Beneficiation in SA: Perspective of German-South African...

Beneficiation in SA:Perspective of German-South

African Industry

Andreas KünneMinister: Economic & Global Issues

German Embassy Pretoria

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StructureWhere are we today?• Catalytic Converters• Automotive Production• Tire production• Chrome Chemicals

Policy Options• Smart interventions / dialogue & flexibility

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Automotive: Catalytic Converters

Globally:

Ccs consume >50% of PGM productionParticle filters (Diesel) use similar technology: High growth potentialFoundation for fuel cell manufacturing

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Catalytic Converters / SA

Locally:

> 10 converter producersCc industry beneficiates 15% of SA PGMsCc > 90% of PGM beneficiation in SATakes 40% of SA domestic steel production5.000 direct jobs (mainly highly skilled)Export revenue > R 20bn p.a.

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Catalytic Converters: Issues

Receding market share (2008: >14% of global, today: <10% and falling)Time to market too long (26 weeks)Capacity 24 mio pieces, production: 16 mio

Why:Lack of skilled labourWeak demand: Over-reliance on Europe, growth markets protected

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Catalytic Converters: Interventions

Comprehensive approach:• Support entry into new market segments• Support research into fuel cell production, together

with industry• Support expansion of value chain in industry-wide

dialogue (> 50 companies in supply chain)• Trade agreements: Global market access

• Industry ready to discuss: Catalytic Converter Interest Group - international manufacturers present in SA

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Automotive Production: Localization

Car manufacturers want to source as much as possible locally (transport, tarriff advantages)Example BMW: Seat belts, assembly of exhaust panels, fuel tank, floor carpets etc.Crucial: Business case AND availability of technology

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Raw materials

Production & sales volumes

Europe

SouthAfrica

ChinaNAFTATechnology & Skills

Productivity & Labor cost

Automotive Production: The MBSA Perspective

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• MB production share for local market20%

• Annual Passenger car production overall

0,3 Mio cars

• Annual Passenger car sales overall0,4 Mio cars

South Africa

Germany

China USA



6 Mio cars

• Annual Passenger car sales overall3 Mio cars



3 Mio cars




15 Mio cars


• IHU (inner high pressure forming)

• Aluminium/Magnesium High pressure casting

• Carbon Fiber Technology

• Blow moulding with insert parts













South Africa

Germany

China USA

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• Aluminium casting alloy

• Aluminium sheet material

• Plastic materials (ABS,EPDM)

• High strength steels









South Africa

Germany

China USA





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Automotive: MBSA Perspective / Raw Materials

30-50 kg/car

20 50

Steel-Body in White

Aluminium-body panels

Aluminium-structure

Magnesium-casting

Carbon fiber-structure

Production cost [€/-kg]

Weig

ht re

du

ctio

n[%

com

pare

d to

ste

el]

∼ 60

∼ 30

Magnesium-sheet

Steel

Aluminium

In order to fulfill future requirements on CO2 emissions, the weight of new generation cars has to be reduced. The availability of the right raw materials with competitive pricing is therefore essential for the automotive production.

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3336

5752

48

27

-42%(-24)

-36%(-20)

+9%9,0%

2012

Moldavia 2012 China

2012*

2011*

2010*

2002*

*Source: NBF (National Bargain Forum) agreed wage* * Includes labor, machining and overheads

ZAR/hour Skill Level 3 Qualified rate

South Africa

120

185

120132

125117111

209 +54%+54%

South Africa 2007

South Africa 2012

MoldaviaCzechSloveniaMexicoChinaGermany

ZAR/Costs of1 Production Hour for Car Trim Sewing (2012) * *

Automotive: MBSA Perspective / Productivity & labor cost

Labor cost development Productivity comparison

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STEEL:

MBSA in discussions with ArcelorMittalPrepared to manufacture material for unexposed sheetsThese are the lesser volumes (combined, 1255 ton/a) - too small for ArcelorMittal to produce MBSA now investigating the possibility of combining volumes with other OEMs

ALUMINIUM:

MBSA and AFSA (Aluminium Federation of South Africa) had first meeting on specifications for sheet metal Next step to formulate combined OEM data sheet, initiate project, establish task team within OEM Council

Automotive Production: New approaches

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Automotive Production: ConclusionProduction & sales volumesRegions with high production and sales volumes have priority with regard to

investments. With low sales volumes in the domestic market, the South African car production relies on exports.

Technology & skillsNew production technologies are available outside South Africa first. Local

production volumes are too low for certain production technologies to be viable. Skills development needed to allow widely spread operation of high-tech production technologies.

Raw materialsLightweighting in car production is indispensable. The necessary raw materials must

be available at competitive pricing. Not all raw materials are locally available, with monopoly pricing being the crucial handicap for most available raw materials in South Africa.

Productivity & Labour costThe cost for labour in South Africa has increased faster than productivity. This leads

to a disadvantage in competition with other regions.

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Tire Production: Continental

One of four tire manufacturers in SALocated in PE regionStrongly committed to sourcing locally

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Tire Production: Continental

Global vs Local

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Tire Production: Material Type / Quantity

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Tire production: Localization

Availability of technologyEconomies of scale?Biggest potential: Reclaimed rubber / yarns & fabricsFramework needs to be in place: Recuperation system built up in consultation with industry

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Chrome Chemicals: From Chrome Ore To Cars (and aeroplanes)

LANXESS example: German high-tech company with strong BRICS focus~1.400 employees in SAChrome ore mine close to RustenburgSeveral production facilities in SA (KZN)Mine -> world‘s most modern chrome chemical plant in Newcastle, KZNChrome ore -> specialized chrome chemicals for automotive, aviation and other industries

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Chrome Chemicals: From Chrome Ore To Cars (and aeroplanes)

Complete value chain in SABeneficiation from A to ZWithout government support programmesIdentified the right niche

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Policy Options

Skills: Comprehensive support to industryTechnology: Support for industry-oriented

research in dialogue w/industry, e.g. magnesiumProductivity: Incentive schemesIdentify & support niches (reclaimed rubber,

PGM applications beyond catalytic converters, ...)Raw materials: Monopoly pricingTrade agreements: Level playing field

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Policy Options: Support Clusters

Secrets of German success in manufacturing: vocational training & clustersIn confined geographic area maximum of expertiseIndustry, colleges, universities, government, labour forceSA examples: Renewables in the Western Cape -> CSP research chair, CPUT training of wind turbine engineers, govt support

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Thank you!

Questions?Questions?

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