals is foreseen to increase from 3,1 to 3,5 over the forecast period.

19

TABLE 16: FORECAST OF SOUTH AFRICAS MINERAL EXPORT REVENUE, 20042009


COMMODITY GROUP 2004+ 4 494 (33,4) PGMs 4 578 (34,0) Coal 2 243 (16,7) Ferrous 751 (5,5) 355 Nonferrous@ (2,6) Industrial 163 (1,2) 1 023 Otherx (7,6) Total primary (P1) 13 607 (100) Processed (P2) 4 349 Total P1 and P2 17 956 P1: P2 3,1 Gold
Notes:

2005 4 197 (27,7) 5 429 (35,8) 3 169 (20,9) 786 (5,2) 373 (2,5) 166 (1,1) 1 057 (7,0) 15 177 (100) 5 629 21 806 2,7

VALUE $ million (FOB) 2006 2007 4 250 4 682 (28,1) (30,1) 5 072 4 622 (33,5) (29,7) 3 497 3 842 (23,1) (24,7) 814 857 (5,4) (5,5) 362 411 (2,4) (2,6) 173 180 (1,1) (1,2) 980 959 (6,5) (6,2) 15 148 15 553 (100) (100) 5 697 5 765 20 845 21 318 2,7 2,7

GROWTH* 2008 6 767 (36,7) 5 324 (28,8) 4 056 (22,0) 784 (7,2) 404 (2,2) 188 (1,0) 934 (5,1) 18 457 (100) 5 825 24 282 3,2 2009 7 455 (25,1) 5 735 (28,7) 4 280 (21,4) 939 (4,7) 386 (1,9) 196 (1,0) 974 (4,9) 19 965 (100) 5 748 25 713 3,5 % pa 8,8 3,8 11,4 3,8 1,4 3,1 -0,8 6,8 4,8 6,3

Figures in parentheses represent percentages of total primary minerals * Compounded annual growth rate from 2004 to 2009 + Actual, converted from rand to dollars at the average exchange rate for 2004 of R6,4499/$ @ Consists of nonferrous minerals and metals, as well as titanium slag, zinc metal and antimony trioxide x Consists of minor contributors not included above, as well as export values for diamonds, uranium and silver

MINERAL-RELATED INVESTMENT IN SOUTH AFRICA Investments of R64,93 billion have already been committed to mineral-related projects in South Africa in 2004 and 2005 (until August), of which some 93 percent is for primary minerals and about 7 percent for processed mineral products (Table 17). Gold and platinum projects make up 26 percent and 61 percent, respectively, of the total for primary minerals. In addition, investments of R54,44 billion in other mining and mineral-related projects are being considered (Table 18). Of the primary mineral projects being contemplated, valued at R53,86 billion, gold accounts for 55 percent, PGMs 37 percent and other minerals for 8 percent. TABLE 17: NEWLY COMMITTED MINERAL-RELATED PROJECTS IN SOUTH AFRICA, 2004*
SECTOR COST R million Primary 60 595 Gold 15 478 Platinum 37 092 Other 8 025 Processed minerals 4 333 TOTAL
Note: * +

COST+ $ million 9 372,8 2 394,2 5 737,4 1 241,3 670,2

AS A PERCENTAGE OF AS A PERCENTAGE OF PRIMARY MINERALS TOTAL MINERAL PRODUCTS 100 93 26 24 61 57 13 12 7 100

64 928
To August 2005 At a Rand/dollar exchange rate of R6,4650

A number of projects are expected to be completed in 2005 in South Africa. Notable among these projects are: 20 Placer Dome / Western Areas JV Twin Shafts in the Gauteng Province, for R4 billion. Avgolds project at Target Mine in the Free State, estimated at R2,1 billion. Anglo Platinums ACP plant phase A. The project is estimated at R1,8 billion. Anglo Platinum in Potgietersrust Platinum valued at R1,3 billion.

TABLE 18: POTENTIAL MINERAL-RELATED PROJECTS IN SOUTH AFRICA, 2004*


SECTOR COST R million Primary 53 864 Gold 29 740 Platinum 19 815 Other 4 309 Processed minerals 575 TOTAL 54 439
Note: * +

COST+ $ million 8 331,6 4 600,2 3 065,0 666,5 89,0

AS A PERCENTAGE OF AS A PERCENTAGE OF PRIMARY MINERALS TOTAL MINERAL PRODUCTS 100 99 55 55 36 37 8 8 1 100

August 2005 At a Rand/dollar exchange rate of R6,4650

REGIONAL COOPERATION (SADC)

South African Development Community (SADC) On 17 August 1992, the Declaration and Treaty establishing the Southern African Development Community (SADC) was signed at the Summit of Head of States or Governments, in Windhoek, Namibia. This Declaration and Treaty replaced those regarding the South African Development Coordination Conference established on 1 April 1980, following the Lusaka Declaration. Today, the SADC comprises of the following 14 member states:
Angola Botswana D.R. Congo Lesotho Malawi Mauritius Mozambique Namibia South Africa Swaziland Seychelles Tanzania Zambia Zimbabwe

The Treaty establishing the SADC was designed to lead to higher levels of co-operation and integration in the region. Member States pledged commitment to pursue common approaches and policies and also effective participation by the people of the region and their institutions in the formulation and execution of policies, strategies and programmes. The SADC vision for mining is hence in harmony with the overall objectives of the Community, which include to achieve development and economic growth, alleviate poverty, enhance the standard and quality of life of the peoples of Southern Africa and support the socially disadvantaged through regional integration. Another objective of the SADC is support for small-scale mining which has been recognised by nearly all the countries in the region as a means of alleviating poverty and empowering local communities. A number of support programmes have been established in various Member States, ranging from provision of loans and grants, to equipment and plant hire schemes and making policy provisions that will enhance and support small-scale activities. The SADC Mining Sector Programme of Action, which was subdivided into six sub-sectors, namely Information, Geology, Mining and Marketing, Mineral Processing, Environment and Human Resources Development, has been restructured to be in line with the Regional Indicative Strategic Development Plan (RISDP). The Mining Sector Programme of Action now comprises only three sub-sectors namely, the Mining Advisory Committee, Geology and Environment Technical Committees and Mining, and the Value Addition Technical Committee. During the last decade, a number of countries within the SADC region have made efforts to reform their mineral policies and regulatory environments, aimed at encouraging private sector participation, attracting new capital investments, technology and skills, and stimulating exploration. 21

Mining continues to be the major foreign exchange earner in most of the larger economies of the SADC region. The mining sector in the region contributes approximately 10 percent of the Gross Domestic Product and 5 percent to employment, while accounting for 60 percent of foreign exchange earnings. TABLE 19: SADC MINE PRODUCTION OF SELECTED MAJOR MINERALS
MINERAL 1998
Asbestos t Coal t Cobalt t Copper t Chromite t Diamonds cts Gold kg PGMs kg Nickel t Lead t Zinc t
Source:

1999
156 229 904 5 466 7 470 48 596 485 217 68 99 140 514 202 014 541 479 177 197 167 692 191 735

PRODUCTION 2000 2001


183 230 438 4 420 7 289 54 345 510 207 66 95 140

2002

2003

2004

178 230 601 7 471 7 085 46 913 492 204 69 84 148

740 454 995 092 405 807 588 917 686 275 147

426 132 054 ** ** ** 448 229 189 557 228 400 000 244 543 000 242 543 000 335 5 155 11 966 22 271 20 309 521 492 673 525 700 518 300 602 900 043 6 224 635 7 106 750 7 803 023 7 730 844 051 44 271 933 62 281 889 7 5 538 418 80 910 427 311 455 976 461 100 442 166 422 200 704 238 798 243 831 274 300 294 897 797 66 906 89 900 79 600 74 200 965 63 598 50 000 57 000 53 000 735 98 843 101 000 148 000 230 000

DME, Directorate Mineral Economics ** Figures not available

During 2001, the total labour force in the SADC mining industry stood at 1 535 642, compared with the 2000 figure of 1 978 845. The decrease in employment was largely due to rationalisation of the workforce after privatisation of previously state-owned mining companies, particularly in Zambia, and declining world demand for and production of minerals, notably asbestos. The introduction of new technologies in the industry has also contributed to the decline in employment levels. The SADC region is a major producer of several important minerals and metals including gold, PGMs, diamonds, manganese, chromium, nickel, copper and cobalt (see Table 19). Although only South Africas production was recorded, the region still experienced an increase in diamond production during 2003 and 2004. Output amounted to 75 538 418 carats in 2003 compared with 80 910 427 carats in 2004. Cobalt production decreased slightly from 22 271 t in 2003 to 20 309 t in 2004 after a dramatic increase from 11 966 t in 2002. The SADC region is the worlds largest producer of gem quality diamonds, producing around 50 percent of the worlds production. The regions gold production increased slightly from 442 166 kg in 2003 to 442 200 kg in 2003. During 2002, several mining companies in Tanzania, Botswana, Namibia, Zambia and Mozambique continued to implement investment programmes. Mine development in the region has focused primarily on gold, diamonds, platinum and base metals. However, there is still great scope for more investments in the mining industry in the region. During 2001, the total expenditure on exploration programmes in the SADC region was estimated at approximately $100 million. Private companies continued to carry out exploration programmes in almost all member states.

African Mining Partnership (AMP)


African Mining Ministers from Algeria, Angola, Benin, Burkina Faso, Burundi, Cameroon, Republic of Congo, Democratic Republic of Congo, Egypt, Ghana, Lesotho, Malawi, Mali, Morocco, Mozambique, Namibia, Niger, Senegal, Sierra Leone, South Africa, Sudan, Swaziland, United Republic of Tanzania, Uganda, Zambia and Zimbabwe attended the second African Mining Partnership (AMP) meeting in Cape Town on 7 February 2005. Representatives from Canada, Sweden and from the mining industry also attended. During the meeting, it was reiterated that member states should continue to show commitment in to facilitate the implementation of adopted projects. The countries represented also reiterated their commitment to policies will enable the mining and minerals industry to contribute significantly to poverty reduction. 22

The Ministers reviewed the progress made on identified projects. They also invited other project leaders to bring the level of their projects up to the level of those that were endorsed. The Ministers further recommended that the Executive Committee meet during the year to review progress on the projects. Following the Cape Town recommendation, the Executive Committee viz. Ghana (Chair) Mali (Vice Chair), South Africa (Secretariat), Egypt (North Africa), Nigeria (West Africa), Namibia (SADC) and Ethiopia (East Africa) held its second meeting in Addis Ababa, Ethiopia on the 12 August 2005. The meeting was also attended by representatives from the following institutions from South Africa, Mintek, Council for Geoscience, Council for Scientific and Industrial Research (CSIR); and Natural Resources Canada, Department of Earth Sciences, Addis Ababa University, Ethiopian Geoscience and Mineral Engineering Association, private and government mining companies/consultants, Geological Survey of Ethiopia, Southern and Eastern African Minerals Centre (SEAMIC), Chamber of Commerce (Ethiopia), United Nations Economic Commission for Africa (UNECA) and Communities and Small Scale Mining (CASM)- Global and Communities and Small Scale Mining (CASM) -Africa. The meeting noted with satisfaction the impressive progress made in implementing most of the projects. Furthermore, it recommended that coordination in the implementation of projects on Artisanal Small Scale Mining (ASM) should be improved and the concept of centres of excellence be broadened to incorporate already existing institutions. The Ministers noted with concern that some of the member states were not responding to requests to send information, which results in delays in the implementation of projects. The meeting also noted the inaugural meeting of the CASM Africa initiative that took place on 10 August 2005 in Addis Ababa, Ethiopia preceding the AMP meeting. The Ministers were concerned that mining was absent on the New Partnership for Africas Development (NEPAD) submission on centres of excellence and emphasised the need to have it included on the agenda. The Secretariat informed the meeting that the application for accreditation by the African Union (AU) was submitted, but the AU is currently restructuring and when this exercise is complete, the application will then be considered. An update on Registration, Evaluation and Authorization of Chemicals (REACH) was also presented by the Secretariat. The Ministers noted the position paper made by the African Caribbean Pacific group (ACP) ministers to the EU commission and further urged AMP member states to continue lobbying within their governments and with other mining countries.

23

DIAMONDS
Ashok Damarupurshad

WORLD DIAMOND PRODUCTION, 2004 World mine production of rough diamonds in 2004 (Table 1) has been estimated at 150 million carats (Mct), a modest increase of 3 percent compared with the revised total for 2003 (146 Mct). It is estimated that the value of mine production increased by 14 percent to $10,35 billion in 2004, from $9,1 billion the year before. The volume increase is attributed to significant increases in production in Canada, Russia, South Africa, Botswana and Namibia, and was achieved despite the approximately ten-million carat drop in production at the Argyle Mine in Australia. Some producers, such as De Beers in South Africa and Botswana, increased output because of a strong rough diamond market, increased competition amongst producers for market share, and also to offset the effects of stronger local currencies against a weaker dollar (the currency in which diamonds are priced). The increase in the value of production was attributed to the continued weakening of the dollar and the consequent 14 percent (overall) upward adjustment in rough diamond prices, stronger demand, and the modest increase in world output. The De Beers Group, with mines in South Africa, Botswana, Namibia and Tanzania, contributed 47,01 Mct carats, or 31,3 percent, to world production by mass and an estimated $4,2 billion (41 percent) by value. In addition, De Beers bought rough diamonds to the value of $700-800 million from Russias Alrosa, and probably also drew on stocks. Russia is currently the largest producer by volume (mass in carats) and the second-ranked producer in terms of value of production (Table 1). The countrys 2004 production is estimated to have increased to 32 million carats valued at an estimated $1,9 billion. Almazy Rossii Sakha (ALROSA) produces about 98 percent of the countrys production. Botswana retained its rank as the top producer by value in 2004. Debswana produced 31 124 649 carats in 2004 (valued at an estimated $2,57 billion), up marginally compared with 2003 (30 412 155 carats). The Damtshaa Mine produced 338 909 carats in 2004, a modest increase relative to its first full year of production (2003). Most of Botswanas output was made up by the combined production of the three larger kimberlite mines, viz. Orapa (16 070 076 carats), Jwaneng (13 682 502 carats) and Letlhakane (1 033 162 carats). Production in the Democratic Republic of Congo (DRC) is estimated to have increased to 27 Mct (valued at over $650 million) in 2004. Societe Miniere de Bakwanga (MIBA), the DRCs 80 percent state-owned diamond company, produced 7,5 Mct of mostly industrial and near-gem quality diamonds at Mbuyi-Maji. Small operators and artisanal miners may have produced as much as 19,5 million carats (value at over $500 million) in 2004. Australia lost its number-one ranking in terms of output by volume in 2004 (21,1 million carats). The 10-million-carat drop in production at Rio Tintos Argyle Mine, resulted in the countrys ranking, in terms of quantity of output, dropping to fourth. The Argyle Mine produced 20,62 Mct down 10,29 Mct (or about 33 percent) relative to the previous years output, mainly due to difficult mining conditions, which led to the processing of lower grade ore. The balance of the countrys production came from Kimberley Diamond Companys Ellendale project. According to Natural Resources Canada, Canadian mine production increased to about 12,8 million carats valued at $1,670 billion in 2004, from 11,2 million carats valued at $1,3 billion in 2003. BHP Billitons (80%-owned) Ekati produced 5,2 Mct in 2004, a decrease of 25 percent ascribed to the processing of lower grade ore during the period, but the value of production increased by 12,5 percent on account of better-quality stones. Rio Tintos (60%-owned) Diavik Diamond Mine, Canadas second diamond mine, produced 7,6 million carats, an increase of 98 percent.

24

TABLE 1:
COUNTRY/S

ESTIMATED WORLD ROUGH DIAMOND PRODUCTION+, 2004


PRODUCTION CARATS 32 000 000 31 124 649 27 000 000 21 100 000 14 400 000 12 800 000 6 200 000 1 900 000 750 650 600 400 350 285 149 560 439 150 000 000 000 000 000 000 778 427 573 000 MASS % 21,3 20,7 18,0 14,1 9,6 8,5 4,1 1,3 0,5 0,4 0,4 0,3 0,2 0,2 99,7 0,3 100 RANK 1 2 3 4 5 6 7 8 9 13 10 11 12 14 $ MILLION 1 900 2 570 650 280 1 200 1 670 900 650 150 130 30 75 55 20 10 280 70 100 VALUE % 18,4 25,0 5,8 2,7 11,7 16,2 8,7 6,3 1,5 1,3 0,3 0,7 0,5 0,2 99,3 0,7 RANK 2 1 7 8 4 3 5 6 9 10 13 11 12 13

Russiae Botswana DR of Congoe Australiae South Africae CanadaM Angolae Namibia South American countriese Sierra Leonee Ghanae Guineae Central African Republice Tanzania SUBTOTAL Other countries* TOTAL:
Sources: e Notes:

10 350

Estimates by the author, De Beers Group annual review, IDEX, 2005, Rapaport News and Natural Resources Canada for Canadian production

All production values, including that for South Africa are estimates + Gem and industrial diamonds * Includes China, Lesotho, India, Ivory Coast, Togo, Zimbabwe and other artisanal production from Africa M March 2004 to February 2005 (i.e., not calendar year)

Angolan production in 2004 is estimated to have increased to 6,2 million carats. The Catoca Kimberlite Mine produces about 3 Mct (worth an estimated $200 million) with the balance coming from alluvial sources, including the Luzamba project, and small-scale and artisanal miners. Alluvial production is difficult to estimate both in terms of volume and value. Angolas total production has thus been conservatively estimated at $900 million. Namibian production from onshore and beach plus marine sources increased significantly to 1,9 Mct, compared with the 1,46 Mct produced in 2003. Of this, marine production totalled a record 865 000 carats. In 2004, Namdeb produced 992 872 carats from its Diamond Area No.1. The increase in production was attributed mainly to the deployment of two new mining vessels, viz., Ya Toivo and !Gariep. Contractors recovered 865 511 carats, compared with 658 062 carats in 2003. At the Williamson Diamond Mine in Tanzania, 285 778 carats were produced from the Mwadui kimberlite pipe during 2004, compared with 166 263 carats in 2003. SOUTH AFRICAN PRODUCTION AND DEVELOPMENTS, 2004 Preliminary statistics indicate that South Africas diamond production in 2004 achieved a new record level of 14,3 million carats, representing an increase of 11,7 percent compared with the 12,8 million carats produced in 2003. The increase was attributable mainly to higher production at De Beers Kimberley and Venetia mines. The increase in production, the continued weakening of the US dollar relative to the rand and the increase in rough prices by an average of 14 percent in 2004 resulted in an increase in the value of production to an estimated $1,2 billion last year. A total of 86 mining and prospecting licensees produced diamonds in 2004, of which, 18 mined kimberlites, 47 exploited alluvial deposits and 21 recovered diamonds from a marine environment.

25

Production from kimberlite contributed about 13 million carats (or 90,1 percent) to total production, significantly up on the output of 11,4 million carats in 2003 as a result of the aforementioned higher production at De Beers Kimberley and Venetia mines. Kimberley mines produced a record two million carats (Table 2), due chiefly to the new Combined Treatment Plant, a production level last achieved 90 years ago (in 1914). The alluvial diamond sectors contribution to total output, at 1,2 million carats (9,2 percent) was modestly up compared with 2003. Marine diamond production declined marginally to about 105 000 carats (0,7 percent) from 116 000 carats in 2003. In South Africa, the Trans Hex Group and Alexkor dominate this sector. De Beers Consolidated Mines accounted for about 13,7 million carats (or about 95 percent) of South Africas preliminary recorded production in volume terms (Table 2), compared with 11,9 million carats in 2003. By value De Beers accounted for an estimated 90 percent of South Africas production in 2004. Trans Hex, South Africas second biggest producer, reported that diamond production for the financial year ending March 2005 totalled 207 000 carats, moderately higher than the 178 200 carats produced in FY2004, due to higher marine diamond production. Alluvial diamond production totalled 137 100 carats in FY2005, marginally lower than the 140 300 carats produced during FY2004, due mainly to lower production at its Saxendrift and Reuning mines. Total production from marine operations was 69 900 carats in FY2005, compared with 37 900 carats in FY2004. Trans Hex also has interests in the Luarica and Fucauma mines in Angola. The company reported that total diamond sales were $162,2 million in FY2005, 13 percent higher than in FY2004. The balance of South Africas production (between 3 to 4 percent by volume) came from stateowned Alexkor and the smaller juristic and natural alluvial diamond producers. South Africas exports of rough diamonds tend to exceed domestic production, due to inventory sales (marginal in 2004) and also to the fact that significant amounts of imported diamonds (supplied by the Diamond Trading Company to sightholders and imported by dealers and cutters in general) are re-exported by these dealers and cutters in the rough form. The total gross roughdiamond export value for 2004 has been tentatively estimated at $1,4 billion. According to the South African Diamond Board, polished diamonds exports in 2004 totalled about 271 000 carats valued at some $552 million, compared with about 353 000 carats worth some $550 million in 2003.

Developments In mid-April 2004, the Department of Minerals and Energy released draft amendments to diamond and precious metals legislation for comment, in the form of the Precious Metals and Diamonds General Amendment Bill. This Bill sought to amend the Diamonds Act, 1986 and the Mining Rights Act, 1967 (the un-repealed chapter 16 of which controls the possession, trading and fabrication of precious metals). In 2005, a decision was taken to separate amendments to the Mining Rights Act, 1967 from this Bill. Subsequently, in June 2005, two Bills, viz., the Diamonds Amendment Bill, 2005, which amends the principal Diamonds Act, 1986 and the new, standalone Precious Metals Bill, 2005 were being finalised.
Other important developments during 2004 are given below in chronological order: A R3-million Jewellery and Craft Exhibition Centre (emporium) was opened at the Johannesburg International Airport precinct in April. In May 2004, the Mineral and Petroleum Resources Development Act, 2002, which controls the prospecting for, and mining of, minerals, came into effect. At the end of October, De Beers sold Dancarl, a small kimberlite fissure mine, to a BEE company in the Northern Cape. De Beers reported that five of its seven mines in South Africa were unprofitable in 2004 due to the strengthening of the Rand against the dollar.

26

TABLE 2:
MINE

DE BEERS CONSOLIDATED MINES ROUGH DIAMOND PRODUCTION, 2004


SOURCE ORE TREATED CARATS (thousand RECOVERED tonnes) 5 773 2 108 481 9 070 2 050 907 1 966 113 481 6 385 909 706 4 458 1 304 416 5 871 7 187 300 290 68 943 33 813 13 743 234 CARATS/ 100 TONNES 36,5 22,6 5,8 14,2 29,3 122,4 23,8 40,6

Finsch Kimberley+ Koffiefontein Namaqualand Cullinan Venetia The Oaks TOTAL/Average


Notes: Source: + Includes contractors

kimberlite kimberlite kimberlite alluvial kimberlite kimberlite kimberlite

De Beers group annual review 2004

DIAMOND TRADING COMPANY (DTC) SALES Rough diamond sales by De Beers marketing arm, the DTC, increased by 3 percent to $5 695 million compared with $5 518 million in 2003. De Beers reported that there was strong demand for rough diamonds from the cutting centres throughout the year. However, cognisance must also be taken of the fact that the DTC raised prices on three occasions, resulting in an average increase of 14 percent for the year. ROUGH DIAMOND SUPPLY Stronger demand for rough diamonds usually induces inventory sales by the larger mining companies including De Beers, ALROSA and Rio Tinto. Moreover, there will be significant trading in the secondary market. Consequently, total rough diamond supply tends to exceed mine production significantly. Total rough diamond supply to the next component of the diamond pipeline (diamond cutters) is therefore estimated to be in excess of $11 billion. Although encouraging, this figure must be seen against the backdrop of high level of debt in the cutting centres.

WORLD DEMAND IN 2004

Major trading centres: Belgium, Israel and India The strengthening of consumer (retail) markets causes a ripple effect back up the diamond pipeline, which is evidenced by a rise in off-take of polished diamonds (brillion). This is represented statistically as an increase in net exports of polished diamonds from the countries that accommodate major diamond trading centres, viz., Belgium, Israel and India.
According to the HRD (Belgiums Diamond High Council) polished diamond exports from Antwerp, the worlds largest diamond trading centre, were $8,12 billion, an increase of about 13 percent in value terms relative to 2003. In terms of volume, exports increased marginally to 9,73 Mct. Polished diamond imports into Belgium in 2004 totalled 10,0 Mct valued at $7,58 billion, an increase of 4,7 percent by volume and 18,3 percent in dollar terms. Therefore, net exports (exports minus imports) of polished diamonds dropped by 31 percent to $541 million. This reduction may be indicative of the growing importance of other trading centres such as Dubai and China. In Israel, polished diamond exports reached 4,64 Mct, worth $6,33 billion, which was a decrease of 1,6 percent in carats, but an increase of 14,4 percent in value terms relative to 2003. Polished diamond imports were some 4,06 Mct, worth about $3,56 billion, a rise of 4,6 percent in dollar terms compared with the year before. Net polished exports were therefore around $2,77 billion in 2004, compared with $2,13 billion the year before.

27

Indias gross polished exports for the financial year ending March 2005 grew by 23,6 percent to $11,18 billion in 2004. Polished diamond imports increased to $2,84 billion from $1,19 billion in 2003. Net polished exports thus increased 12 percent to $8,34 billion. The country produces over 52 percent of the world output of polished diamonds by value (estimated at about $16 billion), about 80 percent in carat terms and about 90 percent in terms of number of polished diamonds.

World diamond jewellery retail sales The Diamond Trading Company (DTC) reported that global retail sales value of diamond jewellery in 2004 had increased by 8,7 percent in dollar terms, underpinned largely by growth in India and the Gulf region. Also encouraging was modest growth in Japan for the second consecutive year. Thus, world jewellery retail sales in 2004 is estimated at about $64 billion. The DTC attributed this increase to higher economic growth in the major consuming countries and to the continued weakening of the dollar.
Retail sales in the United States, which account for half of global diamond jewellery sales, were up by 8 percent to $31,5 billion. Other major consuming markets, including Europe (up 14%) Japan (up 8%), and Asia (up 15%) also saw growth in 2004. PRODUCTION AND MARKET OUTLOOK World diamond mine production is forecast to increase in 2005 to about 160 million carats valued at some $11 billion, on the back of production increases in Australia, Angola, Democratic Republic of Congo, Canada, Botswana, South Africa and Namibia. In July 2005, De Beers reported that group production during the first half (H1) of 2005 had increased to 23,72 million carats from 19,34 million carats in H1 2004. Production at Debswana in Botswana increased to 15,28 million carats in H1-2005, from 12,05 million carats in H1-2004, while production at De Beers Consolidated Mines in South Africa increased to 7,39 million carats from 6,21 million carats in H1-2004. Australias production showed signs of rebounding in the first half of 2005, following difficult mining conditions in 2004. Rio Tinto also reported that production at the Murowa mine, near Zvishavane in southern Zimbabwe, totalled about 180 000 carats in the period between the start of mining in the third quarter of 2004 and the end of June 2005. Angolas production is expected to increase to over 8 million carats in 2005, due mainly to the doubling of capacity at the Catoca diamond mine, via the commencement of a new diamond treatment centre. Societe Miniere de Bakwanga (MIBA), the DRCs 80 percent state-owned diamond company, expects 2005 production to rise to 8,5 million carats from 7,5 million carats in 2004. In Namibia, production is forecast to pass the 2 million carat mark, through higher marine diamond production. Canadas Ekati mine reported that production at its Panda underground project has commenced, and full production is expected early in 2006. The project is expected to deliver 4,7 million carats over a period of six years. Looking further ahead, Canadas third diamond mine, Jericho, which began construction earlier this year is expected to start commercial production in 2006 in the open pit, at a rate of 350 000 carats/year. De Beers first diamond mine outside Africa, Snap Lake in Canada, is scheduled for construction in 2006, and is expected to begin production in 2007, with a full output of 1,5 million carats/year anticipated from 2008. DIAMOND MARKET De Beers reported that rough diamond sales by the DTC for the first half of 2005 totalled $3,2 billion, 8 percent higher that the corresponding period in 2004. De Beers has raised the price of diamonds by an average 6 percent thus far in 2005. Demand for rough diamonds from the cutting centres remained strong during the period. De Beers anticipate that sales in the second half of the year will at least match those of the first half, and that stocks will reduce. 28

Increases in polished exports (by value) from Israel (up 9 percent) and Belgium (up 12 percent) in the first 5 months of 2005, and strong US retail sales for the half of the year are indicative of continuing robust demand conditions. Consumer demand remains high, but there are downside risks in the short term. These include: shrinking diamond-manufacturing profit margins, high diamond industry banking indebtedness, and rising interest rates. For the medium term, the supply/demand fundamentals look much better. In fact, De Beers forecast that consumption of diamond jewellery would increase to $80 billion over the coming decade. This growth in consumption would outstrip growth in supply over this period. REFERENCES & BIBLIOGRAPHY De Beers, 2005 De Beers Group Annual Review, 2004 Diamond Board of South Africa, 2004/5 HRD, 2005 IDEX, 2005 Rapaport News, 2004/5 Tacy Consultants, 2004-5

29

GOLD
A S Conradie

GLOBAL DEVELOPMENTS DURING 2004/2005 The average dollar gold price for 2004, at $409,33/ozt, was 12,6 percent higher than in 2003. This was caused by sustained investment demand, record levels of producer de-hedging, a rise in fabrication demand and lower supply from official sector sales, scrap and mine production. Total world gold supply decreased by 7,2 percent to 3 849t during 2004, caused by losses in all components except implied net disinvestment. Mine production dropped by 4,9 percent, to 2 462t, (Table 1), the lowest level since 1996, while net official sector sales fell by 22,5 percent to 478t, and scrap supply declined by 11,8 percent to 828 tonnes. Implied net disinvestment returned after an absence of two years with a contribution of 81t to supply. Total world demand fell by 7,2 percent, to 3 851t, during 2004, solely as a result of the switch from 2003s implied net investment of 699t to implied net disinvestment of 81 tonnes. Producer de-hedging increased by 58,4 percent to 442t, while total fabrication rose by 5,7 percent, to 3 164t, mainly due to a 5,2 percent rise in jewellery offtake to 2 610t, and a 11,3 percent increase in electronics demand. Producers attempted to raise production through acquisitions, mergers and new projects. Kinross acquired the balance of the Morro do Ouro mine in Brazil from Rio Tinto, its partner in the joint venture, in December 2004. During March 2005, production started at the Tulawaka mine, in Tanzania, a joint venture between Barrick Gold Corp. (70 percent) and Northern Mining Explorations (30 percent). The mine life is expected to be 4 years, producing an average of between 3,1t and 3,3t annually at an average cash cost of $170 to $180 per ounce. Also during March 2005, Harmony Gold Mining was granted the licence to develop and mine the Hidden Valley project, in Papua New Guinea. The mine is anticipated to produce more than 9,3t of gold, and 139,9t of silver, per annum, from a proven reserve of 59t of gold and 793t of silver. Construction of an open pit mine is to commence in mid-2005, with the first gold poured in early 2007. Wheaton River Minerals shareholders approved the merger with Goldcorp on 13 April 2005, after previous merger attempts with Goldcorp by Coeur dAlene and IAMGOLD during 2004 had failed. DEVELOPMENTS IN SOUTH AFRICA DURING 2004/2005 South Africas gold production decreased by 8,8 percent from 373,3t in 2003 to 340,5t in 2004, (Table 2), largely as a result of shaft closures caused by lower grades and the effects of the strengthening rand. Total sales revenue decreased by 11,3 percent to R29,3 billion, due to smaller sales volumes and a lower average rand price, despite a higher average dollar price for the year. Employment in the gold mining sector dropped from 198 466 in 2003 to 180 471 in 2004, while total remuneration increased in the same period. The $1,3 billion takeover of Ghanas Ashanti Goldfields by AngloGold, and the name change to AngloGold Ashanti, became effective on 26th April 2004. On 18 October 2004, it was announced that Harmony Gold Mining Company had made an unsolicited and hostile offer for Gold Fields. Harmonys proposal consisted of two parts: an early settlement offer to acquire up to 34,9 percent of Gold Fields shares on the basis of 1,275 Harmony shares for each Gold Fields share, and a subsequent offer for the remaining Gold Fields shares not tendered in the early settlement offer, including the Gold Fields shares owned by Norilsk Nickel. Harmony acquired 11,8 percent of Gold Fields during the early settlement offer, which closed on 26 November 2004, but failed to accumulate significantly more shares, even 30

after the offer was extended to 20 May 2005. Harmony has subsequently disposed of some of its shares, but decided to retain a 5,4 percent stake in Gold Fields. Durban Roodepoort Deep changed its name to DRDGOLD in December 2004. On 22 March 2005, the company provisionally liquidated Buffelsfontein Gold Mines, the holding company of the North West Operations. This was preceded by the suspension of operations at North West Operations no. 5 shaft following an earthquake on 9 March 2005. Then, a week later, DRDGOLD discontinued mining at the no. 2 shaft, following a further tremor. The name of The Afrikander Lease changed to Aflease Gold and Uranium Resources with effect from 28 January 2005. On 22 February 2005, Aflease announced the sale of 26 percent of its mining assets to a BEE consortium consisting of five companies and the Aflease Employees Trust. The first gold was poured at the companys newly developed Bonanza South mine, near Klerksdorp, on 29 June 2005. On 4 February 2005, the Placer Dome/Western Areas JVs South Deep twinshaft complex was officially commissioned. The R4 billion project commenced in 1994, and consists of two concrete shafts - a main shaft and a ventilation shaft. The main shaft is the deepest single-drop shaft in the world at nearly 3km, and gives direct access to one of the worlds largest identified gold ore reserves of approximately 1 730 tonnes. Sub Nigel Gold Mining Company announced on 14 June 2005 that it had commenced gold production at its Spaarwater Mine, after thirteen years of the mine being on care and maintenance. OUTLOOK Total world gold supply is expected to rise by three to four percent in 2005, resulting from a marginal increase in mine production, and higher net official sector sales of between 500 and 550 tonnes. Scrap supply is forecast to change little from 2004s level, unless the gold price advances further and more rapidly than expected. Demand for investment purposes, as well as for fabrication, is forecast to grow in 2005, despite the higher gold price. Producer de-hedging is expected to continue during 2005, but at a reduced rate. Investment demand is expected to be the most important price driver in 2005, causing prices to establish fresh highs, perhaps even approaching the $500/ozt level. Local gold production during 2005 is expected to decline to some 307t, whilst the price in rand terms is expected to achieve an average of R87 800 per kg. TABLE 1:
COUNTRY South Africa USA Australia China Russia Peru Canada Indonesia Other TOTAL
Sources: # *

WORLD GOLD RESOURCES AND MINE PRODUCTION, 2004


RESERVE BASE# % Rank 40,1 1 4,1 5 6,7 2 4,6 3 3,9 6 181,6 4,6 3 3,9 6 3,1 8 29,0 100,0 PRODUCTION % 13,8 10,6 10,5 8,8 5 7,0 5,2 4,6 32,0 100,0

t 36 000 3 700 6 000 4 100 3 500 4 100 3 500 2 800 26 000 89 700

t 340,5 * 261,8 258,4 217,3 7,4 173,2 128,5 114,2 786,7 2 462,2

Rank 1 2 3 4 6 7 8 -

USGS, 2005, pp 72 - 73 Klapwijk, et al, 2005, pp 39 - 40 DME, Directorate Mineral Economics

31

TABLE 2:

SOUTH AFRICAS GOLD PRODUCTION, EXPORT SALES VALUE AND RESERVE BANK HOLDINGS,1995 - 2004
PRODUCTION SALES VALUE t 523,8 498,3 490,6 465,1 451,2 430,8 394,8 398,5 373,3 340,5 TOTAL R 000 465 184 467 548 904 737 294 641 990 413 272 141 011 598 222 165 052 899 329 871 RESERVE BANK HOLDINGS* t 132,1 118,0 124,1 124,4 122,4 183,5 177,9 173,6 123,6 123.9 R 000 400 951 903 486 102 744 059 288 276 370 981 926 302 131 989 624 798 741 886 591

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Sources:

23 26 24 24 24 25 29 41 33 29

5 5 5 6 6 10 17 14 9 8

South African Reserve Bank, 1996 - 2005 DME, Directorate Mineral Economics * Gold holdings at year-end

Note:

TABLE 3:

SOUTH AFRICA: BREAKDOWN OF PRODUCTION BY GOLD FIELD, 2003 AND 2004


GOLD PRODUCTION 2004 t 118,2 80,7 71,2 25,1 12,8 11,5 7,5 6,9 6,6 340,5

GOLD FIELD 2003 t 128,8 92,0 81,1 26,9 13,1 11,2 7,2 6,4 6,6 373,3

West Wits Line Free State Klerksdorp West Rand East Rand Evander Central Rand Other By-product* TOTAL
Note: * Platinum and base metal mines

TABLE 4:

SOUTH AFRICA: BREAKDOWN OF PRODUCTION BY PROVINCE, 2003 AND 2004


GOLD PRODUCTION 2004 t 156,2 85,0 80,7 15,6 3,0 340,5

GOLD FIELD 2003 t 165,2 98,2 92,0 14,9 2,7 0,2 0,1 373,3

Gauteng North West Free State Mpumalanga Limpopo KwaZulu/Natal Northern Cape Western Cape Eastern Cape TOTAL

32

TABLE 5:

SOUTH AFRICAS GOLD MINES: EMPLOYMENT AND REMUNERATION, 2000 2004


NUMBER OF EMPLOYEES* Total Male Female 216 201 199 198 180 210 698 378 466 471 212 198 195 194 176 872 324 839 905 871 3 3 3 3 3 338 374 539 561 600 9 10 11 12 12 REMUNERATION Male R 000 9 586 193 10 674 641 11 080 912 12 219 422 12 337 091

YEAR

2000 2001 2002 2003 2004


Note: *

Total R 000 809 412 904 390 323 540 496 399 626 850

Female R 000 223 220 229 749 242 628 276 977 289 759

Average number of employees in service

TABLE 6:
MONTH January February March April May June July August September October November December 2004
Sources: # * Note: +

LONDON GOLD PRICE+, 2004


AVERAGE# $/ozt 414,14 404,80 406,58 403,46 384,52 392,17 398,27 400,73 405,29 420,34 439,22 442,50 409,33 HIGH* $/ozt 428,20 416,00 423,70 427,25 394,30 404,25 408,55 410,60 415,65 429,15 453,40 455,75 455,75 LOW* $/ozt 399,75 392,25 390,35 382,75 373,50 382,30 386,20 390,60 396,30 411,25 422,20 433,90 373,50 AVERAGE# R/ozt 2889,22 2738,45 2686,45 2651,85 2603,78 2511,73 2436,51 2598,15 2650,95 2684,10 2655,08 2538,95 2637,10

South African Reserve Bank, 2005 London Bullion Market Association, 2005 London AM & PM fixings

REFERENCES Klapwijk P, Walker P, et al, 2005. Gold Survey 2005: GFMS Ltd, London, 121 pp London Bullion Market Association, 2005. Internet Website: http://www.lbma.org.uk South African Reserve Bank, 2005. Internet Website: http://www.reservebank.co.za US Geological Survey, 2005. Mineral Commodity Summaries, 2005: Internet Website: http://www.usgs.gov

33

PLATINUM-GROUP METALS
A S Conradie

GLOBAL DEVELOPMENTS DURING 2004/2005 Global supplies of platinum, palladium and rhodium rose by 10,6 percent to 463,9t in 2004, due to increased supply from all the producing countries, but especially Russia. World demand for these three metals grew by 10,7 percent to 433,0t, caused primarily by a 21,8 percent increase in demand for palladium. World platinum demand improved by 0,8 percent in 2004 to reach 204,7t, driven by strong sales to the autocatalyst industry. Purchases of platinum for use in autocatalysts rose by 7,3 percent, to a record high of 109,2 tons. The 14,1 percent rise in European demand was powered by higher diesel car sales and tightening diesel emissions standards. In Japan the growth in sales was due to a combination of new demand from the heavy-duty diesel sector in response to new emissions standards, and an overall increase in inventories held by vehicle manufacturers. Demand for platinum from the global jewellery industry dropped by 12,4 percent in 2004, to 68,4t, as the volatility and strength of the platinum price led to a 19,2 percent reduction in demand from Chinese jewellery manufacturers. Industrial demand for platinum climbed by 10,9 percent to 47,6t, as the use of the metal in the glass industry, hard disks and chemical catalysts increased. Net demand for physical platinum investment products improved to 1,2t last year, as a result of higher sales of large bars in Japan. Supplies of platinum grew by 4,2 percent to 205,6t in 2004, as the expansion of production in South Africa accelerated and North American output recovered. South African platinum production reached a record high of 159,9t in 2004, an increase of 7,7 percent compared with 2003. Platinum supplies from North America recovered after a relatively poor 2003, increasing by 30,5 percent to 12,0t, while Zimbabwean output climbed by around 5 percent. However, after significant sales from stocks the previous year, shipments from Russia dropped by 19,0 percent, to 26,4t, to closely reflect the level of mine production. During 2004, demand for palladium increased by 21,8 percent to 205,3t, primarily as a result of the rapid development of palladium jewellery manufacturing in China. Autocatalyst demand for palladium climbed by 10,4 percent, to 118,5t, as US automakers bought more metal, having run down stocks the previous year, and substitution for platinum in gasoline autocatalysts continued. Demand for palladium in electronic applications grew by 6,1 percent to 29,7t, influenced by strong sales of electronic goods and the low palladium price. In 2004, jewellery demand for the metal soared to 28,6t as a result of the remarkably rapid development of palladium jewellery manufacturing in China. Jewellery, consequently, overtook the dental sector as the third largest market for palladium. Demand for palladium in dental alloys improved by 3,0 percent, to 26,4t, in 2004, largely due to the low and relatively stable palladium price. Palladium demand in the remaining other applications jumped by 46,9 percent, to 18,5t, in 2004. This was primarily a result of a surge in sales of palladium bullion bars and coins to North American investors. Total supplies of palladium increased by 18,9 percent, to 237,3t, as substantial sales of Russian metal from stocks augmented that countrys supplies by 28,8 percent, to 118,2 tons. Production of palladium in South Africa grew by 9,6 percent, to 78,0t in 2004, while North American shipments climbed by 12,8 percent, to 32,8 tons. Demand for rhodium rose by 19,4 percent, to 23,0t in 2004, largely due to a 17,1 percent rise in demand from the autocatalyst sector. Overall use of the metal in autocatalysts grew strongly in Europe and Asia as average rhodium levels increased ahead of tighter emissions legislation. Demand from the glass industry also increased markedly, reflecting the rapid expansion of liquid crystal display (LCD) glass manufacturing capacity in Asia. Purchases of rhodium for use in chemical, electrical, glass and other applications jumped by 28,6 percent, to 3,4t, in 2004. Total rhodium supplies in 2004 decreased by 6,0 percent, to 21,1t, as South African production, and sales from North America and Russia, were lower. Demand for ruthenium climbed by 9,2 percent in 2004, to 21,0 tons. Use of the metal in chemical applications fell, but this was outweighed by a strong increase in purchases by the electronics industry. Demand for iridium increased by 9,4 percent last year, rising to 3,6t, as a result of greater consumption of iridium-based catalysts by the chemicals industry. Supplies, 34

predominantly from South Africa, were again more than sufficient to meet improved demand for the two metals. With platinum supplies closely matching demand in 2004, speculative investment by funds was the primary influence on the price. This was especially so during the first seven months of the year when the platinum price moved in a range between $767/ozt and $937/ozt. From midAugust onwards the trading range narrowed, with the price fluctuating between $820/ozt and $880/ozt for most of the remainder of the year. Increased demand for physical metal provided support when the price dropped towards the lower end of this range, whilst fund profit taking tended to cap rallies towards the upper end. The average London price for the year was $845,75/ozt, compared with $691,86/ozt in 2003. The palladium price climbed to over $240/ozt during the first three weeks of 2004, the momentum being provided by fund buying of palladium derivatives. It reached $333/ozt in April, supported by a surge in Chinese purchases of metal for jewellery manufacturing. However, with plenty of metal available to cover both speculative and end user demand, the price collapsed when funds started taking profits. From July to the end of November, the metal traded between $205/ozt and $235/ozt, but ended the year at $184/ozt, after another round of speculative profit taking and substantial offers of metal on the London fixings. The average price in 2004 was $230,03/ozt, compared with $200,61/ozt in the previous year. The price of rhodium climbed to $900/ozt in March, before slipping back to around $800/ozt. When metal was withdrawn from the leasing market, the price reached $1 525/ozt in August, before greater offers of spot metal resulted in the price easing back to end the year at $1 330/ozt. As a result of speculative buying, the iridium price surged from $87/ozt to $230/ozt during the first quarter of 2004, whilst the price of ruthenium jumped from $41/ozt to $75/ozt. The price of both metals then lost ground, iridium falling back to $170/ozt and ruthenium to $68/ozt, by the end of the year. Although the Russian parliament passed a law in February 2004, declassifying information about PGMs, it was not until March 2005 that President Putin signed a decree permitting the release of the data. Russian producers would now be able to publish data on mineral reserves, production, stocks and sales of PGMs, but information on stocks of PGMs held in the State Treasury (Gokhran) and the Central Bank will remain secret for at least the immediate future. At North American Palladiums Lac des Iles mine, the first ore production from the new underground section is expected in the fourth quarter of 2005. The operation is due to reach full capacity, of 2 000t of ore per day, in early 2006. DEVELOPMENTS IN SOUTH AFRICA DURING 2004/2005 PGM production increased by 7,4 percent, to 286,2t, in 2004 from 266,5t in 2003. Production of platinum and palladium increased to 159,9t and 78,0t, respectively, while production of rhodium fell by 0,4 percent to 16,7 tons. During July 2004, Barplats announced the re-opening of the Crocodile River mine, after Implats had suspended mining operations in November 2003. On 18 May 2005, Barplats announced the sale of a 26 percent stake in the company to the Gubevu Consortium, for R172,8 million. In September 2004, SouthernEra Resources reorganised its businesses, with a new company, Southern Platinum Corporation, acquiring the formers PGM and gold assets. On 15 June 2005, Lonmin completed the acquisition of Southern Platinum, which has a 91,5 percent stake in Messina, for $190 million. Lonmin also reached an agreement with Implats to buy out the latters concentrate purchase agreement with Messina for $15 million plus the delivery of a fixed quantity of metals in concentrate until mid-2006. The Messina mine was renamed Lonmin Platinum Limpopo. During February 2005, Implats announced plans to develop two shafts, no. 16 and no. 20, at its Impala mine, at a cost of R6,6 billion. This development would contribute to the companys objective of producing 34,2t of platinum per annum from this mine over the next 30 years. On 7 35

June 2005, Implats and African Rainbow Minerals (ARM) announced their decision to develop the R1,2 billion Two Rivers mine. The joint venture is held 55 percent by ARM and 45 by Implats, with production planned at 6,8t of PGMs per annum. During February 2005, Anglo Platinum announced its decision to further cut its production targets for 2006, to between 84,0t and 87,1t of refined platinum, as a result of the rands strength against the dollar. This new target contrasts with the figure of 90,2t set in 2003 as a target for 2006. On 30 May 2005, Anglo American Platinum Corporation changed its name to Anglo Platinum. OUTLOOK Autocatalyst purchases of platinum are expected to rise once again during 2005, but the increase will be less pronounced than in 2004. Jewellery demand may also improve, although this will depend heavily on the level of Chinese purchases. Supplies of platinum are set to increase further in 2005, although not as rapidly as in 2004, as the rate of growth in South African production slows. The platinum price is forecast to achieve an average of $860/ozt for 2005. Demand for palladium in 2005 is forecast to remain at the same level as in 2004, as autocatalyst demand for palladium is expected to be stable. On the supply side, South African production of palladium should increase once again as platinum output continues to rise, while North American sales are expected to fall short of 2004s high level. The average palladium price for 2005 is forecast at $190 per ounce. TABLE 1:
COUNTRY South Africa Russia Canada USA Other TOTAL 70 6 2 79 t 000 600 390 000 850 840

WORLD PLATINUM-GROUP METALS RESOURCES AND SUPPLY, 2004


RESERVE BASE * % Rank 87,7 1 8,3 2 0,5 4 2,5 3 1,1 100,0 495 452 SUPPLY % 57,8 29,9 5,4 3,7 4 3,2

kg 286 157 147 897 @ 26 949 @ 18 400 * 16 049 @ 100,0

Rank 1 2 3 -

Sources: * USGS, 2005, pp 124 - 125 DME, Directorate Mineral Economics @ Kendall, 2005, pp 48 - 52 Notes: Production @ Platinum, palladium and rhodium only * Platinum and palladium production only

TABLE 2:

SOUTH AFRICAS PLATINUM-GROUP METALS PRODUCTION AND SALES, 1995 2004


PRODUCTION kg 183 097 188 636 196 604 199 953 216 479 206 770 228 747 236 641 266 458 286 157 Mass kg 175 158 183 962 187 167 193 502 198 713 198 944 193 354 207 637 241 262 259 716 EXPORT SALES Value (FOB) R 000 6 572 506 7 428 137 8 403 862 11 602 274 13 964 729 24 645 761 29 381 009 30 459 188 25 553 565 29 526 670

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

R/kg 37 523 40 379 44 900 59 959 70 276 123 883 151 954 146 695 105 916 113 688

36

TABLE 3:
MONTH January February March April May June July August September October November December 2004 @

WORLD PLATINUM-GROUP METALS PRICES, 2004


AVERAGE PRICE ($/ozt) Palladium* Rhodium Iridium 216,27 508,81 87,00 235,04 572,32 96,27 268,99 811,30 209,04 295,46 812,77 227,94 246,03 816,67 214,56 228,93 871,11 210,00 220,37 973,53 206,73 215,51 1295,90 205,00 211,35 1196,65 202,86 218,18 1268,60 196,33 213,83 1307,47 193,73 191,95 1329,91 177,43 230,03 981,73# 186,32#

Platinum* 851,32 846,21 899,54 880,43 809,43 807,35 809,33 847,39 847,90 842,82 854,30 849,34 845,75

Ruthenium 42,25 49,02 71,40 65,05 61,05 60,00 60,00 64,23 68,45 81,05 79,55 71,38 64,68#

Sources: * @ Kendall, 2005, pp 42, 44, 45 Johnson Matthey, 2005 Notes: * # London Platinum and Palladium Market daily fixings Average of all Johnson Matthey base prices Average of Johnson Matthey European base prices

TABLE 4:
YEAR

SOUTH AFRICAS PGM MINES: EMPLOYMENT AND REMUNERATION, 2000 2004


NUMBER OF EMPLOYEES* Total Male Female 96 99 111 127 150 273 571 419 673 629 94 97 109 124 147 717 856 266 954 197 1 1 2 2 3 556 715 153 719 432 4 4 5 7 9 Total R 000 373 273 915 313 936 849 243 123 063 872 REMUNERATION Male R 000 4 277 586 4 806 010 5 782 971 7 021 803 8 742 997 Female R 000 95 687 109 303 153 878 221 320 320 875

2000 2001 2002 2003 2004


Note: *

Average number of employees in service

REFERENCES Kendall, T, 2005. Platinum 2005: Johnson Matthey plc, London, 52 pp Johnson Matthey, 2005. Internet Website, http://www.platinum.matthey.com US Geological Survey, 2005. Mineral Commodity Summaries, 2005: Internet Website, http://www.usgs.gov

37

SILVER
Ashok Damarupurshad

GLOBAL DEVELOPMENTS DURING 2004

Supply According to the World Silver Survey 2005, produced by GFMS for the Silver Institute, world silver mine production (Table 1) at 19 731 t (634.4 Moz) in 2004, was 4 percent lower than that of 2003 (18 940 t or 609 Moz). By country, large increases in output in Australia (up 16 percent to 2 236 t), Russia (up 9,5 percent to 1 179 t) and China (up 7,8 percent to 1 984 t), and moderate increases in output in Peru (up 4,6 percent to 3 061 t) and Mexico (up 4,5 percent to 3 085 t) outweighed declines in production in Kazakhstan, Poland, Canada and South Africa. Primary (main product) silver mines accounted for about 30 percent (5 863 t) of total mine output, an increase of 9 percent relative to 2003. About 70 percent of silver is produced as a by-product from the mining of other metals, such as gold, lead-zinc and copper, and hence, silvers fortunes depend on the vagaries of these metal markets. By-product silver output totalled 13 868 t in 2004.
The worlds top 10 silver-producing countries, viz., Mexico, Peru, Australia, China, Poland, Chile, Canada, the USA, Russia and Kazakhstan produced 17 461 t, or 88 percent, of total mine output in 2004 (Table 1). Mexico maintained its position as the foremost silver-producing country, followed closely by Peru, with Australia in third position. TABLE 1:
COUNTRY Mexico Peru Australia China Poland Chile Canada USA Russia Kazakhstan South Africax SUBTOTAL Others + na TOTAL kt 40 37 37 120 140 na 35 80 12 na 10 511 59 570

WORLD RESERVES AND MINE PRODUCTION OF SILVER+, 2004


RESERVES % 7,0 6,5 6,5 21,1 24,6 6,1 14,0 2,1 1,8 89,6 10,4 100 PRODUCTION % 15,6 15,5 11,3 10,1 6,9 6,7 6,4 6,3 6,0 3,2 0,3 88,5

Rank 3 4 4 2 1 5 3 6 9 73 634,4

Moz 99,2 98,4 71,9 63,8 43,8 42,8 40,6 40,2 37,9 20,6 2,2 561,4 2 271 19 731

t 3 085 3 061 2 236 1 984 1 362 1 331 1 263 1 250 1 179 641 68 17 461 11,5 100

Rank 1 2 3 4 5 6 7 8 9 10 20

Sources: USGS, 2005, Pg 51 World Silver Survey, 2005 x Directorate: Mineral Economics Note: + Metal content na not available

In 2004, total silver supply (mine production, government sales, scrap recovery, implied disinvestment and producer hedging) declined by 0,7 percent to 27 284 t (Table 2), according to GFMS. Scrap contributed 20,6 percent (5 633 t), to silver supply a decline of 1,4 percent, compared with 2003. In 2004, the gap between fabrication demand and conventional supply (mine production and recycled scrap) narrowed to 659 t, chiefly attributable to a 2-percent decrease in fabrication demand from 26 543 t to 26 024 t. As is customary, the deficit was bridged by selling from aboveground stocks, predominantly from government inventories, which GFMS estimated at 1 919 t, a significant drop of 30 percent compared with the 2 743 t recorded in 2003.

