Programme Director;

Distinguished Guests;

Ladies and Gentlemen;

I’m delighted to be here this morning to welcome you all to South Africa.

The mining industry has been crucial to the economic development of South Africa, in both historical andcontemporary terms. Currently, its contribution amounts to between 15% and 20% of South Africa's GDP. This contribution includes goods and services provided to the industry and the value-added beneficiation of mining outputs.

The mining sector is both a major employer and a major contributor to South Africa’s export revenues. It accounts for almost 60% of our export revenue and employs 500,000 peopledirectly and a further 500,000 indirectly. It is also the most significant private sector contributor to tax revenue providing some R25.9 billion in taxes (approximately 17 per cent of total corporate taxes) and R5.5 billion in royalties in 2011.

According to some surveys South Africa is the richest mineral resource holder in the world. Whether we are optimally exploiting these reserves for the benefit of the economy and broader society in an environmentally sustainable way is in question.

Recently there have been significant new discoveries of mineral resources in Ghana, Uganda, Tanzania and Mozambique. Will these, and other African countries in a similar position,be ableto avoid the ‘resource curse’?

The ‘resource curse’ works like this. First, oil or other natural-resource exports strengthen a currency. Then, a stronger currency renders other exports, in agriculture or in manufacturing industry, less competitive and drives them out of business. But the problem is these other exports are often better for a country’s growth and development. For example, the discovery of oil in Nigeria in the 1970s led to the destruction of cocoa and peanut production that employed many more people than the oil, gas or mining sector.

In effect this means that resource exports skew growth toward resources and away from manufacturing. The fact is thatmininguses a lot of land, concentrates ownership, and employs fewer and fewer workers. It attracts investment and turns investment away from manufacturing and the exports of goods and services that use less land, spread ownership, and employ more people.

It is now well known what to do to avoid falling into the trap of the resource curse, but often governments are not able to do what economists and others tell them to do. It is not always possible to lower the exchange rate or to set up a stabilization fund.

Yet there are some things that South Africa, as an old resource-rich country that has been able to diversify its economy, and new resource-rich countries, can and should do.

One is beneficiation and another is localisation. The two processes overlap. The two processes are complicated and complex. South Africa has recently introduced policies on both. The aim of both is to promote development at home.

Forty years ago South Korea had a comparative advantage in growing rice. Had it stuck to that strength alone, it would not be the industrial giant that it is today. It might be the world’s most efficient rice grower, but it would still be poor.

What we in he Non-Aligned Movement have to do now is to put in place the institutions, policies, and laws needed to ensure that natural resources benefit all of our citizens.

Industrialisation is the normal route to development. None of the OECD countries became high-income countries without developing a substantial manufacturing base that in turn provided for full or nearly full employment.

The 2009 UN Industrial Development report <http://www.un.org.cn/cms/p/resources/80/1122/content.html> explains it like this: “This potential for explosive growth is distinctive to manufacturing. As manufacturing activity expands, instead ofrunning up against shortages of land or resources that inevitably constrain the growth of agriculture or the extractive industries, it benefits from economies of scale: unit costs of production fall.”

In the 1980s firms in the developed world began to relocate manufacturing to the developing world to take advantage of cheaper wage and production costs. It was in this period that China became the “low-wage workshop” of the world. It was in this period that resource-poor and coastal countries in north Africa, like Tunisia, began to develop export processing zones that encouraged foreign direct investment.

It was from the 1980s that the Asian tigers in particular took advantage of this wave of relocation ofmanufacturing production into the developing countries.

And it was this wave of globalisation (trade, capital and migration) that African countries missed.Firms in developed countries relocated plants to specific countries in the developing world and benefited from “agglomeration costs” or economies of scale in new locations.

Asia, in particular China, has experienced explosive industrial growth, whereas in many middle-income countries industrialization has stagnated and Africa has remained marginalized. Until now.

It is now our turn in the Non-Aligned Movement to make the best of the resources in our soil.

Here aresome examples, from the Department of Science and Technology (DST), of what South Africa is doing to beneficiate and localise around the development of minerals.

The first example is titanium. South Africa is the second largest supplier of the mineral ore that can produce titanium metal.

However,we add little value to the mineral before export.

The DST is championing the development of a titanium industry across the entire value-chain, from the raw mineral to primary metal powder and ultimately to the forming of metal millproducts (plates, bars, tubes) and components (metal castings, machining and components manufacturing).

The titanium metal powder industry is estimated to have the potential to generate R3-5 billion per annum; which can increase to R10 to R30 billion per annum once a downstream industry is established.The job creation potential of a titanium industry includes about 450 workers, engineers and technologists in metal production, and about 2,000 workers, engineers and technicians in the downstream component manufacturing.

The Council for Scientific and Industrial Research (CSIR) has developed a novel process in which titanium metal can be produced from our abundant mineral resource.

These new capabilities can position South Africa as a world leader in the cost competitive production of high-grade titanium metal powder.Titanium is a sought-after metal especially in the aerospace industry where aircraft and satellites need to be lighter in weight to consume less fuel.

A pilot plant is being built during 2012, accelerating the development of strategic capability for the creation of a titanium industry.

These efforts mean that, in the near future, South Africa will have a new industry built around titanium.

Another example is platinum. Four years ago we launched the Hydrogen South Africa (HySA) programme. Thismarked the initiation of research and development activities by two centres of competence, HySA Catalysis and HySA Systems. In turn, we established, CleanEnergy, a South African fuel cell company that will initially market and eventually assemble and manufacture fuel cells in sub-Saharan Africa in partnership with Anglo Platinum and Altergy Power Systems. This company is still in its market development stage, but it has already sold 18 fuel-cellback-up power systems to Vodacom.

South Africa has also made progress regarding the establishment of centres of competence which have secured partnerships with the private sector abroad. This will enable HySA to penetrate the global fuel market. An agreement is being negotiated with a Norwegian partner for the commercialisation of a hydrogen storage material. The parties have also agreed to co-fund the pilot plant and

upscale it into a fully-fledged manufacturing plant.

A third example is fluorine. Last month, we launched the Multi-purpose Fluorination Pilot Plant at Necsa’s Pelchem in Pelindaba.We believe that this plant will enhance the Fluorochemical Industrial Development Programme. Through this initiative, South Africa has the potential not only to develop much-needed human capital but also to reduce the country’s chemical trade deficit through exports, to attract foreign direct investment, and to increase high-tech research and development towards a stronger fluorochemicals industrial base.

Ladies and gentlemen, since at least 2006 African leaders have reiterated the importance of science and technology to the continent’s development, and committed themselves to increase investment in science and technology to at least 1% of GDP.

Yet science and technology are not yet fully adopted in the development policies of many African states and some countries do not even have STI ministries.

African development is our priority. And science and technology play a crucial role. Through the promotion of bilateral scientific cooperation – specifically in the form of joint research and development activities – South Africa makes significant contributions to the strengthening of relations with key partners both in high-income and in low-income countries. We in the DST have more than 60 formal bilateral and multi-lateral relations.

In the multilateral sphere the Department of Science and Technology has benefited significantly from several important initiatives. For example, within the India-Brazil-South Africa (IBSA) partnership my department has promoted several joint flagship projects on nanotechnology.

In closing, South Africa is thrilled at the prospect of hosting the 13th General Council meeting of the NAM S&T Centre in September 2013, where South Africa will resume its position as the NAM S&T Centre President for three years until 2016.

I thank you.