Following Mining Charter III’s call to the Department of Trade and Industry (DTI) to develop a “Standardised Coding and Product Identification System in the Mining Supply Chain” whereby products can be identified using a unique name and code, the department has established a multistakeholder working group tasked with adopting a system that will create a global catalogue of all components, products and services.
Mining Charter III – gazetted in September 2018 – states that a minimum of 70% of total mining goods procurement spend must be on South African-manufactured goods, with a minimum 60% local content.
To achieve this, the mining industry’s supply chain as a whole needs to be upgraded and to embrace the Fourth Industrial Revolution, so that it is easy to track local and imported purchases with ease, says DTI minerals processing deputy director Abiel Mohlahlo, who will be championing the development and adoption of the system.
“The majority of mines are making ‘free text’ inputs into their procurement data files, in the sense that different mines are using different names to identify the same item. That is challenging when we have to report our findings to the Department of Mineral Resources. As the DTI, we also struggle to identify localisation opportunities,” he says.
Further, mining companies are unable to determine the similarities or the exact value of the products they have procured. In its research, the DTI has determined that “free text” purchases make up approximately 70% of the value of total procurement.
Describing it as, “missing out on a multiplier”, DTI minerals processing director Yusuf Timol adds that Mining Charter III can further allow for the identification and adoption of “serious industrialisation projects”, with an estimated total procurement in the mining industry in excess of R130-billion across all commodity groups.
“[With] trackless equipment, personal protective equipment and automation, these numbers can go even further. If you can localise just 10% of that over the next three years, that would amount to hundreds of millions of rands staying in South Africa and developing the domestic value chain. That will also equate to hundreds of jobs and supporting lateral industries as well,” he adds.
Moreover, Mohlahlo highlights that the mining industry is still far behind other industries such as the fast-moving consumer goods sector, regarding product identification, digitalisation and standardisation. The DTI will work towards the mining industry’s gradual adoption of these aspects.
“When companies buy a product, they should be able to tell just how much of it is local content, where it was manufactured and what its unique characteristics are – including the life span.”
However, listing products on the global catalogue will require that local manufacturers meet basic requirements such as quality and integrity, which Mohlahlo explains will be advantageous for local manufacturers as once their products are listed, they will visible across the global mining value chain.
“The charter states that we have to roll this out within the next five years. Our aim is to become leaders in this area of the mining supply chain. However, this is new to the mining industry and we are, firstly, going to run a pilot programme with the members of industrial clusters Mining Equipment Manufacturers of South Africa, the South African Minerals Processing Equipment Cluster and public–private partnership Mandela Mining Precinct, to which we have close ties,” Timol explains.
The DTI will – as a proud partner – participate in the 2019 Manufacturing Indaba, which will be held at the Sandton Convention Centre on June 24 and 25.
As with the previous five years, the DTI’s role is to ensure that government works with the private sector to make the Manufacturing Indaba an even more prestigious event, which provides a platform to help manufacturers engage with one another, as well as with government.
The event provides an opportunity for industry and government to engage, learn and collectively develop mechanisms to grow the sector, says DTI industrial policy chief director Zukiswa Kimani.
“Events such as these are crucial in highlighting the importance of the manufacturing sector and thus, influence economic discourse on growth drivers. Further, the event supports the drive to change the narrative on manufacturing as a key to preventing industrial decline, and fostering diversification and structural transformation of the South African economy.”
The DTI hopes that the conference can also develop into a truly Southern African Development Community (SADC) event, bringing in SADC countries to participate and to expand regional integration and the cross-border trade of services and products.
“There is an opportunity to leverage opportunities presented by the continent. The continent is well endowed with natural resources necessary for a resource-based industrialisation. It could make African countries become more resilient to economic shocks and less dependent on natural resource exports,” Kimani asserts.
Further, South Africa has a well-established and diversified manufacturing sector, with key subsectors such as food processing and beverages, metals and machinery, chemicals and petrochemicals products, automotive, as well as wood, paper and related products, she adds.
The manufacturing sector remains an important contributor to South Africa’s diversified and technologically advanced economy, particularly in terms of the economic activity it generates and the associated employment opportunities – directly and indirectly – as well as the export earnings, Kimani explains.
The DTI – which is a strategic partner of the Manufacturing Indaba – looks forward to exchanging lessons and experiences to unpack challenges and identify solutions for growth across the manufacturing sector.