Demand According to GFMS, fabrication demand amounted to 26 024 t in 2004, which represented a decline of 2 percent relative to 2003, despite higher silver prices during the year. Consumption
38

of silver is accounted for by the three main sectors, i.e. industrial applications, photography, and jewellery and silverware. The industrial sector is still the largest consumer of silver, absorbing 11 418 t, or 43,9 percent of fabrication demand, followed by the jewellery and silverware (29,6 percent or 7 698 t), photography (21,6 percent or 5 630 t), and coinage sectors (4,9 percent or 1 278 t). World industrial demands rise by 4,7 percent in 2004 to 11 418 t was due mainly to gains in the electronics sector in Japan and the US, and the silver brazing-alloys sector in China. Electrical and electronics applications account for nearly half of industrial silver demand, consuming 5 177 t in 2004. Jewellery and silverware fabrication fell by 9,7 percent to 7 698 tons. According to GFMS, much of this fall was blamed on the 1 018t drop in Indian offtake, due to the 30 percent rise in the local price and a poor monsoon. The photographic sector declined for the fifth consecutive year in 2005. The rise in the popularity of digital photography is being blamed for this deterioration. The use of silver in the minting of coins and the fabrication of medals grew by 14,8 percent to 1 278 t in 2003. Much of the growth was attributed to higher minting in Portugal, Spain, Canada and the USA.

Price The silver price was one of the best performers of all metal prices in 2004, rising by an average of 36 percent over 2004 to a 17-year high, outperforming gold, platinum and palladium in the year.
Prices fluctuated in a range of between $5,80/ozt and $7,50/ozt for most of 2004, with the highest monthly average of $7,49/ozt being achieved in November (Table 3). The year average improved from $4,88/ozt in 2003 to $6,65/ozt in 2004. According to GFMS, there were three key features underpinning the higher prices in 2004: a surge in investment; a decline in net government sales; and the higher fabrication demand. DEVELOPMENTS IN SOUTH AFRICA DURING 2004 South Africas silver mine production continued to decline in 2004 and totalled 71 643 kg, which was marginally down on the 2003 output of 79 782 kg. Silver production occurred as a by-product of 17 gold mines, one lead-zinc mine, one copper mine and two platinum-group metal mines. Gold minings contribution decreased slightly from 24 935 kg in 2003 to 22 535 kg in 2004 (Table 4). Output from lead-zinc mining declined moderately from 47 290 kg to 39 405 kg. Output from the Palaborwa copper mine improved to 8 180 kg in 2004, but output from the PGM mines, at 1 523 kg, was about half of that recorded in 2003 (3 059 kg). Local sales volume of refined silver in 2004, increased to 4 810 kg from 3 583 kg in 2003 (Table 5). Local sales value rose from R4 659 419 to R7 483 062, because of the rise in domestic sales volume and the improved prices during 2004. The average 2004 local sales unit price, at R1 556/kg, was moderately up on that of 2003 (R1 300/kg), due to the higher international prices and despite the appreciation of the Rand against the US dollar.

39

TABLE 2:
SECTOR

WORLD SUPPLY OF, AND DEMAND FOR SILVER, 2003 AND 2004
2003 t 19 010 2 743 5 711 27 464 2004 t 19 732 1 919 5 633 27 284 CHANGE % 3,8 -30,0 -1,4 -0,7

% 69,2 10,0 20,8 100,0

% 72,3 7,0 20,6 100,0

Supply Mine Production Official Sector Sales Old Silver Scrap TOTAL SUPPLY+ Demand Fabrication: Industrial & Domestic Photography Jewellery & Silverware Official Coins TOTAL DEMAND+ DEFICIT
Source: Notes:

10 6 8 1 26 -1

902 000 529 113 543 823

41,1 22,6 32,1 4,2 100,0 -659

11 5 7 1 26

418 630 698 278 024 41,7

43,9 21,6 29,6 4,9 100,0 -63,8

4,7 -6,2 -9,7 14,8 -2,0

World Silver Survey, 2005 + Excludes hedging (i.e. the forward selling of silver and the use of silver loans as a means of financing a mining operation) and implied disinvestment (which is the statistical deficit).

TABLE 3:

SILVER PRICE: MONTHLY AVERAGE LONDON SPOT PRICE, 20022004


SILVER PRICE 2003 $/ozt 4,81 4,65 4,53 4,49 4,74 4,53 4,80 4,99 5,17 5,00 5,18 5,63 4,88

MONTH January February March April May June July August September October November December YEAR AVERAGE
Source: The Silver Institute, 2005

2002 $/ozt 4,52 4,42 4,53 4,57 4,72 4,89 4,92 4,54 4,55 4,40 4,51 4,63 4,60

2004 $/ozt 6,32 6,44 7,23 7,06 5,85 5,86 6,31 6,66 6,40 7,10 7,49 7,12 6,65

TABLE 4:

SOUTH AFRICAS BY-PRODUCT SILVER PRODUCTION BY SOURCE, 2003 AND 2004


2003 MASS kg 24 935 47 290 4 498 3 059 79 782 % 31,3 59,3 5,6 3,8 100 kg 22 535 39 405 8 180 1 523 71 643 2004 MASS % 31,5 55,0 11,4 2,1 100

SOURCE

Gold mines Lead-zinc mines Copper mines PGM mines TOTAL


Source: Note: Directorate Mineral Economics

Totals may not add up due to rounding

In 2004, the export sales mass of silver dropped from 97 536 kg to 71 784 kg apparently due to the lower output, and the absence of inventory sales. Silver is exported as refined metal, in copper and lead concentrates, anode slimes and as silver matte. The export sales value decreased from R106,6 million to R94 million. The average export sales unit price rose from R1 092/kg to R1 309/kg, due to the higher international prices, despite the appreciation of the Rand against the US dollar. 40

DRAFT LEGISLATION In the first half of 2005, the Department of Minerals and Energy drafted new legislation, provisionally titled the Precious Metals Bill, to provide for the acquisition, possession, processing, domestic fabrication and disposal of precious metals. This Bill when enacted will repeal Chapter 16 of the Mining Rights Act, 1967, which is the current legislation governing possession, dealing in, processing, and fabrication of precious metals. Effectively, this new Bill proposes the deregulation of silver in South Africa, as the metal has been excluded from the definition of precious metal in the Bill. TABLE 5: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF SILVER+, 19952004
LOCAL SALES Value R 000 R/t 8 695 595 616 12 786 711 464 5 897 729 759 12 724 986 395 6 852 1 060 987 14 398 1 125 033 4 767 1 182 307 6 663 1 619 868 4 659 1 300 424 7 483 1 555 730 EXPORT SALES* Mass Value t R 000 R/t 149,4 60 253 403 300 137,6 70 227 510 528 179,3 96 364 537 387 130,6 101 293 775 597 154,3 146 408 948 954 155,8 155 539 998 206 122,5 136 956 1 118 468 114,1 162 012 1 419 376 97,5 106 556 1 092 883 71,8 93 995 1 309 416

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes: + *

PRODUCTION Mass t 174,3 168,7 144,0 144,5 152,0 144,1 109,6 113,1 79,8 71,6

Mass t 14,6 18,0 8,1 12,9 6,5 12,8 4,0 4,1 3,6 4,8

Metal content Silver is exported as refined metal, in copper and lead concentrates, anode slimes, in and as silver matte

OUTLOOK

Supply The world mine supply outlook for 2005 is for a moderate increase due to the better outlook for base metal prices in general, and further upside potential for the gold price. At many by-product mines worldwide, capacity is expected to increase marginally; however, no significant new capacity is expected to come on line.
In Mexico, the expansion at Fresnillo was completed in the 4th quarter of 2004, and is expected to raise the mines silver output from 983 tons to 1 110 t in 2005. Looking further ahead, Bolivias silver production could be boosted substantially should Apex Silvers San Cristobal project, which hosts some 450 million ounces of silver, be developed. Although still at the feasibility stage, Apex expects it to be the worlds biggest open-pit silver mine. In Argentina, Sunshines Purquitis project could also come on line in the near future, and will be that countrys largest silver mine, producing about 11 million ounces at full capacity. In October 2004, Silver Standard acquired 100 percent of Sunshine Argentina and announced recently that it would update the initial feasibility work undertaken by Sunshine, in 2005 and 2006. Other projects in the feasibility stage include Coeur dAlenes San Bartolom ($135 million cost) project in Bolivia, Silver Standards Bowdens ($50 million cost ) project in Australia, and Pan American Silvers Alamo Dorado ($45 million cost) project in Mexico (Raw Materials Group, 2005). Much of the short- to medium-term growth in silver capacity will depend on gold and base metal projects going ahead, which will be influence by future developments in these metal markets. Projects could also be accelerated by an improvement in the silver price. An increase in supply from scrap is expected in 2005 because of the improvement in prices. However, government sales are expected to be lower in the coming years as there are indications that release from Chinese official stocks is slowing. 41

Demand The upswing in global economic activity (industrial production) should lead to an increase in silver fabrication in 2005. The industrial applications sector, more specifically the electrical and electronics sector will continue to be the mainstay of silver fabrication. By country, demand is expected to increase in China and Japan.
Over the short to medium term, GFMS forecasts that new (technology) uses of silver will lead to increased offtake. These include fuel cells, silver-based wood preservatives and superconductivity. On the negative side, photographic consumption is expected to decline. The continued development of cheaper digital equipment, producing better quality prints, suggests that demand in this sector will continue to fall. Jewellery and silverware off-take is price sensitive, as they tend to be items of discretionary spending. In India, usage in jewellery may pick up as fabricators and consumers begin to adjust to higher prices, especially if there should be a better monsoon season in 2005. However, illtimed surges in the silver price at times of traditional high demand could have a negative effect.

Market balance and prices The favourable supply/demand fundamentals for silver will help support prices in 2005. The outlook for investment demand (especially if a silver Exchange Traded Fund or ETF is launched in the year) and fabrication demand is positive for prices. An improvement in the silver price in 2005 is dependent on growth in world GDP and levels of industrial production; strong growth in GDP would ensure growth in the electronics industry.
Recently, investors and speculators have been attracted to the silver market. Their participation in the market has led to greater volatility, but could result in a higher year-average in 2005. Prices will probably fluctuate in a range between $6,00/ozt and $8,20/ozt and attain an average price of between $6,70 and $7,70 per troy ounce for the year. REFERENCES GFMS Ltd, 2004-5 Raw Materials Group, 2005 The Silver Institute, 2004-5 The Silver Institute, 2004. World Silver Survey 2004; accessed on the Internet, June 2005

42

COAL
XM Prvost, LA Msibi

DEVELOPMENTS DURING 2004/2005 The twelve-month period comprising the second half of 2004 and the first half of 2005 has been a very good period for the world coal industry and a particularly exciting one for South Africas coal producers. Big companies, with large assets in South Africa as well as in other major producing and exporting countries such as Australia, Colombia and Indonesia, and the junior, small-scale and economic empowerment (BEE) companies, all benefited from good coal prices and the excellent environment for growth. (Fig. 1). FIGURE 1: SOUTH AFRICAN COAL REPORT PRICE INDEX JANUARY TO SEPTEMBER 2005.

In 2004, North America and the European Union both increased their production by 3,6 percent, while Asia Pacific and Russian output increased by 13,4 and 18,3 percent, respectively. World hard coal production thus increased by 9,4 percent. Asia Pacifics improved output was mainly due to China, Australia, Indonesia and Indias combined 325,1 Mt production increase. In South Africa, production increased by 5 Mt or 2,0 percent. However, expected new projects and mine expansions did not materialise, mainly as a result of industrys adjustments to the new mining laws. TABLE 1: WORLD COAL RESERVES, PRODUCTION AND EXPORTS, 2004
RESERVES+ % Rank 13,0 3 23,2 1 19,0 2 8,1 5 6,0 6 10,2 4 0,1 12 2,9 9 5,9 7 3,4 8 1,3 10 0,7 11 6,3 100 PRODUCTION# % 42,3 20,1 8,1 6,2 5,2 4,5 2,8 2,2 1,8 1,3 1,2 0,6 3,7 100 EXPORTS# % Rank 11,5 3 5,7 7 0,2 12 29,0 1 9,0 4 8,6 5 14,2 2 2,6 10 2,9 9 0,4 11 6,8 6 3,6 8 5,5 100

COUNTRY Mt China 62 200 USA 111 338 India 90 085 Australia 38 600 South Africa 28 599 Russia 49 088 Indonesia 740 Poland 14 000 Kazakhstan 28 151 Ukraine 16 274 Colombia 6 230 Canada 3 471 Other 29 995 TOTAL 478 771

Mt 1 956,2 932,5 373,2 285,2 242.8 209,9 129,1 100,0 82,9 62,4 56,6 29,2 174,8 4 629,2

Rank 1 2 3 4 5 6 7 8 9 10 11 12

Mt 86,6 43,4 1,6 218,4 67,9 65,2 107,4 19,6 22,0 2,8 51,7 27,1 41,2 754,9

Sources: + BP Statistical Review of the World Energy June 2005 # Coal Information 2005, International Energy Agency * DME, Directorate Mineral Economics, Richards Bay Coal Terminal, Matola Terminal, Bluff Mechanical Appliance Notes: Totals may not add up due to rounding

43

Although prices have decreased from record high of $ 70,95/t in June 2004 to a low of $ 47/t in August 2005, Richards Bay Coal Terminal (RBCT) FOB prices have been maintained at levels above $ 42/t and the trading price in September was $ 47,18/t, while in Europe, landed steam coal prices CIF for Amsterdam-Rotterdam-Antwerp (ARA) were $ 57,59. This has prompted producers to export as much coal as possible, with the RBCT shareholders using their full entitlement to the terminal and the new BEE companies using the Coal Industry Task Team (CITT) allocation. Recently, one of the main difficulties has been infrastructure constraints caused by the lack of Spoornets coal trains availability, but this hurdle will soon be overcome by an expanded railing capacity shaped to feed the old RBCT and the new South Dunes Coal Terminal (SDCT). The new expansion plans announced 2 Nov 2005 are for an extra 20 Mt/a.
Note: $ mean US$ unless stated otherwise.

FIGURE 2:

PLATTS COAL TRADER INTERNATIONAL PRICES AUGUST 2004 TO AUGUST 2005

According to the International Coal Report and other international market sources, prices will remain within their present range (between $ 40 and $ 60) into the foreseeable future. During the last couple of years, the new BEE coal mining companies have expanded in numbers as well as in production per mine. As a result of the Mineral and Petroleum Resources Development Act (MPRDA) implementation, in May 2004, companies with large coal reserves in the country have made more of their non-core assets available to BEE entrepreneurs. The latter companies, assisted in their endeavours by the DME and more particularly the CITT, now control 16 percent of the countrys coal production. With the consolidation of a number of new deals and joint ventures, already approved but not yet in public domain, this figure will likely increase to 24 percent. With the implementation of SDCT and additional export capacity of 20 Mt/a, it is foreseen that more BEE mines will be able to be begin production. Current export capacity for 2008 will be 92 million tons per annum. The study of present and future coal potential for export, as well as for the inland market is being compiled by a consultant with the assistance of all the BEE mines, the RBCT shareholders and the support of the DME. The results will be available not later than November 2005. The full Clean Coal Technologies (CCTs) in South Africa will be implemented when the new mines and power stations needed to supply more power to the grid are developed and built. CCTs are based on the science of coal combustion. They will lead to an improved understanding and characterisation of conventional combustion processes, to enable the development of techniques that control and reduce solid, liquid and gaseous emissions, to improve operating efficiency and to identify methods for the effective utilisation of combustion by-products. South Africa, a member of the International Energy Agency Clean Coal Science (CCS) Agreement since April 2003, has overseas access to all the CCS resources and projects. South African research scientists can co-operate with their colleagues in this area. Given the right technology, no longer will coal be a threat to the environment and it will remain the worlds mayor energy source. 44

In 2004, exports decreased by 3,5 Mt (5 percent) due to coal export infrastructure constraints. With the decrease of the rand/dollar exchange rate, from R8,68 in January 2003, to R6,75 in June 2005, more of the industrys potential profits were reduced. In 2004, run-of-mine (ROM) coal production increased by 4 Mt to 307 Mt, compared with 2003. Some 242 Mt of this production were of saleable quality 5 Mt more than the previous year. Output by coalfield was: Witbank 173 Mt, Highveld 61 Mt, Waterberg 35 Mt, Free State 23 Mt, Ermelo 13 Mt, Utrecht 0,1 Mt, Nongoma 0,8 Mt, Vryheid 0,8 Mt, Soutpansberg 0,4 Mt, Kangwane 0,04 Mt and Kliprivier 0,09 Mt. (Table 3). As in previous years, the Witbank Coalfield remained the predominant producer and in spite of the large amount of producing mines located in there, it still has not reached its production peak. Most of the large producers, as well as small ones, are viewing this coalfield as offering the most potential for future projects. FIGURE 3: 2004 RUN-OF-MINE PRODUCTION

Coal mines discarded 65 Mt of waste products, 2 Mt more than in 2003. Almost 91 percent of the saleable coal production was supplied by mines controlled by the six larger mining groups, viz. Ingwe (BHPBilliton), Anglo Coal, Sasol, Eyesizwe, Kumba Resources, and Xstrata. FIGURE 4: 2004 COAL PRODUCTION BY MINING COMPANY

Mpumalangas total coal production (56 mines) represented 80 percent of the total ROM coal; while Limpopo Provinces 2 mines produced 11 percent and the Free States 2 mines produced 7 percent. KwaZulu-Natals 4 remaining mines produced the remaining 1 percent. During 2004, opencast mines provided 52 percent of the ROM production. The remaining 48 percent was produced by bord-and-pillar (37 percent), longwall (6 percent) and stooping (5 45

percent). The eight largest collieries, with an output of more than 10 Mt/a each, produced 150 Mt; three large mines (more than 5 Mt/a), produced 20 Mt; 16 medium-sized mines (more than 2 Mt/a) produced 47 Mt; nine smaller mines (less than 2 Mt/a) produced 14 Mt; and the remaining 29 smallest mines (less than 1 Mt/a) produced 12 Mt. The three anthracite collieries produced 1,2 Mt, (Table 4) the same as last year. During 2004, the coal-mining industrys labour force increased from 47 000 to 52 000 workers. In 2004, South African coal was exported to 34 countries; 82 percent to the European Community of which Spain, Great Britain, Italy, Germany and France were the largest customers. Once again, South Africas coal exports to Europe increased whereas exports to Asia decreased. There is still the possibility that South African steam coal exports to Asia might return to former levels due to a sudden increase in demand for our export coal by countries in the region, especially India. (Table 4). In 2004, 67,9 Mt of coal were exported through RBCT and the throughput of the other two terminals, Durban and Maputo, was 1,0 Mt and 0,9 Mt, respectively. From April 2005, 15 BEEs and two common users (CU) obtained a RBCT export allocation of 3 Mt/a for the period 2005/2006. (Table 5). Of the 246 Mt coal sold during 2004 (Table 5) about 27,5 percent was exported, worth R14,5 billion. The remaining 72,5 percent sold inland (178,4 Mt) was worth R13,6 billion. The electricity sector consumed 110 Mt, the synthetic fuels sector used 41 Mt, plus 5 Mt utilised as feedstock for chemicals, whereas the industrial sector, including mining, consumed 9 Mt, the metallurgical industry used 7 Mt and merchants bought 7 million tons. FIGURE 5: 2004 INLAND COAL SALES BY USER

In 2004, the local market prices were relatively stable. The metallurgical price went up by 6,5 percent, industrys price by 6 percent, synthetic fuels by 5,5 percent and coal for power generation (Eskom and others) by 4,5 percent. Prices for the Merchant and Domestic sector remained the same.

46

TABLE 2:

Economic Empowerment Mines and Allocation) Company Mine Anker Coal Elandsfontein/Golfview Black Gold Coal Eastside Colliery Endulwini Resources Black Wattle Eyesizwe Coal New Clydesdale Ilanga Coal Mines Leuufontein 48-IS Imbani Resources Carolina Colliery Ingcambu Investments Thutsi Mine Kumba Coal Grootegeluk/Leeuwpan Leeuw Mining Vaalkrans Mashala Resources Wesselton Mmakau Mining Dorstfontein Colliery Shanduka Resources Savmore Colliery Polmaise Colliery Polmaise Tweewaters Fuel Springlake Colliery Woestallen Colliery Woestallen Colliery Zinoju Investments Magdalena

Common Users (RBCT-CITT Export Province Mpumalanga Mpumalanga Mpumalanga Mpumalanga Mpumalanga Mpumalanga Mpumalanga Limpopo Mpumalanga Mpumalanga Mpumalanga Mpumalanga Mpumalanga KwaZulu Natal Mpumalanga KwaZulu Siding Oostbank/Camden Uitkyk Bezuidenshoutsrus Carolina Camden Ellisras Vaalkrans VanDyksdrift Panbult Broodsnyersplaas

Natal Talana

Some of the larger planned investments, which will expand coal production and exports, that were awaiting the completion of the new coal terminal (South Dunes or RBCT Phase V) project will be implemented now. The major projects being implemented now are: Kumba Resources is planning to open a new coal mine to supply steam coal to a new power station in the Waterberg. The country needs new coal-fired power stations built regularly to satisfy its long-term electricity-generation needs. Eskom has strongly emphasized that coal still has a major role to play in electric generation. Kumbas presence in the Waterberg area could make a major contribution to the supply of South Africas power requirements. As its assets in the Waterberg have inferred resources to sustain mining for 400 years. The Waterberg contains more than 50 percent of South Africas remaining coal resources. This project would create more employment in the Limpopo Province and avoid the environmental problems, which would be created by building another power station in the Central Basin viz. the Mpumalanga and Gauteng Provinces; RBCTs Phase V expansion project is on track. Phase V will increase RBCTs capacity from 72 Mt/a to 92 Mt/a. The CITT is also assessing, on behalf of Spoornet, whether South African coal reserves are able to maintain this level of exports for the long term; Isibonelo, a new Anglo Coal colliery, made its first delivery of coal to Sasol on July 2005. The $65 million colliery started production on time and on budget. A production of 5 Mt/a of thermal coal will be supplied by this colliery to Sasol Synfuels when it reaches full production next year. Both Anglo Coal and Sasol are developing the 200 Mt Kriel South coal reserves in the Mpumalanga Province. In July 2003 an agreement was reached to establish a new opencast operation in the northern portion of the coalfield. Access to the southern portion of Kriel South was granted to Sasol. It is expected that the operations will secure coal output from the Kriel South reserves for Sasol for 20 years; The worlds largest steel producer, Mittal Steel officially opened a pulverised coal injection (PCI) plant for blast furnace No.5 at the Newcastle Steel Works, in KwaZulu-Natal. This plant was completed at a total cost of R204 million ($30 million). Its main advantage is that the required quality for PCI is available locally from the Grootegeluk mine in the Limpopo Province. This allows Mittal Steel to purchase coal in rand compared with imported coking coal, which is purchased in dollars. The introduction of the PCI will therefore permit the reduction in hot metal costs by some R60/t ($8.80/t). Fine coal can also replace the plants reliance on oil, tar, and natural gas as fuel;

47

Transnet and Eskom are contemplating a R1,6 billion mini heavy-haul corridor linking the coalfields of Mpumalanga to Eskoms power stations i.e. Majuba and Tutuka in KwaZuluNatal and Mpumalanga. The line would effectively be an extended siding, from the main coal corridor, with dedicated rolling stock, which will run from Mpumalanga to the RBCT in KwaZulu-Natal. Eskom view this as essential to deal with rising electricity demand. Currently, coal is trucked to Majuba from several collieries, while Tutuka gets its coal from New Denmark Colliery. Apparently Eskom favours the rail solution that will transport about 12 Mt/a rather than a conveyor belt or pipeline. This will take hundreds of trucks off the roads. Eskom initiated the rail project but it was decided in discussion with government that it should be handed over to Spoornet, which will fund and build it as part of its R40-billion suite of investment projects over the next five years. Eskom has made an announcement of its plan to build a greenfield power station in the area of the existing Matimba power station. This coal-fired station is expected to cost between R17 billion and R20 billion. Eskom plans to bring the first unit into commercial production in 2010; Kumba Resources has announced two approved coal projects. The projects are at two mines, Grootegeluk and Leeuwpan, situated in Limpopo and Mpumalanga Provinces. The projects will require a combined capital expenditure of R411 million. The first, requiring an investment of R320 million, will further beneficiate coal at Grootegeluk to generate 0,7 Mt/a of semi-soft coking coal and will increase the present total output to 2,5 Mt/a. This coal will be supplied to Mittal. The project should be completed by July 2006. The second project is to expand production at the Leeuwpan coal mine near Delmas, which will require an investment of R91 million. Kumba is also planning to unbundle into two separate companies: coal and base metals operations and the iron ore assets. A number of Anglos South African base metal assets will be injected into Kumba, which will then merge with Eyesizwe Coal; Endulwini Resources, a BEE company, in partnership with London listed Bisichi Mining, has purchased Ingwes Pegasus coal reserves near Witbank. This reserve contains approximately 12 Mt of high quality low sulphur coal, which will be mined opencast in a joint venture with Ezimbokodweni Mining. Endulwini Resources owns 51 percent in Ezimbokodweni and Bisichi 49 percent. About R150 million will be invested in the development of the opencast mine over the next two years and 250 new jobs will be created. Ezimbokodweni will produce 1,5 Mt/a, to increase the total production of Endulwini Resources to more than 3 Mt/a. This company has also purchased the Groenvlei coal reserve; BHP Billitons $280 million Klipspruit Colliery in Mpumalanga, which opened in 2004 was shelved, until Ingwe is confident that a turnaround in costs can be secured. Higher unit costs on the back of increased consumables, a rise in the deployment of contractors and major modifications were reported. The project was included as part of the groups multibillion dollar portfolio last year, and was suppose to come into full production in 2007. According to BHPB the project needed to be reconsidered in view of the unstable foreign exchange situation. It was concluded that the focus was currently on the Ingwe improvement plan until it begins showing benefits. Also, Anglo Coal and BHP Billiton are rethinking their project in the Western Complex area, which will lead to new studies, involving assets from both companies; Motjoli Resources, an BEE company is about to start a new coal mine, located in Mpumalanga, following the R18 million acquisition of mining rights previously held by Holfontein Investments. The mine will be a JV between Motjoli, which holds 51 percent and an Australian company, GVM Metals. Motjoli plans to start mining in two years time. The mine is expected to produce 1Mt/a, of which two thirds will be exported and the remainder sold to Eskom.

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TABLE 3:

SOUTH AFRICAS SALEABLE COAL PRODUCTION, LOCAL SALES AND EXPORTS, 19952004
LOCAL Mass Mt 146,0 146,3 157,2 168,5 154,6 154,6 152,2 157,6 168,0 178,3 SALES Value (FOR) R000 R/t 6 339 003 43 6 798 340 46 7 624 905 48 8 847 273 53 8 305 568 53 8 772 310 57 9 564 521 63 11 773 123 75 13 212 837 79 13 606 151 76 EXPORT SALES Mass Value (FOB) Mt R000 R/t 59,7 6 478 785 109 60,2 8 111 640 135 59,0 8 499 823 144 67,0 9 559 090 147 66,2 9 234 328 142 69,9 11 185 460 160 69,2 16 956 659 245 69,2 19 366 998 280 71,5 13 490 623 189 67,9 14 472904 213

YEAR

PRODUCTION Mt 206,2 206,4 218,6 224,9 222,3 224,1 223,5 220,2 239,3 242,8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

TABLE 4:

SOUTH AFRICAS ANTHRACITE SALEABLE PRODUCTION, LOCAL SALES AND EXPORTS 19952004
LOCAL SALES Mass Value (FOR) Mt R000 R/t 524 91 836 175 488 98 215 201 575 124 405 216 636 143 215 225 510 130 040 255 515 130 438 253 470 150 797 320 392 148 953 379 181 181 265 394 545 224 882 412 EXPORT SALES Mass Value (FOB) Mt R000 R/t 2 017 292 428 145 2 203 403 030 183 1 648 289 989 176 1 376 267 600 1 94 1 080 229 602 213 1 125 224 747 200 970 283 805 292 759 286 970 378 584 172 202 295 917 235 667 257

YEAR

PRODUCTION Mt 137 466 997 064 919 618 607 305 206 247

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

2 2 1 2 1 1 1 1 1 1

TABLE 5:

SOUTH AFRICAS BITUMINOUS COAL SALEABLE PRODUCTION, LOCAL SALES AND EXPORTS, 19952004
LOCAL Mass Mt 145,5 145,9 156,7 167,8 154,5 154,1 152,1 157,2 167,6 177, 8 SALES Value (FOR) R000 R/t 6 247 168 43 6 700 125 46 7 442 077 47 8 704 058 52 8 148 878 53 8 319 975 56 9 413 724 62 11 624 170 74 13 031 572 78 13 381 268 75 EXPORT SALES Mass Value (FOB) Mt R000 R/t 57,6 6 186 357 107 58,0 7 708 610 133 57,3 8 209 834 143 65,7 9 291 490 146 65,1 9 175 726 141 68,8 10 960 713 160 69,2 16 956 659 244 69,2 19 080 028 279 71,0 13 318 421 188 67,9 14 237 236 212

YEAR

PRODUCTION Mt 204,1 203,9 216,6 222,2 221,6 222,5 222,1 218,9 238,1 241,5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

The DMEs project to calculate the coal reserves and resources for the country has again been delayed and the final report will only be available by the end of the first quarter 2006. The effect of the rand/$ exchange rate, from an average of R7,58 in 2003 to R6,45 in 2004 and R6,20 in first half 2005, and decreased by 8,1 percent from 2004 to 2005 has caused a net loss of revenue of R2,5 billion in 2004, and R342 million by June 2005. Although the international index prices in dollars increased by 64,2 percent from 2003 to 2004, the RBCT FOB rand prices increased by only 12,7 percent in 2004. The 2005 (first half) RBCT FOB rand prices increased by 32,9 percent, compared with 2004.

49

OUTLOOK The main coal issues in South Africa in 2005 are; the recently implemented MPRDA and its implications as a vehicle to release unused coal reserves, now owned by government to new coal entrepreneurs; access to potentially economically viable reserves, previously part of the major coal companys portfolios, now being released as part of the application of the Mining Charter; new coal mining infrastructure (rail and port) including all other relevant coal extraction and beneficiation requirements, needed to make our coal products more accessible to the local and international markets; the rise of the importance of the implementation of clean coal technologies.

Government and industrys co-operation will ease problems caused by the re-shaping of the industry and coal will remain the countrys cheapest energy source for a long time. The industrys inland market provides the basic revenue to the mines, while the export market supplies the extra income that allows local coal prices to remain low and stable. The present outlook for the coal industry is very optimistic. With implementation of some of the outstanding coal projects, including the RBCT Phase V expansion by 2006-7, mergers and JVs already in the pipeline, coal production and exports should increase by 10 to 15 percent. The reassessment of the remaining coal potential in the Central Coal Basin will give many economic empowerment companies the reserves needed to enter the industry. It is expected that more energy from coal will be essential to feed new power stations, plus the increasing popularity of South African coal exports to the EC, Far and Middle East, will once more create the opportunity for old and new coal mines to increase production and keep the inland coal prices at levels affordable to the industry. South Africas very low electricity cost has been our trump card in the past to attract industrial development. Electricity prices need to remain relatively low to lure foreign industries to South Africa. REFERENCES BP, 2003. Statistical Review of World Energy Jun 2005, 40 pp McCloskeys Coal Report, issues MCR 109 MCR 118 McCloskey Daily Coal News 2004 - 2005 DME, Directorate Mineral Economics. Operating and Developing Coal Mines in SA 2004, 66 pp. Mining Weekly Online: Various articles 24/09/2004 - 19/07/2005 www.miningweekly.co.za. OECD International Energy Agency. Coal Information 2005 www.iea.org. Platts International Coal Report, issues 674 to 731. Platts International Coal Report Coal Statistics, issues Jun 2004 to Sep 2005. Platts Coal Trader International, daily issues 2004, and 2005. Prvost, XM Mining Weekly: The Waterberg Coalfield pp 20-23 May 2005 Prvost, XM ABSA Review of World Energy Situation: SA Coal in the World Context Jan 2005. Prvost, XM. MEETI Energy Policy and Management Programme: Coal as an Energy Source, Jhb, June 2005. Prvost, XM. Wits Dept. Mining Eng. GDE Economic Deposits of Southern Africa Coal: Coal Reserves & Resources, Jhb July 2005. Prvost, XM. Wits Dept. Mining Eng. GDE Coal in the Metallurgical Industry: Metallurgical Coal in SA, Jhb August 2005. South African Coal Report: From the Coal Face, issues Jan 2004 to Jul 2005. South African Coal Report: Monthly Newsletter, issues Nov 2004 to Aug 2005. South African Coal Report. South African Coal Statistics 2005, 166 pp. World Coal: issues January 2004 June 2005

50

HYDROCARBON FUELS
Lebohang Musi

DEVELOPMENTS DURING 2004/2005 In 2004, world oil production increased from 78,2 million barrels per day (b/d) to 80,3 million b/d, a growth of 4,5 percent. Total proven world oil reserves estimates have been increased to 1 188,6 billion barrels; at the current rate of output, production could probably be sustained for another 40 years. Some 61,7 percent of the worlds proven reserves are in the Middle East, which pumps nearly one third of the worlds crude, with 74,9 percent of the reserves in the Organisation of Petroleum Exporting Countries (OPEC) (Table 1). The Middle East and North and South America account for almost 60 percent of the total world oil output. There have been reports that oil reserves are steadily diminishing and this coupled to the increase in demand for oil, has resulted in extraordinary oil price hikes. This has encouraged substitution of oil by other fossil fuels- natural gas and coal. Natural gas and coal consumption grew by 3,3 percent and 6,3 percent, respectively. The demand for oil grew by 2,5 million b/d in 2004 representing the biggest growth since 1976. This is more than double the 10-year average rate. The level of spare capacity has been reduced from 3 million to 1 million b/d to accommodate the high demand. In the past 10 years, the top oil producing countries in non-OPEC have been unable to replace their production with new discoveries. The IHS Energy consultants reported that, about 45 percent of the worlds discovered oil had been consumed by the end of 2003. The worlds oil fields have produced about 650 billion barrels of oil to date. In 2004, world natural gas production increased by 2,8 percent to 2,6 trillion cubic metres (m3). Netherlands, Russia, Norway and other European countries have seen increased production that has offset the ongoing decline in UKs output. World natural gas consumption increased by 3,3 percent in 2004 compared with a 10-year average of 2,3 percent. The US has the largest market for natural gas in the world but its consumption has stagnated due to high prices, which grew by 7 percent and industrial restructuring. There was a 4,0 percent growth in gas consumption in countries outside the US with the largest gains in Russia, China and the Middle East. In 2004, world gas reserves increased to 179,53 m3. It is estimated that known reserves are sufficient to sustain future production at current rates for the next 66 years. AN OVERVIEW OF SOUTH AFRICAS HYDROCARBON FUELS South Africas liquid fuels supply is derived from refining crude oil imports (over 60 percent), Sasol synthetic fuels derived from coal (about 25 percent) and Mossgass refinery production based on PetroSAs production (8 percent). Most of the crude oil is imported from the Middle East and Africa, with Saudi Arabia, Iran and Nigeria as the main suppliers. The national oil and gas company PetroSA has two main oilproducing fields, Oribi and Oryx. Oribi produces 15 000 b/d and Oryx 10 000 b/d. These oil fields are located offshore Stilbaai, Mossel Bay and George, Western Cape. Petronet is building a R3 billion pipeline project, which will run between Durban, Johannesburg and Pretoria. The pipeline is scheduled to come on stream in 2010. Currently, Sasol produces 150 000 b/d of oil products, nearly all produced from coal-to-fuel plants. The company aims to produce approximately 500 000 barrels of gas-to-liquid (GTL) per day by 2016 from offshore ventures. Sasol formed a joint venture with Sasol-Chevron and Chevron-Texaco to establish the four GTL centres, which will be in Qatar, Nigeria, Australia and Iran. The GTL technology converts gas into petroleum products including low sulphur diesel. 51

Mvelaphanda Holdings has established a new oil and gas exploration company called Ophir, which is active in at least six African countries namely Gabon, Tanzania, Nigeria, Libya, Equatorial Guinea and Saharawi Arab Democratic Republic (SADR). Its other entrepreneurial activities involve the quest to attain a 10 percent stake of Ibhubesi gas field off South Africas west coast, a 4 percent stake in a joint venture exploring the Nigeria-Sao Tome joint development zone and a 75 percent stake in the UKs Rover Energy, which has an exploration block in Somaliland. BP Southern Africa and its broad-based empowerment partners, the Mineworkers Investment Company (MIC) and WDB Investment Holdings has sold its commercial and industrial fuels marketing business to Masana Petroleum Solutions, which is a black owned company, for R265 million. Sasol and Engen formed a joint venture to establish the biggest South African Black Economic Empowerment (BEE) liquid fuels company called Uhambo Oil. The company will be a leading fuel refinery, marketing and distribution business, with the capacity to produce more than 13million cubic metres of petrol, diesel and kerosene per annum. TABLE 1: WORLD RESERVES AND PRODUCTION OF OIL AND NATURAL GAS, 2004
PROVED RESERVES OIL GAS (bbl x 109) % (m3 x 1012) OPEC COUNTRIES Algeria Indonesia Iran Iraq Kuwait Libya Nigeria Qatar Saudi Arabia UAE Venezuela Subtotal 11,8 4,7 132,5 115,0 99,0 39,1 35,3 15,2 262,7 97,8 77,2 890,3 1,0 0,4 11,1 9,7 8,3 3,3 3,0 1,3 22,1 8,2 6,5 74,9 4,55 2,56 25,57 3,17 1,57 1,49 5,00 25,78 6,75 6,06 4,22 86,72 PRODUCTION OIL+ GAS* % (1 000 bbl/d) % (m3 x 109) % 2,5 1,4 15,3 1,8 0,9 0,8 2,8 14,4 3,8 3,4 2,4 49,5 1 1 4 2 2 1 2 10 2 2 32 933 126 081 027 438 607 508 990 584 667 980 941 2,1 1,4 5,2 2,6 3,1 2,0 3,2 1,2 13,1 3,3 4,0 41,2 82,0 73,3 85,5 0,0 9,7 7,0 17,7 20,6 64,0 45,8 28,4 434,0 3,0 2,7 3,2 0,0 0,4 0,3 0,7 0,8 2,4 1,7 1,0 16,2

OTHER SELECTED COUNTRIES Argentina 2,7 0,2 Australia 4,0 0,3 Brazil 11,2 0,9 Brunei 1,1 0,1 Canada 16,8 1,4 China 17,1 1,4 Ecuador 5,1 0,4 139,2 11,7 Europe & Eurasia# India 5,6 0,5 Malaysia 4,3 0,4 Mexico 14,8 1,2 Norway 9,7 0,8 Oman 5,6 0,5 United Kingdom 4,5 0,4 USA 29,4 2,5 Other 27,2 2,4 Subtotal 298,3 25,1 Total 1 188,6 100
Source: Notes:

0,61 2,46 0,33 0,34 1,60 2,23 0,0 64,02 0,92 2,46 0,42 2,39 1,00 0, 59 5,29 8,14 92,8 179,53

0,3 1,4 0,2 0,2 0,9 1,2 0,0 35,7 0,5 1,4 0,2 1,3 0,6 0,3 2,9 3,7 50,5 100

1 3 3 17

3 3 2 7 47 80

756 541 542 211 085 490 535 583 819 912 824 188 785 029 241 778 319 260

1,0 0,6 2,0 0,3 3,8 4,5 0,7 22,0 1,0 1,0 4,9 3,9 1,0 2,5 8,5 1,1 57,7 100

44,9 35,2 11,1 12,1 182,8 40,8 0,0 1 051,5 29,4 53,9 37,1 78,5 17,6 95,7 542,9 24,1 2 257,6 2 691,6

1,7 1,3 0,4 0,4 6,8 1,5 0,0 39,1 1,1 2,0 1,4 2,9 0,7 3,6 20,2 0,7 83,1 100

BP Statistical Review of World Energy, June 2005 pp. 2, 3, 4, 6, 9, 20, 22 + Includes crude oil, shale oil, oil sands and natural gas liquids and excludes liquid fuels derived from other sources such as coal * Excludes gas flared or recycled # Europe & Eurasia

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OUTLOOK South Africa has a small gas industry, but with the availability of gas from Mozambique, and the possible discovery of offshore reserves, the industry could experience rapid expansion. The Binational Gas Pipeline Commission has been established and its main function is to facilitate the movement of gas between Mozambique (Temane and Pande gas fields) and South Africa. In future, gas will probably become the feedstock of choice in the energy industry. Worldwide, the demand for gas is forecast to grow by 60 percent 2020 when it will supply 18 percent of the total world energy demand. Sasol will be injecting 120 million gigajoules per annum of natural gas into South Africa from Mozambique for the next 25 years. The gas flow commenced in March 2004. The pipeline will increase gas contribution as a primary supply of energy in South Africa from 1,5 percent to 4 percent. The government of Mozambique will be receiving a maximum of 5 percent royalty on all quantities of gas produced. The South African petroleum industry is expected to invest R4 to R5 billion to eliminate pollution caused by the refineries of Sasol, Shell, Total, Caltex, Mossgas, Engen, Tepco and BP. The refinery industry had planned to lower the sulphur level of diesel from 0,55 to 0,3 percent in 2002 and further reduce it to 0,03% by 2006. It is also expected that, between 2006 and 2008, the use of unleaded petrol will have risen significantly. The Department of Minerals and Energy (DME), furthermore, aims to increase the portion of electricity generated from renewable resources to an optimistic target of 5 percent, by 2012. REFERENCES www.atimes.com/atimes/Global_Economy/GE04Dj03.html www.eia.doe.gov/pub/oil_gas/petroleum/feature_articles/2004 Business Report May 11, 2005 Engineering News May 12, 2005 Business Day August 11, 2005 Business Day September 14, 2005

53

URANIUM
Ashok Damarupurshad

WORLD DEVELOPMENTS DURING 2004

Mine production According to the World Nuclear Association (WNA, July 2005), after declining marginally for the last two years, world mine production of uranium jumped by an impressive 12,9 percent, from 35 635t U (42 024t U3O8) in 2003 to 40 248t U (47 464t U3O8) in 2004 (Table 1). This was due chiefly to the restoration of full production in Canada, Australia and Namibia, and to the production rises in Kazakhstan and Uzbekistan. The increase in production was also stimulated by the steadily rising prices in the second half of 2003 and during 2004.
According to the WNA statistics (Table 1), significant rises in mine output were recorded in Namibia (up 49,2 percent to 3 038t U), Australia (up 18,6 percent to 9 011t U), Uzbekistan (up 26,9 percent to 2 016t U), Kazakhstan (up 12,7 percent to 3 719t U) and Canada (up 10,9 percent to 11 597t U). Moderate to marginal declines were registered in the Czech Republic (down 8,8 percent to 412t U), Brazil (down 3,2 percent to 300t U) and South Africa (down 1,6 percent to 746t U). Canada (29 percent) and Australia (22 percent) together produced over half (51 percent) of worlds mine production of uranium. Canada remained the top producer (11 597t U) in 2004, helped by the restoration of full production at McArthur River. Second-ranked Australias production, at 9 011t U, was about two-and-half times that of third-ranked Kazakhstan (3 719t U), which has been ramping up production over the last few years. Africas uranium mine output, made up of production from Niger (3 282t U), Namibia (3 038t U) and South Africa (746t U) accounted for 17,6 percent of World output in 2004 a moderate increase relative to 2003, thanks mainly to the doubling of production in Namibia. According to the WNA, the share of total output by mining method in 2003 was as follows: underground 40 percent, open pit 27 percent, in situ leach 21 percent and by-product output 12 percent. Production by in situ leaching has been increasing over the last decade at the expense of underground mining. TABLE 1: WORLD RESOURCES AND PRODUCTION OF URANIUM, 2004
COUNTRY URANIUM RESOURCES* RAR# Rank (kt U) 439 3 989 1 622 2 71 10 158 7 213 5 93 9 102 8 42 12 295 4 47 11 4 21 143 6 3 218 319 3 537 PRODUCTION 2003 tU 10 457 7 596 3 300 3 143 3 150 2 036 1 589 779 800 758 750 452 310 35 120 515 35 635 2004 % 28,8 22,4 9,2 8,2 8,0 7,5 5,0 2,1 2,0 1,9 1,9 1,0 0,7 717 1,3 100

Canada Australia Kazakhstan Niger Russiane Namibia Uzbekistan USA Ukrainee South Africa Chinae Czech Republic Brazil SUBTOTAL Others World Total
Sources: * + Notes: # e

tU 11 597 9 011 3 719 3 282 3 200 3 038 2 016 846 800 746 750 412 300 39 531 40 248

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 98,7

OECD Nuclear Energy Agency & IAEA, 2001-3 World Nuclear Association, Market Report, 2004-5 Reasonably Assured Resources (RAR) recoverable at < $80/kg Estimated

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More than 80 percent of world production was accounted for by only eight companies, viz, Cameco (8 038t U), Cogema (5 317t U), Energy Resources of Australia (4 349t U), KazAtomProm (3 718 tU), WMC (3 694t U), Rossing (3 038t U), Priargunsky (3 000t U), and Navoi (2 050t U). The largest producing mine in 2004 remained Camecos McArthur River in Canada (7 200t U) followed by ERAs Ranger mine (4 356t U) in Australia.

Demand and total supply Uranium is the fuel used by nuclear power reactors to generate electricity by the process of nuclear fission. According to the IAEA, in 2004, there were 438 such reactors operating in 31 countries accounting for 16 percent of the worlds electricity. WNA estimated that these reactors with a combined capacity of about 364 GWe (Gigawatts of electricity) required 66 658t U in 2004 (Table 2), a moderate increase relative to 2003.
The dominant feature of the uranium market is that uranium consumption continues to exceed mine production by a significant margin. This deficit is filled from several secondary sources, including government and other civilian inventories, reprocessed spent fuel, and the blending down of highly enriched uranium (HEU) from nuclear weapons. The deficit between uranium mine production (40 248t U) and estimated nuclear reactor requirements (66 658t U) was thus 26 410t U in 2004. Therefore, in 2004, mine production accounted for 60 percent of total supply, an increase of 5 percent relative to 2003, while secondary sources accounted for 40 percent. TABLE 2: WORLD NUCLEAR POWER REACTORS AND URANIUM REQUIREMENTS 2004-2005 REACTORS OPERABLE 2004 No MWe 103 59 54 18 19 30 27 n/a 9 17 11 13 7 367 71 438 97 63 45 20 15 20 12 7 12 9 11 5 321 41 363 485 473 521 643 880 793 082 n/a 584 080 429 268 728 966 169 135 URANIUM REQUIRED 2004 (t U) 22 10 7 3 2 3 2 1 1 1 1 1 59 6 66 353 181 661 704 819 013 488 n/a 629 692 536 512 163 751 907 658 REACTORS URANIUM OPERABLE REQUIRED 2005 2005 No MWe (t U) 103 59 54 17 20 31 23 9 9 17 11 15 7 375 64 439 97 63 46 20 16 21 11 6 7 12 9 13 5 332 33 366 587 473 342 303 840 743 852 587 584 080 459 168 728 746 431 177 22 10 8 3 3 3 2 1 1 1 1 1 1 62 5 68 397 431 184 708 011 409 409 352 622 796 536 531 163 549 808 357

NUCLEAR ELECTRICITY GENERATION 2004 billion % of kWh elec USA 788,6 20 France 426,8 78 Japan 273,8 29 Germany 158,4 32 Korea (South) 124,0 38 Russia 133,0 16 UK 73,7 19 China 47,8 2,2 Spain 60,9 23 Canada 85,3 15 Sweden 75,0 52 Ukraine 81,1 51 Belgium 44,9 55 SUBTOTAL 2 373,3 Others 245,3 World 2 619 16
Notes:

COUNTRY

% of elec percent contribution to national electricity production MWe: Megawatt net (electrical as distinct from thermal) kWh kilowatt-hour Sources: World Nuclear Association, 2005 IAEA, 2005, for nuclear electricity production and % of electricity

World consumption of nuclear power (Table 2) increased moderately to 2 619 billion kWh (kilowatt-hour). The United States continued to dominate the market in 2004; its uranium requirements totalled 21 741t U in 2003. The US nuclear industry represents a third of global demand and generally a larger proportion of the spot market. Other major uranium consuming countries in descending order were France, Japan, Germany, South Korea and Russia (Table 2).

