MC3 SA Mining Supply Chain Conference NASREC, 22 May 2019 Paul Jourdan 22 May 2019 MMP MSC Mining Supply Chain Conference
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MC3SA Mining Supply Chain Conference
NASREC, 22 May 2019
Paul Jourdan
22 May 2019MMP MSC
Mining Supply Chain Conference
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Mining in economic development & industrialisation
REGIONAL ECONOMY
socio-enviro-political context
Consumption (induced) Linkages
Knowledge Linkages
HRD• Engineers &
scientists• Technicians• Operators, etc..
RDI• Universities• R&D entities• Firm RDI, et al
Geo-knowledge
Systematic geo-survey & target development
RMCs
Fiscal Linkages• Levies, ground rents, • Duties/tariffs/excise• Royalties, dividends (equity)• CIT, RRT, WHT, PAYE, et al • SWFs, Stabilisation Funds, etc.
Backward/upstream Linkages: Inputs into local/regional/global minerals sector
Capital Goods• Machinery• Equipment• Plant• Vehicles, • et al
Consumables• Explosives/caps• Grinding media• Wear parts, spares• Chemicals/reagents• Fuels & lubes, et al
Services• Drilling/exploration• Finance, ICT• Labour/skilling• Engineering/Analytical• Logistics, catering, et al
Other Inputs• Construction,• Utilities,• et al
Jobs/wages (also in backward, forward, knowledge and infrastructure linkages)
EXPORTS to world economy (into GMVCs)
Intermediates ManufactureRefining
SmeltingMineral
ProcessingMINING
Mine Developm’t
Exploration
Infrastructure Linkages (spatial) into regional economy
• Transport: roads/rail, ports, et al
• Power & transmission• Water & reticulation• ICT, other
Forward/ Downstream Linkages: Key
feedstocks into regional/local
economyManufacturing
(Fe/steels, polymers, Cu/Al, et al)
Agriculture(NPK, conditioners)
Construction(Fe/steels, cement, Cu/Al, aggregate)
Power(fossil fuels: coal,
oil & gas)
Other Sectors
Lateral Linkages: products into other sectors of the local/regional/global economy
© P.JOURDAN
3REGIONAL ECONOMY
socio-enviro-political context
Consumption (induced) Linkages
RMCs
Fiscal Linkages• Levies, ground rents, • Duties/tariffs/excise• Royalties, dividends (equity)• CIT, RRT, WHT, PAYE, et al • SWFs, Stabilisation Funds, etc.
Jobs/wages (also in backward, forward, knowledge and infrastructure linkages)
EXPORTS to world economy (into GMVCs)
Intermediates
ManufactureRefiningSmelting
Mineral
ProcessingMINING
Mine
Developm’tExploration
Infrastructure Linkages (spatial) into regional economy
• Transport: roads/rail, ports, et al
• Power & transmission• Water & reticulation• ICT, other
Forward/ Downstream Linkages: Key
feedstocks into regional/local
economyManufacturing
(Fe/steels, polymers, Cu/Al, et al)
Agriculture(NPK, conditioners)
Construction(Fe/steels, cement, Cu/Al, aggregate)
Power(fossil fuels: coal,
oil & gas)
Other Sectors
© P.JOURDAN
Knowledge Linkages
HRD• Engineers &
scientists• Technicians• Operators, etc
RDI• Universities• R&D entities• Firm RDI, et al
Geo-knowledge
Systematic geo-survey & target development
Lateral Linkages: products into other sectors of the local/regional/global economy
Backward/upstream Linkages: Inputs into local/regional/global minerals sector
Capital Goods• Machinery• Equipment• Plant• Vehicles, • et al
Consumables• Explosives/caps• Grinding media• Wear parts, spares• Chemicals/reagents• Fuels & lubes, et al
Services• Drilling/exploration• Finance, ICT• Labour/skilling• Engineering/Analytical• Logistics, catering, et al
Other Inputs• Construction,• Utilities,• et al
Mandela Mining Precinct (MMP)• Knowledge linkages (RDI & HRD)• Backward linkages (mining supply-chain)
Mining in economic development & industrialisation
4Minds for Mines 4
Key stakeholders
• 150 delegates for 5 weeks
• Government (DST, dti, DPME, DMR, National
Treasury)
• Mining companies
• SA Capital Equipment suppliers
• Mining Universities
• Science Councils
• Organised Labour
• Zero Harm Industry
• Globally competitive & Sustainable
• Need to maximise the mineral endowment
• A diversified strong economy
• Stimulate the local mining manufacturing
sector
Mining in Crisis
• Reviving investment
into mining
• Sustainable
communities
• Cluster employment
• Win-win beneficiation
• Advancing the cluster
Mining Phakisa outcomes
Mining Phakisa
National objectives
to keep the industry afloat during the commodity price
slump …put in place initiatives to place the mining
cluster on a firm foundation …to grow, transform &
contribute to the economy.
