South Africa is renowned for an abundance of mineral resources, accounting for a significant proportion of both world production and reserves, and South African mining companies dominate many sectors in the global industry. This sector contributes around 5% to total GDP.
South Africa is the world’s biggest producer of gold and platinum and one of the leading producers of base metals and coal. The country’s diamond industry is the fourth-largest in the world, with only Botswana, Canada and Russia producing more diamonds each year
South Africa – while holding the world’s largest reserves of gold, platinum-group metals and manganese ore – has considerable potential for the discovery of other world-class deposits in areas yet to be exhaustively explored.
The sector spans the full spectrum of the five major mineral categories – namely precious metals and minerals, energy minerals, non-ferrous metals and minerals, ferrous minerals and industrial minerals.
Apart from its prolific mineral reserves, South Africa’s strengths include a high level of technical and production expertise, and comprehensive research and development activities.
The country has world-scale primary processing facilities covering carbon steel, stainless steel and aluminium – in addition to gold and platinum.
With the growth of South Africa’s secondary and tertiary industries, as well as a decline in gold production, mining’s contribution to South Africa’s gross domestic product (GDP) has declined over the past 10 years. However, this may be offset by an increase in the downstream or beneficiated minerals industry, which the government has targeted as a growth sector.
The Mineral and Petroleum Resources Development Act of 2002 has opened the doors to meaningful participation of black people in the exploration and exploitation of mineral resources. The Act enshrines equal access to mineral resources, irrespective of race, gender or creed. When the Act was passed, there was only one junior mining company. By mid-2008, there were 21.
Lucrative opportunities exist for downstream processing and adding value locally to iron, carbon steel, stainless steel, aluminium, platinum group metals and gold.
A wide range of materials is available for jewellery – including gold, platinum, diamonds, tiger’s eye and a variety of other semi-precious stones.
South Africa’s mining industry is continually expanding and adapting to changing local and international world conditions, and remains a cornerstone of the economy, making a significant contribution to economic activity, job creation and foreign exchange earnings. The sector is regulated by the South African Diamond and Precious Metals Regulator.
Globally, energy is fast becoming an increasingly important sector. In South Africa it contributes about 15% to the country’s gross domestic product (GDP).
South Africa is 75% electrified. Eskom, a parastatal, generates around 95% of the country’s elecricity, with the main generating stations located in Mpumulanga, where there are vast coal reserves.
In fact, due to its large coal deposits, South Africa is able to offer cheap electrical power by international standards. The average standard electricity price is around 42c per kilowatt hour for 2010/11.
South Africa has no significant oil reserves, and relies on coal for most of its oil production. The country has a highly developed synthetic fuels industry, as well as small deposits of oil and natural gas.
Eskom’s network is made up of more than 300 000km of power lines, 27 000km of which constitute the national transmission grid. The country’s electricity supply has been under pressure in recent years and Eskom has plans for a R385-billion expansion programme.
Electricity is primarily coal-fired (92% of SA’s electricity is produced from coal); there is one nuclear power station (Koeberg), two gas turbine generators, two conventional hydroelectric plants and two pumped storage stations.
Coal accounts for about 75% of primary energy consumption in South Africa. The majority of this is used to generate electricity, while a significant amount is channelled to synthetic fuel and petrochemical operations.
Iscor’s steel plants are the main consumers of domestic coking coal, together with the synthetic fuel and petrochemical operators. The gold mining, cement and brick and tile industries are also large users of electricity, generated by steam coal.
Nearly a third of production is exported via the Richards Bay coal terminal, the world’s largest coal export facility. Europe is the primary destination.
Sasol and PetroSA are the two major players in the synthetic fuels market. Sasol is the world’s largest manufacturer of oil from coal, gasifying the coal and then converting it into a range of liquid fuels and petrochemical feed stocks. Sasol has coal liquification plants at Secunda (oil) and Sasolburg (petrochemicals).
Since 2000, the company has been investigating the feasibility of replacing coal with natural gas, based on the high impending capital investment expenditures in coal mining operations and the high cost of compliance with environmental regulations associated with coal.
Oil and gas
In a rationalisation of the state’s commercial interests in the oil and gas sector, Mossgas and Soekor were merged into state oil and gas company PetroSA in 2001. PetroSA converts natural gas into a variety of liquid fuels like petrol, distillates, kerosene and petroleum gas.
South Africa has a well-developed refining and downstream oil sector and is one of the major refining nations in Africa. The country’s crude oil refining capacity is 466 547 bbl/d. Products are sold in local markets and exported, mainly to East Africa.
Multinational companies in South Africa include Shell, BP, Caltex and Total Elf Fina. A number of these companies have struck deals to bring black empowerment companies in as minority shareholders.
PetroSA manages South Africa’s strategic stocks of crude oil, includes the Saldanha Bay oil storage facilities, one of the largest in the world. South Africa imports crude oil primarily from the Middle East, and is trying to reduce its dependency on Iran by increasing imports from Kuwait, UAE, Saudi Arabia and Nigeria.
Nuclear energy does not play a major role in South Africa – accounting for about 3% of all energy – but is being investigated as a future potential energy source and alternative to coal.
South Africa serves on the board of governors of the International Atomic Energy Agency, as it is the most advanced African country in the field of nuclear technology.
Natural energy sources
South Africa had committed itself reducing greenhouse gas emissions by a 34% reduction by 2020, and 42% by 2025.
The launch of the country’s first commercial wind farm in Darling in the Western Cape in 2008 excited interest and more wind farms are currently under development.
The abundance of sun in Africa has also prompted calls for further investment into and use of solar energy facilities, particularly in light of the country’s electricity supply crisis. Read more
SA to balance business, environment
Image: South Africa has no significant oil reserves, and relies on coal for most of its oil production. Sasol is the country’s petrochemicals giant, having pioneered the technology to produce oil, petrol and other chemicals from coal. Photo: Sasol