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Price NUEXCO uranium spot prices started 2004 trading in a narrow range of between $14 -$16/lb U3O8 (Table 3). As the year progressed, rising demand, driven mainly by the economic boom in China (in particular the rapid urbanisation and the consequent need for expansion of electrical power supply capacity), saw prices improving steadily.
In December the average price was $20/lb U3O8, leaving the year average at an encouraging $18/lb U3O8 above the so-called plausible price ($15/lb U3O8) for a mine output of about 40 000 t/y U3O8 (Uranium Information Centre, 2004). TABLE 3:
MONTH January February March April May June July August September October November December YEAR AVERAGE
Source: Metal Bulletin, 2002-4

NUEXCO SPOT URANIUM PRICES, 2002-2004 (MONTHLY AVERAGES)


2002 PRICES ($/l b U3O8) 9,58 9,72 9,95 9,83 9,90 9,90 9,90 9,85 9,81 9,76 9,76 11,16 9,93 2003 PRICES ($/lb U3O8) 10,15 10,10 10,10 10,20 10,98 10,90 10,91 11,25 11,57 12,33 12,97 13,41 11,24 2004 PRICES ($/lb U3O8) 14,77 15,90 17,02 17,75 17,75 17,86 17,90 17,90 19,05 20,08 20,20 20,43 18,05

Spot prices have doubled since early 2003, and explanations vary, but include the following factors: Commodity inflation caused by a weakening US dollar relative to major mining-country currencies, during the period. Depleting commercial uranium inventories. Mine production is unlikely to expand at a sufficient rate to replace falling secondary supplies, in the next two years. Uncertainty over the timing and magnitude of secondary supplies on the commercial market (Stephen Kidd, 2005). Rising demand in China, India and Russia. A more positive outlook for nuclear power due to the implementation of the Kyoto Protocol and the start of Emissions (reduction) Trading (nuclear electricity avoids the emission of 100s of millions of tons of CO2 produced through coal-fired electricity generation) The spot market accounts for only 10-12% of total sales. The majority of trade is via 3-7 year term contracts negotiated directly between producers and utilities, but with prices often at a small premium to the prevailing spot prices. DEVELOPMENTS IN SOUTH AFRICA DURING 2004 In 2004, South Africas uranium production totalled 888t U3O8 (746t U), a decrease of 0,6 percent compared with the 894t U3O8 (751t U) recorded in 2003. Production was recovered as a by-product of gold mining. South African production in 2004 was a mere 12 percent of its historic peak in 1980 (6 147t U). Only one gold mining company, AngloGold Ashanti produced uranium in South Africa in 2004. The companys Vaal River Operations was the tenth largest producing mine in 2004, accounting for 1,9 percent of world production. AngloGold Ashanti announced that it planned to increase uranium output in the coming years due to the favourable price.

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According to statistics provided to the Directorate: Mineral Economics, South Africas entire production of uranium is exported by NUFCOR (Nuclear Fuels Corporation) and no domestic mine sales were reported in 2004. Export statistics show that South Africa exported 787 tons of uranium and uranium compounds (HS code 28.44.10) worth about R204 million during 2004. OUTLOOK

Supply World mine production of uranium, encouraged by the higher prices, is set to increase in the coming years. Prices are currently at a level that is higher than the marginal operating costs of most mines. In 2005, world mine production is estimated to increase moderately to 42 000t U (49 530t U3O8), driven mainly by increases in Canada, Australia and Kazakhstan.
Looking further ahead, two new uranium projects are due to come into production within the next few years, in Canada. With the better market conditions, Camecos Cigar Lake is on track to produce 7 000t U from 2007 and Cogemas Midwest mine will produce 2 200t U from 2006. There are also reports that an application has been made to increase production at Camecos McArthur River mine from 7 200t U (2004) to 8 460t U. Uranium production in Australia is also set to increase. There are plans to increase production at WMC Resources Olympic Dam copper-uranium mine dramatically to about 12 700t U per year. Another two mines could come into production in the near future, viz., Honeymoon (projected production of 900t U/year) and Jabiluka, where production will be phased in to match the decline of the Ranger Mine. In South Africa, Aflease plans to start production at its uranium-gold operations near Klerksdorp, at a rate of 479t U3O8 from 2007. Supply from secondary sources from a whole host of public and private sources will continue to be an important component of supply for many years to come. Non-mine supplies are expected to account for between 40-45 percent of world requirements during the next few years.

Demand Consumption is expected to increase by 2,5 percent to 68 357t U in 2005 due to an expected increase in demand in Asia and Eastern Europe Also of importance are generating capacity upgrade programmes in Europe and the USA and generally higher reactor load factors, which translate to an increase in uranium consumption.
The World Nuclear Association expects World nuclear capacity to grow to 379 GWe by 2010, and to 405 GWe by 2020, representing an annual average growth rate of 0.7 percent.

Markets and Price In 2005, uranium prices are expected to fluctuate in a higher range of between $20,00/lb U3O8 and $28,00/lb U3O8 underpinned by the need for additional primary production to meet uranium requirements. Consultants, International Nuclear Inc., expect that uranium prices will continue to rise through 2006, but then begin to moderate from 2007, with relative stability over the period 2010-2018 as new primary production fills the anticipated supply gap.
Increasing production from Canada, Australia and Kazakhstan, combined with continuing conversion of nuclear weapons, will provide sufficient uranium to meet short-term demand, which is expected to expand by a little over 1 percent/annum.

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REFERENCES & BIBLIOGRAPHY BP, Statistical Review of World Energy, 2004 International Nuclear, Inc. (2004). The Market for Uranium: An overview of Supply, Demand and Prices 2004-2025, 10pp. Metal Bulletin, 2002-2004 NEA/IAEA, 2001/3. Uranium - Resources, Production and Demand: OECD, Paris, 362 pp Uranium Information Centre, 2004-5 World Energy Council, 2002-5 World Nuclear Association, 2002-5

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NONFERROUS METALS AND MINERALS OVERVIEW


J W Perold

INTRODUCTION South Africa is endowed with relatively large reserves of most of the major nonferrous metals and minerals, except for aluminium of which no commercially exploitable reserves exist. The world reserve rankings for seven of South Africas nonferrous minerals range between first and sixth. Most of the orebodies from which the nonferrous metals are mined are polymetallic. Most PGM mines in the Bushveld Complex also produce copper, nickel and cobalt and the Phalaborwa Carbonatite produces copper and nickel. The total nonferrous mining/mineral industry is relatively small, consisting of some nineteen mines and seven refineries. DEVELOPMENTS IN 2004/2005 World economic growth moderated in the second half of 2004, but still expanded at a rate of 5,1 percent for the year as a whole. This solid expansion helped to support increases in international trade volumes and commodity prices, enabling economic growth in most emerging markets as well as in developing countries to exceed expectations. Countries in the emerging Asian region again outperformed most other economies, with China and India recording exceptional growth. Real output growth in Africa, with its mix of agricultural and mining exports, also recorded a growth acceleration in 2004. Lead, copper and aluminium prices soared in the first half of 2004 as some producers suffered strikes, which against a background of low stocks exacerbated physical tightness in the market. The weaker dollar, record oil prices, at times above $50 per barrel, and strong demand from China also encouraged the buying of stocks and price rises which saw copper and other base metals reach highs in 2004 not seen for many years. In October 2004, copper approached its 10-year high at $3 122/t and averaged $2 866/t for the year - 61 percent higher compared to 2003. In the same month, nickel rose to $15 326/t averaging $13 819/t or 44 percent higher than in 2003. Aluminium peaked at $1 767/t on 9 July and averaged $1 719/t or 44 percent higher. Zinc rose to $1 105/t in March 2004 and averaged $1 048/t or 27 percent higher. Lead increased to an astonishing $1 039/t in July and averaged a phenomenal 71 percent higher at $881/t. The tin price also increased sharply during 2004 fluctuating in the upper $8 500 per ton. Available data suggest that global growth remained somewhat hesitant in the first half of 2005. Little progress was made in resolving key imbalances and problems, which characterise the international economic landscape. The magnitude of the saving and fiscal shortfall in the United States, the lethargic pace of Europes economic expansion and the inflexibility of some Asian exchange rates featured among these largely unresolved issues. Furthermore, the extended period of high oil prices (+$50/barrel) in the first half of 2005 and the likelihood of these high prices continuing for the rest of the year, has the potential to threaten the sustainability of economic growth and, therefore, base metals demand. In July 2005, oil prices were still fluctuating in the upper $50s/barrel and base metal price hikes seemed to have halted. High energy prices affects the margins of base metal producers as diesel is a major input cost while a weakening dollar shrinks the revenue of base metal producers especially those in South Africa and Australia. Important base metal developments in South and southern Africa were: Lion Ore, a junior Canadian mining company bought into Nkomati Nickel mine in Limpopo Province. Lion Ore and African Rainbow Mining jointly own 50 percent of Nkomati. Lion Ore wants to increase the output of the mine through the introduction of its new processing technology; 59

Zambias copper production has been booming over the past two years, taking output to above 400 kt/annum levels not seen since the Copperbelt boom in 1969. Of the seven major players on the Copperbelt, Metorex, a South African company, controls the Chibuluma mine in where it intends spending $35 million on development. Metorex also acquired a cobalt plant in Zambia, situated close to the DRC border, in order to process ore from its Ruashi-Etoille project in the DRC, starting with the processing surface dumps; Lion Ore has also invested in Tati Nickel mine, Botswana, to apply its new processing technology in order to increase nickel output; Chinas decision on 22 August 2005 to abolish an 8 percent tax rebate on imported alumina had boosted the chances of the Canadian producer, Alcan establishing the long-awaited $2 billion (R12,9 billion) aluminium smelter at Coega near Port Elizabeth. Alcan has indicated that it is assessing the smelter, which will produce 660 kt aluminium per annum.

In 2004, the total sales value of South Africas primary nonferrous metals and minerals, excluding titanium and zirconium minerals (Tables 1 and 2), increased by 28,8 percent or R1, 36 billion, to R6,07 billion. The increase resulted from the exceptional commodity price hikes. Total nonferrous primary sales including zirconium and titanium minerals also increased by R600 million to R8,2 billion, representing 6,6 percent of the countrys total primary mineral sales valued at some R125 billion. Total primary nonferrous mineral and metal, including titanium and zircon minerals were exported to the following regions: Europe (44,5 percent), Pacific Rim Countries (29,2 percent), North and Central America (18,3 percent), South America (6,7 percent), Middle and Near East (0,8 percent) and Africa (0,4 percent). TABLE 1: SOUTH AFRICAS PRODUCTION AND SALES OF PRIMARY NONFERROUS METALS AND MINERALS, 2003
LOCAL SALES Value R000 5 475 3 053 1 073 733 1 284 1 647 922 ** 121 906 ** 2 853 373 EXPORT SALES (FOR) Mass Value t R000 5 020 63 649 241 36 46 408 567 502 44 053 108 600 16 088 1 081 275 ** * ** 111 810 ** * ** 1 857 264 TOTAL SALES (FOB) Mass Value t R000 5 296 69 124 238 259 39 291 122 482 1 641 235 44 392 109 884 40 128 2 729 197 ** 39 971 ** 252 529 ** 121 906 ** 4 710 639

COMMODITY PRODUCTION Mass t Antimony (mic) 5 291 271 Cobalt ++ 120 920 Copper# Lead (mic) 39 941 40 941 Nickel ++ Titanium minerals ** Zinc (mic) 41 239 Zirconium minerals ** TOTALx 248 504
Notes: mic metal-in-concentrate ++ # ** * x

Mass t 276 19 76 074 339 24 040 ** 39 971 ** 140 719

Metal-in-concentrate and metal Metal-in-concentrate, blister, anode and cathode copper Classified Nil Excludes titanium and zirconium minerals

In 2004, total sales of processed nonferrous metals and minerals (Tables 3 and 4) excluding titanium slag increased by 20,1 percent or R1,82 billion to R10,9 billion compared with 2003. This increase was attributable to the higher sales volume of aluminium as well as higher commodity prices for the processed commodities. Total processed nonferrous metals and minerals, including titanium slag, were exported to the following regions in order of importance: Pacific Rim Countries (31 percent), North America and Central America (30,1 percent), Europe (22 percent), Africa (12,1 percent), Middle and Near East (3,8 percent) and South America (0,9 percent).

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TABLE 2:

SOUTH AFRICAS PRODUCTION AND NONFERROUS METALS AND MINERALS, 2004


LOCAL SALES Value R000 3 723 5 671 1 542 829 Nil 2 129 682 ** 107 630 ** 799 535

SALES

OF

PRIMARY

COMMODITY PRODUCTION

Mass Mass t t Antimony (mic) 4 967 213 Cobalt ++ 309 19 102 574 83 934 Copper# Lead (mic) 37 485 Nil Nickel ++ 39 851 24 989 Titanium minerals ** ** Zinc (mic) 32 001 31 519 Zirconium minerals ** ** TOTALx 217 187 140 674 3
Notes: mic ++ # ** x

EXPORT SALES (FOR) Mass Value t R000 4 762 66 149 310 83 232 29 299 483 293 30 958 120 599 17 725 1 513 381 ** Nil ** 83 081 ** Nil ** 2 266 654

TOTAL SALES (FOB) Mass Value t R000 4 975 69 871 328 99 903 113 233 2 026 122 30 958 120 599 42 741 3 653 062 ** 31 519 ** 223 727 ** 107 630 ** 6 066 189

metal-in-concentrate Metal-in-concentrate and metal Metal-in-concentrate, blister, anode and cathode copper Classified Excludes titanium and zirconium minerals

TABLE 3:

SOUTH AFRICAS PRODUCTION AND SALES OF PROCESSED NONFERROUS METALS AND MINERALS, 2003
LOCAL SALES Mass t 300 299 303 ** 86 027 385 630 Value R000 583 3 320 629 ** 596 361 3 917 573 EXPORT SALES (FOR) Mass Value t R000 5 785 497 892 ** 27 640 531 317 12 612 4 981 081 ** 164 948 5 158 641 TOTAL SALES (FOB) Mass Value t R000 6 085 797 195 ** 113 667 916 947 13 195 8 310 710 ** 761 309 9 076 214

COMMODITY PRODUCTION Mass t Antimony trioxide Aluminium metal Titanium slag Zinc metal TOTALx
Notes:

6 097 734 787 ** 112 462 853 346

** Classified x Excludes titanium slag

TABLE 4:

SOUTH AFRICAS PRODUCTION AND SALES OF PROCESSED NONFERROUS METALS AND MINERALS, 2004
LOCAL SALES Value R000 451 3 724 359 ** 736 808 4 461 619 EXPORT SALES (FOR) Mass Value t R000 5 629 12 008 610 702 6 380 404 ** ** 11 710 44 832 694 668 6 437 244 TOTAL SALES (FOB) Mass Value t R000 5 863 12 459 952 449 10 104 762 ** ** 107 743 781 640 1 066 055 10 898 863

COMMODITY PRODUCTION Mass t Antimony trioxide 5 822 Aluminium metal 866 074 Titanium slag ** Zinc metal 105 384 TOTALx 977 280
Notes: ** Classified x Excludes titanium slag

Mass t 233 341 747 ** 96 033 438 013

OUTLOOK Overall the fundamentals for base metals and minerals are quite positive because of strong growth rates that are expected in East Asia, especially in China where the economy has been growing at a rate of nearly 10 percent in the first quarter 2005. Also, the longer lead-time needed to bring mines on stream will contribute to a favourable price environment in the coming years.

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There has been a lack of investment in mining projects because the capital-intensive requirements of exploration and development as well as the lead-time to finally bring a mine into production have discouraged investors. It has been noted that in Chile where many big copper producing mines are now maturing, fewer new mine projects are being developed. This situation is also further exacerbated in the case of certain minerals such as nickel and copper where the barriers to development seem to be much higher than for zinc. Future nickel production will probably come from the development of new laterite deposits for which the scale of the development, to make them economically viable, translates into extremely high capital costs. Similarly lower grade copper deposits will have to be developed to meet future demand translating into higher capital costs. Development of such projects also requires more time due to their complexity, which is often compounded by their remote locations. In the case of zinc, the barrier to entry is lower due to the smaller size of new zinc mines. As a result, the zinc industry will remain fairly open to new entrants. As a result of the expected continuation of strong demand, all nonferrous mineral and metal prices are expected to continue their upward trend albeit not as strongly as in 2004. Forecasts of annual average price increases are: zinc increasing by 24 percent to $1 300/t; aluminium increasing by 13 percent to $1 940/t; nickel increasing by 5,4 percent to $14 568/t; lead increasing by 2,5 percent to $909/t; and copper increasing by 1,5 percent to $2 909/t. Cobalts average price is anticipated to decrease by 8,9 percent to $22/pound as large volumes of intermediary cobalt has flowed from the DRC to China, tipping the market into a modest surplus. The Mineral Economics Directorate of the Department of Minerals and Energy forecasts that, total export revenue growth for primary nonferrous metals and minerals will grow by 1,4 percent over the 5 year period 2005 to 2009, most of which will be attributed to growth in the export revenue of nickel (Table 6). The improvement in leads performance will be attributed to an increase in annual output from the Black Mountain mine. The outlook for South Africas export revenue from processed nonferrous metals and minerals, excluding titanium slag (Table 7), is less promising. Growth over the period 2005 to 2009 may decline by 1,4 percent as a result of aluminium exports reaching a plateau on the assumption that Alcans aluminium smelter project at Coega might be shelved. TABLE 6: FORECAST OF SOUTH AFRICAS EXPORT REVENUE FROM PRIMARY NONFERROUS METALS AND MINERALS, 2005 2009 ($MILLION FOB REAL 2004 TERMS)
Cobalt++ 16,5 (4,6) 13,0 (3,5) 14,9 (4,1) 16,1 (3,9) 10,7 (2,6) 9,0 (2,3) -9,6 Copper# 74,9 (21,1) 50,8 (13,6) 46,8 (12,9) 45,4 (11,0) 43,6 (10,8) 37,8 (9,8) -10,8 Lead 18,7 (5,3) 24,6 (6,6) 35,1 (9,7) 35,4 (8,6) 36,2 (9,0) 36,7 (9,5) 11,9 Nickel++ 234,6 (66,1) 277,1 (74,3) 260,0 (71,7) 308,7 (75,1) 308,0 (76,2) 297,0 (76,9) 4,0 TOTALx 354,9 (100) 372,9 (100) 362,4 (100) 411,2 (100) 404,1 (100) 386,1 (100) 1,4

Year 2004*

Antimony 10,2 (2,9) 2005 7,4 (2,0) 2006 5,6 (1,5) 2007 5,6 (1,4) 2008 5,6 (1,4) 2009 5,6 (1,5) GROWTH** -9,5
Notes: ++ # x *

Metal-in-concentrate Concentrates and metal Concentrates, blister, anode and cathode copper Total export revenue excludes titanium and zirconium minerals Actual, converted from rand to dollar at a rate of R6,4499/$. Figures in brackets represent percentages of total nonferrous metal and mineral export revenue ** Annual growth rate, compounded, from 2004 to 2009

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TABLE 7:

FORECAST OF SOUTH AFRICAS EXPORT REVENUE FROM PROCESSED NONFERROUS METALS AND MINERALS, 2005 2009 ($MILLION FOB REAL 2004 TERMS)
Antimony trioxide 1,9 (0,2) 1,0 (0,1) 0,9 (0,1) 0,9 (0,1) 0,9 (0,1) 0,9 (0,1) -11,7 Aluminium metal 989,2 (98,2) 1 164,0 (97,9) 1080,0 (97,7) 1050,0 (97,8) 960,0 (97,5) 900,0 (97,3) -1,6 Zinc metal 16,6 (1,6) 23,4 (2,3) 24,0 (2,4) 23,1 (2,3) 24,2 (2,4) 24,0 (2,4) 6,3 TOTALx 1007,7 (100) 1188,4 (100) 1104,9 (100) 1074,0 (100) 985,1 (100) 924,9 (100) -1,4

Year 2004* 2005 2006 2007 2008 2009 GROWTH**


Notes: x *

Total export revenue excludes titanium and zirconium mineral products Actual, converted from rand to dollar at a rate of R6,4499/$. Figures in brackets represent percentages of total nonferrous processed metal and mineral export revenue ** Annual growth rate, compounded, from 2004 to 2009

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ALUMINIUM
LA Themba

INTRODUCTION Aluminium is the most abundant metallic element in the earths crust, and most of the production is derived from bauxite ore. Alumina is extracted from the bauxite by a dissolution process involving caustic soda digestion at high temperatures, and subsequently smelted to produce aluminium. Alumina feedstock for smelters in South Africa and Mozambique is imported from Australia. MAIN MARKETS Aluminium consumption is segmented into five main sectors, viz. transportation, construction, packaging, electrical engineering and general engineering . DEVELOPMENTS DURING 2004/2005 World bauxite resources were estimated at 76,5 billion tons in 2004. The global distribution of bauxite mineral resources was South America (24,8 Mt), Africa (20,4 Mt), Asia (12,8 Mt), Oceania (9,9 Mt) and rest of the world (8,5 Mt). World refined aluminium production increased by 7,2 percent to 30,0 Mt in 2004 (Table 1). Refined aluminium producers in order of importance were China (6,84 Mt), Russia (3,59 Mt), Canada (2,71 Mt), the USA (2,51 Mt), Australia (1,89 Mt) and Brazil (1,46 Mt). South Africas refined aluminium output was 0,89 Mt, ranking eighth in the world. During 2004, world refined aluminium production by region was Asia (9,76 Mt), Europe (8,84 Mt), America (7,47 Mt), Oceania (2,24 Mt) and Africa (1,71 Mt). Refined aluminium production increased in all regions except America, with a 4,0 percent decline, as follows: Asia 19,3 percent, Africa 20,4 percent and Oceania 2,3 percent. Although Asia achieved a 1,56 Mt increase in refined aluminium production, a major producer, China, imposed restrictions on aluminium projects because of rising prices of alumina imports and energy costs. Drought and high electricity cost forced the Beijin government to withdrew power subsidies, compelling companies to cut aluminium smelters output. Russian Aluminium (RUSAL) invested $3 billion in a joint venture with Kazakhstan Eurasian Industrial Association to secure sources of alumina for an aluminium smelter project. Also RUSAL allocated a $3 billion investment for a feasibility study towards developing a 600 kt per annum aluminium smelter in Seberia, in the Irkustsk region, which has abundant energy resources. Construction of the aluminium smelter will start in 2006 and completion is scheduled in 2009. World refined aluminium consumption increased by 8,1 percent to 29,5 Mt compared with 2003. Europe and America achieved relatively low increases of 5,3 percent to 8,4 Mt and 4,2 percent to 7,7 Mt respectively , while Asias consumption grew by 13,1 percent. Aluminium consumption in Africa and Oceania decreased by 2,9 percent to 345 kt and 4,2 percent to 368 kt, respectively. In 2004, the average LME aluminium settlement price was $1 715,38/t, a significant 19,8 percent increase relative to 2003. The monthly average price rose from $1606,83/t in January to $1 730,15/t in April before declining to $1 623,80/t in May. It then gradually increased to a maximum of $1 849,55/t in December. South Africas primary aluminium output increased by 17,8 percent to 866 kt (Table 2) in 2004, following the completion of the Hillside Three Expansion Project at Richards Bay. Local aluminium demand increased from 299 kt to 342 kt, or 14,4 percent. Refined aluminium consumption in the construction, packaging and general engineering sectors market was strong. Exports of aluminium also rose by 22,7 percent to 611 kt compared with 2003.

64

Canadian aluminium producer Alcan with 45 percent share inherited the proposed $2,5 billion Coega Aluminium Smelter Project from the French company Pechiney; which plans to process 660 kt refined aluminium per annum. The Industrial Development Corporation with a 15 percent share remains positive that the one-year delayed project will go ahead. Eskom intends to provide electricity on favourable terms to a Coega aluminium smelter as an incentive to encourage Alcan to proceed. If Alcan gives the go-ahead the construction phase will commence at the end of 2005 and the first refined aluminium output is expected in 2008. Both BHP Billiton expansion projects, at Mozal and the Hillside aluminium smelters in Mozambique and South Africa respectively, commenced production ahead of schedule and cast their first aluminium ingots in 2003, with production gradually increasing throughout 2004. TABLE 1: WORLD ALUMINIUM SMELTER CAPACITY, PRODUCTION AND EXPORTS, 2004
COUNTRY SMELTER CAPACITY kt 6 500 3 420 2 800 4 120 1 850 1 400 1 180 na 695 na na 640 na na 440 na na na na 34 100 PRODUCTION kt 837 594 709 505 889 457 322 864 861 675 642 631 560 % 22,8 12,0 9,0 8,3 6,3 4,9 4,4 2,9 2,9 2,2 2,1 2,1 1,9 1,7 1,5 1,3 1,2 1,1 11,4 100 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 kt 1 679 3 630 2 592 344 1 540 818 1 485 647 51 413 164 390 336 353 148 103 EXPORTS % Rank

China Russia Canada USA Australia Brazil Norway South Africa* India Germany UA Emirates Venezuela UK Bahrain France Spain New Zealand Netherlands Other TOTAL

6 3 2 2 1 1 1

9,6 20,8
14,9 2,0 8,8 4,7 8,5 3,7 0,31 2,4 0,9 2,2 1,9 2,0 0,8 0,6 0,9 3,5 10,3 100

3 1
2 11 4 6 5 7 8 9 15 10 12 11 16 17 13 8 -

524
451 398 350 326 3 428 30 023

316 610 1 800


17 419

Sources: WBMS, 2004, pp 12, 15 USGS, 2004, p 21 * DME, Directorate Mineral Economics.

Source:

WBMS, 2004, p 13

FIGURE 1:

WORLD PRIMARY ALUMINIUM CONSUMPTION BY REGION, 2004

65

FIGURE 2:

WORLD PRIMARY ALUMINIUM PRODUCTION AND SMELTER CAPACITY, 1994 2004

Sources: WBMS, 2004, p 12 USGS, 2004, p 21 DME, Directorate Mineral Economics.

TABLE 2:

SOUTH AFRICAS PRIMARY ALUMINIUM PRODUCTION, LOCAL SALES AND EXPORTS, 19952004
LOCAL SALES Value (FOR) R000 R/t 898 699 7 510 743 663 7 311 027 271 8 291 082 405 8 759 272 373 9 375 775 862 12 111 848 074 12 365 573 821 15 504 320 292 11 095 724 359 11 898 EXPORT SALES Value (FOR) R000 R/t 550 610 6 788 370 993 6 270 063 688 7 166 685 392 7 200 197 552 7 732 090 396 10 361 661 712 11 904 037 008 13 504 981 081 10 004 380 404 10 448

YEAR 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note: Source:

PRODUCTION Mass kt kt 229 120 570 102 673 124 677 123 689 136 674 145 663 230 707 253 735 299 866 342

1 1 1 1 2 3 3 3

kt 85 533 567 512 543 492 476 522 498 611

3 4 3 4 5 5 7 4 6

Unit values calculated before rounding of mass and rand values DME, Directorate Mineral Economics.

FIGURE 3:

SOUTH AFRICAS ALUMINIUM PRICE AND LME CASH SETTLEMENT PRICE (MONTHLY AVERAGES), 1997 2004

Sources: Metal Bulletin, Jan 1997 Dec 2004 DME, Directorate Mineral Economics.

66

OUTLOOK In 2004, the world aluminium market remained tight as demand rose to 30,0 Mt and outstripped the 29,8 Mt supply. The same under-supply scenario is expected in 2005. Several aluminium smelters will close in China, which is expected to reduce world-refined output by 800 1000 kt. Despite planned new aluminium production capacity that is planned to meet an annual average growth is 2,9 percent aluminium demand over five years, additional capacity will not be enough. Smelter capacity will increase by 3 Mt to 34 Mt in 2005, global production is forecast to grow by 4,5 percent to 31,2 kt, but demand will grow by 5 percent to 31,4 kt. The average aluminium price in 2005 is expected to be $1 940/ton. Alcoa and Alcan are in 50 percent joint venture with the Republic of Guinea, in a project to produce 1,5 Mt alumina per annum, and output is scheduled for 2008. In South Africa , primary aluminium production is forecast at 860 kt and 900 kt, during 2005 and 2006 respectively, as production from the commissioned Hillside Three Aluminium Smelter matures. In the South Africa Development Community (SADC), aluminium production is primarily from Mozambique and South Africa, and expected to reach 1 200 kt in 2005. An increase in aluminium production is expected in 2008 from the Coega Aluminium Smelter Project, if Alcan gives the go ahead. FIGURE 4: SOUTH AFRICAS PRIMARY ALUMINIUM EXPORTS BY DESTINATION, 2004

Source:

DME, Directorate Mineral Economics.

FIGURE 5:

SOUTH AFRICAS EMPLOYMENT ALUMINIUM INDUSTRY, 19942004

AND

REMUNERATION:

PRIMARY

Source:

DME, Directorate Mineral Economics.

67

REFERENCES

Metal Bulletin, Jan 2004 Jan 2005. Metal Bulletin Research, Jan 2004 June 2005. Africa.iAfrica.com.African business aluminium smelters drawn to Third World, May 200. U.S Geological Survey, 2004 Mineral Commodity Summaries, January 2004: Internet Website: http://www.usgs.gov World Bureau of Metal Statistics, 2004. World Statistics Yearbook 2004: Ware, Herts, pp 11, 12, 13,15

68

ANTIMONY
L Maphango

INTRODUCTION Stibnite (Sb2S3) is the economic ore of antimony. Stibnite is often found associated with other sulphide minerals and antimony is also produced as a by-product of smelting ores of other metals, primarily gold, silver and copper. Secondary antimony is produced from recycled scrap, particularly antimonial lead battery scrap. Antimony metal is used as a hardener in lead for storage batteries, and it is also used in solders and other alloys. Antimony trioxide is the most important of the antimony compounds and is mainly used as a flame-retardant in textiles, plastics, adhesives and building materials, and as a filler and decolouriser in glass, plastics and ceramics. Other applications are in semiconductors for making infrared detectors, diodes and Hall-effect devices. DEVELOPMENTS DURING 2004/2005 During 2004, world mine production of antimony decreased marginally by 0,16 percent to 154,57 kt compared with 2003 (Table 1). The major producers were China (126,00 kt), followed by CIS (16,78 kt), South Africa (4,97 kt), Bolivia (2,48 kt) and Australia (1,80 kt). China contributed 81,5 percent of world total output. Republic Gold announced that a significant antimony deposit graded at 2,5 percent had been found at its Northcote Project in Queensland, Australia. In China, production returned to full capacity (24 kt/annum) at Hsikwangshan Twinkling Star Cos Lengshuijiang City facilities in central Hunan Province. The local government of the Guangxi Autonomous Region, southwest China, announced that it had granted Chinas state-owned Minmetals Group the right to redevelop its Nandan antimony mines, which are the largest in China. Minmetals is to undertake a geological feasibility study at the mine area, which may take a year to complete. The Lingye Smelting lead project with projected capacity of 100 kt per year is expected to commence production at the end of 2006. The plant will also recover bismuth, antimony and gold. Concern over high-bismuth antimony from China prompted Metal Bulletin to adjust its specification to reflect a benchmark quality. Effective 1 October 2004, the MB price quotation specifies antimony having maximum bismuth content of 100 parts per million. The shortfall of antimony in China, the major factor causing the escalation in price, was attributed to the following: Depletion of stockpiles due to the closure of mines by the government following flooding in Nandan Province; acute shortage of low-bismuth metal which led to a premium for good-quality material; rising demand (about 20 percent annually) for antimony in China owing to the growing manufacturing sector and reduction of tax rebates, which have led to less antimony being exported; lack of investment in Chinas antimony industry. South Africa is a significant producer of high-grade antimony concentrates, accounting for 3,3 percent of the worlds production. Consolidated Murchison mine in Limpopo Province is the only producer of antimony in South Africa. The mine supplies concentrate to an adjacent plant, Antimony Products, which produces crude antimony trioxide for refining overseas. The mine also produces gold (about 1 000 kg per year) as a by-product. The remaining life of the mine is approximately seven years, which could be extended by five years if the Monarch shaft is deepened. During 2004, South Africas antimony concentrate production decreased by 6,1 percent to 4 967t, compared with 2003 (Table 2). Local sales of antimony concentrate decreased by 22,8 percent to 213 t while exports reduced by 5,1 percent to 4 762t. Antimony trioxide production decreased by 4,5 percent to 5 822t. Domestic sales of antimony trioxide decreased by 22,6 percent to 233t, while export sales fell by 2,7 percent to 5 629 tons. In 2004, the average annual MB antimony price was $2 713/t, 16,1 percent higher than in 2005. 69

TABLE 1:

WORLD RESERVES AND PRODUCTION OF ANTIMONY CONCENTRATES, 2004


RESERVE BASE % 61,5 19,7 6,4 8,2 2,3 1,9 100,0 PRODUCTION % 81,5 10,8 3,3 1,6 1,2 0,4 0,3 0,3 0,3 <0,1 0,3 100,0

COUNTRY China CIS South Africa Bolivia Australia Mexico USA Guatamala Peru Canada Other TOTAL kt* 2 400 770 250 320 x x 90 x x x 75 3 900

Rank 1 2 4 3 5 -

t* 126 000 16 780 4 967 2 476 1 800 595 501 400 400 100 549 154 568

Rank 1 2 3 4 5 6 7 8 8 10 -

Sources: USGS, 2005, p 23 WBMS, 2005, p 18 DME, Directorate Mineral Economics. Notes: * x Metal content in concentrates and ores Not specified, but estimates have been included in Other

TABLE 2:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF ANTIMONY MIC, 2000 - 2004
LOCAL SALES (FOR) Mass Value Unit Value t R000 R/t 350 3 620 10 342 228 2 771 12 154 330 6 774 20 527 276 5 475 19 838 213 3 722 17 476 EXPORT SALES (FOB) Mass Value Unit Value t R000 R/t 4 146 25 905 6 248 4 500 26 830 5 962 5 519 65 103 11 796 5 020 63 649 12 679 4 762 66 149 13 891

YEAR PRODUCTION Mass t 2000 3 710 2001 4 827 2002 5 746 2003 5 291 2004 4 967
Note:

Unit values were calculated before rounding of mass and rand values

OUTLOOK In 2005, global output of antimony concentrate is expected to remain at the same level as new projects resulting from investment in antimony mining to take advantage of the robust antimony market, are still in the development stage. Therefore, output in China is forecast to remain unchanged. Current trends suggest that antimony prices could exceed $3 500/t, as the shortage of supply is continuing to squeeze the market. The antimony industry will remain vulnerable to volatile prices, however, the implementation of new blast furnace restoration technologies in China, particularly by the smaller producers, will ease price fluctuations. Although antimonys applications in batteries are increasing, battery technology changes (including maintenance free batteries) and recycling have reduced the volume of primary antimony consumed per battery. Future demand growth will depend on consumption of antimony trioxide in flame-retardants, spurred on by tighter fire regulations and building codes. Other growth areas include the use of antimony trioxide in polymerisation catalysts in plastics, and sodium antimonite in certain glass grades. In 2005, South Africas antimony concentrate production is expected to remain at the same level while trioxide output is forecast to decline by 14,3 percent to 4 990 tons.

70

TABLE 3:
YEAR 2000 2001 2002 2003 2004

SOUTH AFRICAS ANTIMONY MINES: AND REMUNERATION, 2000 2004


EMPLOYEES 1 203 1 245 1 384 1 428 1 308 TOTAL REMUNERATION R000 36 406 43 215 47 829 61 421 62 024

REFERENCES DME, Directorate Mineral Economics. Fortnightly Comment, Antimonys allure regained, 17 June 2005 Metal Bulletin, Jan 2003 December 2004, Internet Website, http://www.metalbulletin.com World Bureau of Metal Statistics, 2005. World Statistics Yearbook: 2005 U.S. Geological Survey, 2005 Mineral commodity Summaries, January 2005: Internet Website, htt://www.usgs.gov U.S. Geological Survey, 2005 Mineral Industry Surveys, August 2004: Internet Website, htt://www.usgs.gov American Metal Market, Find Articles Jan 2004 June 2005: Internet Website, http://www.findarticles.com Metorex Groups 2005: Internet Website, http://www.metorexgroup.com

71

COBALT
A J Harding

DEVELOPMENTS DURING 2004/2005

World Developments Estimated world mine production of cobalt decreased by 3,1 percent to 46 900t (Table 1) in 2004 from a revised figure of 48 400t in 2003; world refined production, on the other hand, rose by 10,2 percent to 47 913t (Table 2). The DRC was the largest producer by country contributing 23,5 percent (11 000t) to newly mined output, followed by Zambia with 19,2 percent (9 000t) and Australia with 14,9 percent (7 000t). Canada (9 457t) was the top producer of refined cobalt while China (8 000t) and Finland (7 893t) ranked second and third, respectively. Chinas refined cobalt output, which has steadily been moving up through the world production ranking order since 2000, was boosted by a massive increase of 148 percent in 2003 followed by another big rise of 75 percent in 2004.
TABLE 1:
COUNTRY D R Congo Zambia Australia Canada Russia Cuba New Caledonia Brazil Morocco South Africa^ Other TOTAL Mt 4 700 680 1 700 350 350 1 800 860 40 na 15 2 505 13 000

WORLD RESERVES AND MINE PRODUCTION OF COBALT*, 2004


RESERVE BASE % 36,2 5,2 13,1 2,7 2,7 13,8 6,6 0,3 0,1 19,3 100,0 MINE PRODUCTIONe % Rank 23,5 1 19,2 2 14,9 3 11,1 4 10,2 5 7,2 6 3,2 7 2,8 2,8 0,7 4,5 100,0

Rank 1 4 3 5 5 2 7 8

kt 000 000 000 200 800 400 500 300 300 309 2 091 46 900 11 9 7 5 4 3 1 1 1

Sources: USGS, January 2005, p51 ^ Mineral Economics Directorate Notes: e * # Estimate Metal Content Cubas mine production exported to Canada New Caledonia production exported as concentrate

Total refined cobalt production amounted to 47 913t in 2004, an increase of 10,2 percent compared with total refined output in 2003. An additional 1 632t was released from stockpile by the USAs Defence Logistics Agency (DLA), making a total of some 49 545t available to the market during 2004.

72

TABLE 2:

REFINED COBALT PRODUCTION BY COUNTRY, 2003 AND 2004 COUNTRY 2003


2004 t 9 457 8 000 7 893 5 791 4 524 3 879 2 947 1 593 1 155 735 545 429 309 199 457 47 913 RANK* 1 2 3 4 5 6 7 8 10 11 12 13 14 15

Canada China+ Finland Zambia Russia Australia Belgium Morocco Brazil D R of Congo India Japan South Africa France Other TOTAL
Source: Notes: Cobalt News, April, 2005, p 2 +

8 4 7 6 4 3 1 1 1 1

43

t 697 576 990 620 654 839 704 431 097 200 255 379 271 181 586 480

Chinese production excludes Umicore production in China, which is included in Table 3

Major changes in membership of the Cobalt Development Institute (CDI) occurred in 2004. Giant Russian mining company Norilsk Nickel was accepted as a new member while the DRCs Gecamines lost its longstanding membership. Decreasing concentrate availability was largely responsible for the decline in Chambisi Metals cobalt production (Table 3). In contrast, the significant increase recorded by Umicore was the result of the company responding to higher cobalt prices, while Incos rise in output reflected a return to normal levels of production after a protracted strike affected company productivity in 2003. Increased output from CTT, a subsidiary of Morroccan mining group MANAGEM, extended the steady growth in production levels recorded by the company during the previous five years. TABLE 3:
COMPANY OMG Falconbridge Norilsk Chambisi ICCI Umicore QNI CTT Inco Sumitomo Eramet TOTAL
Source:

CDI MEMBER COMPANIES REFINED COBALT PRODUCTION,2003 AND 2004


COUNTRY Finland Canada Russia Zambia Canada Belgium Australia Morocco Canada Japan France 2003 (t) 7 990 4 556 4 654 4 570 3 141 1 704 1 800 1 431 1 000 379 181 31 406 2004 (t) 7 893 4 670 4 524 3 769 3 225 2 947 1 900 1 593 1 562 429 199 32 711 RANK 1 2 3 4 5 6 7 8 9 10 11

Cobalt News, April, 2005, p3 *

DLA sales amounted to 1 077t during 2003. Cobalt stocks totaled some 1 243t in DLA warehouses at the end of 2004, down 555t from accumulated stocks in 2003, which means that stockpiles could be exhausted in 2005 if selling continues at the authorized rate of 2 700t per annum. World cobalt mine production is mainly a byproduct of either nickel or copper mining. Currently, about 36 percent of global cobalt output is a byproduct of nickel production. Nickel production from a spate of new projects is expected to increase over the next decade and with the current tendency to produce cobalt irrespective of price or demand for the metal, these new projects alone could well supply some 75 percent of the annual anticipated increase in cobalt demand. 73

Chinese economic growth currently remains the main driver of worldwide demand for the metal. Cobalt demand in China amounted to 9 376t in 2004 and prospects look good for continuing high levels of consumption in an economy that has grown at an average annual rate of 9,4 percent since 1978 and is anticipating annual GDP increases of above 7 percent per annum in the coming decade. Chinese resources of cobalt-bearing ore, however, are insufficient to satisfy domestic demand and cobalt processing facilities therefore depend on imported concentrates. Most of these originate in the DRC and supplies could be in jeopardy should the cobalt price fall below $12/lb. Bearing in mind that Chinas appetite for cobalt-bearing material could be sustained for some time to come, $12/lb could provide crucial support at the lower end of the cobalt price range for the foreseeable future. During 2004 batteries overtook superalloys as the largest consumer of cobalt by sector (Fig, 1). Batteries now account for 21 percent of worldwide cobalt consumption. Superalloys captured 20 percent of the market while the balance was attributed to: catalysts and ceramics/enamels etc, (11 percent each), hard materials and tyres-adhesives etc, (10 percent each), magnets (7 percent) and feedstuffs-electrolysis-recording etc, (6 percent). FIGURE 1: MAJOR USES OF COBALT IN 2004

Source:

Cobalt Development Institute (CDI)

Cobalt is an important constituent of rechargeable Li-ion batteries which during the last few years have been replacing Nickel Metal Hydride (NI-MH) batteries in mobile phones, portable PCs and portable electronic devices. Rechargeable batteries accounted for about $6 billion of the $35 billion battery market in 2004. Japan used to dominate the booming rechargeable battery market, but since 2001 the country has seen its market share being steadily eroded by rising consumption levels in China and Korea. Japans market share has fallen from 82 percent in 2001 to 65 percent in 2004. Cobalt prices remained exceptionally buoyant during 2004 scaling levels close to those seen during the last major bull market of the mid-1990s (Table 4). Strengthened by a sudden rise in demand at the end of 2003, the cobalt price for 99,8 percent material averaged $26,07/lb for the month of January 2004. The price peaked in February at $27,61/lb and monthly averages remained significantly above $20/lb until November, dropping to $17,98/lb in December. During the first half of 2005 market activity subsided considerably largely due to lower demand from Chinese battery manufacturers. The average monthly price of high grade material has therefore trended lower slumping to $14,27/lb in June. In 2004, 99,8 percent cobalt attained an annual average price of $24,15/lb, which more than doubled the 2003 average of $10,77 per pound.

74

TABLE 4:
MONTH January February March April May June July August September October November December AVERAGE
Source: Note: +

COBALT PRICES+, 2002 - 2005


2002 $/lb 7,54 7,17 6,80 6,88 8,64 7,50 7,08 6,31 6,90 6,51 6,66 6,54 6,67 2003 $/lb 7,60 7,91 9,12 9,54 9,81 10,53 10,65 10,83 10,56 10,88 13,86 17,98 10,77 2004 $/lb 26,07 27,61 27,54 26,88 25,93 25,65 25,08 24,18 23,55 22,19 17,18 17,96 24,15 2005 $/lb 18,98 18,30 16,16 17,55 16,80 14,27

Metal Bulletin

Average Metal Bulletin free market buying and selling price for 99, 8 percent cobalt

Developments in South Africa and Africa Cobalt is produced as a by-product of six platinum-group metal mines and one nickel mine in South Africa. Cobalt production rose by 13,8 percent to 308 929 kg in 2004 (Table 5). Local sales value increased by 86 percent to R5,7 million despite a drop in local sales mass of 616 kg and export sales revenue rose by 86,0 percent to R83,2 million. Because of the strengthening of the rand between 2003 and 2004, earnings in US dollars from export sales of cobalt are even more striking recording a massive increase of 169 percent to $12 9 million from $4,2 million in 2003.
During May 2005, South African junior mining company Metorex increased its stake in the Ruashi Etoile copper-cobalt mine in the DRC to 61 percent, paying $3 million to Sentinelle Global Investments, also domiciled in South Africa. The company has an option to raise its investment in Ruashi to 67 percent in May 2006 at a cost of $4,5 million. Metorex also has access to about 3,2 million tons of stockpiled material at Ruashi - Etoile in Katanga province close to the Zambian border. The project has an expected life of fifteen years and will produce between 7 000t and 10 000t of copper and between 1 100t and 1 300t of cobalt per annum. During the first half of 2005, Chambishi Cobalts smelter in Zambia was reduced to 87 percent of its capacity as a result of a protracted refurbishment programme at its Luanshya mine. The reduced feed to the smelter is expected to last until September 2005. OUTLOOK After expanding spectacularly at around 30 percent per annum over the last five years, the cobalt market is expected to slow down to some 6 to 7 percent during the next five years. However, the key to future cobalt price prospects in a very price sensitive market is the outlook for rechargeable batteries, currently the largest consumer of cobalt. Over the next 10 years cobalt-bearing Li-ion batteries should increase their share of the market at the expense of NiMH batteries. It is anticipated that this growth will be driven largely by growing demand for cellular phones and portable electronic equipment such as PCs. Furthermore, the stronger growth in demand will also hasten the shift in the main market for these products from Europe, Japan and the USA to China, India Asia, the Middle East and Eastern Europe. Cobalt is also a component of batteries being manufactured to power hybrid motor vehicles. Hybrid vehicle market penetration is projected to increase to 10 to 15 percent of the vehicle market by 2014. The subdued superalloy market is unlikely to remain weak for much longer. Airbus and Boeing are predicting a return to growth conditions in the aerospace market, which could be in the order of 8,5 percent per year between 2005 and 2020. Another more long-term growth sector is in gasto-liquid technology where cobalt is used as a catalyst in the process that converts natural gas into easily transportable liquid products. 75

An average annual price of about $16,00/lb is forecast for 98,8 percent grade cobalt in 2005. Over the longer term, the metal could trade higher (up to $20/lb) during the next three years, but the expected increased production coming on stream thereafter could trigger a fall in the price. Nevertheless, on the back of continuing Chinese demand for cobalt ore the price is unlikely to fall below the support level of $12,50/lb for the foreseeable future. REFERENCES Cobalt News ,April, 2005, London, pp 2 - 4 U,S, Geological Survey, Mineral Commodity Summaries, January 2005: Internet Website, http://www,usgs,gov

76

COPPER
LA Themba

DEVELOPMENTS DURING 2004/2005 World copper mine production increased by 5,9 percent compared with 2003 to 14,5 Mt (Table 1). Major copper producers in descending order were Chile (5,42 Mt), USA (1,16 Mt), Peru (1,04 Mt), Australia (0,85 Mt), Indonesia (0,82 Mt) and Russia (0,75 Mt). Zambia and South Africa were the leaders in Africas copper mine production at 410 kt and 86kt, respectively. The large increase in production that occurred in Chile was attributed to a phase-four expansion project at BHP Billitons Escondida, ramping up output to 237 kt, and increasing annual production by 400 kt to compensate for falling grades. Since 2001, intermittent stoppages in production at Escondida reduced output by 160 kt and at Caldeco by 100 kt. Peru had the largest year-on-year increase of 16,4 percent output. Global refined copper consumption was 16,4 Mt in 2004, representing a 6,4 percent improvement compared with 2003. The high copper prices, driven by low inventory levels in refined copper, encouraged reversal of cutbacks that were initiated prior to 2004, and added almost 1 Mt to supply in 2004. All regions experienced significant increases in copper consumption; the highest copper consuming region was Asia (7,74 Mt) driven by Chinas consistent appetite for copper at 3,2 Mt. Refined copper consumption in other regions were as follows: Europe (4,56 Mt), America (3,74 Mt), Africa (Oceania (0,17 Mt) and Africa (0,16 Mt). Global copper consumption grew by 5,7 percent in 2004, with increases in the USA (7,0 percent), Asia (6,8 percent), China (5 percent) and Western Europe (1 percent). The world copper market was very tight as demand outstripped supply. The refined copper production deficit totalled 344 kt in 2003, which increased to 719 kt in 2004. The scarcity of copper concentrates forced several Chinese copper smelters to close temporarily. The London Metal Exchange (LME) copper settlement price averaged $2 865/t in 2004, a massive 61,1 percent rise compared with $1 779/t in 2003. The LME copper price averages at $2 423/t in January, increased to $3 009/t in March before declining to $2 687/t in June, and then gradually rose to the year-maximum of $3 145/t in December. Improved demand for copper and the fall in LME warehouse stock levels from 950 kt in 2002, 432 kt in 2003, to 49,4 kt in 2004, contributed to the rise in copper prices. The average South African price was R19 235 per ton in copper mine production or 23,7 percent higher than in 2003. Metorex South Africa discontinued the OOkiep copper slag treatment operation and closed the Maranda zinc-copper mine in South Africa and the Chibuluma copper mine in Zambia. However Metorex upped its funding for the Ruashi Etoile copper mining project in the Democratic Republic of Congo to R250 million. At Palabora Copper Mine in South Africa, the introduction of the underground block caving mining system has proven to be problematic, and bottlenecks at ore withdrawal points were encountered. Secondary breakage mechanisms (crushers) were installed to alleviate these conditions. The run-of-mine production has decreased from 82 kt per day (open pit) maximum to the present 30 kt per day (underground operation). In 2004, South Africas mine production was 102,57 kt and the refined metal production totalled 91,50 kt representing decreases of 15,1 percent and 17,9 percent, respectively, compared with 2003. Local sales mass increased by 10,3 percent to 83,9 kt whereas export sales mass decreased by 36,9 percent to 29,3 kiloton. OUTLOOK Global copper mine output is expected to continue to rise by 8,0 percent to 15,66 Mt in 2005, following expansions and restarting mining areas put on hold in various major copper mines in 77

Chile, the USA Australia and Indonesia. High copper prices have also motivated smaller copper mines to increase copper concentrate production. Canadian First Quantum Minerals with a 44,0 percent share ownership in Mopani Copper mine in Zambia is planning to source 170 kt copper concentrates in the Congo. This will contribute to the anticipated increase in Zambias copper production to 500 kt in 2005. World refined copper production is anticipated to increase by some 3,0 percent. Global copper concentrate is expected to be in surplus in 2005, because of limited copper smelter capacity. Furthermore, shutdowns of numerous copper smelters due to planned maintenance will aggravate copper concentrate bottlenecks and reduce refined copper output. World copper demand is forecast to grow by 4,5 percent in 2005. Improved copper demand will be driven by global economic growth, led by the economic recovery in the US and Japan. In addition, ongoing Gross Domestic Product (GDP) growth in China at the rate of 8,0 percent annually will lead to an increasing copper usage in improving standards of infrastructure, construction, housing and consumer goods. As global copper supply will struggle to keep up with demand, and the London Metal Exchange copper inventory is anticipated to decline to low levels, it is expected that the annual average LME copper price will increase to $ 3 004/t in 2005. TABLE 1:
COUNTRY Chile USA Peru Australia Indonesia Russia China Canada Kazakhstan Zambia Mexico South Africa+ Other TOTAL Mt 360 70 60 43 38 30 63 20 20 35 40 13 110 940

WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF COPPER, 2004


RESERVE BASE* % Rank 38,3 1 5 7,4 2 1 6,4 4 1 4,6 5 4,0 7 3,2 9 6,7 3 2,1 10 2,1 10 3,7 8 4,3 6 1,4 14 15,7 1 100,0 14 PRODUCTION* % Rank 37,4 1 2 8,1 2 7,2 3 5,9 4 5,7 5 5,1 6 4,2 7 3,9 8 3,2 9 2,9 10 2,8 1 1 0,1 18 13,3 3 100,0 11 EXPORTS# % 36,0 3,8 3,9 3,4 7,5 4,5 0,7 5,4 3,4 3,0 0,9 0,4 27,1 100,0

kt 417 160 036 854 823 745 608 563 462 412 399 86 923 488

kt 975 435 440 387 88 508 80 609 391 339 107 29 079 351

Rank 1 5 4 7 10 3 14 2 6 8 9 11

Sources: WBMS, 2005, pp 24, 27, 31, 32 USGS, 2004, p 57 + DME, Directorate Mineral Economics. Notes: * Metal content # Metal content of concentrates, blister, anode and refined copper Totals may not add up due to rounding

78

TABLE 2:

SOUTH AFRICAS AND LME CASH SETLEMENT COPPER PRICE, 20032004 (MONTHLY AVERAGES)
S A COPPER PRICE LME 2003 R/t R/t 16 294,2 13 301,23 16 306,1 15 244,2 15 889,7 16 356,3 16 564,9 19 038,3 15 281,5 16 911,1 15 775,1 17 610,2 15 138,2 15 841,6 14 695,3 16 335,3 14 815,8 16 428,3 14 902,9 18 199,3 15 242,9 16 953,4 15 764,7 16 785,2 15 555,9 19 235,80 CASH SETTLEMENT PRICE 2004 2003 R/t $/t 14 302,0 2 423,6 16 13 975,5 2 759,5 18 13 338,4 3 008,7 19 12 239,6 2 948,7 19 12 642,5 2 733,5 18 12 323,4 2 686,7 17 12 910,5 2 806,7 17 13 008,6 2 846,1 18 13 099,1 2 894,9 18 13 366,7 3 012,3 19 13 832,8 3 122,9 18 14 411,2 3 145,4 18 13 370,90 2 865,8 18

MONTH January February March April May June July August September October November December YEAR AVERAGES

$/t 1 647,7 1 683,8 1 659,0 1 587,5 1 648,3 1 686,5 1 710,0 1 760,3 1 789,5 1 920,5 2 055,4 2 201,3 1 779,14

2004 R/t 766,2 678,0 885,7 324,9 538,9 288,9 205,9 378,7 955,5 254,0 919,5 030,5 435,5

Sources: Business Day, Jan 2004Dec 2004 Metal Bulletin, Jan 2004Dec 2004

TABLE 3:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF COPPER, 19952004


LOCAL SALES Value kt R 000 81 888 337 77 779 367 83 919 194 74 711 048 68 667 943 76 975 095 70 966 874 80 1 381 519 76 1 073 734 84 1 542 829 EXPORT SALES Value Unit R000 784 808 709 370 762 354 770 802 723 591 598 509 827 874 761 829 567 502 583 293

YEAR PRODUCTION kt 162 152 153 166 144 137 141 130 121 103

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note:

Unit Value R/t 10 919 10 074 11 104 9 604 9 825 12 807 13 751 17 197 14 114 18 381

Mass kt 80 77 77 86 77 49 63 51 46 29

Value R/t 9 825 9 267 9 861 8 912 9 381 12 338 13 043 14 909 12 229 16 495

Unit values were calculated before rounding of mass and rand values

TABLE 4:

SOUTH AFRICAS COPPER MINES: EMPLOYMENT AND REMUNERATION, 20002004


EMPLOYEES 4 112 5 742 5 107 4 952 4 043 TOTAL REMUNERATION R000 355 010 442 852 343 260 438 181 494 533

YEAR 2000 2001 2002 2003 2004

REFERENCES World Bureau of Metal Statistics, 2005. World Metal Statistics Yearbook 2005: Ware, Herts, pp 75 U.S. Geological Survey, 2004. Mineral Commodity Summaries, July 2004: Internet website: http://www.usgs.gov

79

LEAD
L Maphango

DEVELOPMENTS DURING 2004/2005 In 2004, world lead mine production decreased slightly by 1,3 percent to 3,06 Mt compared with 2003 (Table 1). China was the leading producer (0,95 Mt), followed by Australia (0,64 Mt), the USA (0,44 Mt), Peru (0,31 Mt) and Mexico (0,13 Mt). Africa contributed 3,4 percent to the world output and Morocco (46,0 kt) was the major producer in Africa followed by South Africa (37,5 kt). South Africas lead mine production declined by 6,2 percent to 37,5 kt (Table 2). This reduction in production was caused by the depletion of a portion of the Broken Hill orebody at Black Mountain mine, which contained higher-grade ore. In 2004, South Africas lead concentrate exports decreased by 29,7 percent to 44 kt compared with 2003. World refined lead metal output increased marginally by 1,1 percent to 6,8 Mt. The leading three producers of refined lead were China (1,81 Mt), USA (1,27 Mt) and Germany (0,41 Mt), followed by Japan, Australia, UK, Mexico, Canada, Korea Republic, and Italy. Significant increases in production occurred in China (15,9 percent) and Germany (15,1 percent). In 2004, production of refined lead by region was Asia (2,88 Mt), America (2,01 Mt), Europe (1,55 Mt), Oceania (0,28 Mt) and Africa (0,10 Mt). Africas refined lead output in 2003 decreased significantly by 26,8 percent because of a huge decline of 59,0 percent in Moroccos production. Output in Asia rose by 9,6 percent to 2,88 Mt, offsetting the reductions in other regions. Asia and America dominated the refined lead market contributing 42,2 percent and 29,5 percent respectively to global output. World consumption of lead metal grew by 4,1 percent to 7,08 Mt compared with 2003. Production of lead metal in the western world was 4,59 Mt in 2004, 186 kt lower than in 2003, while demand improved from 5,29 Mt in 2003 to 5,37 Mt in 2004, representing an increase of 1,5 percent. Consumption of refined lead metal in China increased by 14,1 percent to 1,35 Mt. The major factors driving growth in the lead metal market were the higher use in China for vehicle fleet expansion, production of automotive batteries, and investment in the telecommunication and information technology industries. The decrease in LME stock levels during 2004, bears testimony to this growth. LME lead metal stocks decreased steadily from 88,5 kt in January to 40,5 kt in December 2004, representing a decline of 54,2 percent. South Africas secondary lead metal production decreased by 1,2 percent to 64,1 kt during 2004 (Table 2). Refined lead consumption, including imports, increased by 2,5 percent to 80,7 kt. South Africa imported 16,6 kt of lead metal, reflecting an increase of 20,3 percent compared with 2003. The LME price started at $758,38/t in January and reached a maximum of $974,90/t in December 2004 (Table 3). The average annual lead cash settlement price in 2004 was $886,63/t, reflecting an impressive increase of 72,2 percent compared with 2003. The record high prices resulted from strong demand in China and diminishing stock levels. South Africas annual average price was R5 638,14/t in 2004, 47,4 percent higher than the previous year. During the year, South Africas monthly average lead price followed a similar pattern to the LME prices, starting with a minimum of R4 534,44/t in January and reaching a maximum of R6 150,12/t in October before decreasing slightly to R5 880,93/t in December 2004.