Mining Phakisa: Collectively addressing crisis in mining
5Minds for Mines 5
Phakisa: Collectively addressing crisis in mining
ADVANCING THE MINING
CLUSTER
Revitalise SA Mining R&DRevitalise SA capabilities around mining
specific research, development and innovation
Create local mining equipment manufacturing capability
Develop local manufacturing capability in narrow reef hard rock mining equipment
Maximise Local Supply ChainImport displacement through
localisation & enhanced export competitiveness
Modernisation of SA miningImprove OHS performance and mine efficiencies and to ensure long term
economic sustainability
6Minds for Mines 6
Partners and Stakeholders
Creating MMP MSC capacity
9Minds for Mines 9
Mining as a driver towards Industrialisation
Revitalisation of Mining Local Supply-chain Development Value Addition Post Mining Landscapes
Livelihoods
Mechanization & automation could be jobs neutral!
If the mining supply-chain is developed locally!
10Minds for Mines 10
SADC Imports of Mining Capital Goods (MCG) ($mn)
0
500
1000
1500
2000
2500
3000
3500
4000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
SADC exRSA RSA Source: ITC Comtrade 2018
• The SADC imports roughly $3 to $6 billion of MCG annually
• SA about $2bn/an• Rest of SADC about $3bn/an
Massive import
displacement
opportunity of
~R75 billion/an!
SADC mining supply-chain is
dominated by imports
Mechanisation jobs lost are
gained overseas!
US$ millions
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Housing & Living
ConditionsPlan
Procurement & ESD
Employment Equity
30 points
HRD30 points
Ownership30% HDP
Mine Community
DevelopmentPlan
Procurement & ESD
(Enterprise & Supplier
Development)
40 points
Ring-fenced, 100% compliance required Below 50% Non-Compliant
Mining Charter III Compliance Scorecard for Mining Right Holders
Consequently, 83% compliance
for EE and HRD and ZERO for
Procurement & ESD appears to
result in 50% compliance! Based on factsheet by Deloitte , 2018.
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Procurement & ESD
40 points
15
20
570% of R&D budget in SA
100% of samples analysed in SA
2.5
2.5
R&
D
50% HDP owned& controlled co.
80
% o
f service
s
15% Women owned& controlled co.
5% Youth owned & controlled co.
10% BEE Compliant companies5
5
5
5
70
% o
f goo
ds
44% on BEE Compliant companies
Locally manufactured goods with 60% local content
5% on women/youth owned & controlled co.
21% on 51% HDP owned & controlled co.5
5
5
Procurement & ESD
Based on factsheet by Deloitte , 2018.
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• MC3 Local content definition excludes profit and intangible overheads - anti fronting• Local content to be verified by SABS (MC Guidelines)• BEE Compliant means 26% HDP owned and dti BEE Level 4 compliant• Standardised Coding System (taxonomy) prescribed by the dti• 5 Year ramp-up to 70% of goods
70
% o
f goo
ds
44% on BEE Compliant companies
Locally manufactured goods with 60% local content
5% on women/youth owned & controlled co.
