Over the last decade, the extractive industry has witnessed considerable changes from the dynamic price and investment cycles to emergence of relatively unknown or frontier countries announcing significant hydrocarbon discoveries, as well as traditional oil and gas importers becoming leading exporters.
Today I will look at mineral beneficiation in the extractive industry as a key enabler to Economic growth that East Africa country should embrace in a bid to realize economic growth through its oil and Gas. Mineral Beneficiation in simplistic terms refers to a process through which raw material go through transformation and value addition to yield marketable products. In other words, making the mineral ready for industrial use, this is done by means that does not destroy the physical and chemical composition of the minerals. What is important to note is that a country embracing mineral beneficiation as a policy, should do so even when it does not need those minerals products in its manufacturing industry in a bid to offer competitive advantage. For example South Africa a couple of years back to exported cars, industrial technological machines to the world including machines used in the mining industry ever since their energy sector become expensive this has since shifted to economies like china.
As East Africa economies prepare to upscale its oil and gas industries two main issues should be considered, one the value addition of the entire petroleum products and the other creating a new long term competitive advantage in the eastern Africa countries, the latter being an interesting item that policy maker should look into. Couple of years ago, South Africa was the preferred destination for manufacturing investment globally due to its cheap energy source, this has since changed as the country has lost its competitive advantage other countries like china.
As the debate ranges on Mineral Beneficiation, the traditional as well as the frontier oil and gas producing countries should focus to adopt policy that embrace this aspect and most importantly the long term competitive advantage by making sure that Access to industrial minerals is made available in the form that is required for downstream, manufacturing and at a price that is globally competitive.
Take an example of Tanzania and the discovery of helium gas, the beneficiated products of helium can be of great benefit to the country not only making it an industrial hub but also give it a competitive advantage by making the product beneficiated ready for use in retail chain sector where it is used in preparation of the bar code in super markets. Tanzania can export this rare mineral in its finished form to the rest of the world. Also by having helium ready for use in radiography where it’s used for scanning machine in health sector as well as many other use.
South Africa is one of the leading resource rich countries globally, yet the amount of beneficiation that happens is not enough. Gold, platinum, and zirconium are all exported in raw form to china. Its high time African countries embrace mineral beneficiation in their extractive industries.
So what are the main areas that governments in Africa need to work on in order to realize the advantages of beneficiation? One is that they is need to have cheap and efficient energy source so as to offer beneficiated products at globally competitive prices. Governments also need to work on infrastructural framework, access to this minerals need to be opened up, a lot capacity building needs to be promoted so as to have a skilled/efficient labour force. Another area that policy makers in frontiers countries as well as the traditional economies in extractive industries need to take into account is having a strong efficient state institution that address holistic issues of minerals extraction that will include revenue management of the extractive sector. It’s important to note that analysis in the entire value chain needs to be carried out into benefit from beneficiation. Botswana offers the best case study that most frontiers countries can borrow from.