80

TABLE 1:
COUNTRY

WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF LEAD, 2004


PRODUCTION# kt % Rank 951 31,1 1 642 21,0 2 438 14,3 3 306 10,0 4 128 4,2 5 77 2,5 6 65 2,2 7 55 1,8 8 51 1,7 9 38 1,2 13 3 058 100,0 EXPORTS## % 17,6 18,7 13,9 11,8 1,0 1 5,9 2,5 3,8 1,2 100,0

RESERVE BASE# Mt % Rank China 36 25,7 1 Australia 28 20,0 2 USA 20 14,3 3 Peru 4 2,9 5 Mexico 2 1,4 7 Canada 9 6,4 4 Ireland 1 0,7 8 Sweden 1 0,7 8 India 1 0,7 8 South Africa* 3 2,1 6 TOTAL 140 100,0 Sources: ILZSG, May 2005 USGS, 2005 * DME, Directorate Mineral Economics. Notes: # Metal content ## Metal and contained metal

kt 448 475 354 299 25 151 64 97 31 2 539

Rank 2 1 3 4 5 5 10 7 14 -

TABLE 2:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF LEAD*, 1995 - 2004
LOCAL SALES Value (FOR) R000 R/t 3 509 1 792 132 2 122 6 370 2 839 13 190 3 012 19 755 2 989 22 147 3 716 22 923 4 782 1 284 3 789 EXPORT SALES Value (FOB) R000 R/t 98 286 1 142 191 136 2 206 153 771 1 791 116 029 1 514 90 758 1 346 104 300 1 372 92 825 1 862 88 833 2 214 108 600 2 470 120 599 3 895

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

PRODUCTION Mass kt 88 89 83 84 80 75 51 50 40 37

Mass t 1 958 62 2 244 4 379 6 610 5 949 4 882 339 -

Mass kt 86 87 86 77 67 76 50 41 44 31

Metal-in-concentrate Unit values calculated before rounding of mass and rand values

TABLE 3:

SOUTH AFRICAN AND LME SETTLEMENT PRICES (MONTHLY AVERAGES), 2003 AND 2004
SOUTH AFRICAN 2003 R/ton* 3 987,03 3 878,15 3 959,19 3 684,04 3 377,51 3 574,29 3 707,13 3 903,09 3 683,18 3 828,22 4 108,35 4 207,16 3 824,78 LEAD PRICE 2004 R/ton* 4 534,44 5 294,78 6 021,85 5 903,96 4 978,28 5 510,16 5 606,91 5 779,42 6 003,29 6 150,12 5 993,54 5 880,93 5 638,14 LME CASH SETTLEMENT PRICE 2003 2004 2004 R/ton $/ton R/ton 3 859,84 758,38 5 246,40 3 950,86 888,47 6 013,70 3 673,41 886,48 5 879,84 3 370,80 753,67 4 939,33 3 552,82 808,89 5 485,97 3 698,62 871,32 5 607,03 3 885,61 939,59 5 758,47 3 670,38 921,79 5 952,46 3 818,09 935,45 6 124,30 4 089,99 932,76 5 958,10 4 187,47 967,80 5 860,80 4 509,46 974,90 5 588,42 3 855,61 886,63 5 701,23

MONTH January February March April May June July August September October November December AVERAGE

2003 $/ton 444,60 475,83 456,67 437,38 463,50 468,02 514,78 496,52 521,27 587,33 622,33 692,07 515,03

Sources : ILZSG, May, 2005 * Frys Metals, 2005

81

TABLE 4:

SOUTH AFRICAS LEAD/ZINC MINES: EMPLOYMENT AND REMUNERATION, 2000 2004


EMPLOYEES 1 346 1 812 1 780 1 772 1 593 TOTAL REMUNERATION R000 97 955 114 422 122 659 127 268 115 082

YEAR 2 000 2 001 2 002 2 003 2 004

OUTLOOK According to the International Lead and Zinc Study Group (ILZSG), global lead mine production is forecast to increase by 10,8 percent to 3,37 Mt in 2005, due to expected rises in production in Australia (23 percent), China (12 percent) and Europe (11,5 percent). World refined lead metal output is anticipated to reach 7,09 Mt in 2005, 3,7 percent higher than in 2004. This growth will be led primarily by expansions in China and Europe. For the first time in five years, the Group is expecting the European lead metal output to increase in 2005 by 8,8 percent. Lead metal demand in China is predicted to increase by 8,1 percent to 1,46 Mt; this would be the main driving force behind an anticipated 2,5 percent rise in world consumption to 7,25 Mt. The strong demand is being stimulated by the expansion of the automobile sector in China. Consumption in both Europe and the USA is expected to be similar to that of 2004, owing to a shift in battery manufacturing to lower cost producing countries in recent years. Chinese net exports of refined lead metal to the West are expected to decline by 6 percent to 380,0 kt. in 2005. South Africas lead mine production is forecast to rise by 10,7 percent to 41,5 kt during 2005, due to increasing tonnage that will be hoisted. Lead-in-concentrate exports are projected to reach 54,6 kt in 2005, 76,1 percent higher than in 2004. Secondary lead production is anticipated to improve to 66,5 kt, 2,4 kt more than in 2004. REFERENCES International Lead and Zinc Study Group, LZ/SC/594 of May 2005. International Lead and Zinc Study Group, Lead and Zinc Market Review and Outlook for 2005. International Lead and Zinc Study Group, Monthly Bulletin on Lead and Zinc Statistics, May 2005. Metal Bulletin Research, Base Metals Monthly, May 2005. U.S. Geological Survey, 2005 Mineral Commodity Summaries, January 2005: Internet Website, htt://www.usgs.gov

82

NICKEL
A J Harding

DEVELOPMENTS DURING 2004/2005 World nickel mine production grew by 3,4 percent to reach 1295,4 kt in 2004. Russia was once again the largest producer by country contributing 18,5 percent to total world output, followed by Australia and Canada with 14, 6 and 14,4 percent, respectively (Table 1). Among the five top global producers, Russia, Australia and Canada recorded expanded output while production declined in Indonesia and New Caledonia. The most significant growth in mine production occurred in Canada with total output climbing to 186,5 kt from 162,8 kt in 2003, an increase of 14,6 percent. Total world refined production increased by 4,5 percent to 1 254,3 kt. Russian production of refined metal grew by marginal 2 kt to 262 kt compared with 2003; Australian output fell by 3.6 percent while Canadian production jumped by 21,8 percent to 151,5 kt. The refined nickel market was dominated by Russia, Japan, Australia and Canada. These four countries accounted for 56,3 percent of total world refined production, while China, maintaining its current reputation as the worlds most dynamic industrial growth centre, increased its refined output by 12,2 percent to 72,6 kilotons. TABLE 1:
COUNTRY Mt Russia 9,2 Australia 27,0 Canada 15,0 Indonesia 13,0 New Caledonia 12,0 Colombia 1,1 Cuba 23,0 China 7,6 South Africa* 12,0 Brazil 8,3 Dominican Republic 1,0 Botswana 0,9 Greece 0,9 Venezuela 0,6 Philippines 5,2 Zimbabwe 0,3 Finland Norway Japan UK France USA Other TOTAL 5,1 142,2 3,6 100,0

WORLD NICKEL RESERVES, MINE AND REFINED PRODUCTION, 2004


RESERVE BASE % Rank 6,5 7 19,0 1 10,5 3 9,1 4 8,4 5 0,8 11 16,2 2 5,3 9 8,4 5 5,8 8 0,7 12 0,6 13 0,6 13 0,4 15 3,7 10 0,2 16 MINE PRODUCTION REFINED PRODUCTION Kt % Rank Kt % Rank 240,0 18,5 1 262,0 20,9 1 188,6 14,6 2 123,3 9,8 4 186,5 14,4 3 151,5 12,1 3 142,7 11,0 4 7,3 0,6 18 118,2 9,1 5 43,0 3,4 9 75,0 5,8 6 48,8 3,9 8 71,0 5,5 7 39,6 3,2 11 63,0 4,9 8 72,6 5,8 5 39,9 3,1 9 39,9 3,2 10 36,0 2,8 10 26,2 2,1 14 29,5 2,3 11 29,5 2,4 13 25,2 1,9 12 12 21,7 1,7 13 18,1 1,4 15 18,0 1,4 14 18,0 1,4 16 17,0 1,3 15 7,6 0,6 16 13,3 1,1 16 49,6 4,0 7 71,4 5,7 6 169,6 38,5 12,1 20,0 1254,3 13,5 3,1 1,0 1,6 100,0 2 12 17

1279,9

100,0

Sources: USGS, Mineral Commodity Summaries, January 2005 (for Reserve Base) International Nickel Study Group, 2005 (for production data) * Mineral economics Directorate Notes: All data refer to nickel content

Some 67 percent of the primary nickel produced each year is consumed in the production of stainless steel. Demand for nickel, therefore, depends mainly on the health of the stainless steel industry, which in turn is tied to the performance of the global economy. Despite a 30 percent increase in the oil price during the latter half of the year, real world economic growth averaged about 5,1 percent in 2004. Emerging economies, such as China, India, Malaysia, Indonesia and Thailand accounted for most of the rise in global GDP, but significant expansions also occurred in the USA and the CIS, while in Japan and the EU, the economic growth rate was less than three percent. 83

Global stainless steel output climbed by 7,8 percent to reach 24,6 Mt in 2004: thus maintaining its 6 percent average long-term surge since 1950. Expansions in production continued strongly in China, where a 32 percent year-on-year increase was recorded, while South Korea and India lifted their output sharply with increases by 17 and 11 percent, respectively. The Asian region as a whole averaged 11,8 percent growth in stainless steel production compared with 2003; in Western Europe and Africa 6,2 percent more stainless was fabricated, while the Americas recorded a 3,4 percent increase. Central and Eastern Europe provided the only negative note with output declining by 35,4 percent. Worldwide nickel usage increased by 2,5 percent in 2004. Japan, with total consumption for the year at 190 000t, remained the main nickel-using country but two other Asian countries, China and South Korea, consumed over 100 000t of primary nickel during the year. Other major countries with a high consumption of nickel were the USA (151 600t) and France (106 000t). The nickel price was subjected to more volatility during 2004 than in 2003. Continuing its meteoric rise which began in earnest in August 2003, the average monthly nickel price escalated to a peak of $15 327/t in January 2004; however, after the end of February the price plunged dramatically to a low-point of $11 114/t in May as consumers were reluctant to pay the high prices and switched to non-nickel containing ferritic grades. The price nevertheless surged again during June and July in response to low nickel stocks being reported at the end of May and finally settled down to an average of $13 698/t in December 2004. During the first half of 2005, the price resumed its strong upward trend, once again on the back of falling nickel stocks, with the monthly average exceeding $16 000/t in May. The average annual price for 2004 was $13 817/t which represents a substantial increase of 43,5 percent on the average of $9 628/t recorded in 2003 (Figure 1). FIGURE 1: MONTHLY AND ANNUAL AVERAGE NICKEL PRICES, 1999 - 2004

Nickel prices have risen to their highest levels since 1989. The higher prices were associated with excessive volatility which has raised fears among nickel producers that nickel-bearing stainless austenitic steels could be replaced in some applications. Significant moves towards substituting ferritic for austenic stainless have already been made, especially in Japan, China and India, where series 200 stainless steels, which also use some manganese instead of nickel, are being substituted for 304 grade austenitic steel. The high volatility in price has prompted suggestions that a producer price for nickel should be re-introduced. A new source of demand for nickel is the application of nickel-metal hydride (NiMH) batteries to power gasoline-electric hybrid vehicles. Demand for gasoline-electric hybrid vehicles has been growing in the main industrialized economies since the beginning of the new millennium as a result of political pressure to reduce the levels of pollution being emitted by conventional automobiles. During 2004 rising oil prices have accelerated the demand for more gasoline-hybrid vehicles and at least four automobile manufacturers are believed to be planning to use NiMH 84

batteries to power their gasoline-electric hybrid vehicles for the 2006 and 2007 model years. Furthermore, battery modules being developed at the new facility in Springboro, Oklahoma, are being manufactured for a variety of applications in addition to the transportation market. Nickel is mined in roughly equal amounts from sulphide and laterite ores. The main sulphide deposits, which are usually exploited by underground methods, occur in Russia, Australia, Canada and South Africa (mainly associated with platinum-group metal deposits), whereas laterite ores, located principally in Western Australia, New Caledonia, Indonesia, Colombia, Cuba, Venezuela, Brazil and the Dominican Republic, are worked as open-pit mines. Despite the technical and financing difficulties experienced with high-pressure acid leach technology plants (HPAL) some three to four years ago, the consistently higher nickel prices for the last two years has resulted in a significant number of new nickel projects being announced among which HPAL technology features prominently. The HPAL plants were developed to exploit abundant low-grade laterite ores in Western Australia. Murrin Murrin is one of these Australian projects that had barely managed to achieve 70 percent of its full capacity by 2003 even though it was commissioned some five years ago. Murrin Murrins is now expected to reach its full design capacity by about 2007. Another Western Australian laterite project previously considered dubious is BHP Billitons Ravensthorp, which is expected to come into full production in 2007 or 2008. Other laterite projects from which future production can be anticipated are Moa Bay in Cuba, Goro in New Caledonia and Chinese-financed Ramu in Papua New Guinea. A sulphide project that has long been awaited is Incos massive Voiseys Bay sulphide deposit in Labrador. This project was originally slow-tracked because of the expected onset of new laterite production, but its progress was also protracted by legal and titular problems with regulatory authorities. The construction of a mine began in mid-2002. Progress remains on track and it is now slated to achieve full capacity with an annual output of 50 000t of nickel in 2007.
TABLE 2: YEAR SOUTH AFRICAN PRODUCTION AND SALES OF NICKEL, 1995 2004 PROD Mass Kr 29,8 33,9 34,8 36,7 36,2 36,6 36,4 38,5 40,8 39,9 Mass Kt 13,5 10,3 13,2 14,8 19,2 20,8 22,2 22,6 24,0 25,0 LOCAL Value (FOR) R1000 R/kg 381 736 28,3 332 536 32,2 394 607 30,0 376 398 25,4 653 027 34,1 1 188 509 57,2 1 102 557 49,6 1 579 025 69,9 1 647 922 68,5 2 139 683 85,6 Mass Kt 16,7 21,4 20,4 22,6 16,2 15,3 14,3 15,9 16,1 17,5 EXPORT Value (FOB) R100 R/kg 469 783 28,1 650 944 30,5 609 243 29,6 598 311 26,5 494 716 30,5 862 468 56,5 707 130 49,5 1 060 113 66,6 1 081 275 67,2 1 513 381 85,3 Mass Kt 30,2 31,7 33,6 37,4 35,4 36,1 36,5 38,5 40,1 42,7 TOTAL Value R1000 851 519 983 480 1 003 850 974 709 1 147 743 2 050 977 1 809 687 2 639 138 2 729 197 3 653 062

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Developments in South Africa and Africa Nickel production in South Africa is mostly derived as a by-product of platinum-group metal (PGM) mining, with a very modest portion arising from copper mining. Nickel as the primary product is mined at only one operation, Nkomati Nickel, which is small by world standards and accounts for about 13 percent of total South African nickel output. In 2004 local sales mass increased by 4,2 percent to 25,0 Kt, most of which was consumed in South Africas expanding local stainless steel production, while nickel exports sales in mass terms climbed by 8,7 percent to 42,7 Kt. Domestic sales of nickel improved in value by 29,8 percent to R2,14 billion reflecting bumper returns due to a runaway nickel price. Export sales revenue also excelled rising impressively by 40 percent to R 1,5 billion. However, expressed in dollars, the currency in which exports are earned, export sales performance was even more impressive climbing by 64,2 percent to $234 636 as gains in the dollar price of nickel on the international market outperformed the mitigating effect of a stronger rand-dollar exchange rate.
During 2004, Lion Ore Mining International acquired 50 percent of Nkomati Nickel in a strategic shareholding agreement which will allow production from the mine to be expanded three-fold from its current 5 500 t/a to 16 500 t/a in 2008. Since it was established in 1997, Nkomati has focused its main operations on a high grade nickel ore body averaging about 2,2 percent nickel that will be largely depleted by 2007. The joint venture between Lion Ore and Nkomatis owner 85

African Rainbow Minerals (ARM) will enable it to mine a considerably lower grade but much larger orebody using Lion Ores Activox processing technology and thus increase the life of the mine by an additional 16 years. The same processing technology has been applied in Botswana, where Lion Ore has acquired 85 percent of the Tati Nickel Mine which includes a 43,4 percent stake bought from Anglo American in 2002. Here the two ore bodies involved are the Selkirk and Phoenix deposits. The higher grade Selkirk deposit has been worked out and current operations are targeting the much lower grade Phoenix orebody also using the Activox process. This new open pit mine is expected to have a life-of-mine lasting until to 2014. Zimbabwes Bindura Nickel Corporation (BNC) has announced plans to add another nickel mine to its current stable of mines, the Trojan, near the town of Bindura and Shangani, southwest of Gwere; the new mine, Hunters Road, is anticipated to come on stream in 2011 with a life-of-mine of at least 11 years. Impala Platinum and Dynatec Corp have formed a 50-50 percent joint venture to develop Dynatecs Ambatovy Laterite project in Madagascar. A feasibility study completed on Ambatovy indicates a potential output of 60 000 tons per annum of nickel and 5 600 tons per annum of cobalt. The JV agreement proposes the construction of a $230 million refinery adjacent to Impalas existing one which is located in Springs, Gauteng, to process the mines production. OUTLOOK Due to cutbacks in world stainless steel production from about the middle of the year in response to the prevailing high nickel prices, the nickel market is generally expected to end 2005 in surplus. The magnitude of the anticipated surplus varies according to the decline in estimated demand from sectors other than stainless steel. By mid-year the only area of positive growth was China with consumption having fallen elsewhere. Current estimates of a surplus vary from 6 000t to as much as 50 000 tons. Despite the large number of new projects announced on the back of the high prices attained in 2004 and early 2005, the outlook for the nickel market remains positive. The current surplus in the nickel market is believed to be temporary as many of the new projects will come on stream only after 2006 and take time to ramp up to full production. The nickel price is expected to average about $14 500 in 2005. Most of South Africas nickel production is tied to platinum-group metal mining and therefore future growth in its output will be largely determined by decisions taken by the major platinum miners to exploit new reserves. Since 2003, some projects have been delayed because of the strong rand and with the average rand-dollar exchange rate expected to be slightly stronger in 2005 than 2004, the climate affecting the rate of new project development remains unchanged. Nkomati is planning to triple its production by 2008 which should be easily absorbed by anticipated domestic expansions in stainless steel production. In addition to Columbus Stainless, there is also the possibility that a new stainless steel plant may be built not too far into the future. REFERENCES

U,S, Geological Survey, 2005, Mineral Commodity Summaries, January 2005: Internet Website, http://www,usgs,gov International Nickel Study Group in Mining Journal, London, June 17, 2005, pp 1619

86

TITANIUM
L A Themba

INTRODUCTION Titanium occurs in heavy mineral sands deposits on shores of lakes, rivers and oceans. The most important economic titanium minerals are rutile, ilmenite, leucoxene and anatase. Titanium dioxide content of ilmenite deposits ranges from 35 to 65 percent, while rutile concentrates contain 92 to 95 percent TiO2. In South Africa, ilmenite is upgraded by smelting, which separates the iron content, to produce a titanium slag with TiO2 content of up to 85 percent. In Australia ilmenite is upgraded by hydrometallurgical methods to produce synthetic rutile. PROPERTIES AND MAIN MARKETS Titanium dioxide pigment accounts for 94 percent of world demand for titanium and 3 percent is used to produce titanium metals and metal alloys. The pigments are ultra-white, highly refractive and absorb ultra violet light, and the bulk of production is used in paint and plastics. Titanium metal has a high strength-to-weight ratio, and is used in the aerospace industry. Because of its non-toxicity and inert properties, other titanium applications include foods, pharmaceuticals (tooth-pastes, sun-screens, and cosmetics), and prostheses. DEVELOPMENTS DURING 2004/2005 World titanium mine production was 4 800 kt in 2004 (Table 1), almost unchanged compared with 2002 and 2003. Major producers in descending order of importance were Australia, South Africa and Canada, which collectively accounted for 60,0 percent of global titanium output. Minor producers of titanium were Norway (7,8 percent), USA (6,9 percent) and India (5,9 percent). World titanium feedstock demand exceeded supply in a tight market as full utilisation of consumption capacity in titanium plants was unable to sustain inventories. In Asia- Pacific regions titanium consumption grew by 9 percent of which China accounted for more than half. Chinese titanium pigment production was 460 kt in 2004, and an additional 218 kt were imported. During 2004, Iluka Resources, on heavy studies of embarked heavy minerals projects in the Murray Basin, in the state of Victoria, Australia and are at various stages of geological exploration, feasibility studies and development. The two mineral sands deposits which comprise, the A$270 million Douglas project are at an advance stage and production is scheduled to start in the first half of 2006 and 2007, rising to a total combined annual production level of 180 kt of rutile. Furthermore, first production is expected in the second half of 2007 from the mine expansions at Kulwin, Woornack and Rownack in the northern Murray Basin. During 2004 in South Africa, Australian Mineral Commodities (MRC) continued to conduct exploration and development of the Xolobeni Mineral Sands Project and Tormin Mineral Sands Project. Xolobeni Mineral Sands in the eastern Cape is a 364 Mt resource with 5 percent valuable heavy minerals content and is expected to produce 400 kt concentrates over 25 years life-ofmine. MRC has submitted the Mineral Rights Application to the Department of Minerals and Energy; and if successful the outcome will dictate the mining and development scheduled to commence in 2008 and 2009. The Tormin Mineral Sands deposit is located on the west coast of South Africa. Exploration discovered deposits of the heavy minerals, ilmenite, zircon, rutile and leucoxene. Feasibility studies will commence in 2005. In Malawi, 2 billion tonnes heavy minerals sand-dunes deposits are located on shores of Lake Malawi. Feasibility studies are in progress on the proposed $304,0 million titanium project that involves mining 500 kt ilmenite concentrate annually from Senga Bay and Makanjila as smelter feedstock, to produce 250 kt titanium dioxide slag. In Mozambique, Kenmare Resources development of the Moma titanium mine in Nampula Province is continuing and production will start production in the last quarter of 2006. It is anticipated that the titanium mine will produce 700 kt ilmenite, 60 kt zircon and 17 kt rutile annually over a 20-year period. The mine will employ 436 workers and an additional 1500 in 87

ancillary and support services and contribute 2,5 percent towards GDP in Mozambique. During 2004, the titanium market was tight, with higher prices as demand outstripped supply. The prices of different titanium products were: titanium slag $ 470/t; ferro-titanium $2 500/t and titanium metal sponge $31 500/t. TABLE 1:
COUNTRY Australia South Africa* Canada Norway Ukraine USA India Other TOTAL Mt 250 220 12 60 13 59 210 476 1300

WORLD RESERVES, MINE PRODUCTION TITANIUM, 2004


RESERVE BASE % 19,2 16,9 0,9 4,6 1,0 4,5 16,2 36,7 100 PRODUCTION % 23,5 22,7 15,1 7,3 6,2 6,3 5,2 13,9 100

Rank 1 2 7 4 6 5 3 4

kt* 1130 1090 720 350 290 300 250 670 800

Rank 1 2 3 4 6 5

7
-

Sources: BGS, 2004, p 304 - 305 USGS, 2004, p 191 - 192 * DME, Directorate Mineral Economics.

OUTLOOK Global titanium feedstock output is forecast to increase by 3 percent in 2005 as new greenfield and brownfield projects will be established mainly in China. The capacity of major titanium pigment production according to region is North America (1,73 Mt), Europe (1,43 Mt) and China (571 kt) and is expected to run at full capacity to reduce the production shortfall. It is estimated that Chinas titanium pigment output will reach 900kt in 2010. World demand for titanium is being, driven by strong pigment demand from China and India. Economic recovery will raise demand for titanium feedstock during the United States paint season and pigment producers are expected to continue to operate at full production capacity. Historical events had impacted negatively on the market for titanium metal since the World Trade Centre attack in 2001, specifically the aerospace industry. The emergence of SARS and the Iraqi war stifled economic recovery. Demand for titanium sponge in the USA, the worlds largest market, decreased by 34 percent in 2002 and milled products by 30 percent. This situation has, however, changed and the titanium metal market will be driven by the aerospace industry with improved global demand expected to peak at 75 kt by 2007. Analysts envisage strong demand for titanium feedstock in tight supply conditions, which is anticipated to boost prices above average in 2005 and 2006. Additionally, world titanium feedstock capacity constraints and low stocks levels will induce intermittent price spikes. Prices of ilmenite and rutile are expected to reach a maximum of $140/t and $600/t respectively. In 2005, annual average titanium metal sponge prices are forecast at above $31 500 /t in 2005 and ferro-titanium prices at $2 600 per ton. REFERENCES Metal Bulletin, June 2001 December 2004 Metal Bulletin Research, Jan 2003 June 2004 U.S. Geological Survey, 2004. Mineral Commodity Summaries, January 2004: Internet Website: http://www.usgs.gov World Bureau of Metal Statistics, 2005. World Statistics Yearbook 2005: Ware, Herts, pp 64 Mining Review Africa Issue 1, 2005. Titanium Projects Could Help Develop The Nacala Corridor: Internet website: http://www.miningreview.com All Africa Review,2005. Moma Titanium Project on tract: Internet website: http://www.allafrica.com MBendi Information for Africa, 2005. South Africa Mining: Heavy minerals mining: Internet website: http://www.mbendi.co.za 88

ZINC
L Maphango

DEVELOPMENTS DURING 2004/2005 World zinc mine output was 9,64 Mt in 2004, a marginal increase of less than a percent compared with 2003 (Table 1). China was the leading world producer (2,26 Mt) followed by Australia (1,30 Mt), Peru (1,21 Mt), Canada (0,79 Mt), the USA (0,74 Mt), Mexico (0,46 Mt) and Ireland (0,44 Mt). In Africa, zinc mine production improved to 0,35 Mt in 2004 compared with 0,26 Mt in 2003, contributing 3,6 percent to global output. Zinc mine output in Europe rose by 1,8 percent to 1,0 Mt in 2004. Zinc mine output by country in decreasing order of magnitute was Ireland (0,44 Mt), Sweden (0,20 Mt), Russian Federation (0,18 Mt) and Poland (0,15 Mt). Global refined zinc output increased by 2,9 percent to 10,2 Mt in 2004. The largest producer of refined zinc was China (2,52 Mt), followed by Canada (0,81), Korea Republic (0,67 Mt), Japan (0,64 Mt), Spain (0,53 Mt), Australia (0,47 Mt), Germany (0,36 Mt), the USA (0,35 Mt), Mexico (0,34 Mt) and Kazakhstan (0,34 Mt). Zinc stock levels on the London Metal Exchange (LME) amounted to 629 kt in December 2004 from 740 kt in December 2003, representing a decline of 15,0 percent. World consumption of zinc metal increased by 6,5 percent to 10,5 Mt in 2004. The major consumer of zinc was China (2,47 Mt), followed by the USA (1,25 Mt), Japan (0,62 Mt), Germany (0,51Mt) and Korea Republic (0,48 Mt). Consumption was driven mainly by growth in China and Eastern Europe. China has moved from being a net exporter of zinc metal to become a net importer due to higher domestic demand. Consumption of zinc metal in China increased by a significant 14,6 per cent to 2,47 Mt compared with 2003. In 2004, western world refined zinc metal supply was 6,67 Mt, slightly up by less than one percent, whereas demand grew by 4,7 percent to 7,43 Mt. The excess demand was met by declining stock levels and imports of refined zinc. The Anglo American Skorpion zinc mine and refinery started commercial production in May 2004 after being commissioned in September 2003. The zinc refinery plant is the only one in southern Africa that produces zinc ingots. Skorpion produced 119,2 kt of zinc during 2004. Kumba Resources and American Mineral Fields are preparing to conduct a feasibility study to manage the Kipushi zinc mine in the Democratic Republic of Congo. Kipushi, with a total resource base of 26 Mt grading 19 percent zinc and 2 percent copper, is expected to produce between 30 kt and 50 kt of zinc concentrate per year. South Africas zinc mine output fell by 22,3 percent to 32,0 kt in 2004 (Table 1). The decrease in production was due to the closure of Metorexs Maranda operation in July 2004. Refined zinc metal output was 105,0 kt in 2004 (Table 3), representing a reduction of 6,3 percent compared with 2003, owing to lower concentrate grades which affected stable production. Imports of zinc concentrate by Zincor rose by 12,3 kt to 69,3 kt in 2004 compared with 2003, while exports of zinc metal diminished by 41,7 percent to 16,1 kt. Domestic demand strengthened from 86,0 kt to 90,9 kt in 2004. Zincor, a division of Kumba Base Metal Ltd is the only zinc refinery in South Africa, and most of the zinc metal it produces is consumed locally. Zincor sources its zinc concentrate from Rosh Pinah in Namibia and Black Mountain in Northern Cape. Kumba Resources Rosh Pinah mine produced a record 124 kt of zinc concentrate in 2004, an increase of 14,8 percent compared with 2003. This significant increase was due to higher feed grades, de-bottlenecking and improved efficiency on the mine. The average LME zinc cash settlement price in 2004 was $1 047,76/t, 26,5 percent higher than in 2003 (Table 5). Zinc metal prices traded above the $1 000,00/t level for most of the year, starting at $1 017,00/t in January. Zinc prices were slightly below $1 000,00/t in July, August and 89

September, but rose to a maximum of $1180,21/t in December. The strengthening was due to favourable market conditions in the zinc industry worldwide, as demand increased and stock levels fell. This trend is expected to continue in 2005. In 2004, South Africas average zinc price was R6 899,71, 10,8 percent higher than in 2003. Zinc prices were fairly steady during the year with a high of R 7 520,07/t in March 2004 and a low of R6 244,12/t in August 2004. OUTLOOK World zinc mine production is anticipated to increase by 5,2 percent to 10,15 Mt in 2005. Countries that are expected to drive this growth are Australia, China, India, Ireland, Greece, the Russian Federation and Sweden; the only significant decrease in output will occur in Canada. World refined zinc output is forecast to rise by 3,3 percent to 10,49 Mt in 2005, despite a reduction in Europe due to expected downscaling of Umicores operation in France. The expansion projects at Vedantas Hindustan Zinc operation will boost production of refined zinc metal in India by a significant 28 percent. Increases in output are also envisaged in China, Japan, Kazakhstan and the Republic of Korea. Chinas net imports of refined zinc metal are predicted to be more than 100 kt in 2005. China will source most of its imports from Kazakhstan as has been the case in recent years. World consumption of refined zinc metal in 2005 is forecast to increase by 2,4 percent to 10,7 Mt, due mainly to Chinas strong demand, which is expected to grow by 8,7 percent to 2,7 Mt in 2005. It is anticipated that consumption during 2005 in both Europe and the USA will be similar to that of 2004. South Africas zinc mine production is expected to increase by 3,1 percent to 33,0 kt in 2005, as more ore will be hoisted. It is anticipated that Kumba Resources Rosh Pinah zinc mine in Namibia will increase output by 8 percent to 134,0 kt in 2005. Refined zinc metal production in South Africa is forecast to rise by 4,4 percent to 109,6 kt in 2005. Refined zinc metal consumption is expected to reach 109,9 kt in 2005, 19,0 kt more than in 2004. The Skorpion zinc mine and refinery operation is scheduled to reach full capacity at 150 kt zinc metal per year, contributing about 4 percent of Namibias GDP. Anglo American will export about 90 percent of production to Asian, European and North American markets, with the remaining 10 percent to be delivered to South Africa. TABLE 1:
COUNTRY

WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF ZINC, 2004


PRODUCTION# kt % Rank 264 23,5 1 298 13,5 2 209 12,5 3 791 8,2 4 739 7,7 5 462 4,8 6 438 4,6 7 384 4,0 8 341 3,5 9 32 0,3 25 677 17,4 635 100,0 EXPORTS## % Rank 3,1 11 17,6 1 13,6 2 11,5 3 10,2 4 3,4 9 6,1 5 0,2 24 34,2 100,0 -

RESERVE BASE# Mt % Rank China 90 20,0 1 Australia 80 17,4 3 Peru 20 4,3 7 Canada 31 6,7 5 USA 90 19,6 2 Mexico 25 5,4 6 Ireland Kazakhstan 35 7,6 4 India South Africa* 15 3,3 8 Other 72 15,7 TOTAL 460 100,0 Sources: ILZSG, May 2005 USGS, January 2005 * DME, Directorate Mineral Economics. Notes: # Metal content ## Metal and contained metal Totals rounded and may not add up

2 1 1

1 9

kt 224 1 285 992 842 746 251 445 16 2 494 7 295

90

TABLE 2:

SOUTH AFRICAS PRODUCTION AND SALES OF ZINC METAL IN CONCENTRATE 1995 - 2004
LOCAL SALES Value (FOR)+ Unit value R000 R/t 2 090 2 833 3 912 3 847 4 422 5 246 4 943 4 985 3 050 3 415 EXPORT SALES Value (FOB) Unit Value R000 R/t -

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

PRODUCTION Mass kt 74 76 77 74 71 70 70 66 70 65 63 59 61 56 64 58 41 40 32 31

Mass kt 159 089 209 671 273 788 255 313 287 045 309 406 278 101 290 799 121 906 107 630

Mass kt -

Unit values calculated before rounding of mass and rand values + FOR Gauteng

TABLE 3:
YEAR

SOUTH AFRICAS PRODUCTION, AND SALES OF REFINED ZINC 1995- 2004


LOCAL SALES Value (FOR)+ Unit value R000 R/t 374 991 3 857 413 841 4 332 597 940 6 110 514 865 5 660 488 860 5 600 746 249 8 114 667 062 7 495 797 929 8 399 596 361 6 934 627 081 6 900 EXPORT SALES Value (FOB) Unit Value R000 R/t 10 411 3 752 34 900 4 549 66 383 5 837 67 254 5 540 178 843 6 469 110 635 9 517 173 627 7 517 149 914 8 192 164 948 5 976 108 550 6 711

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

PRODUCTION Mass kt 99 101 108 107 108 103 109 111 113 105

Mass kt 97 96 98 91 87 92 89 95 86 91

Mass kt 2,8 7,7 11,4 12,1 27,7 11,6 23,0 18,3 27,6 16,1

* Include imported refined zinc Unit values calculated before rounding of mass and rand values + FOR Gauteng

TABLE 4:

SOUTH AFRICAS LEAD/ZINC MINES: EMPLOYMENT AND REMUNERATION, 2000 2004


EMPLOYEES 1 346 1 812 1 780 1 772 1 593 TOTAL REMUNERATION R000 97 955 114 422 122 659 127 268 115 082

YEAR 2000 2001 2002 2003 2004

91

TABLE 5:

SOUTH AFRICAN AND LME CASH SETTLEMENT PRICES (MONTHLY AVERAGES), 2003 AND 2004
SOUTH AFRICAN ZINC PRICE 2003 2004 2003 R/ton* R/ton* $/ton 790,61 6 505,91 789,69 502,93 7 222,35 785,15 366,12 7 520,07 790,95 797,67 7 467,01 754,75 942,33 6 971,02 775,65 241,31 7 251,08 790,64 248,92 6 756,04 827,54 038,82 6 244,12 817,88 980,00 6 473,40 818,18 257,16 6 715,62 897,96 163,84 6 930,06 914,53 367,76 6 739,78 977,76 224,79 6 899,71 828,39 LME CASH SETTLEMENT PRICE 2003 2004 2004 R/ton $/ton R/ton 6 855,77 1 017,00 7 035,50 6 519,18 1 087,68 7 362,07 6 362,32 1 105,78 7 334,42 6 571,46 1 032,72 6 768,14 5 945,51 1 028,29 6 973,97 6 248.19 1 021,45 6 573,13 6 246,36 988,36 6 057,36 6 045,93 975,81 6 301,29 5 992,84 975,18 6 384,42 6 253,12 1 064,95 6 802,47 6 153,59 1 095,64 6 634,98 6 370,99 1 180,21 6 765,32 6 297,11 1 047,76 6 749,42

MONTH

January February March April May June July August September October November December AVERAGE
Sources : ILZSG, May, 2005 * Zincor, 2005

6 6 6 5 5 6 6 6 5 6 6 6 6

REFERENCES International Lead and Zinc Study Group, LZ/SC/594 of May 2005. International Lead and Zinc Study Group, Lead and Zinc Market Review and Outlook for 2005. International Lead and Zinc Study Group, Monthly Bulletin on Lead and Zinc Statistics, May 2005. Metal Bulletin Research, Base Metals Monthly, May 2005. U.S. Geological Survey, 2005 Mineral Commodity Summaries, January 2005: Internet Website, htt://www.usgs.gov

92

ZIRCON
L A Themba

INTRODUCTION Zircon occurs in some igneous and metamorphic rocks in the form of two economic minerals, the silicate (ZrO2.SiO3) and the oxide baddeleyite ( ZrO2). Since Palabora Mine in South Africa stopped producing baddeleyite in 2002, the Kovdor mine in Russia is the only producer of baddeleyite. EXTRACTION AND MAIN USES Zircon is recovered from heavy mineral sand deposits where it is usually associated with ilmenite and rutile. It is separated from rutile by its electrostatic properties by means of dredgers and highintensity magnetic separators. Zircon is consumed in five main markets: the ceramic industry, tiles and sanitary-ware opacifiers, zirconia and zirconium chemicals, refractory and foundry (steel /glass) industries, and television and computer glass screens and tubes (figure 1). DEVELOPMENTS DURING 2004/2005 During 2004, global zircon production was 0,95 Mt. (Table 1), representing a 5,3 percent rise compared with 2003. Major zircon producers were Australia (0,45 Mt) and South Africa (0,30 Mt), respectively. In the United States, the Green Cove Springs heavy minerals mining operation was mined out in 2004, but the remaining isolated deposits are still being mined on a small scale. Lulaton, Georgias new mining and processing operation was commissioned to supplement the countrys overall zircon production. The Concord mine was expanded and a new mineral sands mine was opened in Virginia. South Africas zircon production was 0,30 Mt in 2004, an increase of less than one percent compared with 2003. Zircon producers were Anglo Americans Namakwa Sands in the Western Cape and Richards Bay Minerals and Ticor South Africa in KwaZulu-Natal. World zircon demand exceeded 1,0 Mt and Asia and the Pacific region accounted for 42 percent (Figure 2) of consumption, mainly because of Chinas 9 percent economic growth. Europe consumed 35 percent of world supply, as demand for ceramics increased in Spain, Italy and Turkey. World consumption of zircon by region was Europe (405 kt), North America (171 kt), Japan (66 kt), China (248 kt), Asia Pacific (161 kt) and the rest of the world (101 kt). Global distribution of zircon consumption by end-use is shown in Figure 1. In Australia, Iluka Resources advanced the A$270 million Douglas Mineral Sand project at Murray Basin to the development of stage-1 mine and heavy-minerals separation plant. By December 2004, the estimated total resource stood at 39 Mt and 487 Mt with a heavy mineral grade of 15,8 percent and 10,6 percent, respectively. The Douglas Mineral Sands and Bemaxs Pooncarie projects combined are expected to produce 180 kt rutile and 150 kt zircon by 2007. In Gambia, Carnegie Corporation of Australia and the Chinese company Astron have formed a 1:1 joint venture, to develop a heavy minerals mining project. Almost 12,6 kt zircon concentrate was processed and shipped to China for grade evaluation in early 2005. Annual concentrate production at a level of 240 kt zircon and 1 200 kt ilmenite is scheduled to commence in the second half of 2005. In Kenya, Canadian Tiomin Resources has invested C$25 million in geological exploration, engineering and feasibility and environmental studies for four heavy minerals resources projects at Kwale, Vipingo, Kififi and Mambrui. The most advanced project at Kwale revealed contains an estimated resource of 254 Mt mineral sands, of which 38 Mt is measured and 216 Mt indicated. In early 2005, a 21 year mining license and lease for Kwale project was signed with the Kenyan 93

government and development is expected to commence during the last quarter. The first production of 10 Mt per year is scheduled for the second quarter of 2007, at levels of 7,5 Mt ilmenite, 1,75 Mt rutile and 0,84 Mt zircon. Mozambiques Corridor Sands has three shareholders viz. Southern Mining Corporation of South Africa (36 percent), Western Mining Resource of Australia (54 percent) and Industrial Development Corporation of South Africa (10 percent). The cost of the first phase is $ 495 million while the total project cost is $1 billion. It is planned to build eight furnaces over a period of 12 years to smelt ilmenite to titanium slag and the resource is sufficient for a period exceeding 50 years. The first production of 0,26 Mt ilmenite and 0,75 Mt zircon is expected in 2007. Kenmare Resources confirmed that it will commission the Moma project in Mozambique in 2006; it will produce 700 kt of ilmenite per annum and a large tonnage of zircon as a by-product. During 2004, the zircon market was tight as demand outstripped supply, resulting in price increases from $ 450/t to $ 570/t. Price increases for different zircon products varied; sand concentrate increased by 15 percent, ceramics grade zircon by 12 percent, while milled opacifier-grade rose by 11 percent. Various price ranges for zircon products are shown in Tables 2 and 3. TABLE 1: WORLD RESERVES, MINE PRODUCTION AND EXPORTS OF ZIRCON MINERALS, 2004
RESERVE BASE Mt % Rank 30,0 41,7 1 14,0 19,4 2 5,3 7,4 4 6,0 8,3 3 4,6 6,4 5 3,8 5,2 6 3,7 5,2 7 4,1 5,7 72,0 100 (Production)

COUNTRY Australia South Africa USA Ukraine Brazil India China Other TOTAL

kt 450,0 302,0 100,0 35,0 22,0 20,0 15,0 11,0 955,0

PRODUCTION % Rank 47, 1 1 31.6 2 10,4 3 3,7 4 2,3 5 2,1 6 1,6 7 1,2 100 -

kt 80,3 370,6 36,4 na 1,2 110,7 620,0

EXPORTS % 13,0 60,0 5,8 na 0,2 19,2 -

Rank 2 1 3 na na na 17 -

Sources: BGS, 2004, p 304305 USGS, 2004, p 191192 Notes: All figures refer to ZrO2

TABLE 2:

ZIRCON SAND, FLOUR AND OPACIFIER PRICES, APRIL 2001 TO JUNE 2004
Pricing US$/t bulk US$/t bulk US$/t bulk April 2001 330390 350400 350400 April 2002 365 410 360410 350410 June 2003 450500 450500 450500 June 2004 450 570 450 570 450 - 570

Shipping terms Sand Fob Australia Fob South Africa Fob US Flour (95% passing 45m) Fob Europe Fob Asia Micronised (d50 5 m ) Fob Europe Fob Asia

US$/t bagged US$/t bagged

470530 510550

510540 450550

450550 540600

550 - 620 550 - 680

US$/t bagged US$/t bagged

540580 580610

600630 610660

680720 690760

680 750 680 790

94

TABLE 3:

PRICES FOR FUSED MONOCLINIC ZrO2 AND BADDELEYITE IN US $/t


2002 2 000 - 2 2 400 - 3 3 100 - 4 15 000 - 25 2003 2 150 - 2 2 550 - 3 3 250 - 4 15 200 - 25

Monoclinic zirconia 2001 Refractory/ abrasive grade 2 400 - 2 800 Ceramic pigment grade 2 700 - 3 200 Structural/ electronic grade 3 200 - 4 700 High Purity advance ceramic grade 17 000 - 25 000 Stabilised zirconia Refractory grade 3 700 - 4 200 High Purity Advance ceramic grade 30 000 - 75 000

400 500 500 000

550 650 650 200

3 000 - 4 200 20 000 - 70 000

3 150 - 4 350 20 200 - 70 200

FIGURE 1:

WORLD CONSUMPTION OF ZIRCON BY END-USE IN 2004.

Source:

TZMI Database

FIGURE 2:

WORLD CONSUMPTION OF ZIRCON BY REGION IN 2004.

Source:

TZMI Database

OUTLOOK The establishment of new mines and expansions to increase zircon availability could not alleviate the tight zircon market in 2004. Annual demand growth at a rate of 3 percent is expected which will exceed supply in 2005 and a deficit is likely to occur. Irrespective of the several zircon projects that are planned and projected to come on-line between 2005 and 2007, the additional supply would and not halt the declining world production. Further reasons for a shortage of zircon will be declining grades and a consequent reduction in production, relocation of mining and mineral processing equipment and mine closures. The major new mining projects at Kwale in Kenya and the Douglas Sands in Australia are expected to produce 0,85 Mt and 0,75 Mt respectively, but will only come into production in 2007. 95

Pacific Rim zircon demand is expected to rise, led by Chinas strong growth in the ceramics and refractory industries. Europes prospects for zircon demand are positive especially in Italy, Spain, Turkey and Iran. In this anticipated undersupplied zircon market, zircon prices will continue to soar at a rate of 20 percent per annum, from $ 500 $ 750 per ton by the end 2005. An unabated increase in prices will also force zircon-consuming industries to seek substitute material or technologies. REFERENCES

Metal Bulletin, Jan 1995June 2004 Metal Bulletin Research, Jan 2001June 2004 U.S. Geological Survey, 2003. Mineral Commodity Summaries, January 2004: Internet Website: http://www.usgs.gov Industrial Minerals, February 2005. Mike ODriscoll. Zircon no pacifier to market squeeze. World Bureau of Metal Statistics, 2004. World Statistics Yearbook 2002: Ware, Herts, p 75.

