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ENHANCING LINKAGES AND

TECHNOLOGICAL CAPACITIES IN MINING:


LESSONS FROM SOUTH AFRICA
Innovation in Mining and Developing Countries
UNU-MERIT Workshop
07 December 2016
David Kaplan
Policy Research in International Services and
Manufacturing
Department of Economics
University of Cape Town

Structure of the Presentation


South African Linkages and Technological
Capacities
Explaining the Depth of Linkages and
Technological Capacities
Implications for Developing Countries

Linkages
2011, RSA mining expenditure (after depreciation & impairments) R437 billion

Capital expenditure, R 47 bn
Dividends to shareholders R 13 bn

Taxation,
R26bn

Interest paid R 17 bn

Labour costs, R89 bn

Purchases & operating costs (steel,


timber,electricity, rail, etc.), R251 bn

Linkages total
R437billion 89% spent locally
Very considerable local multiplier
Mining output increases have a major impact
on the economy and on employment

Linkages B-BBEE
Procure a minimum of 40% of capital goods from B-BBEE entities by
2014
Ensure that multinational suppliers of capital goods annually
contribute a minimum of 0.5% of annual income generated from
local mining companies towards socio-economic development of
local communities into a social development fund from 2010
Procure 70% of services and 50% of consumer goods from B-BBEE
entities by 2014
(These targets exclude non-discretionary spending).
Local Procurement Accord on 31 October 2011signed by organised
labour, business community constituents and Government.
business committed to progressively increase the levels of local
procurement by the Top 84 companies (members of Business
Leadership).

Technological Capacities
Areas of expertise
mine design and development,
construction and structural engineering, ventilation
and cooling
contract mining
shaft sinking
mineral processing, tailings treatment, process control,
metallurgical testing, smelting and refining,
niche systems and components (hoisting, winding,
hydropower drills, filters, pumps, pinch valves)
strategic consumables (cement, shotcrete, explosives,
grinding balls

Technological Capacities:
SA Patents by Tech Class 2010-14
SA Grants

Class Grants

SA Share %

Boring or
penetrating earth

15

1894

0.79

Hydraulic and earth


engineering

13

1618

0.80

Specialised
metallurgical
processes

11

1031

1.07

Mining or in situ
disintegration hard
material

11

371

2.96

Abrasive tool
making

11

341

3.23

Chemistry: Fischer
Tropsch

17

299

5.69

SA SHARE 2014

0.05

Technological capacities
Technology counts (2008)
All Patents

Mining Technology
Patents

Share (%)

South Africa

2,969

128

4.3

United States

1,587,915

7,882

0.5

Australia

16,283

311

1,9

Canada

55,580

853

0.5

Technological capacities
Citations received (2008)
All patents

Mining Patents

Other Patents

South Africa

5.52

7.06

5.44

United States

8.52

6.99

8.53

Australia

5.39

4.15

5.41

Canada

6.69

4.70

6.72

Average

6.53

5.73

6.53

Technological Capacities:
Exports
In 2013, exports of mining capital equipment
reached R32 billion
Most exports to Africa also Australia, US,
Canada
Positive balance on trade account
No data on services exports - substantial

Technological Capacities:
Investments
Anglo American
De Beers
Medium sized companies competing in tech.
sophisticated areas eg. drilling (5% of drilling
companies)
Declining importance

Technological Spillovers:
Some Examples
Full body scanners
Large construction projects

Explanatory Factors (1):


Intensity of the Local Challenge
A series of unique challenges
E.g.
Deep mining gold
Impurities platinum; coal

Explanatory Factors (2):


Market structure
Intense buyer-supplier cooperation to meet
technological challenges.
Co-operative research. Mining houses
investing collectively substantial resources.
COMRO.
Many independent companies. Space for
specialist suppliers who could amortise R&D
over many projects

Explanatory factors (3):


Scale and Time
Large scale
Long time horizon
Allowed for recovery of investments that were
long term and scale intensive e.g. refining; shaft
sinking; infrastructure

Explanatory Factors (4):


Role of the State
An independent developmental state
Main objective to develop business and
employment opportunities
Particularly with the decline of agriculture
Nationalist, racist - racist based democracy

Explanatory factors (5)


High levels of protection
Early development
Tariffs
Natural protection
Pre-1994
Sanctions and dis-investment

Implications for Policy


Many features of SA not replicated:
Protection; scale; government role.
But others are
Uniqueness; common challenges; a degree of
natural protection
Plus
Mining far more technologically intensive
Increased outsourcing of non-mining activities

Implications for policy


Enhancing Linkages
The myth of the mining enclave
The shared interest of input providers, mining
companies and government
Identification of quick wins the low
hanging fruit
Longer term perspectives

A Special Focus on Engineering?


From mining company perspective:
The importance of readily available
engineering capacities to continuous
operations of mining and smelting.
High costs of flying in expertise
From developmental perspective:
Key role of engineering. The transfer science
Spread effects

Policy Implications:Enhancing
Technological Capacities
(1)
Possibilities for collective mining R&D (more
D) coordinated by government
Development of supportive training and
research supporting institutions National
System of Innovation

Policy Implications. Enhancing


Technological Capacities
(2)
Initial focus on effective assimilation of foreign
technologies
Encouraging spread effects
Later more focus on innovation and lateral
migration of technology from mining

Thank you
Merci beaucoup

David Kaplan
david.kaplan@uct.ac.za