Prof May Hermanus 10 June 2015

1. Research and DevelopmentSouth African Mining IndustryPresentation to Parliamentary Portfolio Committee on Mineral Resources10 June 2015 Prof May Hermanus 10 June 2015

2. Outline The Mining and Minerals Sector Research and Development (R&D) Capacity and Funding Role of SIMRAC (MHSC) Where to Mining R&D? CSIR initiatives to Revitalise Mining R&D Conclusions

3. The Mining and Minerals Sector

4. Key Points • South Africa has significant mineral reserves • Mature industry, with easily mined deposits / high grade deposits already extracted • Challenges • In mining operations one aspect of the legacy of our past is labour intensive mining long after changes elsewhere • Reduced and fragmented R&D capacity • No overarching strategy for the mineral value chain (DST, DMR and DTI strategies exist) • The problems to be resolved by R&D have changed in focus and scope, and need to be addressed as a system • Natural resource trade offs

5. Minerals Endowment • RSA has an abundance of wealth in mineral reserves – USD 2.5 trillion (www.south africa.info and CGS) • World Number #1 in: • PGMs (87.7%) • Chromium (72.4%) • Manganese (80%) • Titanium (65%) • Gold (12.7%)) 5

6. Mining and South Africa • Contribution to GDP – 7% direct and 10% indirect (induced) • Very labour intensive • Estimated: one miner supports 12-15 dependents • The NDP calls for increasing employment and growth in country. • Mining (moreover the minerals value chain) has a critical role to play in the development of the country 6

7. Challenges in Mineral Extraction • Depth of mining & lower grade deposits • Cost Considerations • Increase in COSTS and RISKS associated with deep level mining • Variable of commodity price • Low productivity (mining methods and skill shortages) • Natural resource trade offs (land use water, arable land, sterilisation of land, environmental impacts) • New coalfields, limited infrastructure and high quality resources 7

8. Challenges in Mineral Extraction www.i2mine.eu

9. Mining Value Chain – role players • Exploration to extraction to benefication • The National System of Innovation supports R&D along the value chain through Government Departments (DMR, DST, DTI etc) and three Science Councils • Traditional roles being defined as: Minerals value chain is more than these 3 areas! 9

10. Mining Research in the CSIR Mining Value Chain – role of the CSIR Through a multi-disciplinary RD&I approach, a multitude of significant challenges can be addressed the CSIR, CGS and MINTEK as well the universities involved in mining (WITS, UP, UJ, UCT etc.) 10

11. R&D in South AfricaCapacity and Funding

12. Mining Research in the CSIR Mining Value Chain – role of the CSIR 12

13. Research and Development Capacity: Key Points • Exploration – Extraction /Mining – Beneficiation. R&D gap in middle • No overarching minerals sector strategy, No overarching R&D Strategy (DMR, DTI, DST) • Mining Phakisa /Mining Lab presents new opportunities • Capacity and funding availability are inter-related • No funding, no R&D • But funding alone, cannot jumpstart R&D • Human capital (experienced researchers) and funding required • Long term projects replaced by short term projects • Funding Patterns • Government driven globally • Private sector retreated from R&D, state not stepped in 13

14. Research and Development Capacity • Capacity and funding availability are inter-related • R&D capacity in South Africa peaked in 1989 at approximate 800 full time researchers, with 660 at the Chamber of Mines Research Organisation (COMRO) • Overall mining (extraction) R&D strategy was held by the COMRO • Steady declines in all the major disciplines of mining • New focal points & issues emerged since • Less than 50 people in full-time mining research, most at the CSIR • Concomitant decline in membership of professional societies, e.g. South African National Institute for Rock Engineering, and the Mine Ventilation Society • Both struggling to meet demand for members’ expertise 14

15. Funding: Institutions and Sources • Exploration: CGS. In 2014: R290m in total with R270m in form of government grants • Extraction: Uncertain, possibly of the order of R60m. Small initiatives (R25m from MHSC; 10m CSIR, private funding of university chairs and specific projects etc.) • Beneficiation: Mintek. Of the order of R487m in 2014 of which R209 is in the form of government grants. 15

16. Funding: Institutions and Sources • Extraction (Mining Operations) • Collaborative Industry funding for productivity and environmental issues • Virtually no collaborative research funding, as for Deep Mine, Future Mine, Platmine • Coaltech: the only industry co-ordinated collaborative research funder, focus productivity and environmental issues • Sector Level funding of Occupational Health and Safety • Funding traditionally via MHSC – SIMRAC in the region of R 25m per annum • Down from R40m p/a • MHSC Centre of Excellence not yet operating • CSIR • Grant funding from DST allocation to the CSIR ( ≈ R 10 million p/a focussed on HCD and generation of new knowledge) • Industry funding • Private funding on projects to universities • Research chairs and collaborative programmes • Wits Occupational Health, UP Safety • Wits – Centre for Mechanised Mining Systems, Centre for Sustainable Mining and Industry (project funded) 16