96

FERROUS METALS AND MINERALS - OVERVIEW


Mpumzi Bonga

INTRODUCTION South Africa is the worlds largest producer of chromium and vanadium ores and a leading supplier of their alloys. It is also a major producer of iron and manganese ores and an important supplier of ferromanganese, ferrosilicon and silicon metal. The combined sales revenue of both primary and processed ferrous minerals in 2004 amounted to R28.27 billion ($4.38 billion), 17.8 per cent of the total value of all primary and processed mineral sales in the country, while export sales of these commodities generated R21.4 billion ($3.32 billion) in revenue, 18.5 per cent of the value of all total mineral exports (Table 1). The increased contributions, although only by small margins, of both export and total ferrous mineral sales revenue in 2004 compared with 2003, is testimony to the growing importance of ferrous metals in South Africas mineral industry. Ferrous mineral ores were produced at some 24 mines and their added-value ferro-alloys at 23 metallurgical works during 2003. Over the last decade, chromium, manganese and vanadium, have been increasingly processed to higher levels of added value than iron, with the bulk of the growth in iron production being exported in the form of iron ore. South Africas ferrous minerals contributed $1 242 million (5.0 percent) to total mineral sales (primary plus processed) and $750million (4.2 percent) to total mineral exports in 2004. DEVELOPMENTS DURING 2004 World demand for ferrous minerals surged in 2004 helped mainly by continuing double-digit annual growth in Chinese crude steel production. World steel production rose to a new record of 1 037.5 million tons, some 7 percent higher than the previous record of 969.3Mt attained in 2003 (Fig. 1). In China, output increased by over 22.5 percent to 272.4 Mt, accounting for 26.3 percent share of world production. World crude steel production continued to increase during the first half of 2005, and was 7 percent higher in the first half of this year compared with the same period last year. Global steel making capacity amounted to 1 184Mt in 2004 with an average capacity utilization rate at 88 percent. The main growth occurred in Asia, with China increasing its output by more than 25 percent. Chinese imports of iron ore climbed by 40.3 percent in 2004. The benchmark contract price for iron ore rose by 71.5 percent in 2005. The bull market for iron ore also boosted the dollar or euro prices of other ferrous commodities: average manganese ore prices increased by 62.9 percent and silicon metal prices went up 3.3 percent, while high carbon ferromanganese average prices came down by 32.8 percent and the average EU silicomanganese price dipped by 36.6 percent in 2005. Chrome ore prices have ranged upwards by 20 to 30 percent, depending on grade, and charge chrome increased by 62 percent. Vanadium prices also increased sharply- up 135 percent for ferrovanadium while vanadium pentoxide rose by 170 percent despite the strong currency in 2004, resulting in a 107 percent rise in revenues despite lower tonnages compared with 2003. The combination of a rise in the export mass of manganese alloys and higher prices of most ferro-alloys boosted the total earnings for processed ferrous minerals by 38.8 percent compared with 2003. Domestic sales of the processed products recorded a 95.8 percent increase in earnings, while local sales tonnage was up by 5.6 percent.

97

FIGURE 1:

WORLD CRUDE STEEL MONTHLY PRODUCTION, 1998-2004

Source:

International Iron and Steel Institute, monthly statistics; Website, http//www.worldsteel.org

The growth in domestic sales of primary and processed ferrous minerals in 2004 is an indication of the increasing trend to produce value added products in South Africa. The higher annual growth rate of local sales revenue in comparison with that of export sales recorded for both primary ferrous minerals as well as ferroalloys during the ten year period from 1995 to 2004 confirms this trend. Over this period export sales earnings of ferrous minerals have risen at a rate of 2.65 percent per annum, whereas local sales of ferrous minerals have climbed at a rate some 3.64 percent per annum. Over the same period ferro-alloy revenues have increased at annual rates of 12.29 and 16.77 percent, for export sales and local sales, respectively. In order to stay competitive and retain market share in the rapidly expanding market for iron ore in the Far East, Kumba Resources, South Africas largest iron ore producer, has committed to expanding its Sishen iron ore mine and develop the Sishen South deposit. The Sishen Expansion Project (SEP), which will see iron ore, output expanding from the current 36 Mt/a to 47 Mt/a by 2009 to meet growing global demand seems to be on track. Kumba has signed an agreement with Transnet which will result in Kumba spending R3 billion to expand output while Transnet will invest R4.5 billion to upgrade rail and port infrastructure. Capacity is expected to increase to 41 Mt/a by 2007/08. Despite the fact that no large player (like Alcan or Pechiney) has yet committed itself to building an aluminium smelter at the port of Ngqura near Port Elizabeth, construction is going ahead while the state and industry are exploring the possibility of using this port as an alternative to accommodate the extra iron ore tonnages that may exceed the capacity of the upgraded Orex- Saldanha route. Consideration is also being given to moving manganese ore exports from Port Elizabeth to this port. The upward trend in employment on ferrous mines, which began in 2002 and continued into 2004, as employment rose by 20.6 percent to 17 122 from 14 196 (Table 2). Total remuneration rose by 11.7 percent to R1.3 billion and the average annual earnings decreased by 7.4 percent to R75 050 per employee compared with 2004 (Table 2).

98

TABLE 1:

SOUTH AFRICAS PRODUCTION AND SALES OF PRIMARY AND PROCESSED FERROUS MINERALS, 2003 AND 2004
EXPORT SALES Kt R000 24 745 24 076 3 439 885 3 130 436 TOTAL SALES Kt R000 37 175 36 155 4 585 485 4 191 071

COMMODITY PRODUCTION LOCAL SALES Year kt Kt R000 Iron ore 2004 39 322 12 430 1 145 599 2003 38 086 12 079 1 060 635 Chrome Ore 2004 2003

7 645 6 436

6 736 6 318

1 366 675 973 838

513 502

318 893 177 880

7 249 6 820

1 685 569 1 151 718

Manganese Ore 2004 4 281 2003 3 501 Ore Subtotals 2004 51 248 2003 48 992 Chrome Alloys 2004 2 965 2003 2 813 Manganese Alloys 2004 985 2003 921 Silicon Alloys 2004 2003 Vanadium 2004 2003

2 093 1 794

656 434 614 393

2 403 1 957

1 082 285 852 983

4 497 3 751

1 738 719 1 467 376

21 259 20 192

3 168 708 2 648 866

27 661 26 535

4 841 063 4 161 299

48 921 46 726

8 009 773 6 810 165

486 301

1 849 168 886 219

2617 2640

9 903 486 7 658 552

3 103 2 941

11 752 654 8 544 771

192 193

932 019 633 653

754 707

4 329 260 2 534 220

945 900

5 261 280 3 167 873

191 184

93 85

501 509 414 429

104 106

658 216 672 867

197 191

1 159 726 1 087 296

23 27

3 1

715 916 108 667

16 19

1 674 785 1 072 477

18 20

2 090 701 1 181 144

Alloy Subtotals 2004 4 164 2003 3 945 Ferrous Totals 2004 55 412 2003 52 936

774 580

3 998 612 2 042 968

3 491 3 472

16 565 747 11 938 116

4 263 4 052

20 264 361 13 981 084

22 033 20 772

7 167 320 4 691 833

31 152 21 30 008

404 810 16 099 415

53 184 50 778

28 274 134 20 791 249

TABLE 2:

SOUTH AFRICAN FERROUS REMUNERATION 2000-2004


EMPLOYEE Number 12 725 12 049 13 288 14 196 17 122

MINES:

EMPLOYMENT

AND

GROSS

YEAR 2000 2001 2002 2003 2004

REMUNERATION R000 R000/ employee 812 558 63.86 891 800 74.01 975 984 73.42 1 150 981 81.07 1 285 022 75.05

OUTLOOK Despite attempts by the central bank to cool its overheated economy towards the end of the first half of 2004, China remains the biggest factor likely to drive demand for ferrous minerals and their alloys in the coming decade. This country is rapidly becoming a major consumer nation and with still some 65 percent of its population yet to be urbanized, it should it should remain the largest consumer of ferrous metals for many years ahead. The commodities most affected will be iron and manganese ore for steel production and ferrochrome for stainless steel. 99

The forecast of ferrous minerals export revenue until 2009 is based mainly on projections for iron ore, as it will account for the biggest share (75.4 percent) of total ore sales during the forecast period. In order to keep pace with future Chinese demand for iron ore to satisfy its ever increasing steel production and remain globally competitive, South Africas current iron ore export industry, almost entirely based in the Northern Cape, needs to expand its output more rapidly than the current rate. Iron ore export revenue is expected to grow at a rate of about 4.8 percent per annum from 2005 to 2009 while the forecast for total ferrous ores is 4.0 percent per annum. The forecast of processed ferrous minerals export revenue to 2009 is dominated by chrome alloys, accounting for 62 percent of the share of total earnings, with manganese alloys contributing 25 percent and earnings from manganese and vanadium products relatively small in comparison. The export revenue of chrome alloys has grown at an average rate of 8.8 percent per annum over the last ten years while that of manganese alloys grew at an average of 5.5 percent annually. Chrome alloys, with substantial installed and modernized surplus capacity, are in a strong position to increase their market share whenever weak cyclical prices force high-cost world suppliers to exit the business. Overall ferrous processed mineral export earnings are expected to approach $2.0 billion in 2009.

100

CHROMIUM
N Kweyama

INTRODUCTION World chromite ore reserves are largely concentrated in Southern Africa. No less than 84 percent of the total is associated with the Bushveld Complex of South Africa and the Great Dyke of Zimbabwe (Table1). Together they supply 47 percent of world ore output, although they only account for 11 percent of global ore export. Both countries concentrate on adding value to the ore, and therefore export predominantly beneficiated products especially ferrochrome (Table 2). TABLE 1:
COUNTRY South Africa* Kazakhstan India Zimbabwe Finland Brazil Turkey China Albania Iran Other TOTAL
Sources: u + * Notes: #

WORLD CHROMITE ORE RESERVES, PRODUCTION AND EXPORTS, 2004


RESERVE BASEu Mt % 5 500 72,4 320 4,2 67 0,9 930 12,2 120 1,6 17 0,2 20 0,3
# # # # # #

Rank 1 3 5 2 4 7 6 -

626 7 600

8.2 100,0

kt 7 645 3 290 2 948 621 579 462 506 197 158 183 1464 17 153

PRODUCTION+ % Rank 44,5 1 19,1 2 17,2 3 3,6 4 3,3 5 2,6 7 2,9 6 1,1 8 0 10 1 9 8 100,0 4

EXPORTS+ kt % Rank 513 11,4 4 764 17 3 910 20 1 0 0 # # #

128 442 731 59 183 770 500

2,8 9,8 16,2 1,3 4,0 17,1 100,0

7 5 2 8 6

USGS Mineral Commodity Summaries, 2002 and 2003(For Reserve Base) Derived from ICDA Statistical Bulletin, July 2005 Mineral Bureau Included under Other

South African production and export data excludes the chromite tailings accumulated over several years after extraction of platinum-group metals from the UG 2 reef. DEVELOPMENTS IN 2004/2005

World Demand In 2004, 85 percent of chromite output was converted into ferrochrome for metallurgical applications. The remaining 15 percent of the ore produced was used in the refractory, foundry and chemical industries accounting for 7,5 percent, 2,8 percent and 4.4 percent respectively.
Stainless steel production accounts for more than 90 percent of ferrochrome consumption and is the primary influence of world chrome demand. An average growth trend of 4 percent per annum has characterized stainless steel production for four decades, with the trend approaching 6 percent over the last six years. In 2004, world stainless steel melting production reached an all time high of 24,9 Mt, which is up by 9,4 percent from 22,8 Mt in 2003. In 2004 Asia outpaced all other regions in stainless steel production growth recording a 13,8 percent increment while Europe and Africa realised a 4,1 percent increase and US output expanded by 3,5 percent. Unusually high economic growth rates in the developing economies of Asia and Eastern Europe underpinned the recent growth patterns. Growth was mainly driven by Asia, with China recording an exceptional growth rate of 40 percent year on year. The stainless steel market was tight during the year with high prices and escalating surcharges. Mills in Europe had to minimize their off peak stoppages which traditionally fall in the third quarter. The fourth quarter saw strong global output growth of 9,3 percent. Nickel price maintained its firm tone throughout the year while scrap shortages resulted in strong demand and prices of stainless steels main alloying materials, nickel and ferrochrome. 101

TABLE 2:
COUNTRY South Africa* Kazakhstan Zimbabwe India China Finland Russia Japan Brazil Sweden Norway Turkey Other TOTAL
Sources: + * Notes:

WORLD CHROMIUM FERROALLOY PRODUCTION AND EXPORTS, 2004


PRODUCTION+ % 45 14,7 3 8 10,6 4 5 0 3 1 0 0 3 100,0 EXPORTS % 54 17 7 4 2 0 4 0 0 1 0 0 7 100,0

kt 2 965 969 218 527 697 264 352 13 206 128 0 39 197 6 575

Rank 1 2 7 4 3 6 5 11 8 9 10

kt 2 617 820 360 239 97 31 219 3 0,3 71 0,5 41 361,2 4 819

Rank 1 2 3 4 6 9 5 10 12 7 11 8

Derived from ICDA Statistical Bulletin, July 2005 DME, Directorate Mineral Economics.

Gross mass of high, medium and low carbon ferrochrome and ferro-silicon-chrome

WORLD SUPPLY World chromite ore production advanced by 15 percent to 17,1 Mt in 2004 an increase of 15,5 percent above 14,8 Mt in 2003, in response to a shortage of scrap and strong ferrochrome prices. Halfway through the year China experienced an excess of ore stocks which resulted in accelerated ferrochrome production. World ferrochrome output expanded to 6,5 Mt in 2004, a modest 4 percent rise from 6.3 Mt in 2003. Eastern Europe and Asia were major contributors to ferrochrome output growth due to their export performance. China and Albania recorded a 23 and 19 percent hike in charge chrome exports respectively, while Russia and Kazakhstan experienced a combined 20 percent surge in foreign trade. South Africas ferrochrome production increased by 5 percent to 2,9 Mt in 2004, a modest expansion despite strong demand which indicate limited flexibility in adjusting capacity to increase output. In the beginning of 2004, the worlds largest chrome chemical plant in China was closed due to environmental concerns. The shut-down countered the effect of the ban on the use of chromic acid on timber treatment by the Environmental Protection Agency, and ensured a tight supply conditions in the chemical chrome market. WORLD PRICES According to the Industrial Minerals publication, published by Metal Bulletin in London, the prices of metallurgical chromite grade in 2004 traded in a range of $65 - $75/t in the first half of the year. During the second half the price range advanced to $75 95/t. Strong demand for metallurgical grade negatively affected supply to the foundry, chemical and refractory markets, with price ranges rising to $170 - $190/t, $125 - $150/t and $100 - $120/t respectively. The third and fourth quarter of 2004 saw the first roll-over in charge chrome prices since 2003 in a range of $0,72 - $0,74/lb. High charge chrome prices resulted from the strong rand and the high cost of inputs. Strong price display in the face of tight supply is evident in the price behaviour in terms of the local currency. The effective charge chrome rand price in the last two quarters of 2004 was equivalent to R 5 000/t c.i.f. which exceeded the previous all time high of R4 000/t c.i.f. in 2002.

102

TABLE 3:
YEAR

SOUTH AFRICAS PRODUCTION AND SALES OF CHROMITE ORE 1995 - 2004


PROD. kt 085 078 162 480 817 662 502 436 405 645 LOCAL SALES EXPORT SALES Mass Value (FOR) Mass Value (FOB) kt R000 R/kg kt R000 R/kg 3 798 359 973 95 1 148 247 033 215 3 608 404 921 112 1 353 429 838 318 4 913 575 588 117 1 288 424 626 330 5 093 575 798 113 859 335 766 391 5 815 694 220 119 841 310 370 369 5 689 718 930 126 1 090 360 794 331 4 598 625 023 136 931 377 286 405 5 300 786 979 148 651 314 380 483 6 318 973 837 154 501 177 880 354 6 736 1 366 675 203 513 318 893 622 TOTAL Mass Kt 4 946 4 961 6 201 5 952 6 656 6 779 5 529 5 951 6 820 7 249 SALES Value R000 607 006 834 759 1 000 214 911 564 1 004 590 1 079 724 1 002 309 1 101 358 1 151 717 1 685 568

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

5 5 6 6 6 6 5 6 7 7

SOUTH AFRICA South Africas chrome ore output expanded by 3,2 percent from 7,4 Mt to 7,6 Mt in 2004. Capacity constraints limited the ability of local chromite producers to respond to strong world demand (Table 3). Chromite ore export mass reversed its declining trend by achieving two percent growth from 2003 reaching 0.51 Mt in 2004 from 0,50 Mt. Escalating ore prices resulted in a corresponding export revenue hike of 79 percent in 2004 from R1,7 billion in 2003 to R3,1 billion. Although total ore sales mass increased by 6,3 percent from 6,8 Mt to 7,2 Mt in 2004, total sales value realised a growth of 46 percent from R1,1 billion to R1,6 billion in 2004 consistent with the overheated market suffering from supply constraints Ferrochrome local sales mass and value increased by 60 percent from 0,3 Mt to 0,4 Mt and 125 percent from R0,8 billion to R1.8 billion respectively, underpinned by strong consumer demand in the local economy. Export sales mass for ferrochrome recorded a slight decline, but a strong price performance during the year resulted in a 30 percent increase in export value from R7,65 billion in 2003 to R9,9 billion in 2004. The combined revenue from chrome ore and ferrochrome sales reached an all time high of $2 billion in 2004, a 56 percent improvement from $1,28 billion in 2003. Frequent steep price adjustments and firm demand were the main factors behind this performance. Data shown in Tables 1 and 3 does not include the use of previously mined UG2 dump material in recent years to complement newly mined ore feed in local ferrochrome production. Hernic is building a 78 MVA closed furnace and a 350 000t/y Outokumpu pelletising and sintering plant at a cost of R 429 million, to be commissioned at the end of 2005. Merafe Resources has acquired a 50 percent interest in the chrome reserves previously owned by Samancor in the Wonderkop joint venture. Merafe also purchased 50 percent and 26 percent of Kroondal and Marikana mine reserves, respectively. The above transactions will raise Merafes stake in the Xstrata-Merafe joint venture to 17.5 percent by July 2006. TABLE 4: SOUTH AFRICAS PRODUCTION AND SALES OF FERROCHROME 1995 - 2004
LOCAL SALES Mass Value (FOR) kt R000 R/kg 112 238 853 2 100 111 224 062 2 020 139 279 647 2 019 142 300 333 2 115 160 322 877 2 018 185 431 748 2 332 170 399 012 2 347 218 631 996 3 000 300 886 219 3 000 486 1 849 168 4000 EXPORT SALES Mass Value (FOB) kt R000 R/kg 1 355 2 851 299 2 105 1 415 2 589 764 1 830 1 633 3 306 948 2 025 1 650 3 904 556 2 367 1 897 3 885 708 2 048 2 119 5 461 517 2 578 1 976 4 717 028 2 387 2 190 6 078 759 3 000 2 640 7 658 552 3 000 2617 9 903 486 4000 TOTAL SALES Mass Value Kt R000 1 467 3 087 152 1 526 2 813 826 1 772 3 586 595 1 792 4 204 889 2 057 4 208 585 2 304 5 893 264 2 146 5 116 040 2 408 6 710 756 2 941 8 544 771 3103 11 752 654

YEAR 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

PROD. kt 1 517 1 478 1 940 2 025 2 155 2 574 2 141 2 351 2 813 2 965

103

OUTLOOK Growth in Chinas stainless steel consumption is expected to remain at high levels in line with its overall economic growth rate in 2005. However, a slowdown in world economic growth is expected as a result of under-performing EU economies and persistently high energy costs. Therefore it is forecast that growth in stainless steel will approach 7 percent. In 2004 stainless steel prices remained at elevated but stable levels. Escalating nickel prices raise prices for the final consumers, resulting in a higher proportion of ferritic grades, which do not contain nickel, in stainless steel production. The anticipated reduction in output by EU producers is expected to bring demand and supply into balance, resulting in stable prices and reduced surcharges in 2005. Weak world economic fundamentals are expected to result in a slower growth of above 5 percent in demand for chromite ore and ferrochrome in 2005 from the record level output in 2004. Additional production capacity of both ore and ferrochrome towards the end of 2006 will result in excess supply negatively affecting prices. The rand to dollar exchange rate will strongly influence the extent of price adjustment in the ferrochrome market. Supply discipline will be crucial in maintaining healthy price levels, as it is possible that the rand will remain strong in the medium term. TABLE 5: SOUTH AFRICAN CHROMITE MINES: EMPLOYMENT AND REMUNERATION 2000 - 2004
EMPLOYEES 5 425 5 026 5 404 5 775 6744 TOTAL REMUNERATION R000 332 768 379 309 338 778 419 223 468 414

YEAR 2000 2001 2002 2003 2004

REFERENCES

ICDA Statistical Bulletin in 2005 ICDA News 2004 - 2005 Chrome Market Spotlight, 2004 - 2005 Tex Report 2004 - 2005 Industrial Minerals 2004 - 2005

104

IRON ORE
Mpumzi Bonga

GLOBAL DEVELOPMENTS DURING 2004/2005 PRODUCTION World iron ore production increased by 11 percent to reach 1 200 Mt in 2004 from 1 100 Mt in 2003 (Table 1). Increased production was reported in all major producing countries except Canada. Earlier peaks in world production occurred in 1989 (910 Mt), 1997 (925 Mt) and 2 000 (970 Mt). Brazil remained the largest producer at 270 Mt, with Australia in the second place at 241 Mt. India and China achieved the largest year on year increases of 22 percent and 19 percent, respectively. Australias production grew by 14 percent, Brazils by 10 percent, followed by Ukraine, Russia and Kazakhstan, each of which recorded increases of approximately 6 percent. According to output by region, although Africa recorded the lowest increase of 1,7 percent, South Africa increased its production by 3,6 percent. The contribution of developing countries to total global iron ore production in 2004 remained at 55 percent, the same as in 2003, while the CIS contributed 15 percent. On a comparable grade basis China increased its share of world production by 12 percent, or 146 Mt, its third consecutive annual increase surpassing the countrys previous highest contribution level of 125 Mt in 1997. TRADE Total world exports increased for the third successive year reaching 634 Mt, up 8,5 percent as international iron ore trade reached a new record. Developed market economies accounted for 40 percent of iron ore exports, the CIS for 7,5 percent, while the developing countries accounted for 51 percent in 2004. Despite being the second biggest producer, Australia was the leading exporter at 211 Mt with the largest producer Brazil in second place at 201 Mt. The third most important exporter, India increased its exports for the fifth consecutive year to 63 Mt, followed by Canada and South Africa with 22,5 Mt and 25 Mt, respectively. Japans imports increased by 1,9 percent to 134,9 Mt, but China surpassed Japan as the number one importer (208 Mt) accounting for 32 percent of total world imports, 40 percent up on the previous year. Collectively, China, Japan and Republic of Korea accounted for 59 percent of total world imports, while the EU accounted for 26 percent. Seaborne iron ore trade grew at approximately 13 percent to 590 in 2004 on the back of high demand from Asia, particularly China. Freight rates were stubbornly high due to increase iron ore imports resulting from the expansion of the Chinese steel industry as well as higher coal demand worldwide which put pressure on freight capacity. Port congestion led to long waiting times which reduced the availability of shipping capacity while the total fleet has not been growing at the same pace as demand for new capacity.

105

Table 1:
COUNTRY

WORLD RESERVES, PRODUCTION AND EXPORTS OF IRON ORE, 2004


EXPORTS % Rank 31,7 2 33,3 1 7,7 4 9,9 3 1,3 9 3,9 5 3,6 6 2,8 7 1,5 8 4,3 100 100

RESERVE BASE* PRODUCTION Mt % Rank Mt % Rank China# 15 000 9,4 3 145,7 12,2 4 Brazil 11 000 6,9 5 270,5 22,6 1 Australia 25 000 15,6 2 241,0 20,1 2 CIS 63 000 39,4 1 181,3 15,1 3 India 4 000 2,5 7 120,6 10,1 5 USA 14 000 8,8 4 54,7 4,6 6 South Africa 1 500 0,9 9 39,3 3,3 7 Canada 2 500 1,6 8 28,1 2,4 8 Sweden 5 000 3,1 6 22,3 1,9 9 Venezuela 1 500 0,9 9 20,0 1,7 10 Other 18 000 11,0 74,7 6,0 TOTAL 2004 160 500 100 1 198,2 100 2003 1 100
Sources: USGS, 2003 (for Reserve base ) UNCTAD Trust Fund on Iron Ore, 2004 DME, Directorate Mineral Economics. Notes: * #

Mt 200,9 210,7 48,6 62,7 8,4 24,7 22,5 17,4 9,3 28,3 633,5 581,0

Iron content China produced 300 Mt of low grade ore, which has been converted by a factor of 0.47 to a world equivalent average iron content of 146.6 Mt by UNCTAD

PRICES Iron ore contract prices for 2004 were settled in April 2004 at around 18 percent higher than in 2003. Negotiations for 2005 started in December with the first agreement being reached in February 2005 at an unprecedented 71,5 percent increase on 2004 between supplier of Brazil CRVD and Japas Nipon Steel. The worlds largest iron ore producing company CVRD maintained its role as price setter during negotiations in 2005, as has been the case for the last five years; however, BHP Billiton, initially demanding an additional 8,5 percent freight premium, caused the negotiations to drag on into April but eventually dropped these demands to settle at the same level of increase as other suppliers. Despite protestations by some steel makers, increases in pellet prices were even higher at 91 percent for DRI and 87 percent for blast furnaces. The average annual increase in the contract price of iron ore in 2005 was the highest ever with price levels approaching those of the 1970s and 1980s. Due to the persistently high prices being demanded by iron ore producers, a tendency has emerged among steelmakers to look for captive mines for diversification as well as future security of supply. Although sport prices were high in 2004, they were lower compared with 2003. India, due to its relative proximity to China, is able to take advantage of the high Chinese demand with freight rates that are around 20-30 percent lower than major competitors. LOCAL DEVELOPMENTS DURING 2004/2005 In April 2004, Anglo-Dutch steel producer Corus Group and Kumba Resources signed a five year contract to supply Sishen iron ore at a rate of 2,6 Mt per year increasing progressively to 3,3 Mt per annum by 2008/2009. Sishen South, situated 70 km south of Sishen mine, will depend on an additional development to rail and port infrastructure for its expansion. In 2004 Kumba and Transnet signed an agreement, whereby Transnet will invest R4,5 billion to upgrade rail and port facilities to handle the additional output resulting from a committed R3 billion expansion at Kumbas Sishen mine which will raise production by 12 Mt per annum, a considerable part of which will be exported to China. Transnet plans to upgrade the capacity of the Orex rail line and the port of Saldanha to handle exports of 41 Mt/a by 2007/08. An alternative Sishen-Ngqura export route is also being explored to cater for extra volumes since the eventual total output from Sishen and Assmang is expected to exceed the capacity of the upgraded Sishen-Saldanha route. South Africas iron ore production rose by 3,3 percent from 38,8 Mt in 2003 to 39,3 Mt in 2004 (Table 3) mainly as a result of increasing demand for fine Sishen ore from Chinese mills. Consequently, export sales went up 2,8 percent to 24,75 Mt, with the Pacific Rim countries 106

accounting for almost 65 percent of export volumes. Local consumption increased by 2,9 percent to 12,43 Mt, reflecting a stronger domestic market during the year, while local sales value increased by 8.0 percent to R1 145,6 million, and revenue from export sales revenue went up 9,9 percent despite the strong rand. Total sales mass grew by 2 percent while the total value of sales rose by 9.4 percent. The average local price grew by 4,5 percent because of the higher domestic consumption while the export unit price increased by 6,9 percent due to higher annual international iron ore prices. Kumba Resources, now a subsidiary of Anglo-American, is under pressure to find BEE partner as required by both the Mining charter and the Mineral and Petroleum Resources development Act of 2002 promulgated in May 2004. Kumba is therefore expected to announce an empowerment partner shortly, and ARM is a potential candidate to buy into Kumba to reduce Anglos majority stake to the previously agreed level of 49,5 percent. The change in Kumbas ownership in favour of Anglo has cost Kumba its share of the $1,6 billion Hope Downs Project in Australia after its partner, Hancock Prospecting, decided to exercise a first right of refusal in terms of a breach of the JV agreement which precluded new ownership of the company; this action was supported by the Western Australias government regulatory authorities. As a result Hancock Prospecting has paid over A$234 million (R1,2 billion) to Kumba and Rio Tinto has stepped in as the new JV partner in the Hope Downs project. Hope Downs has reserves of 450 Mt with total resources estimated at around 850 Mt. Kumba has meanwhile turned its attention to the Falane project in Senegal, a deposit with indicated resources that could see it produce 10 to 15 Mt per year over a period of 20 years. The competition Commission has allowed LNM to raise its stake in Mittal Steel (formerly Iscor) to above 50 percent despite protestations from organised labour and the IDC. The state gave this take-over the go ahead after it secured an undertaking from LNM that a more benign developmental pricing model would be used for local sales. Mittal Steel has thus far failed to implement such a new pricing structure. In the interim, Government, impatient with Mittals delaying tactics, has revoked antidumping duties protecting Mittal against cheap steel imports from Russia and the Ukraine and is also considering lifting the 5 percent duty currently applicable on imports. TABLE 2:
COUNTRY Mass Mt 272,5 98,5 112,7 64,3 46,4 47,5 38,7 32,9 28,3 32,6 280,2 9,5 1054

WORLD CRUDE STEEL PRODUCTION, 2004


PRODUCTION 2004/2003 Growth % Share 24,0 5,2 2,0 4,6 3,6 2,6 4,9 5,7 5,6 2,7 4,2 100 25,8 9,3 10,7 6,1 4,4 4,5 3,7 3,1 2,7 3,1 25,6 1,0 9,3

Rank 1 3 2 4 6 5 7 8 10 8 19

China USA Japan Russia Germany South Korea Ukraine Brazil Italy India Other Of which SAfrica TOTAL
Source: IISI,2004

Efforts to restructure the iron ore mining industry in the Northern Cape to optimise the exploitation of the remaining resources of iron ore in the Kalahari Field have been revived after talks between Assmang and Kumba were indefinitely postponed when the two could not agree on certain issues at the beginning of last year. These two major players each have unmined resources adjacent to the others current operations. The purpose of the discussions was for these companies to swap their adjacent rights for the purpose of rationalising future mining activities but they could not agree on a suitable method for evaluating these remaining high grade deposits.

107

TABLE 3:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF IRON ORE, 1995-2004.
LOCAL SALES Mass Value (FOR) kt R000 R/t 11 157 384 407 34 10 443 400 928 38 11 157 466 635 42 11 654 517 058 44 9 102 484 584 53 10 745 595 643 55 11 373 684 202 60 11 057 1 009 107 91 12 079 1 060 635 88 12 430 1 145 600 92 EXPORTS SALES Mass Value (FOB) kt R000 R/t 21 847 1 273 479 58 19 328 1 290 756 67 20 730 1 619 345 78 22 093 1 973 948 89 21 095 1 721 421 82 21 397 2 469 106 115 23 519 3 444 701 146 24 303 4 304 611 177 24 076 3 130 436 130 27 745 3 439 885 139

YEAR PRODUCTION kt 944 828 224 964 512 707 757 484 085 322

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

31 30 33 32 29 33 34 36 38 39

OUTLOOK Growth in the iron ore industry is expected to continue in 2005 with China as the growth engine driving both the steel and iron ore businesses. Chinas crude steel production in the first quarter of 2005 was already 106 Mt, up 31 percent from 81 Mt in 2004 and therefore based on a comparison with the performance in 2004 when iron ore imports shot up by 44 percent to 208,1 Mt from 148,1 Mt in 2003, crude steel output in 2005 should exceed the record of 1054.6 Mt set last year. World demand for iron ore could also reach new heights in 2005, in fact Chinas huge appetite for imported ore is likely to be the dominant factor determining future short-to mediumterm growth trends in global iron ore seaborne trade. China has adopted a two pronged strategy to secure its needs for iron ore imports by Investing in joint ventures in iron ore production abroad Securing long term contracts at certain price levels. Given the vigour with which these measures are being pursed it appears that the Chinese have no intentions of slowing down their steel production and therefore iron ore consumption is bound to rise as the authorities attempt to move development to the yet under developed regions of the country. If this happens, fears of overheating the countrys economy would prove baseless as further industrialization will ensure job creation and increase spending power. Since attempts by the Chinese authorities to moderate growth succeeded in achieving a soft landing for the economy last year, the short and long-term outlook for both the iron ore and steel industries seems to be promising. The future performance of South Africas iron ore industry is inextricably tied to changes in the exchange rate of the rand against the dollar, which is a function of economic and political factors, and infrastructure. The strengthening of the currency lately seems to have dampened the pace of growth of the iron ore and related industries as shown by the postponement of certain projects thus curtailing job opportunities that these projects may have introduced. Nevertheless, international prices could show improvement in 2006, thus benefiting ore producers, irrespective of exchange rate developments, as steel producers compete for ore supplies after ore producers have supplied their customers tied up in long-term contracts. Furthermore, the expansion in rolling stock to cater for transporting additional tonnages of iron ore from mines to harbours for export, as well as expansion of export facilities at ports to handle these larger volumes, is likely to help South Africa regain some or all of the market share lost due to lack of rail and port infrastructure. South Africa, whose share of the Chinese iron ore imports used to be 12 percent but had shrunk to 6 percent in 2004, stands to gain if the infrastructure development programme can be accelerated.

108

TABLE 4:

SOUTH AFRICAS MANGANESE MINES EMPLOYMENT AND REMUNERATION, 1997 2003


EMPLOYEES 5 019 5 022 5 389 5 961 7 142 TOTAL REMUNERATION R000 345 814 379 713 457 804 523 607 575 174

YEAR 2000 2001 2002 2003 2004

REFERENCES THE TEX REPORT UNCTAD IISI,2004

109

MANGANESE
Mpumzi Bonga

DEVELOPMENTS DURING 2004/2005 WORLD DEMAND World crude steel production rose to 1054,6 Mt in 2004, representing a 9,4 percent improvement on the 964 Mt produced in 2003. With the exception of Oceania (Australia & New Zealand), annual output increased in all manganese producing regions, with China experiencing the highest growth of 23,2 percent from 222,4 Mt to 272,4 Mt. Chinese contribution to global crude steel production increased from 20 percent in 2003 to 25 percent in 2004, while crude steel production in Japan increased by a modest 2,0 percent and African production went up by 1,2 percent. Brazil became the eighth largest producer, displacing India to ninth position. During the first four months of 2005, Chinese crude steel production remained the dominant driver of world demand for manganese ore and alloys, but lower steel prices brought about by stricter Chinese government controls in the steel market and weakening global demand resulted in a slump, which started in April and deteriorated in May and appeared set to last until September 2005. Chinese crude steel production totalled 29,73 Mt in May 2005, up 37,5 percent from the year before while its cumulative total from January-May 2005 totalled 136,15 Mt, up 27,4 percent compared with the same production in 2004 and manufactured steel products went up 25,4 percent to 127,4 Mt. The buoyant world steel market resulted in manganese ore demand eclipsing supply during the second and the last quarters of 2004 driving spot prices of the commodity up sharply. Suppliers responded by increasing production capacity to satisfy the surging demand, particularly from China, which has increased its imports of both low and high-grade manganese ore. Supplydemand situation for manganese has been extremely cyclical since 2003 with deficits and excesses in production alternating quarterly to the extent that an 89 kt deficit at the end of 2004 was translated into a surplus of 140 kt during the first quarter of 2005. TABLE 1: WORLD MANGANESE RESERVE BASE, MINE PRODUCTION AND EXPORTS, 2004
RESERVE BASE# Mt % Rank 100 2,0 4 3 4 000 80,0 1 4 75 1,5 5 3 560 11,2 2 3 150 3,0 3 2 36 0,7 7 2 56 1,1 6 2 * * 9 0,2 8 * * 14 0,3 7 5 000 100 29 PRODUCTION % Rank 11,5 4 14,4 1 2 11,8 2 2 11,6 3 1 8,3 6 2 6,9 7 9,0 5 1 0,3 9 1 0,8 8 0,3 9 25,7 1 100 13 EXPORTS % * 18,5 21,6 8,6 16,9 2,6 11,7 11,6 * 8,5 100

COUNTRY China South Africa+ Australia CIS Gabon India Brazil Ghana Mexico Iran Other TOTAL

kt 420 280 481 450 460 035 676 92 233 89 128 347

kt * 420 827 125 212 338 534 520 * 0* 143 119

Rank 8 2 1 6 3 7 4 5 8 -

Sources: USGS, 2003 (for Reserve base ) + DME, Directorate Mineral Economics. Notes: # * Manganese content Included under Other

WORLD SUPPLY In response to the increasing demand from steel manufacturers, global manganese ore production rose by 24,2 percent from 23,6 Mt in 2003 to 29,3 Mt in 2004 (Table 1) which equates to a content of 10,3 Mt of contained manganese (Mn). In 2004 the production of high grade (>44%Mn) manganese ore increased by 30 percent while medium grade (30-44%Mn) went up 15 percent and low grade (<30%Mn) remained unchanged relative to 2003 production figures. World manganese ferro-alloy production improved by 9,3 percent to 10,6 Mt (Table 2). 110

Production capacity for manganese ore increased by 6,4 percent from 29,6 Mt in 2004,to 31,5 Mt in 2005, as major producers expanded their production capacity in anticipation of higher demand. The following factors contributed to the high demand for manganese ore : Anticipated rise in world crude steel production output The increase to 9,5kg of manganese units consumed per metric ton of crude steel produced. Growth in production capacity A sharp rise in world demand for ferromanganese alloys. TABLE 2: WORLD PRODUCTION AND EXPORTS OF FERROMANGANESE AND FERROSILICOMANGANESE, 2004
PRODUCTION % 37,8 21,9 7,2 1,6 4,8 5,3 5,5 3,9 2,5 2,6 6,8 100 EXPORTS % 17,3 27,1 15,9 3,5 0,1 12,3 2,2 3,1 1,1 4,2 13,2 100

COUNTRY China CIS South Africa+ France Japan Norway India Brazil South Korea Australia Other TOTAL kt 4 009 2 324 769 173 514 569 587 412 264 277 724 10 621

Rank 1 2 3 10 6 5 4 7 9 8

kt 826 1 290 759 168 8 584 106 150 55 199 621 4 766

Rank 2 1 3 6 10 4 8 7 9 5

Sources: Metal Bulletin Research, 2003 + DME, Directorate Mineral Economics

WORLD PRICES Japanese consumers usually negotiate prices with their Australian and South African suppliers at about the end of the first quarter of each year. Contracts for 2005 were fixed at $3,99 per metric ton unit (Mtu which refers to 1 percent of a ton of contained manganese), an increase of 63 percent on the 2004 price of $2,45 per metric ton unit. This is a new contract price, exceeding the 1990-1991 price of $3,35 per metric ton unit. The second high price reflected high demand for the commodity, long-term contracts signed between China and major suppliers at higher contract prices of $4,0 per metric ton unit and the higher Mn units consumed in producing one metric ton of crude steel. The average price of high carbon ferromanganese (HCFeMn) in Europe rose to 971/t in 2004, an increase of 90,4 percent over 505/t in 2003. However during the first half of 2005, prices went down dramatically averaging some 652 per ton. Although the average European silicomanganese price went up from 534/t in 2003 to 965/t in 2004, during the first half of 2005 the price has averaged only 612 per ton. SOUTH AFRICA South African manganese ore production rose by 22,3 percent to 4 282 kt in 2004, and exports increased by 22,3 percent to 2 403 kt (Table 3). The local sales value increased by 6,8 percent to R656,4 million in 2004, while export earnings rose 26,9 percent to R1,082 billion in 2004 due to higher sales driven by strong demand.

111

TABLE 3:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF MANGANESE ORE, 1995 - 2004
LOCAL SALES Value (FOR) R000 R/t 239 889 W 246 209 W 308 526 W 321 337 W 319 308 W 368 604 W 423 621 W 583 603 W 614 393 W 656 435 W EXPORTS SALES Value (FOB) R000 R/t 452 204 284,5 537 665 326,3 578 603 326,4 634 027 377,4 615 190 392,2 863 512 468,0 877 819 575,0 1 042 952 678.0 852 983 436.0 1 082 285 450,0

YEAR PRODUCTION kt 199 240 121 044 122 635 266 322 501 282 Mass kt W W W W W W W W W W

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note:

3 3 3 3 3 3 3 3 3 4

Mass kt 1 589 1 648 1 773 1 680 1 569 1 845 1 528 1 539 1 956 2 403

W Withheld

The reversion of custodianship of all South Africas mineral resources to the state has seen mining companies re-applying for mining rights while some investors have formed partnerships with BEE companies to apply for prospecting and mining permits. This could permit the entry of a third significant manganese player, in addition to Samancor and Assmang. Recently , it was reported that prospecting rights to certain Northern Cape farms containing manganese have been awarded to three BEE groups resulting in a loss of a potential resource of 350 Mt for Assmang (a subsidiary of ARM) where the old order rights were vested. Renewal of these old order rights by the company would have required ARM to have a 51 percent BEE partner in terms of the new Mineral and Petroleum Resources Development Act of 2002. Although South Africa holds 80 percent of the world manganese resources it accounts for only about 22 percent of the global ore export market. As the South African governments drive for more domestic beneficiation of manganese ore gains momentum, its share of the world export market of manganese ferro-alloys increased as the country supplied 26 percent of the world high carbon ferromanganese and 9 percent of the silicomanganese (figures 1&2), in 2004, a significant improvement on the 17 percent and 7 percent , respectively supplied in 2003. FIGURE 1: WORLD MANGANESE ORE RESERVES

112

FIGURE 2:

WORLD SUPPLY OF HC FERROMANGANESE BY COUNTRY

FIGURE 3:

WORLD SUPPLY OF SILICOMANGANESE BY COUNTRY

TABLE 4:

SOUTH AFRICAS HIGH AND MEDIUM-CARBON FERROMANGANESE PRODUCTION, LOCAL SALES AND EXPORTS, 1995 2004
LOCAL SALES Value (FOR) R000 R/t 100 352 1 573,0 129 356 1 868,4 101 714 2 062,0 156 223 2 056,4 213 870 2 115,7 292 110 2 172,4 329 750 2 517,0 530 166 3 280,0 493 599 3 272,0 783 993 5 127,0 EXPORTS SALES Value (FOB) R000 R/t 952 268 1 678,0 880 763 1 956,9 861 348 1 898,9 856 393 1 975,8 855 597 2 029,2 1 101 710 1 975,8 1 232 009 3 035,4 1 805 324 3 795,0 1 352 433 3 093,0 2 495 947 5 600,0

YEAR PRODUCTION kt 173 458 759 120 106 873 844 954 362 914 Mass kt 804 234 322 971 089 483 009 639 843 914

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

507 548 498 542 527 596 523 618 607 611

63 69 49 75 101 134 131 161 150 152

Mass kt 567 543 450 086 453 597 433 432 421 636 458 131 405 876 475 645 437 181 445 683

113

TABLE 5:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF OTHER* MANGANESE ALLOYS, 1995- 2004
LOCAL SALES Value (FOR) R000 R/t 60 924 2 050,0 89 459 2 296,0 117 052 2 473,2 130 452 2 613,3 127 316 2 973,3 119 369 2 795,1 121 337 3 218,1 122 736 3 495,0 140 054 3 345,7 148 026 3 798,4 EXPORTS SALES Value (FOB) R000 R/t 645 654 2 330,8 683 973 3 235,4 830 646 3 119,1 979 022 3 279,7 854 154 3 754,7 977 552 4 406,1 1 099 792 5 228,2 1 256 592 5 840,0 1 181 787 4 373,3 1 833 313 5 956,0

YEAR PRODUCTION kt 625 034 238 845 545 400 176 802 152 928 Mass kt 714 965 328 918 819 704 705 293 860 971

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note: *

277 294 326 308 307 310 259 315 313 373

29 38 47 49 42 42 37 35 41 38

Mass kt 277 007 211 404 266 313 298 512 227 488 221 850 210 359 215 259 270 225 307 821

Individual product details withheld for reason of company confidentiality

Total manganese alloy production in South Africa (Tables 4 and 5) increased by 7,1 percent in 2004 to 985,8 kt, while exports increased by 6,5 percent to 753,5 kt. Total sales value increased by 65,9 percent to R5,26 billion, while export earnings went up by 71,2 percent to R4,33 billion. TABLE 6: SOUTH AFRICAS MANGANESE MINES EMPLOYMENT AND REMUNERATION, 1997 2003
EMPLOYEES 2 723 2 458 2 281 2 001 2 495 2 460 3 236 TOTAL REMUNERATION R000 114 340 117 887 133 976 132 778 179 203 208 150 241 433

YEAR 1998 1999 2000 2001 2002 2003 2004

OUTLOOK World crude steel output is increasing at an accelerating rate, particularly in China, it seems that China should be able to maintain sustainable growth of 7-8 percent per annum over the next decade. In line with the International Manganese Institute (IMnI) that world steel production will reach 1 245 Mt by 2010 with China accounting for 33 percent or 413 Mt of the total output, China is already producing a quarter of the global output. The prediction that Chinese steel production growth will subside from more than 20 percent to 5 percent per annum after 2005 has yet to materialise, as growth for the first half of 2005 is already at 27,4 percent. While the drive by Chinese authorities to enforce environmental compliance among ferro-alloy producers and the stated intention to remove the subsidies that currently encourage overproduction, seem to be gaining momentum, producers are reported to have made attempts to export more tonnage in order to beat the deadlines for removing these incentives. Furthermore it is expected that the production of manganese alloys (ferromanganese and silicomanganese) will drop drastically as Chinas lower prices make production unprofitable for some Chinese producers as this was evidenced by the drastic reduction towards the end of last year and the beginning of 2005. These measures, however, may upset the world supply-demand balance to such an extent that ensuing shortages may lead to an upward spiral in prices. The outcome will depend largely on how strictly the authorities enforce their environmental regulations as well as control over excessive production of manganese alloys. REFERENCES THE TEX report (2004 - 2005) The International Manganese Institute (2004 - 2005) The International Iron and Steel Institute (2004 - 2005)

114

SILICON
Mpumzi Bonga

DEVELOPMENTS DURING 2004/2005

World Demand World demand for silicon depends on international markets for aluminium castings and for silicon chemicals. Demand for ferrosilicon is closely allied to developments in the global steel industry. South Africa is a minor role-player supplying 7,6 percent and 3,8 percent of world exports of silicon metal and ferrosilicon, respectively (Tables 1 and 3)
World refined aluminium consumption grew by 8,1 percent to 29,5 Mt in 2004 compared with 2003. Wold crude steel production grew by 9,4 percent in 2004, reaching a record level of 1054,6 Mt, thus leading to a strong demand for ferrosilicon. TABLE 1:
COUNTRY China USA Brazil Norway CIS France South Africa Canada Other TOTAL Mt 385,1 184,7 180,7 179,4 112,1 108,2 50,5 44,8 59,4 1 319

WORLD PRODUCTION AND EXPORTS OF SILICON METAL, 2004


PRODUCTION+ % 29,2 14,0 13,7 13,6 8,5 8,2 4,9 3,4 4,5 100 EXPORTS % 42,3 4,5 15,7 13,7 10,8 1,3 4,4 3,3 2,8 100

Rank 1 2 3 4 5 6 7 8 9

Mt 545,0 58,0 202,0 176,0 139,1 57,0 42,0 17,4 1 288

Rank 1 5 2 3 4 9 6 7 7

Sources: + Data estimated (silicon content) from information supplied by various bureaux

SILICON METAL IN 2004 Estimated global output improved to 1 319 kt in 2004 from an estimated 1 182 kt in 2003. As a result of the improved demand, South Africas production of silicon metal increased by 3,3 percent to 50,5 kt (Table 2). Despite dollar earnings rising by a significant 16,3 percent in 2004, due to the stronger rand, export receipts in rands decreased by 0,8 percent from R392,6 million to R389,4 million. Likewise, although contract prices improved by 13,2 percent in 2004, from an annual average of $1 386/t in 2003, to $1 586,5/t in 2004,the average export sales unit price fell by 12,0 percent from R9 630/t in 2003 to R8473/t in 2004 (Table 2). TABLE 2: SOUTH AFRICAS PRODUCTION AND SALES OF SILICON METAL, 1995 - 2004
LOCAL SALES Value (FOR) R000 R/t 16 366 4 303 18 922 6 260 21 487 7 240 16 951 7 705 8 493 7 271 9 493 6 691 15 215 7 002 38 586 8 486 49 713 8 739 65 414 7 403 EXPORTS SALES Value (FOB) R000 R/t 115 323 4 494 148 358 6 055 202 837 6 359 270 860 6 999 237 754 7 179 274 498 6 702 313 627 7 956 320 007 10 766 392 582 9 630 389 430 8 473

YEAR PRODUCTION kt 30.1 28.5 34.0 32.6 35.8 40.6 39.4 42.5 48.5 50.5 Mass kt 3,8 3,0 3,0 2,2 1,2 1,4 2,2 4,3 5,7 8,8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mass kt 25,7 24,5 31,9 38,7 33,1 41,0 39,4 29,7 40,8 45,9

FERROSILICON IN 2004 World ferrosilicon production increased by 2,3 percent to an estimated 3 717 kt in 2004, while exports increased to nearly 1 760 kt. The USA and EU imposed antidumping duties on imports of ferrosilicon from Russia and China in 2004 thus driving up prices of these commodities, 115

particularly in those two major markets. Although the Chinese authorities have revised import tax rebates on several ferro-alloys, the 13 percent rebate on ferrosilicon remained unchanged in 2005. Asian spot prices of ferrosilicon rose by 32,6 percent from $611 per ton in 2003 to $810 per ton in 2004 as a result of constraints in supply from Chinese ferrosilicon producers, coupled with a very strong domestic market in China. Spot prices for the first six months in USA averaged $836/t, while EU spot prices were about 639/t. Prices have remained flat for the first half of 2005. South Africas total sales of ferrosilicon dropped by 1,7 percent in 2004 to 142 kt, of which 59 percent was sold into the local market, predominantly to the steel industry (Table 4). Export sales mass dropped to 57,8 kt, a 12 percent decline. TABLE 3:
COUNTRY China CIS Norway USA South Africa Brazil France Iceland Other TOTAL
Sources: + #

WORLD PRODUCTION AND EXPORTS OF FERROSILICON, 2004


PRODUCTION+ % 41,8 21,3 8,3 4,4 3,9 3,7 2,0 1,4 13,2 100 EXPORTS % 40,7 19,1 14,5 1,0 3,8 4,1 1,6 3,1 12,1 100

Mt 1 554,0 7 91,7 308,5 163,5 139,8 138,5 74,3 52,0 495,7 3 717

Rank 1 2 3 4 5 6 7 8

Mt 694,0 352,0 187,0 60,0 57,8 85,0 37,5 68,0 219,1 1 760,0

Rank 1 2 3 5 7 4 8 6

Data estimated (in silicon content) from information supplied by various bureaux Directorate Mineral Economics

TABLE 4:

SOUTH AFRICAS PRODUCTION AND SALES OF FERROSILICON, 1995 - 2004


LOCAL SALES Value (FOR) R000 R/t 135 250 2 356 172 015 2 788 223 698 3 155 203 824 3 293 201 832 3 364 242 824 3 441 245 946 3 733 325 226 4 092 364 716 4 618 436 095 5 174 EXPORTS SALES Value (FOB) R000 R/t 118 677 2 356 99 814 2 788 141 019 3 155 163 989 3 293 153 633 3 364 120 402 3 441 110 771 3 733 306 851 4 203 280 285 4 267 268 786 4 648

YEAR PRODUCTION kt 92,7 87,3 102,2 108,4 106,0 108,5 107,6 141,7 135,3 140,6 Mass kt 57,4 61,7 70,9 61,9 60,0 70,6 65,9 79,5 79,0 84,3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Mass kt 50,5 30,3 47,5 48,0 46,4 36,6 31,4 73.0 65,7 57,8

OUTLOOK World steel production should increase further this year to reach the 1,2 billion ton mark by 2007. China, which is already producing 25 percent of global output is eventually expected to account for almost 33 percent of world crude steel output. Primary aluminium production also expected to continue with its upward trend. This increase in steel and primary aluminium production will result in higher demand for both silicon metal and ferrosilicon in 2005 and so Chinese production is expected to reach record levels as it has enormous silica resources as well as massive investment in ferro-alloy plants. However the continued dominance of export markets by supplies from China is under threat from the imposition of antidumping duties by the USA and EU. Shortages of Chinese ferrosilicon as a result of these antidumping duties may lead to disruptions in supply in the West and thus keep markets in deficit. Further market tightness can be expected as a result of the rise in domestic demand resulting from strong growth in Chinese crude steel production. The 5 percent reduction in export rebate may prevent the Chinese from exporting on 116

the same scale as last year forcing them to concentrate on the domestic market. However, Chinese dominance of the markets might continue despite the reductions as the export rebate remains high at 13 percent. South African producers of both silicon metal and ferrosilicon are expected to take advantage of the potential shortfall in supplies by increasing output in order to capture some of the market lost to Chinese and Russian suppliers as a result of antidumping duties imposed by the West. However, there are constraints that will limit their capacity to increase exports, such as infrastructure (rail and harbour) and lack of raw materials. Spoornets undertaking to expand infrastructure may boost the drive for more exports.