21% on 51% HDP owned & controlled co.5
5
5
Procurement of Mining Goods
Shortfall in local procurement may be offset by ESD (30% for goods & 10% for services)
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Enterprise & Supplier Development
Supplier Supplier OEMMine(Right
Holder)
Local Content Local Content Local Content
Mine Supplier Development via OEM
16Minds for Mines 16
Summary of MC3 Supply-chain development
➢ HRD spend of 5% of pay-roll (+1% Skills Levy);
➢ 70% of R&D spend must be in SA;
➢ 70% of goods purchases from firms with ≥26% black ownership, ≥B-BBEE Level 4 and ≥60% local content;
➢ SABS certification of local content;
➢ 80% of services purchases from local firms;
➢ 5 years to ramp-up purchases requirements & local content;
➢ Company 5y Inclusive Purchase Plan by 2019;
➢ Common mining purchases taxonomy (under dev. by the dti);
➢ Preferential purchases from black-, women- & youth-owned firms
MC3 supply-chain development provisions include:
18Minds for Mines 18
Doubling the SA MCG sector!
Key Facilitation Interventions could include:• Targeted dti scheme for MCGs as per APDP (capex grants prototypes)
• Specialised mining supply-chain VCF for new products & prototypes (TRL7 to 9);
• Funding window for pre-prototype product development (TRL 3 to 6);
• JV w/MMP to establish a start-ups incubator & accelerator (TRL7 to 9);
• PPFA designation of MCGs (“Yellow Metal”) by the dti & Treasury;
• Targeted funding facility to grow black-owned MCG firms (TRL 5 to 9);
• “Test Mine” partnership: MMP, Minerals Council, MEMSA (TRL 5-9);
• MMP mining supply-chain capacity (warm bodies) to build the sector;
• Competitive credit facility for machinery leasing to "level the playing field" with foreign importers (Volvo, Cat, Komatsu, et al);
• Et al
19Minds for Mines 19
Conclusion for Mining Supply Chain:
MC3 a big step forward, but NOT a silver bullet
Need to constantly increase our cost competitiveness and value offering through:
• Building strong supply chain clusters
• Constant technology development (SAMERI et al)
• UNSPSC/GS1 coding for standards, inventory and supply chain control
• Working closely with dti on manufacturing and export facilitation
• Being a key partner in the Mandela Mining Precinct initiatives such as “Test Mine”
• Ongoing engagement on the Mining Charter
20Minds for Mines 20
Resources-based Industrialisation (RBI)
Thank YouMMP Contacts
Navin Singh: [email protected]
Alastair Macfarlane: [email protected]
Paul Jourdan: [email protected]
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33 Member Companies & growing …
• 13 Founder members, grown to 33• 13 Members ≥51% black-owned (40%)• 25 Members ≥26% black-owned (76%)• 22 members ≥ BBBEE Level 4 (67%)• including emerging companies, software
developers/IT, supply chain (components)
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Recent Activities
MMP & MEMSA launch exhibition &Lean manufacture factory training
Innovation
• 3 Finalists in Isidingo Drill Challenge
• On-going Product innovation
• Engaging with MMP research streams
Growth & Competitiveness
• Expanding into export markets - 49% growth to 11% of turnover. Africa, North and South
America, Europe, Asia, Australia.
• World Class Manufacturing Techniques (lean) - Team Leader training by MEMSA
Standards
• Member and Board Codes of Ethical Conduct
Cooperation: dti, DST, DMR, MCSA, SAMERDI, SAMPEC, SACEEC, ECIC, IDC, National
Cleaner Production Centre, CSIR
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Collaborate - Building the SA Supply Chain
Partner with us through procurement, and two flagship programmes for 2018-9:- Development of a Test Mine (with MMP)- Supply Chain Localisation & Development