17. MHSC / SIMRAC • Mine Health and Safety Council funding predominantly for OHS research • OHS and mining / processing methods are interlinked • MHSC: research informed by past incident statistics • R&D to prevent further losses • Multi year research programmes largely stopped • Short term, single year activities • Impedes development of research capability • Restricted to modest R&D gains • MHSC developed Centre of Excellence – works on using selected services providers as preferred research providers. • Operational model not finalised. • Annual Reports: excess of R 180 million research funds remain unspent

18. Where to Mining / Extraction R&D?

19. Strategic and Coordinated • R&D should be informed by clear strategy • Long term focus, informed by local conditions and global developments • Build on capabilities and offerings of all role players, especially the country’s remaining experts • Co-ordination, collaboration, complementary effort needed • Funding arrangements to be informed by strategy • Skills levies (directed to HCD for research and development) • NRF funding of high level R&D skills • Rents and royalties on minerals, tax incentives • A Mining R&D HUB • Consolidate research labs and infrastructure • House / rebuild national mining capabilities and offerings at CSIR (Carlow Road, Cottesloe, Kloppersbos) Access to MHSC funding to be explored

20. Mining Phakisa – An Opportunity to Rebuild R&D • Aim of the Phakisa is to enhance activities in strategic areas aligned to National Growth plan • Mining identified as a key sector • Timing coincides with discussions between institutions and amongst stakeholders about developing a Mining Sector R&D strategy, with specific attention to mining /extraction • Inclusive Mining Phakisa process necessary, institutional interest high 20

21. CSIR Initiatives

22. The CSIR and its mandate 22

23. The mandate unpacked 23

24. The CSIR response to supporting national priorities CSIR response to national priorities The CSIR responds to national priorities in line with its mandate and in support of South Africa’s National Development Plan • To achieve this, the CSIR has: • identified research impact areas to focus its research and development • implemented flagship programmes that addresssignificant challenges at national scale through multidisciplinary RDI interventions • introduced integrated responses to national initiatives and strategic collaboration with government departments, state-owned enterprises and the private sector

25. Future of Mining in CSIR • Innovation across the value chain • SAMI has plateaued if not on thedownward slope on the “S curve” – stepwise or evolution • How does SAMI make the change from step wise progression to the revolutionary change required? Where R = RD&I 25

26. Future of Mining in CSIR Where R = RD&I 26

27. Future of Mining in CSIR • CSIR through its multi-disciplinary RD&I approach can address significant and multitude of challenges • Contribute to maximise efforts together with other institutions • CSIR works through Research Impact Areas • Aims: • wide portfolio management; • clear articulation of the CSIR identity; • implementation of organisational wide research programmes; • strategic stakeholder engagement; • improved communication of the CSIR research focus; and • development and communication of CSIR capabilities. 27

28. Future of Mining in CSIR • Mining Research Impact Area under discussion: • Will address • Efficient, Safe and Competitive Production:improve efficiencies whilst reducing the exposure to hazards • Natural Resource Trade offs: minimise the impact on the environment & surrounding communities, maximise land use opportunities post-mining • Value Add post mineral processing: upgrading and value add to RSA minerals via local manufacturing and production • Research and Innovation: build an innovation culture 28

29. Initiatives to Date • Competence and capability mapping across all of the CSIR Business Units of offerings to the mining sector • focus is on CSIR integrated capabilities for the Mining sector rather than just dedicated mining capabilities • Business plan for Kloppersbos Flammable Gas and Coal dust Explosion Facility • CSIR is coordinating a workshop on current SA mining strategies • DST engaging CSIR to manage the Rock Innovation Programme • CSIR involved with NRF in exploring an international collaborative programme between SA, Finland and Chile. • CSIR engagements with China via BGRIMM - exploring collaborative mining research programmme 29

30. CSIR Mining Champions • Navin Singh – Mining RIA champion • Johan le Roux – Implementation Unit – Host the Mining OHS Laboratories (Kloppersbos, Rope Testing, Air & Dust testing, Human Factors, SCSR etc) • May Hermanus – CSIR mining champion - Natural Resources and the Environment 30

31. Thank you 31