117

VANADIUM
N KWEYAMA

INTRODUCTION Vanadium is an important alloying element which confers specific properties on a range of different steels. Two thirds of vanadium production is derived from bi- or co-product sources. Approximately 90% of the total vanadium output is used in the form of ferrovanadium by steel makers, with most of the balance consumed in titanium alloys, other non ferrous metals and as a catalyst in chemical applications. Growth in demand for vanadium has been slightly higher than that of steel although there have been few new applications for many years. Most of the growth has been through an increase in vanadium content used in special steels. TABLE 1:
COUNTRY South Africa* China Russia U. S. A Other TOTAL
Sources: + * Notes:

WORLD VANADIUM RESOURCES AND PRODUCTION, 2004


RESERVE BASE+ % 31 36 18 10 2 100,0 PRODUCTION % 49 28 21 0 2 100,0

Kt 12 000 14 000 7 000 4 000 1 000 38 000

Rank 2 1 3 4

kt 23,3 13,2 10 Nil 1 47.5

Rank 1 2 3

USGS, Mineral Commodity Summaries, January 2004 (for Reserve Base) Minerals Beureau (SA Reserves to a depth of 50 m below surface)

All data in metal content includes production and exports from non-mining sources

DEVELOPMENTS DURING 2004/2005

World Demand Steel production exceeded the one billion ton milestone in 2004, rising from 969 Mt in 2003 to a record level of 1057 Mt, an increse of 9 percent. An average annual growth rate in output of 5,7 percent was achieved between 2000 and 2004, with China accounting for 56 percent of world crude steel expansion. Chinas steel output grew by another 50 Mt in 2004 a 22 percent increase compared with 2003. Production in the US and Europe showed a modest improvement over 2003. Vanadium alloy prices have more than trebled since 2003 as a result of strong demand from Chinese steel producers. Increased activity in the construction sector towards the end of 2004 prompted the return of Chinese buyers to the vanadium market, initiating one of the steepest price rises in the history of vanadium. World Supply World production of vanadium was dominated by South Africa (49 percent of world output) followed by China (27 percent ) and Russia (21 percent) (Table 1). Although China is reputed to have a larger reserve base than South Africa, the quoted resource for South Africa. has not been calculated to its full exploitable extent and the grade of ore is believed to higher in SA
The following events influenced the demand supply balance In January 2004 China passed a regulation requiring the use of high grade rebar in construction was passed into law, boosting vanadium demand and simultaneously reducing the export capacity. Xstrata decided to close their Windimurra plant in Australia and Vantech vanadium plant in South Africa both plants had been placed on care and maintenance in 2003. Vanady Tula of Russia attempted to acquire the ferrovanadium conversion unit from Nikom, used to convert vanadium pentoxide into ferrovanadium, thus restricting the availability of ferrovanadium to steel producers.

118

Supply tightness became more pronounced in the last quarter of 2004 as Chinese producer Pangang experienced furnace disruptions delays and Highveld Steel encountered logistical problems, resulting in bullish sentiment and creating an expectation of future high prices.

World Prices Vanadium prices started 2004 on a firm tone, based on the growing world economy and strong Chinese demand. In May 2004, the monthly average price of ferrovanadium and vanadium pentoxide peaked at $27,29/kg and $6,09/lb respectively. By midyear, however, demand for vanadium had declined sharply, reflecting the effect of tight credit lines in China and sufficient stock levels held by buyers. This negative trend was reversed in the third quarter as steel makers lifted production and long-term contract buyers re-entered the spot market, seeking protection from future price increases. By December the monthly price averages for ferrovanadium and vanadium pentoxide had increased to $48,33/kg and $ 9,47/lb, respectively. Average annual prices for 2004 rose considerably, with the spot price for ferrovanadium rising by over 135 percent from $11,47/kg in 2003 to $27,04/kg, while vanadium pentoxide shot up to $6,00/lb in 2004 from $2,21/lb in the previous year, an increase of over 170 percent.
DEVELOPMENTS IN SOUTH AFRICA Vanadium output fell by 14 percent from 27 Mt in 2003 to 23 Mt, in 2004 as a result of the plant closures and the high inventory levels accumulated from previous years. Local sales mass, however continued its dynamic growth trend from 2003 realising a 135 percent leap from 1,1 Mt to 2,6 Mt in 2004 in response to the boom in construction spending and strong vanadium demand for chemical applications in the domestic market (table 2). TABLE 2:
YEAR

SOUTH AFRICAS PRODUCTION AND SALES OF VANADIUM, 1995 2004


PROD. T 122 740 590 868 612 021 184 227 172 302 LOCAL SALES EXPORT SALES Mass Value (FOR) Mass t R000 R/kg T 361 15 540 43 12 739 286 18 025 63 14 322 313 25 996 83 15 723 223 28 332 127 17 531 240 18 747 78 15 871 300 24 848 83 15 865 269 20 121 75 17 262 395 36 015 91 19 954 1 119 108 666 97 18 816 2 637 415 915 158 16 275 TOTAL SALES Value (FOB) Mass Value R000 R/kg t R000 366 732 29 13 097 382 272 560 355 39 14 608 578 380 848 183 54 16 036 87 4179 245 014 71 17 754 273 346 893 309 56 16 111 912 056 755 006 48 16 164 778 854 886 248 51 17 532 906 369 114 5036 57 20 249 1 181 051 1 072 477 57 19 935 1 181 144 1 674 785 103 18 913 2 090 701

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

14 14 15 18 17 18 18 25 27 23

Mass data is given in units of vanadium contained . Internal domestic consumption of vanadium slag and fused pentoxide or trioxide is eliminated from both production and sales data to avoid double and triple counting. These figures, therefore apply to production and sales of the final product which is sold after processing yield losses. The production and export data includes all exported slag and fused pentoxide, which may have a yield loss of 2,0 kt of vanadium during further processing overseas. In world supply terms these outputs might regularly be counted once, or twice more as overseas production, overstating the markets

Revenues from local sales almost trebled, recording a value of R415 million in 2004, a staggering 284 percent improvement from R108 million in 2003. Revenue significantly outperformed output growth in local sales mass, indicative of the strong price performance during the period. This pattern is also evident in total sales; while total sales mass recorded a negative growth of 5 percent in 2004 down from 19 Mt in 2003 to 18 Mt, total revenues rose by a massive 107 percent in dollar terms showing an exceptional price performance despite the strong rand. OUTLOOK The short-term outlook for vanadium is promising, given the strong demand anticipated from China. The price is expected to remain at elevated levels in 2006 as a result of supply tightness. Should high prices persist in the medium term, convergence between the price of ferrovanadium and pentoxide is possible. Consistently high vanadium prices will encourage investment in conversion technology by steel makers. This should minimize supply disruptions resulting in a stable market and contribute to the long-term economic health of the industry.

119

Local steel demand will accelerate as infrastructure projects by parastatals and the private sector gain momentum. The softening tendency of the currency will further boost revenues from vanadium production. Demand for vanadium will continue to expand rapidly in China in response to growth in steel production, but the anticipated negligible growth in steel production in Europe and the USA will limit growth in vanadium demand. However strong demand growth from China should ensure a record output level in 2005. TABLE 3: SOUTH AFRICAN VANADIUM MINES: EMPLOYMENT AND REMUNERATION, 2000-2004
EMPLOYEES 1 467 1 240 1 221 1 219 1 081 TOTAL REMUNERATION R000 163 315 155 202 153 779 173 687 163 900

YEAR 2000 2001 2002 2003 2004

REFERENCES ICDA News October 2003 - April 2005 Tex Report January 2004 - June 2005 USGS Mineral Commodity Summaries January 2005

120

INDUSTRIAL MINERALS OVERVIEW


J Duval

INTRODUCTION On the local market the industrial minerals sector has been performing satisfactorily for the past six years (1998-2004), in real terms (see graph 1). The value of industrial mineral exports remained fairly level from 1998 to 2001, but since then has declined gradually to the 2004 level of R1,05 billion. The building and construction industries were responsible for the upswing in local sales, and reduced phosphate rock exports the main factor influencing export sales. PRODUCTION AND SALES (TABLE 3) Industrial minerals contributed 4,9 percent of total mineral sales in 2004, i.e. 14,1% of total local mineral sales and 1,2 percent of mineral export sales. On the local market sales of industrial minerals increased by14,6 percent, nominal value, in 2004 compared with 2003, and by 13,8 percent in real terms.

Local sales have been on a healthy upward trend since 2001, largely as a result of increasing building and construction activity. Export sales are decreasing, caused mainly by decreasing export of phosphate rock. Foskor has increased production as well as treatment capacity, resulting in greater local production of phosphoric acid. COMMODITY COMMENTS Local and export sales volumes of andalusite increased by 6 025t and 37 643t respectively, leading to an increase in total sales value of R56 million in 2004 over 2003. The andalusite market has been in the doldrums for some time, but is related to the steel industry, which accounts for the improvement in the market. Local sales of limestone show a marginal increase over the previous year. The quantity of limestone going into the manufacture of cement has dropped slightly. The major reasons for this are an increase in the use of pozzelanics, improved plant efficiencies and a possible overhang of cement supplies caused by transport difficulties in the previous year. The value of exported granite decreased substantially (52,4%), compared with the previous year, although the volume exported decreased only marginally. The main reason for this is that major producers are now selling their product free on rail or free on mine, meaning that their 121

customers are now paying all transport costs. Previously these costs were factored in to a delivered or FOB price. The strength of the rand and a strongly competitive international market have also had a negative effect the earnings of stone exporting companies. Apart from flint clay and kaolin, sales of clay minerals, increased in 2004, with plastic clays generally used for bricks and tiles, leading the way. Sulphur production, sales and import figures are difficult to interpret. It appears that local production is greater than total sales, and yet sulphur is imported. Production includes sulphur in all forms (SAF), an example of which is sulphur in sulphuric acid. Elemental sulphur is imported and used in the manufacture of acid. It appears that imported sulphur in locally produced sulphuric acid may be reported as local production, leading to inflated local production figures. Further attention is to be paid to this matter. Aggregate and sand sales increased by 36,2% in volume and 40,9% in sales value in 2004 in relation to 2003, which suggests that price increases have not been excessive. TABLE 2: SOUTH AFRICAS PRIMARY INDUSTRIAL MINERALS PRODUCTION AND SALES, 2003
PRODUCTION LOCAL SALES (FOR) Quantity Quantity Value (R)
44 163 6 218 355 673 57 445 ** 426 845 ** 17 502 080 ** 470 1 080 ** 2 664 947 ** 467 454 2 069 738 480 154 7 735 6 522 53 515 154 10 286 623 149 100 964 471 29 943 117 ** 20 832 429 ** 1 198 800 443 ** 1 723 716 678 043 ** ** 22 964 857 84 112 704 165 095 803 237 782 942 4 051 168 5 113 837

COMMODITY

EXPORT SALES (FOB) Quantity Value (R)


130 029 4 469 * * * ** * * 15 805 ** 470 * * 249 697 ** 418 884 32 485 * 163 342 166 735 556 64 27 806 * * * ** * * 9 200 812 ** 2 673 135 * * ** 14 583 728 70 136 1 198 847 21 799 274 * 144 759 394

TOTAL SALES Quantity Value (R)


174 192 10 687 355 673 57 445 ** 426 845 ** 17 517 885 ** 940 1 080 ** 2 914 644 ** 467 872 2 070 622 512 639 7 735 169 864 220 250 710 16 714 429 149 100 964 471 29 943 117 ** 20 832 429 ** 1 208 001 255 ** 4 396 851 678 043 ** ** 37 548 585 84 182 840 166 294 650 259 582 216 4 051 168 149 873 231

1. General Andalusite 164 921 Asbestos # Barytes # Calcite # Feldspar 57 738 Fluorspar ** Gypsum 394 069 Kieselguhr ** Limestone & lime 21 267 241 Magnesite ** Mica 1003 Mineral pigments 764 Perlite ** Phosphate rock+ 2 642 970 Pyrophyllite ** Salt 441 306 Silica 2 311 540 Sulphur 613 892 Talc 6 719 Vermiculite 182 802 2. Dimension and building stone Granite 78 471 Sandstone Siltstone Slate 3. Clays Attapulgite Bentonite Plastic clays Flint clay Kaolin 4. Aggregate & sand 5. Miscellaneous TOTALS

47 824 056 1 823 792 40 677

384 1 599 646 9 020

741 619 850 551

718 745 749 1 553 20 *

463 212 2 988 793 30 000 *

766 569 805 3 376 812 40 677

4 588 412 676 850 9 020 551

14 585 145 060 # 53 279 86 365

14 74 7 372 59 72 32 587

473 357 831 958 948 337

6 31 79 23 40 1 356

750 210 749 439 572 071

304 345 136 627 838 074

* 11 023 * 2 362 12 018 * 957 338 222 4 390 237 029

* 3 728 000 * 2 968 166 8 900 593 * 250 476 421 1 355 286 410

14 85 7 372 62 84 32 587

473 380 831 320 966 337

6 34 79 26 49 1 356

750 938 749 407 473 071

304 345 136 793 431 074

1 207 814 643 5 745 523 439

Sources: DME, Directorate Mineral Economics + Foskor, 2003 Notes: All quantities are in metric tons, unless otherwise specified * Nil ** Classified, included under Miscellaneous # Not available

122

TABLE 3:

SOUTH AFRICAS PRIMARY INDUSTRIAL MINERAL PRODUCTION AND SALEs 2004


PRODUCTION LOCAL SALES (FOR) Quantity Quantity Value (R)
234 625 # # # 53 044 ** 452 271 ** 21 961 335 ** 901 512 985 ** 2 735 150 ** 394 775 2 400 169 633 417 8 115 196 893 50 188 586 276 452 65 702 ** 459 032 ** 17 704 965 ** 55 757 962 ** 2 484 392 ** 406 654 2 168 056 390 036 8 134 7 287 64 429 853 1 144 844 116 046 625 561 38 112 271 ** 18 782 841 ** 1 230 366 879 ** 274 350 20 ** ** 34 715 822 74 055 286 195 580 646 201 706 166 4 364 627 6 228 895

COMMODITY
6. General Andalusite Asbestos Barytes Calcite Feldspar Fluorspar Gypsum Kieselguhr Limestone & lime Magnesite Mica Mineral pigments Perlite Phosphate rock+ Pyrophyllite Salt Silica Sulphur Talc Vermiculite

EXPORT SALES (FOB) Quantity Value (R)


167 672 * * * * ** * * 16 075 ** 766 * 267 653 ** * 649 68 918 * 178 774 211 719 329 * * * * ** * * 9 673 424 ** 4 072 002 43 628 * ** 11 683 431 * 1 006 857 47 676 647 * 150 943 505

TOTAL SALES Quantity Value (R)


217 860 586 276 452 65 702 ** 459 032 ** 17 721 040 ** 821 1 005 ** 2 752 045 ** 406 654 2 168 705 458 954 8 134 186 061 276 149 182 1 144 844 116 046 625 561 38 112 271 ** 18 782 841 ** 1 240 040 303 ** 4 346 352 801 590 ** ** 46 399 253 74 055 286 196 587 503 249 382 813 4 364 627 157 172 400

7. Dimension and building stone Granite Sandstone Siltstone Slate 8. Clays Attapulgite Bentonite Plastic clays Flint clay Kaolin 9. Aggregate & sand 10. Miscellaneous TOTALS

145 443 2 483 793 47 534

149 029 262 1 125 985 652 440 10 663 285

381 699 2 5041 *

342 283 532 1 345 689 *

527 142 4 987 793 47 534

491 312 794 2 471 674 652 440 10 663 285

20 419 55 859 # 53 367 81 901

20 75 9 945 59 67

233 464 049 848 766

8 35 118 23 42

962 662 700 643 879

286 483 774 618 971

* 10 529 * 3 703 8 834 *

* 5 956 098 * 3 786 640 5 066 307 * 256 905 927 1 052 163 016

20 85 9 945 63 76

233 993 049 351 600

8 41 118 27 47

962 618 700 430 946

286 581 774 258 278

44 436 785

1 910 432 095 8 52 314 406 5 033 229 192

44 436 785

1 910 432 095 1 109 280 333 6 085 392 208

Sources: DME, Directorate Mineral Economics + Foskor, 2004 Notes: All quantities are in metric tons, unless otherwise specified * Nil ** Classified, included under Miscellaneous # Not available

IMPORTS OF PRIMARY INDUSTRIAL MINERALS (TABLE 4) The total value of imported, primary industrial minerals decreased by 9,8 percent in 2004, in relation to the previous year. The pattern and quantity of imports remained fairly constant. The quality of industrial minerals may vary considerably, and this can make price comparisons from year to tear, in R/t terms, very misleading. It must also be borne in mind that imports from members of the South African customs union are not reflected in Table 4. Salt imports are far in excess of those stated, with most salt imports sourced from Namibia. Soda ash imports are not reported, as all come from Botswana and no figures are available.

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TABLE 4:

SOUTH AFRICAS IMPORTS COMMODITIES, 20032004


2003 Mass t 4 871 1 033 622 590 447 134 738 555 400 562 930 272 4 954 20 698 517 245 002 750 679 597 519 816 223 253 931 194 250 470 375 388 0,6 043 121

OF

PRIMARY

INDUSTRIAL

MINERAL

COMMODITY

Salt (25.01) Iron pyrites (25.02) Sulphur (25.03) Graphite natural (25.04) In powder or flakes (25.04.10) 1 Other (25.04.90) Sand (25.05) Silica & quartz sands (25.05.10) 1 Other (25.05.90) 1 Quartz (25.06) Kaolin (25.07) 11 Bentonite (25.08.10) 5 Fullers earth (25.08.20) Fire clay (25.08.30) Other clays (25.08.40) Alumino-silicates (25.08.50) 1 385 Chalk (25.09) 4 Phosphate rock (25.10) 142 Barytes (25.11.10) 3 Kieselguhr (25.12) 5 Natural abrasives (25.13) 1 Slate (25.14) 8 Marble (25.15) Granite (25.16.12) 22 Dolomite (25.18) Calcined (25.18.20) Agglomerated (25.18.30) Magnesite & magnesia (25.19) 55 Gypsum (25.20.10) 1 Limestone (25.21) Slaked lime (25.22.20) 10 Asbestos (25.24) 1 Mica (25.25) Steatite (25.26) 5 Cryolite (25.27) Sodium borates (25.28.90) 2 Perlite (25.30.10) 16 TOTAL

Value (FOB) R R/t 1 700 729 349 905 280 877 275 408 471 442 4 925 510 1 576 565 1 3 1 24 15 1 3 5 57 4 14 8 16 1 25 729 577 110 925 135 202 12 372 81 654 353 351 975 010 774 968 235 234 782 365 434 037 374 431 648 598 152 417 504 372 353 505 342 601 440 743 532 692 386 024 542 315 582 201 033 514 708 3 405 11 794 995 301 779 156 552 414 225 536 084 203 402 341 994 577 933 295 121 415 321 483 415 961 148 812 726 270 288 090 369

2004 Mass Value(FOB) t R R/t 3 168 4 480 461 1 414 575 632 085 1 099 554 000e 251 419 142 454 1 387 40 462 961 263 946 816 190 8 114 195 604 069 056 594 544 552 810 943 700 120 706 624 162 607 359 495 480 1 903 374 4 726 369 152 798 1 130 227 3 937 425 922 249 23 562 233 13 209 558 1 048 108 563 3 522 654 270 123 7 179 597 38 211 551 7 007 676 10 670 018 5 573 400 24 745 374 3 251 275 13 931 728 1 715 422 77 305 3 039 1 037 8 635 4 114 846 11 713 11 2 999 5 795 537 277 724 182 766 289 704 467 356 608 495 397 637 578 645 3 408 3 820 2 446 4 097 3 507 1 478 2 271 5 516 7 049 3 162 1 385 1 087 287 2 293 2 323 3 610 1 591 4 014 2 344 2 3 1 1 6 1 3 1 2 11 1 451 518 439 158 406 003 027 710 137 397 576 692

2 2 2 2 4 3 3 4 1 1 2 4 1 3 1 1 1 1 1 1 2 2 2 12 2

15 5

1 6 133 3 4 1 15 5

1 154 338 81 928 2 731 186 11 770 4 133 1 021 12 230 7 4 270 5 953 595 712

53 2 8 1 5 1 8

IMPORTS OF MANUFACTURED INDUSTRIAL MINERAL COMMODITIES (TABLE 5) Similarly to primary industrial mineral imports, the import of a selection of manufactured industrial mineral commodities decreased by 12,5 percent in 2004, in comparison with the previous year. Imports of ceramic products were the most significant, increasing by 28,3 percent to just more than R1 billion. Imported articles of asbestos cement increased by 35,0 percent to R41,4 million. It seems ironic that, for health reasons, asbestos mining has ceased in South Africa and that asbestos bearing cement imports are increasing.

124

TABLE 5:

SOUTH AFRICAS IMPORTS OF MANUFACTURED COMMODITIES, 20032004

INDUSTRIAL MINERAL

COMMODITY

Articles of stone, plaster, cement, asbestos, mica or similar materials Building stone (68.02) Worked slate & articles of slate (68.03) Millstones and grindstones (68.04) Natural abrasive powders (68.05) Slag wool, rock wool & similar mineral wools (68.06) Articles of asbestos-cement (68.11) Fabricated asbestos fibres (68.12) Friction material (68.13) Worked mica & articles thereof (68.14) Refractories Of siliceous fossil meals (69.01) Other bricks (69.02) Other refractory ceramic goods (69.03) Ceramic products Ceramic building bricks (69.04) Roofing tiles (69.05) Ceramic pipes (69.06) Unglazed ceramic (69.07) Glazed ceramic (69.08) Ceramic wares for laboratory (69.09) Ceramic sinks (69.10) Tableware (69.11) Ceramic tableware (69.12) Ceramic articles (69.13) Other ceramic articles (69.14) Glass and glassware (70.00) TOTAL
Source: Note: RSA, Commissioner for South African Revenue Service, 2004 2005 Codes in brackets refer to subchapters of the Harmonised System

2003 Value (FOB) R 505 327 411 93 988 575 6 269 745 58 061 110 121 242 091 100 679 658 30 777 794 4 732 748 76 036 306 13 539 384 734 666 127 3 834 217 382 728 305 348 103 605 835 586 726 943 038 6 345 123 84 433 23 799 135 284 649 061 311 885 858 38 253 318 73 880 683 70 192 209 19 917 228 5 636 640 331 882 915 2 407 463 179

2004 Value (FOB) R 562 327 447 132 596 336 4 542 418 58 900 173 131 136 954 122 921 243 41 411 087 4 105 818 75 804 183 13 516 553 763 372 041 5 915 430 453 680 845 303 775 766 1 071 811 007 2 029 121 3 633 827 443 379 40 285 044 378 265 943 361 406 758 54 565 556 101 044 196 100 850 779 22 635 495 6 650 909 313 264 671 2 710 775 166

EMPLOYMENT TABLE 6: SOUTH AFRICAS INDUSTRIAL MINERALS MINES AND QUARRIES: EMPLOYMENT, REMUNERATION AND REVENUE GENERATION, 19992004
EMPLOYEES Total R000 642 684 663 958 709 638 755 940 858 603 1 003 450 REMUNERATION R/employee Nominal 41 245 45 545 50 870 54 474 57 566 62 509 REVENUE GENERATION R/employee Real* Nominal Real* 53 807 267 594 349 093 56 414 284 837 352 811 59 593 337 663 395 567 58 462 382 515 410 521 58 366 381 134 386 433 62 509 350 288 350 288

YEAR

1999 2000 2001 2002 2003 2004


Notes: * CPI deflated

15 14 13 13 14 16

582 578 950 877 915 053

Excludes employees and remuneration where the industrial mineral commodities are byproducts of other mineral sectors. The improving trend in the total number of employees in the industrial mineral sector that started in 2003 has continued in 2004, with a 7,6 percent increase. Improved data collection may account for some of the increase. Average remuneration per employee has also improved (16,9 percent). Average wages in this sector are comparable with those in the gold and platinum sectors (R70 000 and R60 000 per employee respectively).

125

AGGREGATE AND SAND


VN Agnello

INTRODUCTION The sand and aggregate industry comprises some 520 registered operating quarries and sand extraction operations in South Africa. In 2004, 369 operators submitted production returns a net increase of 55. This is estimated to represent approximately 50 percent of all sand and aggregate producers in South Africa, and about 80 percent of total volume. The South African construction sector is a R72-billion industry, employing a workforce of more than 310 000 and can be divided into three main sub-sectors, a) civil engineering and construction, b) residential building and c) non-residential building. A complex set of factors determines demand in the construction industry, these include: fluctuations in interest rates, population growth, migration patterns, urbanisation, housing subsidies, income growth, building costs and property prices, property taxes and public policies relating to housing and procurement practises. It is often said that a healthy construction sector is indicative of a healthy economy, while a lacklustre industry reflects a depressed economy. In the following, local sales refer to sales within South Africa, regional sales refer to sales in SADC countries (excluding South Africa) and exports to sales beyond SADC borders. DEVELOPMENTS DURING 2004/5 In 2004, production of sand and aggregate in South Africa increased by 36,4 percent to 44 437 kt. Major production increases (greater than 35 percent) at leading sand and aggregate operators, which includes Gomes Transport, Denver Quarries, Maccsand, Coegaskop West, St. Lukes Quarry and some Holcim and Lafarge quarries, have boosted sales significantly. There were notable increases in sales to Kempton Park, Randburg, Roodepoort, Pretoria and environs, Midrand, Durban and environs, Durbanville, Somerset West and the southern Cape. Since 2001, sand and aggregate sales by volume, have increased 17,3 percent year-on-year (Table 1). Local sales value improved by 40,9 percent to R1 910,4 million, with a unit value increase of 3,4 percent to R43,0/t. Anomalous sand tonnages in 2003 have been attributed to the removal of incorrectly coded sand data from the database. The increase in aggregate and sand consumption indicates a strengthening in domestic infrastructural activity, especially in the maintenance and extension of road, rail, air, and harbour transport services, and in water and energy capture and distribution, as well as in domestic, industrial, and commercial building and construction (Table 2). TABLE 1:
YEAR kt 26 055 26 546 22 321 22 434 21 360 22 106 26 852 35 953

SOUTH AFRICAS LOCAL SALES OF AGGREGATE AND SAND, 19972004


COARSE+ Mass Value (FOR) R000 R/t 751 128 28,8 788 072 29,7 693 301 31,1 743 015 33,1 776 511 36,4 880 469 39,1 1 281 263 47,7 1 781 943 49,6 FINEx Mass Value R000 74 021 61 802 55 727 60 258 63 736 78 249 74 808 128 489 TOTAL Mass Value kt R000 33 075 825 149 33 828 857 352 29 341 767 322 28 597 804 817 27 632 832 238 28 916 958 718 32 587 1 356 071 44 437 1 910 432

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Kt 7 020 6 163 6 271 6 236 6 184 6 810 5 735 8 484

(FOR) R/t 10,5 10,0 8,9 9,7 10,3 11,5 13,0 15,1

(FOR) R/t 24,9 25,3 26,2 28,1 30,1 33,2 41,6 43,0

+ Includes crusher sand x Natural sand Unit values calculated before rounding of mass and rand values

Domestic cement consumption showed an upward trend of 17,4 percent for 2004. A strong increase in brick sales (and shortages) for 2004 confirms this upward trend of infrastructural activity. However, regional cement sales and exports shrunk by 1,1 and 41,7 percent respectively 126

cement export sales represent less than 2,5 percent of total supply. In 2004, moderate price increases were introduced throughout the sand and aggregate industry (Table 3); of the top 30 producers, 10 operators increased prices by at least 10 percent, whilst another 8 operators increased prices by 5-10 percent. Strong demand, the intermittent short supply of bricks, building blocks, galvanised sheet metal and other construction materials, as well as rising fuel, transport, maintenance and compliance costs, have forced producers and builders input costs to escalate exponentially over the last few years. This has had a knock-on effect on building contracts and tendering in the construction industry. Several mining projects in Angola; road, bridge and low-cost housing developments in Namibia, Botswana, Swaziland, Malawi and Mozambique will augment short-term forward books. However cross-border activity has tapered down over the last two years, primarily through rand volatility and the default on contractual payments by several African countries. Further abroad, the Middle East, the Far East, Australasia and recently South America are offering potential for large contracts/ tenders for South African construction companies. Governments proposed R165 billion investment programme, which includes improving transport infrastructure, services and the road network, the taxi redevelopment programme, community infrastructure, integrated settlements, prison and hospital upgrades, police station and court facilities, peri-urban, rural and municipal upgrades, the Dept. of Public Works planned building upgrades, educational colleges and revamps, water resource infrastructures and housing roll-out plans should be a tremendous boost to the construction industry in the immediate future. In the private sector, short and medium-term developments include the implementation of large investment programmes such as nuclear and ethanol projects, mine expansions within the platinum and ferrochrome industries, Sasols Project Turbo and localised up-market developments of residential dwellings, estates, hotels, casinos, shopping centres, convention centres and office parks. Further, Eskom and Transnets proposed multi-billion roll-out plan augur well for the industry. TABLE 2: APPROVED AND PLANNED CONSTRUCTION PROJECTS OF VALUE GREATER OR EQUAL TO R1 BILLION, 2004/2005

Current projects Hibberdene Harbour project, power station development (Richards Bay), Durban Port upgrade, King Shaka Airport, Riverhorse Valley and Simbithi Eco-estates, Ocean View Hotel (KwaZulu-Natal) Blue IQ projects, Motor Industry Development Plan, Alexandra Renewal Project, Innovation Hub, Melrose Development node, Cosmo City Housing Development (Gauteng) Berg Water Scheme (Western Cape) Coega International Development Zone and Port of Ngqura (Eastern Cape) Maputo Corridor project and Sasol Pipeline (Mozambique) Possible future projects Mine and plant expansions (platinum, gold and nickel, new collieries, heavy mineral sands) New Limpopo Dam (Limpopo Province) Braamhoek pump-storage scheme (Free State border) Gautrain, Africa theme park, Tshwane International Convention centre, Tshwane Inner City Programme, Temba water scheme, provincial government precinct (Gauteng) Aluminium smelter and Coega stainless steel plant (Eastern Cape) Dube Tradeport, pulp mill upgrades (KwaZulu-Natal) Saldanha port expansion, N2 Gateway project (Western Cape) Recommissioning and construction of new power stations (locations unspecified) Namibian, Swazi and Mozambican road upgrades In 2004, Government contributed 19,0 percent to total gross fixed capital formation (GFCF), public corporations 10,8 percent and private business 70,2 percent. In 2004, GFCF (in nominal terms) improved from R163,4 billion to R178,7 billion, attaining a growth of 9,4 percent compared to 9,0 percent in 2003. GFCF figures may prove misleading, as large structural and mechanical components are also included. Nevertheless, construction works has excelled with real annual 127

growth of about 10 percent. The government has a stated objective to expand GFCF from 19 percent of 25 percent of GDP in the next 8 years. The fast-tracking of regulated, government tenders through public-private partnerships (PPP) will address some of the countrys multi-billion rand infrastructure backlog. In 2004, the civil engineering industry contracted by 3,3 percent in nominal terms to R17,2 billion (local revenues only). The cumulative number of tenders declined by 7,6 percent over the 12 month period up to the first quarter of 2005, whilst the value of contracts awarded increased by 20,5 percent and average annual employment levels declined by 8,2 percent. An annualised growth of 8 percent (real) has been predicted for the civil engineering industry for 2005. In 2004, 254 construction companies were liquidated, a year-on-year decrease of 19,4 percent. Working conditions remain difficult, although the number of new company registrations has grown exponentially to 1 200 per month, from an initial 540 per month in 2000. The business confidence of contractors in the residential sector has improved significantly, whilst the oversupply of office space has curtailed demand for non-residential building projects, although tendering has been fiercely competitive. TABLE 3:
SIZE Mass Kt 2 202 7 434 2 348 3 076 2 900 3 156 6 048 5 735 2 800 32 587 Value (FOR) R000 108 234 425 858 122 888 141 431 91 838 144 107 263 741 74 808 125 044 1 356 071

SOUTH AFRICAS LOCAL SALES OF AGGREGATE BY SIZE, 20032004


2003 R/t 49,1 57,3 52,3 46,0 31,7 45,6 43,6 13,0 44,7 41,6 Mass kt 2 846 9 960 2 539 3 184 4 075 869 8 301 8 484 4 178 44 437 2004 Value (FOR) R000 R/t 133 157 46,8 594 482 59,7 143 653 56,6 164 087 51,5 132 050 32,4 39 615 45,6 382 192 46,0 128 489 15,1 192 707 46,1 1 910 432 43,0

26 mm or more 1326 mm <13 mm Base course (G1-G3) Sub-base (G4-G7)+ Crusher-run Crusher sand Natural sand Other* TOTAL
Notes:

* Includes refuse, waste, soil, granulated slag, filter media, steel slag, boulders, rock chunks, calcrete, gravel, sandstone and shale Unit values calculated before rounding of mass and rand values

Recent trends in the sand and aggregate industry include: the reworking of mine waste dumps as substitutes for borrow pit material; the use of pelletised, recycled waste materials (such as dredge sludge, treated sewage, incinerator bottom ash, household waste, demolition debris and reclaimed asphalt pavement); the construction of noise berms along highways; and environmental applications (soil-erosion control programmes and water treatment). Further, the use of industrial by-products, such as lightweight aggregates (foamed slag, sintered pulverised fly ash and granulated discarded rubber tyres) and dense aggregates (granulated blast-furnace slag and heavy minerals) are sought-after, efficient, cheaper alternatives for both construction and cement manufacturing. A sustainable alternative to the re-gravelling of rural roads is the use of stabilisers, dust inhibitors, concrete inlays and low-coast seals. The number of people employed in aggregate and sand quarries and pumping operations increased by 20,6 percent compared with 2003, and total remuneration increased by 25,6 percent (Table 4). Average earnings per employee increased by 4,2 percent. New initiatives include skills programme (collated Adult Basic Education and Training material for construction workers) and large funding allocations for the National Skills Fund, which have been earmarked for the training of small and medium-sized construction companies. A lack of capital and inadequate technical and administrative support has stymied several BEE initiatives. The Construction Industry Development Board (CIDB) and the National Federation are pro-actively addressing fronting the falsifying of empowerment credentials in all facets of the construction industry. The CIDBs Register of Contractors, the Supply Chain Management Procurement System and the Public and Municipal Finance Management Acts will boost credibility and integrity within the 128

industry. Several technical delays have postponed the finalisation and the release of an empowerment charter and scorecard for the construction industry, although the charter will be ready by December 2005. Industry associations, such as the Aggregate Sand Producers Association of South Africa (ASPASA), have encouraged a best-practice approach for all sand and aggregate contractors and operators. Illegal operators, mainly in sand extraction, ignore legal processes and regulations and undercut authorised producers. Other problems in the construction industry include: the lack of real BEE growth; the intermittent use of substandard materials in RDP houses (and associated bad workmanship); health risks such as HIV, tuberculosis and silicosis; unrealistic tendering by inexperienced contractors; sporadic shortages of labour, technical skills and building materials; the 3 000 unrehabilitated borrow pits throughout South Africa; illegal and fly-by-night sand operators; and the anti-competitive use of borrow pits by municipalities, provincial authorities and illegal operators. The DME, ASPASA and other industry associations are addressing these problems pro-actively. OUTLOOK Further consolidation of operations is expected in the construction and civil engineering industry, with fewer though larger contracts awarded, and the value of some larger contracts will increase significantly. It is expected that the increase in tender activity will continue, especially with smaller tenders where the focus is on empowerment. This may lead to increased competition amongst the medium-sized and larger contractors as their contracts and profit margins diminish. A flood of public sector tenders in the near future may boost business confidence and profits substantially, but could create further building material scarcities and, thus, higher building costs. Maintenance and improvement of South Africas infrastructure, especially low-cost housing, ports, rail and roads, is key to sustained growth in the local construction industry. Non-residential building activity is expected to increase significantly during the next few years. Strong growth of 5,0 percent has been forecast for the industry as a whole for the 2005 period, in-line with current GDP projections. GFCF is expected to attain levels of above 9,0 percent growth in the next 3 years, with government increasing its GFCF share up to 21 percent in 2008. A continued upswing in the residential sector is anticipated with mass property development expected to continue well into 2006. Macro-projects such as the Gautrain, Cosmo City, Bergriver water scheme and the successful World Cup soccer bid will affect medium to long-term infrastructural spending positively. Cross border activities are expected to grow considerably through 2006 to 2007. Only through sustained investment in current and future infrastructural developments will South Africa be able to achieve high levels of economic growth. TABLE 4: SOUTH AFRICAS AGGREGATE AND SAND QUARRIES: EMPLOYMENT AND REMUNERATION, 19992004
EMPLOYEES 4 055 3 636 3 655 3 564 3 961 4 777 TOTAL REMUNERATION R000 157 556 158 447 169 407 181 750 217 299 272 968

YEAR 1999 2000 2001 2002 2003 2004

REFERENCES

Business Day articles, January 2005 July 2005 Cement and concrete review 2004, CNCI Construction and Civil Engineering report, Who Owns Whom, August 2005 Engineering News articles, January 2004 July 2005 E. Snyman (Industry Insight) in personal communication P. Blaauw (SAFCEC) in personal communication State of the Civil Industry 2004, SAFCEC
129

ALUMINO-SILICATES
N. Tshabalala

INTRODUCTION Kyanite, andalusite, and sillimanite are anhydrous alumino-silicate minerals that have the same chemical formula, Al2SiO5, but differ in crystal structure and physical properties. Each may contain varying amounts of impurities such as manganese and iron. Alumino-silicates are used primarily in the making of refractory materials. Refractories are heat-resistant materials used in high-temperature applications such as furnaces, boilers, ladles, and kilns, in the metallurgical, glass, chemical, cement, and other industries. There is a wide range of substitutes for alumino-silicates, particularly in high-grade refractory products. Important controlling factors that determine alumino-silicate demand include purity, cost of alternative products, and its reactivity as a kiln liner and the changing technology in steel production. INTERNATIONAL DEVELOPMENTS IN 2004/2005 Major alumino-silicates producers are South Africa, France, China and the USA (Table 1) with a total world output of 632kt. In the period from end of 2003 up to the end of 2004 there has been an increase of andalusite production in South Africa and China. Growth has to a certain extent been curtailed by stagnant product prices (consumers paying the absolute minimum for refractory linings), whilst production costs are on the increase due to escalating energy and freight costs as well as higher performance requirements from consumers. Chinese producers seem to have achieved stability, following a long period when local producers were selling products at prices lower than their own production costs. Aluminosilicate sales are rising in China, driven by the rapid growth in the steel producing industry, manufacturing sector and rising prices. The iron and steel industry is the major consumer of alumino-silicate minerals and products, both locally and internationally. In Europe and America, the purchase of finished steel products has led to a decrease in consumption of alumino-silicates. TABLE 1:
COUNTRY China South Africa Zimbabwe USA France India Other TOTAL
Sources:

WORLD PRODUCTION AND EXPORTS OF ALUMINO-SILICATES, 2004


TYPE A, K, S A K K A K, S A, K, S kt 211+ 235 4 90e 63 28 0,6 632 PRODUCTION+ % Rank 33,4 2 37,2 1 0,6 6 14,0 3 10,0 4 4,0 5 0,1 100 30 EXPORTS % 14, 8 33,7 31,8 12,0 <1,0 7,7

kt 57 130 123 46 <1 30 100

Rank 3 1 2 4 6 5

BGS, 2005, pp 64 DME, Directorate Mineral Economics + For 2003, or latest available A Aandalusite K Kkyanite S Silimanite e Estimated Totals may not add up due to rounding

Notes:

130

LOCAL South Africa is the worlds leading producer of andalusite. Major supplying companies are SAMREC, Rhino Minerals (both are part of the IMERYS SA Group) and Andalusite Resources (which came on stream at the end of 2002). In 2004, andalusite production rose from 165kt to 235kt. Local sales increased by 6 kt to 50 kt in 2004, due to the strong demand from the local iron and steel industry. Exports are also on the rise (Table 2), primarily because of steady demand in Europe. Major andalusite consumers expect high performance and quality at continuing low prices. There has been no major price change since 2001 (Graph 1). In South Africa andalusite mining companies have created more employment opportunities and the number of employees, especially for women, has been rising steadily over the past 5 years (Table 3). TABLE 2: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF ANDALUSITE,1995 2004
LOCAL SALES Value (FOR) R000 R/t 32 062 518 39 737 638 49 071 751 41 595 792 34 405 824 40 527 890 45 456 985 45 456 1 051 53 515 1 212 64 430 1 284 EXPORTS Value (FOB) R000 R/t 83 208 560 116 143 733 124 958 776 118 291 820 91 246 840 117 886 907 130 089 798 118 064 1 056 166 736 1 282 211 719 1 263

YEAR

PRODUCTION kt 206 234 251 236 137 183 193 165 165 235 Mass kt 62 62 65 53 42 46 46 46 44 50

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

Mass kt 149 159 161 144 109 130 133 112 130 168

Local sales include inter-mine sales Unit values calculated before rounding of mass and Rand values

FIGURE 1:

AVERAGE ANDALUSITE PRICES, 1999 - 2004

TABLE 3:
YEAR 2000 2001 2002 2003 2004

SOUTH AFRICAS ALUMINO-SILICATE MINES: EMPLOYMENT, 20002004


EMPLOYEES 317 306 281 280 363 TOTAL REMUNERATION R000 19 883 21 320 23 813 24 627 27 652

131

OUTLOOK Although South Africa achieved sales of andalusite in 2004, rising costs and stagnant prices resulted in local producers trying to force prices up by holding back their high quality products. This could also be an attempt to curb the problem of inferior foreign refractory products being favoured over local products. It remains to be seen whether this tactic works. Over the long term, the international markets are likely to remain oversupplied resulting in a fairly bleak outlook. REFERENCES Industrial Minerals, 2005

132

DIMENSION STONE
D Naidoo

INTRODUCTION Dimension stone is a term applied to naturally-occurring rock that may be cut, shaped or selected for use in blocks, slabs, sheets or other construction units of specific shapes or sizes. It is commonly used for the cladding of buildings, curbing, paving, flagging and revetting for its architectural or engineering properties; also in memorials, particularly tombstones. The construction sector accounts for over 80 percent of world consumption, with the funerary, monumental industry accounting for 15 percent, and various special applications for around 3 percent. South African dimension stone production consists mainly of granitic rock with slate and sandstone making up the balance. The term granite is applied very loosely in the industry, and is used to describe almost any medium-to coarse-grained igneous or metamorphic rock. Grey and black norites, trade named black granite, all from the Bushveld Igneous Complex (B.I.C.), form the backbone of the South African dimension stone industry. Red (B.I.C.) granites which are, true quartz-bearing granites, and greenish metamorphic rock (e.g. Olive Green, Montana Green and Verde Bitterfontein) from the Namaqualand area are also well established on international markets. INTERNATIONAL DEVELOPMENTS Total world raw quarry production is estimated at 75 million tons, with processing waste of 30 million tons, yielding net production of approximately 45 million tons. China leads with estimated production of 14 million tons (raw), followed by Italy and India with estimated production of 7,8 million tons and 7,5 million tons respectively. Production in Iran is estimated at 7,3 million tons. China and India have experienced increased production while production in Italy is declining slowly. LOCAL DEVELOPMENTS There was consolidation in the industry in 2004, as a result of Kelgrans poor financial performance. Kelgran Limiteds associated company Kelgran Investments (Pty) Ltd which housed Kelgrans quarrying interests was taken over by JVK Srl (JVK) a joint venture between Finstone Srl (Luxemborg) and RED Graniti Spa (Italy). As a result of the acquisition, JVK assumed control of all aspects of Kelgrans quarrying interests. Kelgran now sells directly to local clients but JVK purchases the balance of production for export giving Kelgran the advantage of not duplicating international marketing structures. Finstone Srl (Luxemborg) has two subsidiaries in South Africa, Finstone SA and Marlin Holdings, the latter which houses the quarrying interests of the Finstone Group. South Africa sold 575 kt of dimension stone (527 kt of granite and 48 kt of slate) in 2004, valued at R502 million, a 13 percent increase in mass compared to 2003. Local sales amounted to 193,9 kt, an increase of 60 percent compared to 2003. Natural stone is gaining popularity in the local market, with the most growth in domestic and monumental applications. As a result of the effect of the strong rand on exports, Finstone South Africa has focussed heavily on promoting finished goods in the local market. The Garankuwa thin slab facility now sells 70 percent of its production to the local market. In addition, the Minaco costruction division sources local material for overseas projects. South Africas exports amount to about 380 kt; 29 percent directed to Italy followed by China and Belgium, which account for 15 and 13 percent respectively. The Department of Minerals and Energys export statistics show that 42 percent of exports are directed to Switzerland but in reality, sales are invoiced to Swiss-based block trading companies such as Dorking AG and Multistone. In 2004, export earnings decreased significantly by 50 percent. This was due to group restructuring at Finstone and the strong rand. Finstone now sells to Dorking SA (Pty) Ltd on a free on truck or free on rail basis. Dorking is then responsible for the transport costs to the port, where previously this cost was carried by the quarrying company and reported in quarrying 133

companies sales figures to the Department. The four most important varieties of granite produced in South Africa are Rustenburg Grey, African Red, Belfast Black and Olive Green. The supply/demand balance for Rustenburg exhibits inelastic behaviour as a result of price sensitivity and the ease of substitution with other materials. At current pricing levels, Rustenburg is slightly oversupplied hence putting pressure on pricing, and at current exchange rates may lead to closure of quarries, particularly small operations without the financial backing to survive through the difficult times. Olive Green supply/demand is balanced at current levels. The market for green coloured materials is probably in decline overall. The market for African Red is substantially less than it was several years ago due to changes in fashion trends as well as competition from other red materials from India and China, but there are indications of a recovery. In 2004, Finstone moved its Impala granite processing plant from Brits to Marikana, consolidating its operations at the Marikana granite facility. The Impala plant site was occupied by Wanli Stone in August 2004, under a 60:40 joint venture between Wanli Stone and Marlin Corporation. The Wanli Stone Group (Xiamen Wanli Stone Co. Ltd) is one of the leading private companies in the Chinese natural stone industry, with a number of quarries and eight processing plants throughout that country. The intention is to use small blocks of granite, which are generally difficult to sell, and waste material to manufacture tombstones, garden furniture, basins and kitchen sinks. The operation employs 50 people. Modern Chinese equipment is used in the plant although all operations, other than design, are manually controlled. Quality control inspections are carried out right through the production process. OUTLOOK While the stone industry is growing internationally, current exchange rates make South African material particularly uncompetitive. Exclusive materials will still be able to find markets, but these may be at reduced volumes as customers switch to alternatives due to pricing. If a material very similar to Rustenburg was discovered in, say China or India, it could all but wipe out Rustenburg production (in the same way that Zimbabwe Black and some Indian materials have led to current Belfast Black production being less than 10% of peak levels), although yields from the Belfast quarries had declined dramatically as economic reserves were depleted. TABLE 1: SOUTH AFRICAS GRANITE PRODUCTION, LOCAL SALES AND EXPORTS, 19952004
LOCAL SALES Value (FOR) R000 R/t 35 580 389 37 482 442 39 610 450 38 134 513 33 105 498 47 334 477 39 836 465 37 229 495 47 824 609 149 029 1025 EXPORTS Value (FOB) R000 R/t 304 314 486 425 965 683 525 634 778 485 709 725 600 033 1 053 627 687 743 677 698 890 837 332 1 328 718 746 1 868 342 284 897+

YEAR

PRODUCTION* kt 718,1 708,7 764,0 743,9 636,5 951,2 846,7 705,8 463,2 527,1 Mass kt 91,5 84,8 88,0 74,3 66,5 99,5 85,6 75,2 78,5 145,4

1995 1996 1997e 1998 1999 2000 2001 2002 2003 2004
Notes:

Mass kt 626,6 623,9 676,0 669,6 570,0 844,8 761,1 630,6 384,7 381,7

* In the absence of available data, production is taken to be equal to total sales volume e Estimated because Marlin and Kudu did not submit full returns for 1997 + FOR/FOM, see local developments, paragraph 3 Unit values calculated before rounding of mass and rand values

134

TABLE 2:

SOUTH AFRICAS SLATE PRODUCTION, LOCAL SALES AND EXPORTS, 19952004


LOCAL SALES Value (FOR) R000 R/t 7 413 405 12 085 602 13 007 319 11 979 534 8 487 287 6 450 251 7 313 315 8 434 340 9 020 222 10 663 224 EXPORTS Value (FOB) R000 R/t 5 796 939 8 872 814 9 390 840 5 846 872 443 938 277 1 408 ** 27 1 356 ** **

YEAR

PRODUCTION* kt 24,5 31,0 32,2 29,1 32,1 25,9 23,2 24,8 40,7 47,5 Mass kt 18,3 20,1 21,0 22,4 29,6 25,7 23,0 24,8 40,7 47,5

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Notes:

Mass kt 6,2 10,9 11,2 6,7 2,6 2 0,2 ** 0,02 ** **

* In the absence of available data, production is taken to be equal to total sales volume ** Nil Unit values calculated before rounding of mass and rand values

