South Africa plans to use its position as the current convener of the Council of African Ministers of Industry to develop a common continental framework for extracting greater value from the prevailing minerals boom, Trade and Industry Minister Dr Rob Davies has revealed.

The rise in the demand for natural resources, which has been accompanied by strong commodity price increases, is already attracting foreign investor interest. But Davies says that South Africa is also keen to use the upturn to stimulate greater investment into minerals beneficiation across the continent.

In a recent address at the University of Johannesburg, he described a possible initiative to realise greater value from the current resources cycle as “one project that all of Africa has in common”.

But foreign investment and minerals beneficiation are also important objectives within South Africa’s own New Growth Path (NGP) and the country’s industrial policy action plan (Ipap), a new version of which would be unveiled soon.

Davies reports that South Africa has already secured a “declaratory” commitment from China for “minerals beneficiation at source”. The commitment forms part of the comprehensive strategic partnership agreement, signed by Presidents Hu Jintao and Jacob Zuma, during Zuma’s State visit to Beijing in August last year.

“Now we have to follow that through,” Davies asserts, describing minerals beneficiation as an important driver of industrial development.

“What we are now working towards is a framework for extracting more value from these mineral products and exporting higher value-added products to other countries, including China.”

South Africa is already studying a range of value-addition projects, including one to turn mineral sands into titanium alloy. “At the moment, if you export titanium sands, you get $400/t. If we were to export titanium alloy, we could receive $100 000/t.”

Earlier, Economic Development Minister Ebrahim Patel revealed that South Africa was studying the feasibility of developing what he termed the world’s first integrated metals plant capable of “beneficiating” titanium, zirconium, vanadium, magnesium and silicon.

Should the project prove viable, it could involve an investment of R15-billion and create more than 7 000 jobs in construction, as well as in the operation of the plant. The probable location has not been disclosed, nor was the identify of the investors, or how power could be secured for the project.

Davies argues that South Africa and Africa is not alone in seeking such investment reciprocity, with Brazil having recently insisted that a Chinese firm invest in a steel mill in return for an iron-ore contract.

South Africa is, therefore, also likely to raise the prospect of greater beneficiation reciprocity with the Brazil, Russia, India and China (Bric) bloc, when it formally joins the grouping at a Bric summit in April. “We are keen to use all of these new relationships to try to get investment in value-added activities,” Davies says.

The NGP and Ipap were also geared towards boosting the attractiveness of South Africa as a destination for foreign direct investment into productive activities, rather than merely as a destination for portfolio flows.

Government is, therefore, concentrating on incentives, such as the R20-billion 12i tax scheme, improving the investment climate and seeking industrial spin-offs from its R846-billion public infrastructure programme.

A new public procurement system is currently being developed, which will incorporate ‘fleet procurement’ arrangements for everything from buses and locomotives to power plants, changes to the preferential procurement regime to encourage local production, and a revamped industrial offsets system to stimulate further investments in local manufacturing capacity.

“That work will come to a head this year,” Davies reports.

Also being given priority is improvements to such basic mechanisms as company registration, which is currently managed less than optimally by the Companies and Intellectual Property Registration Office (Cipro).

From April 1, Cipro will fall away and become a component within the larger Companies and Intellectual Property Commission.

“We are also putting in new leadership into the running of the new commission in line with the Companies Act. But on the registration of companies, there is a degree of stability emerging and we expect that, once the new commission is in place, we will begin to turn the corner.”