Msuku, meaning gold in Venda, hopes to provide the management, operational and technical services necessary to integrate value-added processes profitably into the gold-mining industry.
This is expected to unlock significant value in the value-chain of the precious-metals industry, and help South Africa gain a dominant position in the downstream industries, such as jewellery manufacture and industrial applications for precious metals.
“Msuku is interesting in the sense that, forthe first time, it will provide an opportunity todemonstrate what Mintek has achieved in developing refining technology in an operational environment,” comments Harmony marketing director Ferdi Dippenaar.
Harmony is the only producer that refines and markets its own gold.
Its refinery, in Virginia, in the Free State, has been upgraded to produce over 100 t of refined gold a year.
“With the refinery came the need, from a Harmony perspective, to beneficiate the gold, firstly by refining it to a higher standard than that achieved by other standard refineries, which required the development of new technology, undertaken in conjunction with Mintek,” explains Dippenaar.
From there the company began looking at the next level of value-addition in terms of product, that is the manufacture of downstream products such as wire, rope, granules and alloys.
Once again the research and development to make this possible was undertaken in conjunction with Mintek.
Today, a large range of value-added products are produced by Harmony for the local and export markets.
“The creation of the Msuku business venture is the next logical step in extending the competitive advantage we have established over the last few years to a larger market,” informs Dippenaar.
“It takes the research and development achieved and crystallises the value from it.
“Msuku may sell the technology to otherinterested parties, inside and outside South Africa,” he continues.
In time, it may well happen that Msuku will sell the technology and operate clients’ facilities.
Mintek and Harmony have already developed a gold-bar casting machine through Msuku. “Until now, bar-casters have been imported, typically from Italy.
“Importing makes a simple product very expensive, as it is exposed to the rand:dollar exchange rate, the cost of spares, maintenance and training,” indicates Dippenaar.
The bar-caster manu-factured by the group has been in operation at the Harmony refinery for the last six months.
It reportedly outperforms the model imported from Italy in efficiency and capacity.
According to Dippenaar, conventional thinking is that pieces of plant and equipment required in downstream development are technologically advanced.
However, he points out that building the bar-caster proved this was not the case.
“I see no reason why plant and equipment that is currently built overseas cannot be built in South Africa, and for the local industry to be doing the exporting and gaining the benefits, instead of paying inflated prices by importing,” remarks Dippenaar.
This is not to say that plant and equipment will be exported in large volumes, but every precious-metal refiner that enters into the first stage of value-addition needs certain equipment that South Africa could supply.
Mintek has undertaken a fair amount of research and development in value-addition initiatives, but much of it has not been completed or commercially tested.
Msuku will now provide the vehicle for this to happen.
“There is indeed much that can be done in the future – there is more technology that needs to be researched and refined.
“Now that there is a group focused on taking this drive forward, the chances of further research and development are much higher,” explains Dippenaar. The new company is currently a 50:50 partnership between Mintek and Harmony, but provision of at least 20% has been made for the participation of a black economic empowerment company.
Msuku is just one of Harmony’s beneficiation initiatives.
Harmony markets its own gold and believes that, contrary to popular belief, gold can be branded.
“Our activities in what we have produced, what we have sold, not just in bars but also in other industrial products and jewellery, have proved that there is definitely brand recognition in the gold market.
“The ability to brand a commodity ultimately implies there is an added value that comes back to the shareholders,” notes Dippenaar.
Harmony’s drive to add value has provedsuccessful for the company, as it saves costs by refining its own gold and earns additional income through adding value to its products.
“Our success in beneficiation projects goes beyond the benefit it has brought the company.
“Through downstream development we have been able to create growth and employmentopportunities in the Free State gold fields, an area which has seen a high level of poverty, and needs to be regenerated following the down-scaling of mining activities in the region,” states Dippenaar.
Harmony has undertaken a fair amount of work in the jewellery industry.
A few thousand Lord of the Rings (LOTR) have been sold by the gold company since the start of the company’s One Ring marketing campaign in 2001.
Most of the 14- and 18-carat-gold rings, meant to replicate the ring worn by thecharacter Frodo in the LOTR film series,are manufactured by Harmony in Randfontein and currently sold to the US, UK and Canadian markets, with other orders from Indonesia, Singapore and South Africa.
Following Harmony’s contract, Virginiajewellery manufacturing company Emthuthwini has been contracted to manufacture otherjewellery pieces inspired by the LOTR trilogy.
This contract has grown the company from eight people to 40 in six months, providing much-needed employment.
The company has also taken existing infrastructure in the Free State region and made it available at an affordable price to jewellery manufacturers.
A jewellery company in Virginia, Free State – a joint venture between the IDC and Canadian company Royal Chain – Royal South African Manufacturers, occupies a facility provided by Harmony.
The company employs 700 people and is manufacturing about 200 kg a month of mainly jewellery chain for the export market.