TABLE 3:
YEAR 2000 2001 2002 2003 2004

SOUTH AFRICAS DIMENSION STONE QUARRIES: EMPLOYMENT, 20002004


EMPLOYEES 2 563 2 580 2 742 2 570 2 356 TOTAL REMUNERATION R000 82 010 88 115 96 131 80 367 91 807

REFERENCES Montani C, 2004, Stone 2004 : World Marketing Handbook Bradley F, 2004, Marble-Stat 2004 I Ashmole / L Celori May (Finstone South Africa), personal communication

135

FLUORSPAR
D Naidoo

INTRODUCTION Fluorspar is the commercial name for the mineral fluorite (calcium fluoride, CaF2), which when pure consists of 51,1 percent calcium and 48,9 percent fluorine. Commercial fluorspar is graded according to quality and specification into acid grade (min. 97 percent CaF2), metallurgical grade (min 80. percent CaF2) and ceramic grade (80 - 96 percent CaF2). Approximately one half of world production is used in the production of hydrofluoric acid (hydrogen fluoride, HF), a key intermediate in the production of a wide range of organic and inorganic fluorine based chemicals. Approximately one third is of metallurgical grade and used as a flux in steelmaking to reduce slag viscosity, reduce melting point and remove impurities from steel. Metallurgical grade fluorspar is also used in the production of aluminium, as aluminium fluoride (AlF3) is a component of the molten bath in the electrolytic reduction of alumina to aluminium metal. Ceramic grade fluorspar is used in the glass and ceramic industries. Smaller quantities are used in the manufacture of magnesium and calcium metal and welding rod coating. WORLD RESERVES AND PRODUCTION China dominates the worlds fluorspar industry, with 23 percent of world reserves and 56 percent of world production. Mexico with 8,3 percent of world reserves and South Africa with 16,7 percent of world reserves are responsible for 15,4 percent and 5 percent of world production respectively. Total world production increased by 4,4 percent to 4,75 Mt in 2003 compared with 2002. Most of the increased production was from China and Mexico (Table 1). INTERNATIONAL DEVELOPMENTS In 2004, China reduced its fluorspar export quota to 750 000 tons. This continues the trend of recent years as China attempts to reduce exports in order to supply the rapidly increasing domestic market. The average export license fee in 2004 was in the $55 $60 per metric ton range. With effect from 1 May 2005, the Chinese Ministry of Finance, with the approval of the State Council, cancelled the 5 percent export rebate on fluorspar with the intention of curbing exports and pushing up prices. PRICES Prices for acid grade fluorspar increased marginally in 2004 after a significant increase in 2003. The June 2005 price of Chinese acidspar (filtercake, dry basis, CIF US Gulf) was $225 $235 per ton, South African acidspar price (filtercake, FOB Durban) was $157 $167 and metallurgical grade material (Chinese, min 85% CaF2, bulk CIF Rotterdam) was sold at $185 $195. LOCAL DEVELOPMENTS South Africas production of fluorspar increased by 13,0 percent to 265 kt in 2004 as a result of improvements to Vergenoeg Fluorspar Mine (completed in late 2003) and Witkop Fluorspar Mine (completed in September 2004). The production increase in South Africa was motivated by the reduction of Chinas export quotas. Witkops capital expansion project raised output to 180 000 tons per annum, making it South Africas largest producer. The full effect of the plant expansion will be seen in 2005. Although world acidspar prices increased in 2004, local profits were offset by the strong rand, leading to Metorex, Vergenoegs owner, reporting a 10 percent reduction in the mines profit, to R9,3 million, for the financial year to June 04. Sallies, Witkops owner, reported a net loss of R15,6 million for the same period. Sallies loss for the 6-month period to 31 December 2004 was R23,2 million, attributed to its long-term contract with Honeywell signed in 2000, in terms of which prices were subject to a price cap of $116/ton. Spot prices have increased significantly in the past year but Sallies could not take advantage from this. The company initiated negotiations 136

with Honeywell with a view of either suspending the contract until such time as the exchange rate allowed it to be executed profitably, or renegotiating the terms. The contract was successfully renegotiated and supplies to Honeywell, which were suspended in February 05, have been renewed. South Africas export sales in 2004 increased by 10 percent to 233 kt as a result of higher global demand, while local sales increased by 10 percent to 23 kt as a result of increased sales of metallurgical grade fluorspar. Vergenoeg commissioned a dedicated gravel production plant in 2004, supplying metallurgical grade gravel to the local market. Hand-cobbed ore is fed to a small screening plant which yields high-quality metspar gravel sized at between 7mm and 60 mm, for use in the local steel and cement industries. OUTLOOK Work continues on new projects in Australia and Vietnam and capacity upgrades in Kenya and South Africa. Increased production is expected from Mongolia, which has large reserves but in the past has exported most of its material to Russia and Ukraine. Vergenoeg Fluorspar Mine intends increasing sales of acid-grade product to 150 000 tons per annum by 2006. Prices are expected to strengthen as a result of the buoyant market. TABLE 1:
COUNTRY China Mexico South Africa Russia Mongolia Spain France Kenya Morocco Namibia Other@ TOTAL
Sources: x Notes: USGS, 2005, pp 62 63

WORLD RESERVES, PRODUCTION AND EXPORTS OF FLUORSPAR, 2003


RESERVE BASEx % 22,9 8,3 16,7 3,8 3,3 1,7 2,9 0,6 1,0 38,8 100,0 PRODUCTIONx % 55,8 15,4 5,0 3,6 4,0 2,7 2,2 2,1 1,6 1,7 6,1 100,0

Mt 110 40 80 18 16 8 14 3 na 5 186 480

Rank 1 3 2 4 5 7 6 9 8

kt 2 650 730 235 170 190 130 105 100 75 80 290 4 750

Rank 1 2 3 4 5 6 7 8 9 10

Totals may not add up due to rounding na Not available @ Includes Brazil, Morocco and USA

TABLE 2:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF FLUORSPAR, 1995 2004
LOCAL SALES Mass Value (FOR) kt R000 R/t 29 7 728 268 28 8 545 300 36 11 192 309 21 9 142 435 34 11 665 344 36 13 369 371 91 54 680 603 34 18 423 537 21 16 225 767 23 18 247 793 EXPORTS Value (FOB) R000 R/t 59 849 359 80 525 487 92 380 506 89 696 586 130 092 661 100 218 680 220 223 850 205 687 980 153 309 727 183 329 787

YEAR

PRODUCTION kt 196 202 207 237 218 213 286 227 235 265

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note:

Mass kt 167 165 183 153 197 147 259 210 211 233

Unit values calculated before rounding of mass and rand values

137

TABLE 3:

WORLD ACIDSPAR PRICES, 2003 2005 PRICE RANGE ($/t) Jun 04 Dec 04 195 - 205 105 - 125 125 - 140 195 - 205 120 - 135 129 - 145

Jun 03 Chinese, dry basis, CIF US Gulf Mexican, FOB Tampico, bulk, wet filter cake South African, dry basis, bulk, FOB Durban
Source: Mineral Price Watch, 2003 - 2005

Dec 03 165 -170 105 - 125 105 - 125

Jun 05 225 - 235 130 - 150 157 - 167

148 - 154 105 - 125 105 - 125

TABLE 4:

SOUTH AFRICAS FLUORSPAR MINES: EMPLOYMENT AND REMUNERATION, 2000 2004


EMPLOYEES TOTAL PRODUCTIVITY REVENUE REMUNERATION GENERATED R000 t/employee R000/employee 17 337 677 361 22 219 691 664 23 491 579 565 22 161 719 518 22 832 724 557

YEAR

2000 2001 2002 2003 2004

314 414 392 327 366

REFERENCES USGS BGS Mineral Price Watch SA Mining, February 2005 Metorex Limited, Annual Report 2004 Sallies Limited, Annual Report 2004 / Interim Results 31 December 2004

138

LIMESTONE AND DOLOMITE


VN Agnello

INTRODUCTION It is estimated that world production of limestone is of the order of 5 billion tons per year. This figure includes limestone used as dimension stone and as aggregate, as well as that used in the cement, chemical and agricultural industries. World lime production is estimated at greater than 200 million tons per annum, and lime ranks as the fifth most commonly used chemical, after sulphuric acid, nitrogen, oxygen and ethylene. The terms, lime and lime products, refer to quicklime (CaO) and slaked lime (Ca(OH)2). The term, lime, is frequently used incorrectly to describe limestone products, such as agricultural limestone. Cementitious products are derived from a blend of limestone, aggregate, shale, sand and silica; these products are used as masonry cements, ready mix cements, mortars and plasters in the construction industry. In South Africa the principal use of limestone is in the manufacture of cement, followed by metallurgical applications (as a fluxing agent in steel making), the manufacture of lime and agricultural uses. Limestone and dolomite are not as widely used in South Africa for aggregate or dimension stone as elsewhere in the world. Lime, limestone and dolomite products are used in the following applications: Agriculture animal feed, fertilizers, pH control, fungicides Construction mortar, cement, whitewash, building stone Manufacturing glass, food processing, steel refining, papermaking, leather applications Metallurgy steel refining, fluxing, neutralizing agents, flocculation, causticization Other industries water treatment, purification, bleaches, adhesives, Ca-supplement in food, explosives, oil spill clean up, medicines and insulation.

DEVELOPMENTS DURING 2004 The market for cementitious products in South Africa is divided into civil engineering and building sectors. In the civils sector, a 3,1 percent decrease in turnover for 2004 is indicative of consolidation and a temporary lull in large-scale infrastructural spending. The completion and/or near-completion of harbour and waterfront projects (Durban, Richards Bay and Ngqura port upgrades); building projects (Constitution Hill, Cape Town Convention Centre and Johannesburg International Airport extensions, various estate and mass-property developments) and touristrelated projects (especially in the Western Cape), highway projects (N4 Bakwena Platinum Project) and dam projects (Baviaanspoort Sewage Works, Mohale Dam), point to renewed short and medium-term investment in infrastructural activity within the country (see Aggregate and Sand, Table 2). Industry expectations have not been met as a result of delays in major capital projects, particularly in mining, petrochemicals and the public sector. In 2004, limestone and dolomite production in South Africa increased by 3,3 percent compared with the previous year (Table 1), while local sales increased by 11,6 percent (by mass). The average sales value of limestone has little significance, other than as an indication of cost of production, as the bulk of sales are in the form of intercompany transfers to in-house cement or lime plants. Local consumption of limestone is on an upward trend, approaching levels last achieved in 1997 (and pre-1990). In 2004, local sales of lime increased by 10,6 percent to 1,7 Mt. Exports of lime and limestone products (by mass) decreased by 16,0 percent to a new low of 9,5 kt this is attributed to the decline in ferrochrome production at Zimbabwe Alloys, a major importer of these products. Other export markets, such as the sugar, gold and copper industries, which require lime products, have all been affected by production stoppages related to power cuts, fuel scarcities and raw material shortages in Zimbabwe. Sales of limestone for the manufacturing of cement decreased by 2,0 percent by mass, in 2004 (Table 2). In 2004, sales of metallurgical grade carbonates increased by 2,9 percent compared 139

with 2003 an upturn in local and world steel consumption has boosted sales in the last year. Agricultural limestone and dolomite sales recorded a 4,9 percent drop in sales to 889 kt for 2003. Low aglime volumes have been attributed to a downturn in end-user consumption: low grain prices, excess supply as well as cheap maize imports have resulted in farmers cutting costs on soil conditioners and remediants. TABLE 1: SOUTH AFRICAS PRODUCTION AND LOCAL SALES OF LIMESTONE AND DOLOMITE FOR NON-AGGREGATE USE, 19972004
PRODUCTION Kt 21 212 19 742 19 030 19 279 18 946 20 738 21 267 21 961 Mass Kt 18 242 17 037 15 205 14 898 15 110 16 901 17 502 17 705 LOCAL SALES Value (FOR) R000 R/t 705 124 38,7 708 318 41,6 738 386 48,6 778 917 52,3 901 551 59,7 1 055 733 62,5 1 198 800 68,5 1 230 367 69,5

YEAR

1997 1998 1999 2000 2001 2002 2003 2004


Note:

Unit values calculated before rounding of mass and rand values

TABLE 2:

SOUTH AFRICAS LOCAL SALES OF LIMESTONE AND UNCALCINED DOLOMITE BY APPLICATION, 19972004
METALLURGICAL Mass Value (FOR) Kt R000 R/t
2 2 1 2 2 2 1 2 324 067 998 131 038 088 972 029 91 84 85 96 90 98 104 106 750 871 247 379 442 690 861 120 39 41 43 45 44 47 53 52

YEAR

CEMENT Mass Value (FOR) Kt R000 R/t


11 10 10 9 9 11 11 11 533 541 074 794 700 218 893 655 130 118 132 136 156 188 216 226 185 456 375 004 639 653 148 517 11 11 13 14 16 17 18 19

AGRICULTURAL Mass Value (FOR) Kt R000 R/t


710 865 836 653 799 993 935 889 23 29 29 26 36 49 53 52 055 801 055 205 497 281 732 740 32 34 35 40 46 50 57 59

Mass kt
2 151 2 100 927 969 974 1 017 1 110 1 155

OTHER Value (FOR) R000 R/t


151 169 156 170 185 230 260 277 982 625 396 403 487 879 981 015 71 81 169 176 190 227 235 240

1997 1998 1999 2000 2001 2002 2003 2004


Note:

Unit values calculated before rounding of mass and rand values

In 2004, the local sales mass of hydrated lime for water purification increased, although sales for chemical and other applications decreased in mass by 28,9 and 37,3 percent respectively this was partly compensated for by year-on-year price increases of at least 6,5 percent (Table 3). In the quicklime sector, consumption in pyrometallurgical uses grew moderately, whilst sales (by mass) in chemical applications grew by an unanticipated 27,2 percent. Several lime producers have renegotiated long-term contract prices with major consumers, as rail tariffs, wage increases and energy prices continue an upward spiral. Cement producers face similar challenges. Local sales of cement (by mass) increased by 17,4 percent to 10,7 Mt, with the Eastern and Western Cape recording growth of at least 24,8 percent during 2004. Regional cement sales (sales to Botswana, Lesotho, Namibia and Swaziland) decreased by 1,1 percent to 1,0 Mt; however sales to Namibia increased by 5,1 percent In 2004, exports comprised 2,4 percent or 280 kt of total sales, which is significantly less than the 6,2 percent (595,7 kt) achieved in 2002. Some cement companies are actively seeking export markets, although rand volatility has hurt export sales over the last 2 years. In 2004, primary consumers such as blenders, readymix producers and concrete product manufacturers showed the largest volume increase (Table 4).

140

TABLE 3:

SOUTH AFRICAS LOCAL SALES OF HYDRATED LIME AND QUICKLIME, 20032004


2003 Value (FOR) R000 R/t 241 540 249 288 19 20 30 562 744 778 702 051 288 398 900 508 698 358 2004# Mass Kt 864,1 795,7 24,6 29,1 24,6 1 738,1 Value (FOR) R000 R/t 249 616 259 650 20 16 18 564 130 725 315 437 289 326 819 574 745 325

LIME PRODUCT, BY SECTOR USE Quicklime Pyrometallurgical Chemical Hydrated lime Water purification Chemical Other TOTAL 1
Notes:

Mass Kt 838,1 625,8 21,9 40,9 44,0 570,9

Unit values calculated before rounding of mass and rand values # Lime exports amounting to 9 487 tons valued at R4,8 million were recorded for 2004

TABLE 4:

SALES TONS BY END-USE SECTOR FOR CEMENTITIOUS PRODUCTS, 20022004


2002 1 621 599 1 190 036 4 776 806 409 222 665 579 232 785 508 294 219 367 9 623 688 2003 1 676 503 1 274 538 5 067 927 428 944 648 150 252 490 606 380 220 294 10 163 170 2004 1 968 461 1 547 340 5 889 771 366 949 704 425 241 840 780 609 236 605 11 736 000 Percent change y-o-y for 2004 18,3 21,4 16,2 -14,5 8,7 -4,2 28,7 7,4 15,5#

End-use Sector Concrete Product Manufacturers Readymix Producers Resellers Civil Construction (Direct) Building Construction (Direct) Mining Blenders Other TOTAL
Source: Notes:

Cement & Concrete Institute Market Review 2004 # Figures include statistics for Swaziland, Namibia, Botswana and Lesotho

Factors such as securing market share, strategic acquisitions and the need for sustained growth has led some South African construction companies to focus on lucrative contracts offered in other African countries and overseas (see Aggregate and Sand). Additional factors that are affecting the construction industry negatively, include the temporary stagnation in non-residential building activity, capacity constraints in government infrastructural spending, skilled labour shortages and high building costs. Planned expansions have been initiated by Natal Portland Cement (additional 600 kt capacity, costing R700 million), Lafarge (additional 1 Mt, costing R1 billion) and PPCs multi-plant upgrade (1 Mt total, costing R1,36 billion). Holcim have not announced any major plant upgrades as yet. High demand and localised cement shortages have forced producers to recommission specific processing and distribution plants to reduce lead times. Cement plant and operational upgrades include: improving crushing/ grinding capacities, advanced pre-heater kilns; pre-heater retrofits and additional precalciners; water injection systems and bag filters instead of electrostatic precipitators; the installation of grate cooler and kiln off-gas systems; value-based management initiatives; supply-chain optimisation; outsourcing of distribution logistics; uniform procurement systems; increased automation through software and hardware upgrades; real-time statistical analysis; and smart fleet management. The conversion of coal-fired kilns to accept scrap tyres and other waste-derived fuels as an energy source will replace a significant portion of the 1,2 Mt of coal used for kiln-firing in cement production. In the cement market, consumption trends include: a significant growth in blender sales and ready-mix production, at the expense of site-mix production; a move away from CEM II to CEM III and CEM V products; and a strong increase in pozzolanic fillers (particularly granulated slag at the expense of fly ash).

141

Technological advancements include: new concrete durability tests, high-strength cements, plasticisers with added workability, water-reducing admixtures, new reinforced concretes and stope-support packs, more efficient tilt-up methods, sealing gels for concrete waterproofing, durable concrete inlays for asphalt road replacement, textile concretes, high-tech refractory concretes, fibre-reinforced shotcrete and low viscosity self-compacting concrete. Bi-annual quality audits, continuous safety, health and environmental programme (ISHE) audits, best practice initiatives and quality assurance schemes for the whole construction industry (including ready-mix concrete producers and other blenders) will boost the credibility and integrity of this industry. In 2004, the number of employees in limestone and dolomite quarries increased by 5,7 percent over the previous, and total remuneration increased by 12,9 percent (Table 5). Labour productivity decreased by 2,3 percent whilst average earnings per employee improved by 17,3 percent. OUTLOOK In South Africa, limestone and dolomite production is influenced more by local demand than by the availability of resources. Additional interest rate cuts, GDP growth of 5 percent, stable inflation and renewed fiscal spending on infrastructure by the Dept. of Public Works and provincial authorities and municipalities, will increase consumer confidence and affect cement demand positively (see Aggregate and Sand). In the private sector, positive developments include the implementation of large investment programmes by platinum, ferrochrome and nickel producers, Sasols Project Turbo, as well as market residential dwellings, hotels, casinos, convention centres, shopping centres, and office parks. Real growth of 8,0 percent has been forecast for the civil engineering sector for 2005. Proposed plant expansions will push the cement industrys current capacity up by 2,6 Mt to 15,6 Mt, although this may fall short of the forecast 16,7 Mt capacity needed in 2010. A growth rate of 5 percent per annum has been forecast for the domestic cement industry over the next 2 years, whilst regional growth is set to reach a maximum of 1,5 percent. Acid water treatment solutions based on the use of lime and/or limestone have shown great efficiencies and cost-effectiveness in the testing phase, and may significantly affect the sales of these commodities in the short to medium-term. Agricultural consumption of dolomite and limestone is generally unpredictable, although depressed maize prices will negatively affect aglime producers over the next 2 years. Improved efficiencies and trading conditions for steel producers will boost metallurgical-grade carbonate sales by at least 2 percent over the next 2 years. Strong demand and fewer technical specifications and contractual obligations, have persuaded several carbonate producers to supply aggregate instead of metallurgical markets. Future cement plant upgrades will focus on reducing heat consumption, improving production output, lowering unit costs and reducing stack emissions. Substantial growth is expected in cement and concrete additives, concrete rail sleepers and poles, modular textured masonry and plastic reinforced and corrosion-resistant cement. Pulverised limestone will increase its market share significantly as a cheaper alternative to quicklime. Ground calcium carbonate is expected to increase its dominance in filler and whitening applications, particularly in the paint and paper industries.

142

TABLE 5:

SOUTH AFRICAS LIMESTONE AND DOLOMITE QUARRIES: EMPLOYMENT, REMUNERATION AND PRODUCTIVITY, 19992004
EMPLOYEES 2 2 2 2 2 2 754 668 557 518 166 289 TOTAL REMUNERATION R000 163 726 173 138 179 388 190 668 185 540 229 923 LABOUR PRODUCTIVITY t/employee 6 910 7 227 7 410 8 236 9 819 9 594

YEAR 1999 2000 2001 2002 2003 2004

REFERENCES

Business Day articles, January July 2005 Cement and concrete review 2004, CNCI Construction and Civil Engineering report, Who Owns Whom, August 2005 Engineering News articles, January 2004 July 2005 E. Snyman (Industry Insight) in personal communication P. Blaauw (SAFCEC) in personal communication State of the Civil Industry 2004, SAFCEC

143

PHOSPHATE ROCK
D Naidoo

INTRODUCTION South Africa is largely self-reliant in supplying the domestic demand of phosphate rock. Phosphate rock is needed for the production of phosphoric acid and downstream phosphate fertilisers as well as de-fluorinated calcium phosphates for animal feeds. Foskor is South Africas sole supplier of high quality and high-grade beneficiated phosphate rock to the local industry, and is a wholly-owned subsidiary of the Industrial Development Corporation. The company has a mining division with production facilities in Phalaborwa and phosphoric acid and fertiliser plants at Richards Bay. INTERNATIONAL DEVELOPMENTS Phosphate rock production is undertaken in around 30 countries, with the top five the United States (25,6 percent), China (17,9 percent), Morocco (16,8 percent), Russia and Tunisia accounting for nearly 75 percent of total world output. World phosphate rock production increased marginally to an estimated 137 Mt in 2003. There was increased production of phosphate rock in China, Russia, Australia and Egypt. TABLE 1:
COUNTRY USA China Morocco# Russia Tunisia Jordan Brazil Israel South Africa* Syria Australia Senegal Other TOTAL
Sources: x * Notes:

WORLD RESERVES AND PRODUCTION OF PHOSPHATE ROCK, 2004


RESERVE BASEx % 8,0 26,0 42,0 2,0 1,2 3,4 0,7 1,6 5,0 1,6 2,4 0,3 6,4 100,0 PRODUCTIONx % 25,6 17,9 16,8 8,1 5,8 4,9 4,1 2,4 1,9 1,8 1,7 1,1 7,9 100,0

Mt 4 000 13 000 21 000 1 000 600 1 700 370 800 2 500 800 1 200 160 3 180 50 000

Rank 3 2 1 7 10 5 11 8 4 8 6 12

35 24 23 11 7 6 5 3 2 2 2 1 10 137

kt 000 500 000 000 890 760 600 210 640 430 290 470 800 000

Rank 1 2 3 4 5 6 7 8 9 10 11 12

USGS, 2005, p 122 123 Foskor, 2003

# Including Western Sahara Totals may not add up due to rounding

LOCAL DEVELOPMENTS South Africas production of phosphate rock increased by 3,5 percent, to 2 735 kt in 2004 (Table 2). The higher production was a result of rectification work undertaken at Foskors Extension 8 project at the mine. Foskors endeavours to ramp up to full acid production is dependent on the availability of wagons and locomotives from Spoornet, a major factor currently constraining growth in production. Total phosphoric acid production increased by 12 percent to 1 Mt and local sales increased by 33 percent to 381kt in 2004, due to increased production and local sales from Sasol Nitro. Phosphoric acid exports increased by 20 percent to 523 kt in 2004, largely due to increased exports from Foskor.

144

TABLE 2:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF PHOSPHATE ROCK, 1995 - 2004
LOCAL SALES Mass Value (FOR) kt R000 R/t 873 ** ** 894 ** ** 998 ** ** 909 ** ** 521 ** ** 417 ** ** 591 ** ** 532 ** ** 665 ** ** 484 ** ** EXPORTS Value (FOB) R000 R/t ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** ** **

YEAR

PRODUCTION kt 822 655 732 739 957 796 420 803 643 735

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

2 2 2 2 2 2 2 2 2 2

1 1 1 1 2 2 2 2 2 2

Mass kt 1 404 953 902 830 994 779 555 349 250 268

Sources: Foskor 2004 Note: ** Classified

Foskor sells 1 Mt per annum of phosphate rock to domestic fertiliser manufacturers. Prior to May 2004, the local phosphate rock price was based on the international dollar price of diammonium phosphate, FOB, US Gulf, and merchant grade acid, CFR India. This price was approximately 35 percent cheaper than import parity (the cost of importing the product). As a result of losses suffered over the past two financial years, caused by the strong rand, depressed prices, increased freight and raw material costs, Foskor has attempted to align its domestic phosphate rock price with import parity. With the recent local price (FOR, Phalaborwa) in the region of $54 per ton and the import parity price approximately $72 per ton (CFR, India), this attempt caused an outcry in the local fertiliser industry. Foskor has since relented, but hopes to move towards import parity pricing in the near future. However, a final decision may be dependent on the recommendations of a Department of Trade and Industry study on import parity pricing in general. Coramandel Fertilisers, one of the leading producers of fertiliser in India, has acquired a 2,5 percent stake in Foskor with the option of increasing to 16,5 percent. The deal includes a business assistance agreement. In 2003, Foskor acquired 5 percent in Godvari Fertilisers, owned by Coramandel. The stake in Godvari guaranteed Foskor a minimum combined supply of 200 000 tons per annum of phosphoric acid to Godvari and Coramandel. Foskor acquired Sasol Nitros phosphoric acid plant for R95 million during 2005. In terms of the deal between the Industrial Development Corporation, Foskors owner, and Sasol, Foskor is to take over Sasol Nitros productions and storage assets whilst Sasol will retain the gypsum disposal dumps but will allow Foskor to deposit gypsum on the dumps for four years. After this Foskor will take over the dumps or Sasol will close and rehabilitate them. The sale is, inter alia, subject to the approval of the Competition Commission. OUTLOOK The phosphate market is expected to tighten over the next five years as demand outpaces supply. The International Fertiliser Industry Association has predicted that worldwide demand for phosphate fertilisers will grow at a rate of 2,5 percent per year during the next five years. Continued growth in world population and the need for dependable food supplies ensures the importance of phosphates.

145

TABLE 3:
YEAR

SOUTH AFRICAS IMPORTS OF PHOSPHATE ROCK, 1995 - 2004


IMPORTS (FOB) Value R000 54 646 70 049 104 459 92 830 72 228 94 092 66 312 114 052 57 353 38 211

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source:

Mass kt 482 496 557 424 281 331 172 231 143 133

R/t 113 141 188 219 257 285 385 494 401 287

RSA, Commissioner for South African Revenue Service, 1995 2004

TABLE 4:
YEAR

SOUTH AFRICAS EXPORTS OF PROCESSED PHOSPHATES, 1995 - 2004


EXPORTS kt P2O5 Diammonium Superphosphates phosphate 88,9 121,9 98,6 109,2 47,2 60,4 78,3 50,8 82,0 12,7 72,4 208,0 55,7 176,4 114,0 172,5 27,9 172,9 21,4 69,8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note:

Phosphoric acid 308,4 242,1 202,7 215,4 328,0 752,9 627,4 511,4 574,2 679,7

Monoammonium phosphate 18,7 37,5 26,4 23,6 49,0 52,7 59,7 9,3 115,4 82,7

Total 537,9 487,4 336,7 368,1 471,7 1 086,0 919,2 806,7 890,4 853,6

Calculated from data published by: RSA, Commissioner for South African Revenue Service, 1995 2004

TABLE 5:
YEAR 2000 2001 2002 2003 2004
Source: Note:

WORLD PHOSPHATE ROCK PRICE, 2000- 2004


PRICE+ $/t 36,1 34,7 36,2 36.1 37,3

Phosphorus and Potassium, 1999 2004 + Average annual price, FOB, US Gulf

146

TABLE 6:
YEAR 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: Note:

WORLD PHOSPHORIC ACID PRICE+, 1995 2004


US GULF $/t (FOB) 294 311 330 337 320 260 250 250 250 250 NORTH AFRICA $/t (FOB) 339 350 358 366 359 320 310 305 305 305

Fertilizer International, 1995 - 2004 + Average annual prices

REFERENCES USGS Foskor Annual Report, 2004 Fertiliser International, 2005

147

SPECIAL CLAYS
VN Agnello

INTRODUCTION In 2003 (the year for which the most recent world statistics are available), the USA dominated clay production, with 35,1 percent of the world kaolin production and 39,4 percent of combined world bentonite and attapulgite output (Tables 1). During 2004, South Africas total sales of special clays (excluding flint clay), amounted to 182,8 kt, valued at some R98,5 million (Table 2). Attapulgite recorded significantly higher production levels, while kaolin output decreased marginally during the year. Campaign mining has skewed bentonite production totals: only 55,9 kt was mined in 2004 compared to 145 kt in 2003. Valueadded kaolin, chamotte (calcined flint clay) and some bentonite were exported, but all other crude clays were sold domestically. The total value of local sales of all special clays amounted to R87,5 million in 2004, and the total export value was R11,0 million. Kaolin superseded bentonite as the most important special clay, contributing 48,7 percent to the total sales value, whilst bentonite and attapulgite contributed 42,2 percent and 9,1 percent by value, respectively. TABLE 1: WORLD PRODUCTION OF KAOLIN AND BENTONITE, 2003
KAOLIN PRODUCTION % 35,1 9,2 10,1 7,0 4,8 3,5 3,2 2,6 2,6 2,6 2,0 1,9 0,4 15,0 100,0 BENTONITEI COUNTRY Rank 1 2 3 4 5 6 7 8 9 10 11 12 27 USA 6 China 1 Greece 1 Turkey Spain# Mexico Japan Russia Germany Italy India Brazil South Africa Other 2 TOTAL 17 kt 700 290 200 841 742 617 543 500 479 475 450 421 160 562 000 PRODUCTION % Rank 39,4 1 7,6 2 7,1 3 5,0 4 4,4 5 3,6 6 3,2 7 2,9 8 2,8 9 2,8 10 2,7 11 2,5 12 0,9 15 15,1 100,0

COUNTRY USA 8 UK 2 Brazil 2 China 1 Korea, Rep. Of 1 Mexico Germany Vietnam Iran Czech Republic Spain Malaysia South Africa Other 3 TOTAL 22
Source: Notes:

Kt 010 097 300 600 100 798 738 600 593 582 450 426 86 425 800

BGS, 2005, pp 8-9, 41-42 + For 2003 or latest available. Includes re-exports I Including attapulgite and Fullers earth # Including sepiolite Totals may not add up due to rounding

TABLE 2:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF SPECIAL CLAYSI, 2004
LOCAL SALES Mass Value (FOR) kt R000 67,8 42 880 20,2 8 962 75,5 35 662 163,5 87 505 EXPORT SALES Mass Value (FOB) kt R000 8,8 5 066 0 10,6 5 956 19,4 11 022 TOTAL SALES Mass Value Kt R000 76,6 47 946 20,2 8 962 86,0 41 619 182,8 98 527

COMMODITY PROD. kt 81,9 20,4 55,9 158,2

Kaolin Attapulgite Bentonite TOTAL


Notes:

I Excludes flint clay Totals may not add up due to rounding

148

KAOLIN

International The major kaolin exporters, in descending order, were the USA, UK, Brazil, China and the Czech Republic. One of the major world producers of high-quality grade special clays, Imerys, has a controlled production capacity of nearly 5 Mt per year. Other major kaolin producers include Huber Engineering Materials and Engelhard (both in the USA) and CADAM and Para Pigmentos (PPSA) in Brazil.
Kaolin consumption is heavily influenced by the paper market (and indirectly by print advertising), which accounts for 45 percent of world demand. In 2004, worldwide printing and writing paper production totalled an estimated 110 kt, a 5,3 percent increase over 2003. Paper-grade kaolin products are used in coating and filler applications to enhance the printability, appearance and value of paper and board products. In 2004, most clay producers reported gross sale increases, although profit margins have been limited by higher energy and raw material costs, increased research and development expenditures (especially for filler-fibre composite materials) and high freight tariffs. The 1st quarter of 2005 saw all major kaolin producers increase kaolin prices by 4 8 percent. Product diversification, the relocation of production and manufacturing units to low-cost centres (e.g. major capacity increases in Brazil by Imerys, CADAM and PPSA), strategic international partnerships and further consolidation in the kaolin industry and its main consumer, the paper industry, have positioned major roleplayers to accommodate escalating production and transport costs. In the paper industry, kaolin has lost significant market share to carbonate filler and coating products, such as ground calcium carbonate (GCC) and precipitated calcium carbonate (PCC). Carbonates offer unparalleled brightness, blue tints and high solids runnability. Nonetheless, copigment products, double coating systems and the superior printability and high gloss of quality kaolin, have allowed producers to re-capture some market share in the paper industry. Renewed threats to the kaolin industry include Speciality Minerals Inc.s new PCC plant in Walsum, Germany that has a plant capacity of up to 500 kt per annum of coating-grade PCC products.

Local Local sales of kaolin decreased by 7,5 percent, from 72,9 kt in 2003 to 67,8 kt in 2004 (Table 3). Sales of crude and milled kaolin, by volume, decreased by 22,4 percent and 2,0 percent respectively. Washed kaolin sale volume increased by 9,5 percent in 2004 (Table 4). The average local price of kaolin increased by 13,9 percent to R633/t (FOR). Washed kaolin exports shrunk to 10,6 kt in 2004, while 15,9 kt of kaolin was imported. Imported products include micronised kaolin and paper coating-grade products.
TABLE 3: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND IMPORTS OF KAOLIN, 19972004
LOCAL SALES Mass Value (FOR) kt R000 R/t 168,0 40 086 239 160,0 38 603 241 116,4 34 276 294 80,4 32 071 399 71,3 32 219 452 79,4 37 332 470 72,9 40 573 556 67,8 42 880 633 EXPORTS Value (FOB) R000 R/t 816 1 171 488 1 110 146 1 550 466 1 680 491 2 009 254 2 988 925 2 156 562 1 478

YEAR

PRODUCTION kt 164,4 138,3 123,2 89,2 83,5 86,7 86,4 81,9

1997 1998 1999 2000 2001 2002 2003 2004

Mass kt 22,1 25 24,9 27 17,5 27 16,4 27 15,7 31 17,8 53 11,6 24 15,9 23

Sources: RSA, Commissioner for South African Revenue Services, 19982005 Notes: Import figures also include other kaolinitic clays Unit values calculated before rounding of mass and rand values

149

In the last 10 years, local kaolin sales have shrunk from about 180 kt per annum to 70 kt per annum a decline of 61 percent (Figure 1). A technological changeover in local paper manufacture necessitated the substitution of kaolin fillers by GCC and PCC. From April 2005, no local kaolin will be used in any paper manufacturing. Declining consumption trends have also been attributed to: GCCs replacing most kaolin fillers in paint, plastic and rubber applications, the use of plastic clays and fireclays in ceramic bodies and refractories, the use of attapulgite and petroleum by-products as binders in fertiliser compounds; the mass exodus of local whiteware, earthenware and tableware producers (due to high production costs and cheap, imported finished articles); high-quality kaolin imports for chinaware and high-end ceramics; the use of other alumina-based products such as pyrophyllite and bauxite for electroceramics; and the exploitation of other low-cost fillers such as talc, dolomite and limestone. TABLE 4:
YEAR Mass kt 91,4 76,0 51,0 32,9 29,2 43,1 36,2 28,1

SOUTH AFRICAS LOCAL SALES OF KAOLIN BY TYPE, 19972004


LOCAL SALES Value (FOR) Mass R000 R/t kt 3 650 40 11,2 2 825 37 38,0 2 308 45 21,3 2 775 84 5,3 4 058 139 5,0 9 595 222 4,8 9 287 257 5,1 8 387 298 5,0 EXPORTS Mass Value (FOB) kt R000 R/t 65,4 33 602 514 45,9 24 952 544 44,2 25 797 584 42,1 27 746 660 37,1 26 720 720 31,5 26 351 836 31,6 29 804 942 34,6 33 040 955

1997 1998 1999 2000 2001 2002 2003 2004


Note:

Value (FOR) R000 R/t 2 834 253 10 825 285 6 171 290 1 551 290 1 441 290 1 387 290 1 482 290 1 453 290

Unit values calculated before rounding of mass and rand values

FIGURE 1:

KOALIN CONSUMPTION IN SOUTH AFRICA, 1990 AND 2004

In contrast to declining trends in most ceramic applications, kaolin demand for tiles and sanitaryware has increased significantly in the last few years due to capacity increases in the ceramics industry, a major increase in bathroom upgrades by middle-income home-owners and new product ranges in specialised ceramics, tile and sanitaryware components. Profits have been maintained through cost-cutting initiatives and an increase in exports local kaolin is exported to over thirty countries worldwide. Pro-active research and the development of niche markets are bearing fruit for some producers. However, no kaolin producer in South Africa sells a coating-grade or calcined product. Most producers are employing new, low-cost technologies to add value to their products, which include: improved fine milling techniques, the use of whitening additives, moisture inhibitors, driers and better packaging. Good quality kaolin reserves, mostly located in the Western Cape, have been sterilised by rapid urban expansion, unfavourable location in terms of primary local markets, transport factors, the proximity of prestige wine farms and environmental compliance costs. BENTONITE

International The dominant global producers of bentonite are American Colloid Co., S & B Industrial Minerals SA (formerly Silver & Barytes Ores Mining Co.), Sud Chemie and Spanish-based companies
150

Bentonitas Especiales SA, Tolsa SA and Sepiol SA. The major applications of bentonite are for cat litter, metallurgical (foundry sands and pelletising) and the oil industry. The last 5 years have seen a further consolidation of producers and either stagnation or decline of mature markets, particularly in Western Europe and the USA. Several bentonite companies are focussing on potential deposits, products and markets in Eastern Europe, the CIS and China, and are either investing directly or shifting traders and marketing agencies to these countries.

Local There are three operating, bentonite mines in South Africa; the Cape Bentonite Mine (owned by Ecca Holdings) near Heidelberg, Western Cape; the Ocean Bentonite Mine and Blauwbosch Mine (both located near Koppies, Free State and owned by G&W Base & Industrial). A 61,8 percent production decrease in 2004 has been attributed to campaign mining implemented at the Koppies operation in 2003 (Table 5).
Local sales of bentonite increased significantly to 75,5 kt in 2004, whilst average local prices decreased by 12,6 percent to R473/t. In 2004, total imports amounted to 24 kt, used mostly as a pelletising agent in ferrochrome production and to a lesser extent in paint, paper and wineclarifying applications. Ferrochrome, foundry, drilling muds, civil and oil bleaching applications account for 91% of bentonite consumption (Figure 2). The local bentonite market has experienced an annualised growth of 6,8 percent from 1990 to 2004. TABLE 5: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF BENTONITE, 19972004
LOCAL SALES Mass Value (FOR) kt R000 R/t 52,0 17 800 342 55,5 17 231 311 55,2 17 192 312 62,5 21 378 342 51,8 19 793 382 67,8 32 916 485 74,4 31 210 420 75,5 35 662 473 EXPORTS Value (FOB) R000 R/t 52 103 4 065 408 3 728 338 5 956 566

YEAR

PRODUCTION kt 75,5 48,4 49,3 90,1 108,3 101,1 145,1 55,9

1997 1998 1999 2000 2001 2002 2003 2004


Note:

Mass kt 0 0 0,5 0 0 10,0 11,0 10,5

Unit values calculated before rounding of mass and rand values

FIGURE 2:

BENTONITE CONSUMPTION IN SOUTH AFRICA, 1990 AND 2004

ATTAPULGITE Currently, there are two full-time and two seasonal attapulgite producers in South Africa. The main use of attapulgite is as pet litter, but there is also strong demand for attapulgite as a carrier for pesticides and animal feeds and as a pelletising agent. Both production and local sales increased significantly in 2004 20,2 kt of mostly crude attapulgite was sold (Table 6). It is important to note that the addition of a relatively new producer has skewed statistics as from year-end 2001. Much vertical integration exists in the industry, as the final, processed attapulgite product is often sold by sister companies at prices greater than R3000. Import replacement is a key growth market for attapulgite. 151

FLINT CLAY There are only two producers of flint clay in South Africa, Refractory Minerals (a subsidiary of SAMREC) and Vereeniging Refractories (VERREF). However, there are other producers of flintlike clays whose products compete with those of Refractory Minerals. Local sales by value of flint clay increased by 5,4 percent to R23,6 million in 2004 (Table 7). Over 70 percent of flint clay is calcined and sold as chamotte, with a small amount (less than 5kt) exported in 2004. Flint clay is used primarily in the refractory industry in kiln linings, crucibles and condensers, and to a lesser extent in water purification. Recent developments include the award of a large international contract to VERREF to supply Chilean copper smelters with refractory lining bricks. TABLE 6: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF ATTAPULGITE, 19972004
LOCAL SALES Mass Value (FOR) kt R000 R/t 9,4 3 787 402 7,7 3 164 409 6,8 2 993 442 8,6 3 447 400 5,8 3 224 549 11,0 5 883 535 14,5 6 750 466 20,2 8 962 443 EXPORTS Value (FOB) R000 R/t 24,6 546 128,0 684 118,7 784 11 574

YEAR

PRODUCTION kt 9,4 7,8 7,0 10,3 9,2 13,3 14,6 20,4

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Mass kt 45 187 151 0 20 0 0 0

Unit values calculated before rounding of mass and rand values

TABLE 7:

SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF FLINT CLAY, 19972004
LOCAL SALES Mass Value (FOR) kt R000 R/t 106,7 17 980 168 86,5 19 218 222 90,4 20 586 228 53,1 21 539 406 57,1 20 087 352 ** 21 543 ** ** 22 440 ** ** 23 644 ** EXPORTS Value (FOB) R000 R/t 2 860 452 99 417 2 968 ** 3 787 **

YEAR

PRODUCTION kt 91,7 82,8 88,9 48,5 47,2 ** ** **

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Mass kt 6 1 0 0 0 0 ** **

** Classified Unit values calculated before rounding of mass and rand values

REMUNERATION Total remuneration for all bentonite, attapulgite, flint clay and kaolin quarries increased by 11,0 percent to R27,8 million in 2004 (Table 8). Expansions in the bentonite and attapulgite industry have compensated for retrenchments at several kaolin operations and the labour force has been rising since 2001. Labour productivity improved by 2,9% over the last year. TABLE 8: SOUTH AFRICAS KAOLIN, BENTONITE, ATTAPULGITE AND FLINT CLAY QUARRIES: EMPLOYMENT AND REMUNERATION, 19992004
EMPLOYEES 435 412 396 423 444 479 TOTAL REMUNERATION R000 14 769 15 010 16 056 22 246 25 045 27 804

YEAR 1999 2000 2001 2002 2003 2004

152

OUTLOOK Extensive research has led to the development of industry specific clay products, which sell at premium prices. Marginal growth is expected in western bentonite markets such as cat litter, foundry sands and pelletising. High oil prices have encouraged many companies to bring forward oil exploration projects, with current trends suggesting that consumption of drilling muds will increase significantly. In Europe and the USA, growth markets include detergent and civil engineering applications, whilst in Asia, cat litter and bleaching/oil refining applications show tremendous potential in the short- and medium-term. New growth markets include water and effluent treatment and pharmaceutical applications. World markets for kaolin products are generally mature, and there are few opportunities for newcomers to enter the market (both locally and internationally). Future growth in kaolin consumption will be driven by an increasing demand for high-gloss, fine papers. Predicted annual growth for world kaolin demand is set at 0,5 1 percent, whilst GCC and PCC annual growth is expected to be 3 4 percent. It is estimated that in the next 5 years, 6 Mt of new printing and writing capacity will come on stream in China. Glossing clay product sales are expected to grow significantly, as more Chinese paper manufacturers are using coated wood-free machines. Global paper production is expected to grow at an average of 3,2 percent per year. High growth rates are expected in Asia (4,4 percent per year), Europe (3,0 percent) and North America (1,7%). Two new growth markets are fuel cell applications and nano-composite technologies. Further consolidation, strategic acquisitions (especially of Brazilian and Chinese operations) and trans-continental alliances are expected in the clay industry, as well as in associated industries, such as paper, petroleum, cat litter and fillers. This will increase clay demand, improve profit margins and reduce excess capacities of several global companies within these markets. Current challenges that international kaolin producers face include 1) the continuous demand for better quality kaolin products, 2) limiting production, raw material, energy and transport costs and 3) the threat of other functional, commercial fillers such as synthetic white pigments, chalk, limestone, talc, GCC, PCC and pyrophyllite. Sales of South African special clays, mainly to local consumers, depend on growth in the national economy. In the medium- to long-term, the industry should benefit from the expected expansion in industrial manufacturing and in industries that consume special clays, although the strong rand has made certain export routes uncompetitive. Clay prices are very sensitive to transport costs, toll fees and fuel price increases, which result in price increases. Beneficiation, small-scale mining and compliance costs are other important aspects influencing future developments in the special clays industry. It is expected that other white mineral substitutes will be increasingly competitive in kaolin filler applications. Some local ceramic producers have developed new foreign markets and increased their production capacities accordingly. Strong growth (and increased clay consumption) is expected in this industry in the next two years, although cheap imports from China, Brazil and India are damaging local ceramic and clay producers markets. Locally, future technological developments will be around superfine and nano-fine size fractions, narrow particle distributions, improved functionality, moisture removal and better packaging. New, favourably located deposits need to be explored and delineated to unlock kaolin potential in South Africa. Real growth can be maintained through smart advertising, competitive pricing, further research and development and an increase in consumer demand, particularly from sanitaryware, tile and refractory producers. According to domestic industry sources, bentonite output is expected to grow by about 4 6 percent annually over the next two years, based on a local demand increase of about 4 percent per year and significant growth in exports. Bentonite consumption trends suggest that bentonite will become the most important special clay, by value and volume, produced in South Africa within the next year. Growth will be focused on the foundry and pelletising industries; throughput in the ferrochrome industry is expected to double within the next four years as seven new pelletising units are scheduled to be built from August 2005 onward, although market saturation may be reached in the next five years. Other niche markets that show strong growth include civil/ environmental (particularly import replacements, water retention and treatment), medicinal, 153

aquamarine, nano-plastics, fibre technologies, pulp and paper manufacturing and composite material manufacturing. The two largest deterrents to significant real growth in niche markets are consumer mindset and ignorance. Flint clay is likely to experience continued competition from high alumina refractories, as well as grog (recycled chamotte) that can be inexpensively regenerated. Industry sources have indicated that cheap imported products may replace local flint clay in water purification applications. Cat litter, animal feed and pelletising applications are expected to provide strong demand for attapulgite. Several producers have or will be increasing their plant capacities in the next year. Two possible new entrants into the attapulgite industry may compete with established producers. Synthetic resins and adsorbents, which retain their efficiencies for at least 12 years, may prove threatening to the attapulgite adsorbent market in the medium- and long-term. REFERENCES:

Engineering News, Feb 2004 July 2005 Industrial Minerals, July 2003 July 2005 Mineral Price Watch, Feb 2004 July 2005

154

SULPHUR
D Naidoo

INTRODUCTION Sulphur is a non-metallic element, the fourteenth most abundant element in the earths crust, as well as being an important constituent of plant and animal life. Owing to the application of its major derivative, sulphuric acid, sulphur is one of the most important commodities in the industrial sector. Sulphuric acid consumption is regarded as one of the best indicators of a nations industrial development. INTERNATIONAL DEVELOPMENTS In 2003, world production of sulphur in all forms (SAF) increased by 4,7 percent to 61,0 million tons. The major producers were USA, Canada and Russia (see Table 1). According to the International Fertiliser Association, consumption of elemental sulphur in 2004 rose by seven percent, to 45,2 Mt due to firm fertiliser and industrial demand. PRICE Prices stabilised in 2004 and the FOB Vancouver price was in the $60 per ton range. The only unstable factor was freight rates which were underpinned by the flood of raw materials into China. This tied up shipping that otherwise would have been used for dry bulk trade, including sulphur. However, by March 2005 there was an upward trend in prices led by escalating Chinese demand, and technical problems with sulphur loading systems in Canada. LOCAL DEVELOPMENTS In South Africa elemental sulphur is recovered from pyrites, metal sulphide smelter gases, coal and crude oil. As sulphuric acid is the form in which more than 85 percent of SAF is used, most elemental sulphur is converted to sulphuric acid. South Africas production of SAF increased by 2 percent, to 633 kt in 2004 (Table 2). Sulphur was recovered as a by-product from four oil refineries, one synthetic fuels producer, three gold mines, six platinum mines, one zinc mine and one copper mine. Sulphur recovery from oil refineries increased by 9,2 percent, to 288 kt in 2004, as a result of measures taken to meet the 2006 deadline for clean fuels specifications. These specifications require, among other things, that the maximum level of sulphur in petrol and diesel be reduced from 0,1 percent to 0,05 percent and 0,3 percent to 0,05 percent respectively, by January 2006. There were marginal decreases from gold, copper and zinc mines, while output from PGM mines increased significantly by 180 percent. This was largely due to increased production of sulphuric acid from Rustenburg Platinum Mines, owned by Anglo American Platinum (Angloplat). In 2004, Angloplat successfully upgraded its Waterval Smelter in order to reduce its sulphur dioxide emissions. As part of the Anglo Platinum Converting Process (ACP) project and technology upgrade, an entire new acid plant has been constructed to convert the sulphur dioxide into sulphuric acid. There was a marked increase in the fixation of sulphur dioxide through the new acid plant, resulting in a 72 percent decrease in sulphur dioxide emissions from the Waterval Smelter when compared to 2003. South Africas imports of crude sulphur decreased by 11 percent, to an estimated 554 kt in 2004. This was a result of decreased imports from Sasol Nitro which shut down one of its sulphuric acid and phosphoric acid plants in December 2003 owing to the increased cost of importing sulphur, depressed world phosphoric acid prices and the strong rand. OUTLOOK Booming demand is expected from China and India as both countries endeavour to feed their growing populations. Major capital expenditure on fertiliser plants is planned. Spending on 155

sulphur consumption for Asian fertiliser production continues to grow with plenty of room for even more growth. Elemental sulphur consumption is expected to increase to 46,7 Mt in 2005. TABLE 1:
COUNTRY USA Canada Russia China Japan Saudi Arabia Germany Kazakhstan United Arab Emirates Mexico Iran Chile Korea Republic Poland France Other TOTAL
Source: USGS 2005, pp 162 163

WORLD PRODUCTION OF SULPHUR- IN-ALL-FORMS, 2003


PRODUCTION kt S % 9 600 15,5 9 030 14,6 6 600 10,7 6 090 9,9 3 310 5,4 2 400 3,9 2 360 3,8 1 930 3,1 1 900 3,1 1 610 2,6 1 360 2,2 1 300 2,1 1 300 2,1 1 180 1,9 1 000 1,6 10 830 17,5 61 800 100,0

TABLE 2:

SOUTH AFRICAS PRODUCTION OF SULPHUR-IN-ALL FORMS, 2003 AND 2004


2003 MASS t 264 077 175 621 108 137 58 881 7 177 613 893 % 43,0 28,6 17,6 9,6 1,2 MASS t 288 435 165 207 104 264 55 291 20 221 633 418 2004 % 45,5 26,1 16,5 8,7 3,2

SOURCE

Oil refineries Gold mines Copper mines Zinc mines PGM mines

TABLE 3:

SOUTH AFRICAS PRODUCTION, CONSUMPTION, AND LOCAL PRICE OF ELEMENTAL SULPHUR, 1995 - 2004
PRODUCTION kt 233 232 256 178 139 184 123 170 264 288 CONSUMPTION* For acid production Non-acid use kt kt 673 87 693 106 678 100 763 84 662 88 682 98 695 100 706 105 856 110e 700 115e PRICE R/t (FOR) 265 299 326 375 439 420 450 504 617 674

YEAR

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Sources: Producers and consumers Notes: * e Consumption includes imports Estimate

156

TABLE 4:
YEAR

SOUTH AFRICAS PRODUCTION AND LOCAL SALES OF PYRITE, 1995 2004


PRODUCTION kt S 158 184 167 152 141 146 150 183 176 165 Mass kt S 152 161 163 173 144 142 158 182 173 155 LOCAL SALES Value (FOR) R000 R/t S 63 488 418 77 326 480 97 194 596 89 565 564 85 408 593 90 687 638 97 704 619 96 946 531 88 359 512 66 128 428

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note: S Contained sulphur

TABLE 5:
YEAR

SOUTH AFRICAS IMPORTS OF SULPHUR, 1995 2004


CRUDE/UNREFINED Mass Value (FOB) kt R000 R/t 602 118 577 197 526 88 040 167 540 85 505 158 531 95 347 180 697 142 193 204 700 201 465 288 678 107 640 159 569 194 579 341 623 275 408 442 554e 251 419 454 SUBLIMED & OTHER+ Mass Value (FOB) kt R000 R/t 1,000 3 844 3 844 0,770 1 620 2 103 0,659 1 527 2 317 0,291 995 3 419 0,244 756 3 098 0,228 995 4 362 0,151 954 6 318 91 35 220 387 118 68 124 577 156 53 984 346 TOTAL Mass Value (FOB) kt R000 R/t 603 122 421 149 527 89 660 203 541 87 032 170 531 96 342 161 697 142 949 181 700 202 460 289 678 108 594 160 660 229 799 348 741 343 532 464 710 308 403 434

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Source: Notes:

RSA, Commissioner for South African Revenue Service, 1995 2003 + All forms of sulphur other than those specifically referred to e Estimate Totals may not add up due to rounding

TABLE 6:

SOUTH AFRICAS PRODUCTION AND CONSUMPTION OF SULPHURIC ACID*, 1996 2004


PRODUCTION FROM Pyrite Elemental Other sulphur kt kt kt 481 2 099 339 470 2 054 324 457 2 216 121 423 2 031 200 423 1 938 211 241 1 840 146 250 2 010 170 176 2 517 194 165 2 123 200 CONSUMPTION FOR Fertilisers Mining Industrial use kt kt kt 2 144 195 328 2 085 182 287 2 242 169 299 2 317 179 289 2 834 161 277 2 089 150 270 2 500 165 280 290e 2 878 170e 2 409 180e 300e

YEAR

Total kt 919 848 794 654 654 227 430 867 488

1996 1997 1998 1999 2000 2001 2002 2003 2004

2 2 2 2 2 2 2 2 2

Sources: Producers and consumers Notes: * e 100% H2SO4 Estimate

157

TABLE 7:
MONTH

WORLD SPOT PRICES OF ELEMENTAL SULPHUR, 2001 2004


PRICE RANGE* $/t 2002 2003 27 - 32 37 - 56 27 - 32 48 - 81 27 - 35 48 - 81 27 - 40 55 - 60 37 - 42 55 - 64 37 - 56 58 - 66

Feb Apr June Aug Oct Dec


Source: Note: Sulphur, 2000 2004 *

2001 22 - 24 22 - 24 14 - 15 14 - 15 14 - 18 14 - 18

2004 58 - 66 58 - 66 58 - 66 58 - 66 58 - 65 58 - 65

End of month spot price, FOB, Vancouver, Canada.

REFERENCES Sulphur, 2005 USGS, 2005 Presidents Report, Fertiliser Society of South Africa

158

VERMICULITE
VN Agnello

INTRODUCTION Vermiculite is an hydrated phlogopite mica that which exfoliates or expands into worm-like pieces upon heating. The name vermiculite is derived from the Latin vermiculare to breed worms. Vermiculite is non-combustible, insoluble in water and organic solvents, has good insulating properties and is safe and easy to handle. Due to its inherent stability, vermiculite is being used increasingly in health and safety applications. Untreated vermiculite is commonly used in wall plasterboard. Exfoliated vermiculite is used extensively as a lightweight aggregate in fireproofing, thermal insulation, cementitious coatings, fireproofing in steelworks and foundries, acoustic plasters, horticultural growth media and as a fertilizer carrier. Ground vermiculite is used as filler in brake linings. The increase in bulk volume of commercial grades is 8 to 12 times, but individual vermiculite flakes may exfoliate as much as 30 times. The bulk density of crude vermiculite or vermiculite concentrate is in the range of 640-1120 kg/m? and exfoliated or expanded vermiculite is in the range of 64-160 kg/m?. Crude vermiculite from Palabora Mining Co. (PMC) near Phalaborwa, Limpopo Province, consists of golden-brown flakes, which are classified into five size grades for specific markets. Being non-combustible and insoluble in water or organic solvents, vermiculite is safe and easy to handle, making it suitable for a wide range of different applications. Due to its inherent stability, vermiculite is being used increasingly in applications where health and safety are of prime importance. Vermiculite is a member of the phyllosilicate group of minerals, formed by the weathering of phlogophite or biotite. While it has little use in its natural state, exfoliated vermiculite is extremely light, and used in lightweight concrete or plaster, for thermal and acoustic insulation as a packing medium, a horticultural carrier as a filler or extender in paper, paint or plastics, and in coating and film- forming applications. DEVELOPMENTS DURING 2004/2005

International Major vermiculite mines are located in South Africa (PMC), Zimbabwe (Samrec), Brazil (Uniao Brasiliera de Mineracao), the USA (Virginia Vermiculite Ltd and W.R. Grace & Co.), Russia (JSC Kovdorslyuda) and Australia (Australian Vermiculite Industries). In 2004, South Africa ranked first in world output of vermiculite (41,0 percent) followed by the USA (20,8 percent) and China (14,6 percent) (Table 1). Asbestos class-action lawsuits have negatively affected US vermiculite production over the last 4 years this has allowed Chinese producers to capture a greater portion of US markets, particularly W.R. Grace & Co.s marketshare. Chinese exports have grown by at least 40 percent in 2004.
TABLE 1:
COUNTRY South Africa USA China Russia Brazil Zimbabwe Other TOTAL
Source:

WORLD RESERVES, PRODUCTION AND EXPORTS OF VERMICULITE, 2004


RESERVE BASE % Rank 40,0 2 50,0 1 10,0 100,0 PRODUCTION % Rank 41,0 1 20,8 2 14,6 3 5,2 4 5,2 5 3,3 6 9,8 100,0 EXPORTS % Rank 94,6 1 5,3 2

Mt 80 100 na na na na 20 200

kt 197 100 70 25 25 169 47 480

Kt 178 10 na na na na na 188

100,0

USGS, 20052, pp 184 - 185

159

In June 2004, Regis Resources began vermiculite production from a mine in southern Ontario, Canada. Major vermiculite mines are located in South Africa (Phalabora), China, Brazil, Zimbabwe and the United States. In 2003, South Africa ranked first in world output of vermiculite (41,3 percent) followed by the USA (22,6 percent) and China (11,3 percent) (Table 1). US production declined by 33 percent from an estimated 150 kt in 2001 to 100 kt in 2003. This decline is almost certainly related to allegations that some vermiculite-based products contain asbestos. Canadian junior international mining and investment company, International Business Investments Corp., which already owns the Namekara vermiculite plant in Uganda, has signed an option agreement to acquire the Mica Peak vermiculite claims in Clarke County, Nevada. Namekara has 5 million tons of proven reserves of high-grade coarse vermiculite, and the life of the mine has been estimated at more than 100 years.

Local South African vermiculite production increased by 7,7 percent to 197 kt in 2004 (Table 2). Local sales and exports masses have improved by 12,3 and 9,5 percent respectively over the same period. Strong vermiculite demand has been attributed to construction, fireproofing and insulating applications. New health and safety legislation implemented in the USA and Europe have indirectly boosted demand. PMC has also revolutionised its mine and plant processing methods over the last 18 months, this includes: improved selective mining, fine tuning and streamlining of all product streams, doubling yield rates, lowering logistical costs, reducing employee numbers and focusing on high quality, consistent products.
In 2004, South Africa exported 96 percent of total production, mainly to consumers in Europe (51percent) and North America (34 percent). There has been no change in the dollar price range for the last 2 years, i.e. $160 to $260/short ton, FOB Rotterdam. The average rand export price (FOB) decreased from R886/t to R 844/t. The local currencys strong appreciation against the US dollar has had a negative effect on profit margins. TABLE 2: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF VERMICULITE, 19952004
LOCAL Mass kt 10,3 10,4 9,7 6,6 6,1 5,7 5,9 6,5 6,5 7,3 SALES EXPORTS SALES Value (FOR) Mass Value (FOB) R000 R/t kt R000 R/t 1 200 117 204,9 88 813 433 1 275 122 171,4 88 886 519 1 351 140 184,8 99 136 537 1 130 171 222,8 138 702 623 1 517 250 186,5 120 046 644 3 191 555 195,0 132 501 680 3 686 624 154,0 125 096 814 4 498 692 170,0 205 681 1 208 5 114 784 163,3 144 759 886 6 229 855 178,8 150 944 844

YEAR PRODUCTION kt 221,7 196,0 211 221,3 217,8 208,8 157,0 210,0 182,8 196,9

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Note:

Unit values calculated before rounding of mass and rand values

Though international consumers prefer coarser vermiculite grades; PMC, through an extensive research and development (R & D) programme has been able to find receptive markets for its finer fractions. The majority of R & D on local vermiculite products and applications is done in Toulouse, France, and Australia. Plant and exfoliating technologies are developed in-house at PMC, Phalaborwa. Internationally, PMC vermiculite products are highly acclaimed due to their excellent springback properties, low sodium content, overall consistency, superior performance in fireproofing applications and the asbestos-free nature of the product. In September 2004, independent testing in Europe confirmed (once again) that local vermiculite is asbestos free. Polarised light microscopy examinations did not detect any amphibole or chrysotile asbestos fibres present in any of the samples of vermiculite, nor did X-ray diffractometry detect any crystalline silica in any of the samples. 160

In 2004, the labour force was reduced by 23,8 percent (Table 3), accompanied by an increase of 27,7 percent in total remuneration. In the past three years total remuneration has increased by 76,7 percent, with the number of employee back to the same number as in 2001. South Africa ranks first in terms of output of vermiculite. Phalabora Mining Company is the only producer, operating a mine in Limpopo Province. Moreover, South African vermiculite is replacing asbestos in brake linings, while being used as an absorbent for industrial spill clean-up operation. A key contributor to maintaining this large market share is the quality of South African vermiculite. The technology used in the extraction is on par with that used internationally, but moderniszation is being looked at. PMC is working with local users to promote increasing beneficiation of raw material, thereby increasing the foreign exchange potential of the industry. World vermiculite reserves are estimated to be 50 ,000,000million tons (enough for the next 100 years at current usage rates), with the reserve base being 200,000,000t million tons. The major reserves in the USA are in Montana, South Carolina and Virginia. In South Africa 90 percent of the reserves are located in the Phalaborwa complex. Phalaboras vermiculite has been found to be the ideal raw material for boards manufacture. The impact of this development will have a significant effect on sales volumes in the future. World demand for vermiculite is expected to increase, driven by developments of new applications for the commodity. Worldwide the greatest challenge to vermiculite use arises from incidents in the US, where mineral contaminated with asbestos was mined in the past. Phalabora vermiculite has repeatedly been proved asbestos-free through independent testing. Logistics continues to be an important component in the industrial minerals market and the geographic location of Phalabora relative to the end customer contributes almost 70 percent of the delivered costs of vermiculite. Ocean freight rates were successfully contained and remained flat for the year. Rail transport during the year presented significant challenges for the logistics team as the local rail service provider struggled to meet the demands. Traditional producers are increasingly under threat from cheap suppliers from countries such as China. China has increased its production by 38 percent in 2002 and is becoming a threat to the vermiculite market. However, the developments of specialiszed products and their increasing application by existing consumers (for examplee.g. building materials) will go some way to counter that challenge. TABLE 3: SOUTH AFRICAS VERMICULITE MINE : EMPLOYMENT, AND PRODUCTIVITY, 1999 2004
EMPLOYEES 218 250 295 379 369 281 TOTAL REMUNERATION R000 13 662 19 750 25 893 25 558 36 989 45 765

REMUNERATION

YEAR 1999 2000 2001 2002 2003 2004

OUTLOOK Perlite substitution is a real threat to vermiculite producers in horticultural, fireproofing and construction markets. In the medium to long-term, the Libby Mine asbestos lawsuits will have a detrimental affect on USA local vermiculite sales. However, as a major exporter to the USA, South Africa has not been affected by the negative publicity and lawsuits. US consumption of vermiculite concentrate is forecast to increase moderately by 1-2% per annum, in-line with construction trends. Consumption of vermiculite concentrate in Western Europe is expected to remain unchanged between 2006 and 2009, although more stringent health, safety and compliance regulations may boost sales. The economic boom in South East Asia bodes well for local vermiculite exporters, with an expected, annualised growth of between 3 and 7 percent. Several new niche markets may triple 161

local vermiculite production totals, if current field trials prove successful. Heat retention and retardant applications will increasingly become more commonplace as end-users focus more on health, safety, environmental compliance and improved process efficiency. In the short and medium-term, local consumption is expected to increase by at least 4 percent per annum as product awareness, improved marketing and greater substitution of other insulative products is realised. Though only a few players govern world vermiculite production, current trends suggest that lowcost production centres in China and Africa will grow rapidly in the next 5 years. Growth markets for vermiculite include high performance automotive gaskets and seals, catalytic converter mats, high temperature coatings for woven glass and ceramic fibre products, condensation control paints; upgrading the fire resistance of organic foams and other polymer systems, nuclear waste cleanup, water and soil detoxification and the containment of industrial spills.

162

STATISTICS FOR OTHER INDUSTRIAL MINERALS


VN Agnello, D Naidoo, N Tshabalala

1.

NATURAL ABRASIVES SOUTH AFRICAS IMPORTS OF NATURAL ABRASIVES, 19972004


IMPORTS Value (FOB) R000 R/t 1 285 2 920 3 233 1 770 4 569 3 125 3 472 3 762 3 696 3 390 7 695 4 840 8 010 4 577 5 573 3 586

TABLE 1:
YEAR

1997 1998 1999 2000 2001 2002 2003 2004


Source:

Mass t 440 1 827 1 462 923 1 090 1 590 1 750 1 554


RSA, Commissioner for South African Revenue Service, 19982005

2.

BARYTES

TABLE 2.1: SOUTH AFRICAS PRODUCTION AND LOCAL SALES OF BARYTES, 1997 2004
YEAR PRODUCTION Mass t 2 071 610 2 844 1 628 LOCAL SALES Value (FOR) R000 1 793 1 693 2 388 3 083 155 183 149 116

1997 1998 1999 2000 2001 2002 2003 2004

Mass t 5 421 4 566 3 533 4 577 353 470 355 276

R/t 331 371 676 674 438 391 420 420

TABLE 2.2: SOUTH AFRICAS IMPORTS OF BARYTES, 1997 2004


YEAR Mass t 1 980 1 421 1 716 2 423 2 254 2 925 3 245 3 056
RSA, Commissioner for South African Revenue Service, 19982005

1997 1998 1999 2000 2001 2002 2003 2004


Source:

IMPORTS Value (FOB) R000 R/t 2 378 1 201 2 243 1 579 2 725 1 558 3 196 1 319 3 722 1 651 5 329 1 822 4 352 1 341 7 008 2 293

163

3.

DIATOMACEOUS EARTH (KIESELGUHR) SOUTH AFRICAS IMPORTS OF DIATOMACEOUS EARTH, 1997 2004
IMPORTS* Value (FOB) R000 R/t 6 581 1 460 6 942 1 663 9 089 1 967 9 572 2 241 11 857 3 144 20 406 4 262 14 975 2 994 10 670 2 323

TABLE 3:
YEAR

1997 1998 1999 2000 2001 2002 2003 2004


Source: Notes:

Mass t 4 506 4 175 4 621 4 272 3 772 4 788 5 002 4 594


RSA, Commissioner for South African Revenue Service, 19982005 *

Production statistics are not published because there is only one producer

4.

FELDSPAR

TABLE 4.1: WORLD PRODUCTION OF FELDSPAR, 2003+


COUNTRY Italy China Turkey Japan USA Thailand France Spain Korea, Rep. Czech Republic Egypt Mexico India Germany Other TOTAL
Source: Notes: + * BGS, 2005, pp 24 Where 2003 figures were not available, latest figures have been used Includes weathered granite, feldspar

kt 2 972 2 000 1 862 1 100* 800 780 671 550 477 421 350 346 308 233 2 145 15 000

PRODUCTION % 19,8 13,3 12,4 7,3 5,3 5,2 4,4 3,7 3,2 2,8 2,3 2,3 2,1 1,6 14,3 100,0

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 -

TABLE 4.2: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF FELDSPAR, 1997 2004
YEAR PRODUCTION Kt 68,1 56,4 59,3 67,0 66,1 66,6 57,7 53,0 Mass Kt 48,0 32,0 40,0 52,2 70,6 61,0 57,4 65,7 LOCAL SALES Value (FOR) R000 R/t 15 671 326 13 052 408 15 002 375 20 686 397 27 016 382 26 334 432 29 943 521 38 112 580 EXPORT Mass kt 2,6 1,4 1,4 0,8 1,2 0,5 SALES Value (FOB) R000 R/t 1 668 637 1 072 745 1 053 763 825 1 091 1 665 1 333 822 1 591 -

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Unit values calculated before rounding of mass and rand values

164

5.

GRAPHITE SOUTH AFRICAS IMPORTS OF NATURAL GRAPHITE, 1997 2004


IMPORTS Value (FOB) R000 R/t 2 378 1 201 2 243 1 579 2 725 1 558 3 196 1 319 7 602 3 918 7 751 5 056 4 926 3 404 4 879 3 419

TABLE 5:
YEAR

1997 1998 1999 2000 2001 2002 2003 2004


Source:

Mass t 1 980 1 421 1 716 2 423 1 940 1 533 1 447 1 427


RSA, Commissioner for South African Revenue Service, 19982005

6.

GYPSUM

TABLE 6.1: WORLD PRODUCTION OF GYPSUM, 2003


COUNTRY USA Spain Canada Iran Mexico China Thailand Australia France India Other TOTAL
Source: Notes: BGS, 2005 pp 29 30 + 2003 or latest Totals may not add up due to rounding

16 12 9 8 6 6 6 3 3 2 22 99

kt 000 000 025 400 986 900 500 900 500 881 869 000

PRODUCTION % 16,2 12,1 9,1 8,5 7,1 7,0 6,6 3,9 3,5 2,9 23,0 100,0

Rank 1 2 3 4 5 6 7 8 9 10 -

TABLE 6.2: SOUTH AFRICAS PRODUCTION, LOCAL SALES, AND CONSUMPTION OF NATURAL GYPSUM, 1997 2004
YEAR PRODUCTION Mass kt 356 482 441 426 381 438 427 459 LOCAL SALES Value (FOR) R000 R/t 15 977 45 22 579 47 20 497 47 17 239 40 17 651 46 20 014 46 20 832 49 18 783 41 CONSUMPTION FOR CEMENT# kt 377 368 347 346 352 370 391 452

1997 1998 1999 2000 2001 2002 2003 2004


Source: Notes: CNCI Review 2005

kt 366 486 514 413 383 422 394 452

# Includes synthetic gypsum. The total is derived from regional cement sales, with the assumption that 38,5t gypsum/1 000t cement is consumed. Unit values calculated before rounding of mass and rand values.

165

TABLE 6.3: SOUTH AFRICAS IMPORTS OF GYPSUM AND GYPSUM PLASTERS, 1997 2004
YEAR Mass t 2 641 3 957 2 361 2 565 1 741 1 861 1 931 2 624 GYPSUM Value (FOR) R000 R/t 2 118 802 3 616 914 3 893 1 649 5 633 2 196 2 039 1 171 2 909 1 564 2 732 1 415 3 039 1 158 GYPSUM PLASTERS Mass Value (FOB) kt R000 R/t 6 126 4 280 699 5 099 5 028 986 5 351 4 662 871 5 669 5 018 885 5 422 7 809 1 440 4 893 7 021 1 435 5 256 6 560 1 248 4 761 6 365 1 337

1997 1998 1999 2000 2001 2002 2003 2004


Source:

RSA, Commissioner for South African Revenue Service, 1998 2005

7.

MAGNESITE WORLD RESERVES AND PRODUCTION OF MAGNESITE, 2003


RESERVE BASE+ % 54,5 2,9 13,3 0,5 0,4 0,5 0,5 2,2 13,6 1,0 1,2 9,1 100 PRODUCTION % 45,5 14,7 11,8 4,2 3,5 2,4 2,2 2,2 2,1 1,5 1,2 1,2 0,8 0,7 0,4 5,6 100

TABLE 1:
COUNTRY China Turkey Russia Slovakia Austria Spain Greece Australia Korea, DPR India Brazil Netherlands Canada South Africa Iran Other TOTAL

Mt 3 000 160 730 30 20 30 30 120 750 55 65 * * 3 * 500 5 500

Rank 1 4 3 8 11 8 8 5 2 7 6

kt 10 000 3 224 2 600 933 766 517 500 473 450 323 269 260 165 86 70 1 232 22 000

Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Sources: BGS, 2005, pp 46 USGS, 2005, pp 101 Notes: + Contained magnesium * Reserve base figures unavailable Totals may not add up due to rounding

TABLE 7.2: SOUTH AFRICAS PRODUCTION AND LOCAL SALES OF MAGNESITE AND DERIVED PRODUCTS, 19972004
YEAR PRODUCTION Mass t 66,3 64,8 63,7 63,0 36,5 87,2 86,1 65,9 LOCAL SALES Value (FOR) R000 21 573 22 060 21 119 20 156 26 979 25 379 30 511 25 978

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Mass t 103,0 110,0 138,3 92,4 70,2 113,6 131,3 123,2

R/t 209 201 153 218 384 223 232 211

Unit values calculated before rounding of mass and rand values

166

TABLE 7.3: SOUTH AFRICAS IMPORTS OF MAGNESITE AND MAGNESIA, 19972004


YEAR Mass Kt 1,9 3,9 3,4 2,7 2,9 13,4 15,3 11,6 MAGNESITE Value (FOR) R000 R/t 3 166 1 652 3 780 953 3 423 995 3 857 1 436 5 561 1 922 18 243 1 363 17 030 1 116 15 007 1 292 MAGNESIA Value (FOB) R000 R/t 56 352 803 71 829 1 041 58 193 1 073 64 616 1 158 74 292 1 462 95 144 2 052 64 898 1 624 62 299 1 480

1997 1998 1999 2000 2001 2002 2003 2004


Source:

Mass kt 70,1 69,0 54,2 55,8 50,8 46,4 40,0 42,1

RSA, Commissioner for South African Revenue Service, 19982005

8.

MICA

TABLE 8.1: WORLD PRODUCTION OF MICA, 2003


COUNTRY USA China Korea, Rep Canada France Spain Russia Finland India Malaysia Taiwan Other TOTAL
Source: Notes: BGS, 2005, pp 48 + For 2003 or latest available Totals may not add up due to rounding

kt 78,6 66,2 33,6 30,0 17,0 11,8 10,0 9,3 4,2 3,6 3,2 12,6 280,0

PRODUCTION % 28,1 23,6 12,0 10,7 6,1 4,2 3,6 3,3 1,5 1,3 1,1 4,5 100,0

Rank 1 2 3 4 5 6 7 8 9 10 11 -

TABLE 8.2: SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF SCRAP AND FLAKE MICA, 1997 2004
YEAR PRODUCTION Kt 1 423 1 556 1 010 525 937 880 1 003 901 Mass Kt 815 801 894 1 188 960 390 470 55 LOCAL SALES Value (FOR) R000 R/t 1 502,7 1 844 1 192,6 1 489 1 363,1 1 525 2 005,3 1 688 ** ** ** ** ** ** ** ** EXPORT SALES Mass Value (FOB) kt R000 R/t 387 1 584,9 4 095 334 1 481,5 4 436 263 1 212,4 4 610 488 2 193,7 4 495 664 ** ** 481 ** ** 470 ** ** 766 ** **

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

* Withheld for reasons of company confidentiality Unit values calculated before rounding of mass and Rand values

167

TABLE 8.3:
YEAR

SOUTH AFRICAS IMPORTS OF MICA, 1997 2004


IMPORTS* Value (FOB) R000 R/t 520,2 868 765,0 913 553,3 1 254 543,3 2 539 882,2 2 818 1 286,0 4 763 1 021,3 2 720 846,6 1 709

1997 1998 1999 2000 2001 2002 2003 2004


Source:

Mass t 599 838 441 214 313 270 375 495


RSA, Commissioner for South African Revenue Service, 19982005

9.

MINERAL PIGMENTS SOUTH AFRICAS PRODUCTION AND SALES OF MINERAL PIGMENTS, 19972004
LOCAL SALES Value (FOR) R000 R/t 507 410 583 415 647 406 870 445 860 406 446 435 678 628 758 769 EXPORT SALES Mass Value (FOB) kt R000 R/t 110 274 2 491 42 124 2 957 60 135 2 254 126 180 1 430 20 44 2 181

TABLE 9:

YEAR

PRODUCTION Kt 1 397 1 352 216 568 852 282 764 512 Mass Kt 1 235 1 405 1 593 1 954 2 116 1 023 1 080 985

1997 1998 1999 2000 2001 2002 2003 2004

10.

POTASH

TABLE 10.1:WORLD POTASH RESERVES AND PRODUCTION, 2003


COUNTRY Canada Russia Belarus Germany Brazil Israel Jordan China USA Spain UK Chile Other Total
Sources: x +

RESERVE BASEx Mt K2O % 9 700 57,1 2 200 12,9 1 000 5,9 850 5,0 600 3,5 580 3,4 581 3,4 450 2,7 300 1,8 35 0,2 30 0,2 50 0,3 625 3,7 17 000 100,0

Rank 1 2 3 4 5 6 7 8 9 10 11 12 -

kt K2O 9 140 4 653 4 229 3 563 395 1 958 1 177 440 1 100 506 621 420 1 420 28 400

PRODUCTIONx % 32,2 16,4 14,9 12,6 1,4 6,9 4,1 1,6 3,9 1,8 2,2 1,5 0,1 100,0

Rank 1 2 3 4 12 5 6 10 7 9 8 11 -

USGS, 2004, pp 126 -127 BGS, 2005, p 59

168

TABLE 10.2:SOUTH AFRICAS IMPORTS OF POTASH, 1997 2004


YEAR POTASSIUM CHLORIDE kt K2O R000 137,2 114 905 142,8 154 182 255,8 176 707 299,6 245 063 243,5 231 835 304,9 362 295 245,8 197 952 276,8 253 155 POTASSIUM SULPHATE kt K2O R000 17,3 30 018 15,1 33 914 16,1 19 539 18,6 26 136 25,8 42 257 25,3 55 835 31,2 47 621 22,6 30 776 POTASSIUM NITRATE kt K2O R000 18,1 52 323 14,9 66 615 33,1 65 803 32,1 65 531 40,5 94 951 39,0 101 411 35,2 80 245 40,0 99 972 TOTAL kt K2O 172,6 172,8 305,0 350,3 309,8 369,2 312,2 339,4 R000 197 246 254 711 262 049 336 730 369 043 519 541 325 818 383 903

1997 1998 1999 2000 2001 2002 2003 2004


Source: Note:

RSA, Commissioner for South African Revenue Service, 1998 2005 Up to 10 percent of the imports were probably for non-fertiliser uses

11.

PYROPHYLLITE

TABLE 11: SOUTH AFRICAS PRODUCTION AND EXPORTS OF PYROPHYLLITE, 1997 2004
YEAR PRODUCTION Kt 610 500 277 989 047 587 350 152 Mass Kt ** ** ** ** ** ** ** ** LOCAL SALES Value (FOR) R000 R/t 7 734 ** 8 599 ** 10 400 ** 14 389 ** 18 098 ** 22 965 ** 24 541 ** 34 716 ** EXPORT SALES Mass Value (FOB) kt R000 R/t ** 11 520 ** ** 11 679 ** ** 16 468 ** ** 25 409 ** ** 18 607 ** ** 14 584 ** ** 8 876 ** ** 11 683 **

1997 1998 1999 2000 2001 2002 2003 2004


Note:

10 11 13 11 14 15 14 35

** Classified

12.

SALT

TABLE 12.1:SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF SALT, 1997 2004
YEAR PRODUCTION Kt 320 352 358 346 355 429 441 395 Mass Kt 405 480 490 487 420 450 467 407 LOCAL SALES Value (FOR) R000 R/t 65 894 163 68 552 143 71 876 147 74 543 153 75 445 180 82 770 184 84 113 180 74 055 182 EXPORT SALES Mass Value (FOB) kt R000 R/t 3 462 175 2 242 121 2 328 154 1 119 113 1 76 70 <1 23 860 1,2 140 114 <1 70 168

1997 1998 1999 2000 2001 2002 2003 2004


Note:

Unit values calculated before rounding of mass and rand values

169

TABLE 12.2:SOUTH AFRICAS LOCAL SALES AND EXPORTS OF COARSE SALT, 1997 2004
YEAR PRODUCTION Kt 280 353 365 362 299 315 386 357 Mass Kt 23 647 27 733 31 120 31 332 31 161 36 132 43 222 42 572 LOCAL SALES Value (FOR) R000 R/t 85 1 78 1 85 2 86 <1 104 1 115 <1 112 <1 119 EXPORT SALES Mass Value (FOB) kt R000 R/t 106 75 105 79 189 101 90 94 76 70 23 86 70 168 -

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Unit values calculated before rounding of mass and rand values < less than

TABLE 12.3:SOUTH AFRICAS LOCAL SALES AND EXPORTS OF PROCESSED SALT, 1997 2004
YEAR PRODUCTION Kt 125 127 152 124 121 135 81 49 Mass Kt 42 246 40 820 40 756 43 211 44 285 46 638 40 990 31 315 LOCAL SALES Value (FOR) R000 R/t 337 1 323 <1 327 <1 347 <1 367 345 506 639 EXPORT SALES Mass Value (FOB) kt R000 R/t 356 293 137 281 140 525 29 324 -

1997 1998 1999 2000 2001 2002 2003 2004


Notes:

Unit values calculated before rounding of mass and rand values < less than

TABLE 12.4:SOUTH AFRICAS SALT MINES: EMPLOYMENT AND REMUNERATION, 1999 2004
YEAR 1999 2000 2001 2002 2003 2004 EMPLOYEES 959 948 880 860 864 823 TOTAL REMUNERATION R000 18 844 19 234 21 662 22 170 26 566 30 782

13.

SILICA

TABLE 13.1:SOUTH AFRICAS PRODUCTION, LOCAL SALES AND EXPORTS OF SILICA, 1997 2004
YEAR PRODUCTION Kt 463 223 170 137 127 251 311 400 Mass Kt 2 345 2 097 1 872 2 080 2 211 2 253 2 070 2 168 LOCAL SALES Value (FOR) R000 R/t 112 578 48 114 224 54 107 776 58 119 284 57 130 650 59 158 964 71 165 096 80 195 581 90 EXPORT Mass kt 930 2 191 2 558 718 482 1 038 884 649 SALES Value (FOB) R000 R/t 298 320 1 375 627 731 286 591 822 636 1 320 1 742 1 679 1 199 1 356 1 007 1 551

1997 1998 1999 2000 2001 2002 2003 2004

2 2 2 2 2 2 2 2

170

TABLE 13.2:SOUTH AFRICAS SILICA MINES: EMPLOYMENT AND REMUNERATION, 1999 2004
YEAR 1999 2000 2001 2002 2003 2004 EMPLOYEES 630 558 550 540 565 720 TOTAL REMUNERATION R000 26 888 28 024 28 957 29 101 33 468 41 525

14.

TALC

TABLE 14.1:SOUTH AFRICAS PRODUCTION AND SALES OF TALC, 1997 2004


YEAR PRODUCTION Kt 574 328 873 600 030 511 719 115 Mass Kt 11 664 8 649 9 095 8 869 9 024 12 395 7 735 8 134 LOCAL SALES Value (FOR) R000 R/t 4 424 379 3 137 363 4 645 511 4 541 512 4 081 452 4 552 367 4 051 524 4 365 537 EXPORT SALES Mass Value (FOB) kt R000 R/t 56 31 555 104 58 558 96 53 555 40 24 588 16 10 610 -

1997 1998 1999 2000 2001 2002 2003 2004

12 11 7 5 3 2 6 8

TABLE 14.2:SOUTH AFRICAS IMPORTS OF TALC, 1997 2004


YEAR Mass t 6 328 6 670 5 021 4 213 4 114 5 522 6 000 5 480
RSA, Commissioner for South African Revenue Service, 1998 2005

1997 1998 1999 2000 2001 2002 2003 2004


Source:

IMPORTS Value (FOB) R000 R/t 8 999 1 422 9 996 1 499 8 704 1 734 8 130 1 930 9 079 2 207 2 519 456 7 063 1 177 11 713 2 137

171

DIRECTORATE: MINERAL ECONOMICS RECENT PUBLICATIONS


(UPDATED 7/11/2005)
REVIEWS South Africas Mineral Industry, 2003/2004 South Africa Invest in an Intense and Diverse Mineral Industry (2005) INFORMATION CIRCULAR MB Bulletin (Tri-mester) STATISTICS Mineral Production and Sales Statistics (Monthly and Annually) BULLETINS B1/2004 REPORTS R37/2002: R38/2002: R39/2005: R40/2002: R41/2003: R42/2003: The Tantalum Market (A micro-economic analysis) A Review of the Dimension Stone Industry in South Africa, 2002. Investment in South Africas Mineral Sector, 2005 Possible Financial Sources for Small-to- Junior Empowerment Mining Companies An Overview of South Africas Mineral Based Fertilizers, 2003. An Overview of South Africas Primary Industrial Mineral Imports and Exports, 2003. A Review of the Dolomite and Limestone Industry in South Africa The Silica Industry in the Republic of South Africa An Overview of the South African Iron, Manganese and Steel Industry during the period 1984-2003 Bentonite, Pyrophyllite and Talc in SA The Kaolin Industry in South Africa, 2005 South African Ferrous Minerals Production Trends, 1994-2003 Dolomite and Limestone in SA: Supply and Demand, 2005 Precious Metals Trade - General Information Handbook, 2004. Minerals South Africa: Statistical Tables 1982-2003

R43/2003: R44/2004: R45/2005:

R46/2005: R47/2005: R48/2005: R49/2005: H2/2004:

DIRECTORIES D1/2005: Operating Mines and Quarries and Mineral Processing Plants in the Republic of South Africa, (2005) Operating and Developing Coal Mines in the Republic of South Africa, (2005)

D2/2005: 172

D3/2003: D4/2002: D6/2003: D7/2004: D8/2005: D9/2005: D10/2004: D11/2004: D12/2005:

Operating Gold Mines and Recovery Plants in the RSA, (2003) Salt Producers in the Republic of South Africa, (2002) Platinum-group Metal Mines in South Africa, (2003) South African Diamond Handbook and Operating Diamond Mines Directory (2004) Ferrous Mineral Commodities Produced in the Republic of South Africa, (2005) Producers of Dimension Stone in South Africa, (2005) Producers of Nonferrous Metal Commodities in South Africa, (2004) Producers of Industrial Mineral Commodities in South Africa, (2004) Operating and Developing Black Empowerment Mining Companies in the Republic of South Africa, (2005) African Mining Mining Companies Government Department and Related Organizations Producers of Sand and Aggregate in the RSA, (2003)

D13/2004:

D14/2003:

173

USEFUL ADDRESSES DEPARTMENT OF MINERALS AND ENERGY


HEAD OFFICE The Director-General Private Bag X59 0001 Pretoria www.dme.gov.za Mineralia Centre 234 Visagie Street Pretoria Tel: (012) 317 8000 Telefax (012) 320 4327 BRANCHES Mine Health and Safety Inspectorate Energy Branch Mineral Development Branch MINERAL DEVELOPMENT REGIONAL DIRECTORATES The Regional Manager: Mineral Regulation - Eastern Cape Private Bag X6076 Auto and General Towers 6000 Port Elizabeth 6th, 13th , 14th Floor 190 Govan Mbeki Avenue Port Elizabeth Tel: (041) 585 3862/4/6 Telefax: (041) 585 3881 The Regional Manager: Mineral Regulation - Free State Private Bag X33 9460 Welkom www.dme.gov.za/mhs www.dme.gov.za/energy www.dme.gov.za/minerals

Prestasi Building cnr Ryk and De Kaap Streets Welkom Tel: (057) 391 1300 Telefax: (057) 352 2270

The Regional Manager: Mineral Regulation Gauteng Private Bag X5 2017 Braamfontein

209 Smit Street Braamfontein 2107 Tel: (011) 358 9700 Telefax: (011) 339 1858

The Regional Manager: Mineral Regulation KwaZulu/Natal Private Bag X2014 Talana Building 3000 Dundee 26 Beaconsfield Street Dundee Tel: (034) 212 1807 Telefax: (034) 212 2721

174

The Regional Manager: Mineral Regulation Mpumalanga Private Bag X7279 ReceiverofRevenue Building 1035 Witbank cnr Paul Kruger and Botha Avenue Witbank Tel: (013) 656 1448 Telefax: (013) 690 3288 The Regional Manager: Mineral Regulation - Northern Cape Private Bag X6093 29-31 Currey Street 8300 Kimberley Kimberley Tel: (053) 830 0800 Telefax: (053) 832 5631 The Regional Manager: Mineral Regulation - Northern Province Private Bag X9467 101 Dorp Street 0700 Polokwane Polokwane Tel: (015) 287 4700 Telefax: (015) 287 4729

The Regional Manager: Mineral Regulation - North-West Private Bag A1 2570 Klerksdorp

Senwes Hoofkantoor, No 1 Charl De Klerk Straat Klerksdorp Tel: (018) 464 1631 Telefax: (018) 462 9036

The Regional Manager: Mineral Regulation - Western Cape Private Bag X9 Customs House, 4th Floor 8012 Roggebaai Lower Heerengracht Foreshore Cape Town Tel: (021) 419 6105 Telefax: (021) 419 6260 The Regional Manager: Mineral Regulation Rustenburg PO Box 150 0309 Tlhabane

Tlhapane House Tlhapane Shopping Centre Tlhapane Tel: (014) 565 6417 Telefax: (014) 565 6424

The Regional Manager: Mineral Regulation Springbok Private Bag x14 8240 Springbok

Andia Building Voortrekker Street Springbok Tel: (027) 712 2546 Telefax: (027) 712 1959

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DEPARTMENT OF TRADE AND INDUSTRY HEAD OFFICE Department of Trade and Industry Private Bag X84 www.dti.gov.za 0001 Pretoria

DTI Campus Block E Cnr Esselen & Meintjies Streets Sunnyside, Pretoria Tel: (012) 394-3612 Telefax: (012) 394-4612

PARASTATAL ORGANISATIONS Council for Geoscience Private Bag X112 Silverton 0001 Pretoria

www.geoscience.org.za

280 Pretoria Road Silverton Pretoria Tel: (012) 841 1911 Telefax: (012) 841 1221

CSIR P O Box 395 Brummeria 0001 Pretoria

www.csir.co.za

Meiring Naude Road Brummeria Pretoria, 0184 Tel: (012) 841 2911 Telefax (012) 349 1153

CSIR - Mining Technology (Miningtek) P O Box 91230 www.csir.co.za/miningtek 2006 Auckland Park

cnr Carlow & Rustenburg Avenue Mellville Johannesburg Tel: (011) 358 0000 Telefax: (011) 726 5405

Eskom P O Box 1091 2000 Johannesburg

www.eskom.co.za

Megawatt Park Maxwell Drive Sunninghill Ext 3 Sandton Tel: (011) 800 8111 Telefax: (011) 800 4299

Mintek Private Bag X3015 2125 Randburg

www.mintek.co.za

200 Hans Strijdom Drive Randburg Tel: (011) 709 4111 Telefax: (011) 793 2413

Petro SA Private Bag X1 V & A Waterfront 8002, Cape Town

www.petrosa.co.za

Portswood Square, Dock Road V & A Waterfront Cape Town, 8001 Tel: (021) 417 3000 Telefax: (021) 417 3144

176

NECSA P O Box 582 0001 Pretoria

www.necsa.co.za

Church Street, West Extension Pelindaba, Brits District Tel: (012) 305 4911 Telefax: (012) 305 3111

The Industrial Development Corporation of SA Ltd (IDC) www.idc.co.za P O Box 784055 2146 Sandton

19 Fredman Drive Sandton Tel: (011) 269 3000 Telefax: (011) 269 3116

The South African Diamond Board P O Box 16001 2028 Doornfontein

5th Floor S A Diamond Centre 240 Commissioner Street Johannesburg Tel: (011) 334 8980/6 Telefax: (011) 334 8898

OTHER MINERAL-RELATED ORGANISATIONS Aggregate and Sand Producers Association oF South Africa (ASPASA) PO Box 61809 www.aspasa.co.za Chamber of Mines Building 2107 Marshalltown 5 Hollard Street Marshalltown Johannesburg Tel: (011) 498 7265 Telefax: (011) 498 7269 Chamber of Mines of South Africa PO Box 61809 www.bullion.org.za 2107 Marshalltown

Cnr Sour & 71 Marshall Street Marshalltown Johannesburg Tel: (011) 498 7100 Telefax: (011) 834 1884

Copper Development Association (Pty) Ltd P O Box 14785 www.copper.co.za 1422 Wadeville

53 Rendell Road Wadeville Germiston Tel: (011) 824 3712 Telefax: (011) 824 3120

Federation of SA Gem & Mineralogical Societies P O Box 17273 www.fosagams.co.za 0027 Groenkloof

30 Van Wouw Street Groenkloof 0181 Tel: (012) 460 7562 Telefax: n.a

177

Ferro Alloy Producers Association (FAPA) P O Box 1338 www.seissa.co.za 2000 Johannesburg

Metal Industries House 42 Anderson Street Johannesburg Tel: (011) 833 6033 Telefax: (011) 838 1522

Metal Merchants Association PO Box 413299 2024 Craighall

92 Buckingham Avenue Craighall Park Tel: (011) 788 9587 Telefax: (011) 788 9587

Metorex (Pty) Ltd P O Box 2814 2132 Saxonwold

www.metorexgroup.com

2nd Floor Cradock Heights 21 Cradock Avenue Rosebank Tel: (011) 880 3155 Telefax: (011) 880 3322

South Africa Stainless Steel Development Association (SASSDA) P O Box 4479 www.sassda.co.za Mutual Place Building, 2128 Rivonia 3rd Floor Cnr Rivonia Boulevard & Mutual Road Rivonia Tel: (011) 803 5610 Telefax: (011) 803 2011

Steel and Engineering Industries Federation of SA (Seifsa) P O Box 1338 www.seifsa.co.za Metal Industries House 2000 Johannesburg 42 Anderson Street Johannesburg Tel: (011) 833 6033 Telefax: (011) 838 1522 The Institute of Mine Surveyors of SA P O Box 62339 www.ims.org.za 2107 Marshalltown

Chamber of Mines Building, Room 509 5 Hollard Street Marshalltown Tel: (011) 498 7682 Telefax: (011) 498 7681

178

The South African Institute of Mining and Metallurgy P O Box 61127 www.saimm.co.za 2107 Marshalltown

Chamber of Mines Building, 5th Floor 5 Hollard Street Marshalltown Tel: (011) 834 1273 Telefax: (011) 838 5923/ 833 8156

SELECTED SOUTH AFRICAN MINING COMPANIES Anglo American Plc (South African Corporate Office) P O Box 61587 www.angloamerican.co.uk 2107 Marshalltown

44 Main Street Marshalltown Johannesburg Tel: (011) 638 9111 Telefax: (011) 638 2455

Anglo Platinum Ltd P O Box 62179 2107 Marshall town

www.angloplatinum.com

55 Marshall Street Marshalltown Tel: (011) 373 6111 Telefax: (011) 373-5111

Anglogold Ashanti PO Box 62117 2107 Marshalltown

www.anglogold.com www.anglogoldashanti.com

11 Diagonal Street Johannesburg Tel: (011) 637 6000 Telefax: (011) 637 6624

The Associated Manganese Mines Of South Africa Limited PO Box 783580 www.avmin.co.za 24 Impala Road 2146 Sandton Chislehurston Sandton Tel: (011) 779 1000 Telefax: (011) 779 1017 Billiton plc (African Regional Office) P O Box 61820 www.billiton.com 2107 Marshalltown

6 Hollard Street Johannesburg 2001 Tel: (011) 376 9111 Telefax (011) 838 4716

De Beers Group Private Bag x01 2135 Southdale

www.debeersgroup.com

Cnr Crownwood & Diamond Drive Crown Mines Tel: (011) 374 7000 Telefax: (011) 374 7700

179

Durban Roodepoort Deep, Limited PO Box 390 www.drdgold.com 1700 Maraisburg

EBSCO House 4 299 Pendoring Ave Blackheath, Randburg Tel: (011) 219 8700 Telefax: (011) 476 2637

Foskor Limited PO Box 1 1390 Phalaborwa

27 Selati Weg Phalaborwa Tel: (015) 789 2006 Telefax: (015) 781 5861

Gold Fields Limited Postnet Suite 252 Private Bag X30500 2014 Houghton

www.goldfields.co.za

24 St Andrews Road Parktown Johannesburg Tel: (011) 644 2400 Telefax: (011) 484 0626

G&W Base and Industrial Minerals (Pty) Ltd PO Box 14052 www.gwbase.co.za 1422 Wadeville

155 Immelman Road Wadeville Tel: (011) 824 2710 Telefax: (011) 824 2721 / 2720

Harmony Gold Mining Company Ltd PO Box 2 www.harmony.co.za 1760 Randfontein

Block B, Randfontein Office Park Cnr of Main Reef Rd & Ward Ave Randfontein Tel: (011) 411 2000 Telefax: (011) 692 3879

Hernic Ferrochrome (Pty) Ltd PO Box 4534 www.hernic.co.za 0250 Brits

103 De Kroon Brits Tel: (012) 381 1100 Telefax: (012) 381 1111

Impala Platinum Holdings Ltd PO Box 61386 www.implats.co.za 2107 Marshalltown

Old Trafford 4 Isle of Houghton Boundary Road Houghton Tel: (011) 481 3900 Telefax: (011) 484 0254

Mittal Steel SA P O Box 2 1900 Vanderbijlpark

www.mittalsteel.com

Delfos Bldv Vanderbijlpark Tel: (016) 889 2488 Telefax: (016) 889-9111

180

Lonmin Platinum PO Box 98811 2152 Sloane Park

www.lonmin.com

Northdowns 17 Georgian Crescent Bryanston East Johannesburg Tel: (011) 516 1300 Telefax: (011) 516 1310

Marlin Corporation Ltd PO Box 60043 2010 Benmore

www.marlin.co.za

21 Impala Road Chiselhurston Sandton Tel: (011) 775 5000 Telefax: (011) 883 3601

Palabora Mining Company Ltd PO Box 65 www.palabora.co.za 1390 Phalaborwa

Copper Road Phalaborwa Tel: (015) 780 2000/2911 Telefax: (015) 781 0448

Samancor P O Box 61820 2107 Marshalltown

www.bhpbilliton.com

6 Hollard Street cnr Hollard & Marshall Street Johannesburg Tel: (011) 376 9111 Telefax: (011) 838 4716

Samrec PO Box 8118 0046 Centurion

www.imerys.com

Sanlam Ewigt 259 West Street Centurion Tel: (012) 643 5880 Telefax: (011) 643 1966

Sasol P O Box 5486 2000 Johannesburg

www.sasol.com

1 Sturdee Avenue Rosebank 2196 Tel: (011) 441 3111 Telefax: (011) 788 5092

Xstrata SA (Pty) Ltd Private Bag X 82288 0300 Rustenburg

www.xstrata.com

44 Vanadium Street Rustenburg 0300 Tel: (014) 590 6000 Telefax: (014) 590 6002

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TERTIARY INSTITUTIONS

Universities - Training in Metallurgy and Minerals Processing:


1. University of the Witwatersrand School of Chemical and Metallurgical Engineering Contact Persons: Prof H Potgieter Mrs Mala Raghununan 2. University of Pretoria Department of Metallurgical Engineering and Materials Science Contact Person: Prof Chris Pistorius pistori@postino.up.ac.za 3. University of Cape Town Department of Chemical Engineering Contact Person: Prof Cyril OConnor

hermanp@prme.wits.ac.za mala.r@prme.wits.ac.za

ctoc@chemeng.uct.ac.za

Department of Mechanical Engineering, Materials Science Program Contact Person: Prof B Tait btait@ebe.uct.ac.za 4. University of Stellenbosch Department of Process Engineering Institute for Mineral Processing and Intelligent Process Systems Director: Prof C Aldrich Tel: (021) 808-4487 /4712

Universities Technology and Comprehensive:


1. Tshwane University of Technology Department of Chemical and Metallurgical Engineering Contact Person: Dr Hilda Chikwanda ChikwandaHK@tut.ac.za 2. University of Johannesburg Department of Extractive Metallurgy Contact Person: Mr. Des Bell Department of Engineering Metallurgy Contact Person: Dr. Didier Nyembe 3. Vaal University of Technology Department of Metallurgical Engineering Contact Person: Mr Frans du Toit

dbell@mail.twr.ac.za

didinyem@mail.twr.ac.za

fransd@vut.ac.za

182

ORGANISATIONAL STRUCTURE OF MINERAL POLICY AND PROMOTION BRANCH

MINERAL POLICY AND PROMOTION BRANCH

CD : MINING & MINERAL POLICY

CD : MINERAL PROMOTION

CD : ECONOMIC ANALYSIS

Directorate Mine Environmental Management Policy Research and Development Directorate Mineral Policy Development Directorate Benefication Economics

Directorate Mineral Economics

Directorate Small-Scale Mining

183

DIRECTORATE: MINERAL ECONOMICS, ORGANOGRAM


N Van Averbeke Director L Maruping Secretary

184
J A G Duval Deputy Director Industrial Minerals M D Kohler Deputy Director
V Agnello Principal Mineral Economist X Prevost Chief Mineral Economist L A Themba Chief Mineral Economist L Musi Senior Mineral Economist L Maphango Senior Mineral Economist L Msibi Economist D Naidoo Senior Mineral Economist N Tshabalala Mineral Economist N Kweyama Senior Mineral Economist M W Bonga Chief Mineral Economist A S Conradie Chief Mineral Economist D Damarupurshad Chief Mineral Economist N Botha Senior Admin Clerk M C Lourens Senior Admin Clerk S M Lekganyane Admin Clerk

P Mwape Deputy Director Special Studies

A J Harding Deputy Director Precious & Ferrous Metals J W Perold Deputy Director Non Ferrous Metals

T Phetla Assist Director

J Roberts Chief Mineral Economist

H Hunt Sr Admin Officer

E Mokwena Senior Mineral Economists

A Coetzee Chief Admin Clerk

T Tjatje Mineral Economist

L Hlangane Sr Admin Clerk

M Phale Mineral Economist

J Mazibuko Admin Clerk

E Raletsemo Admin Clerk

R S Mokone Admin Clerk

C Segolela Operator

S Mongale Sr Admin Clerk

M Motsoenyane Admin Clerk

D J Swane Admin Clerk

S van Staden Sr Admin Clerk