PRESS RELEASE – 14 September 2018
MEMSA to grow local supply chain of capital equipment for mining
14 September 2018: Part of the newly-launched Mandela Mining Precinct in Johannesburg, the Mining Equipment Manufacturers of South Africa (MEMSA) aims to grow the local supply chain of capital equipment for the mining industry. Improved competitiveness and market access will accelerate job creation and industrialisation of the South African economy.
At present, MEMSA is focusing on rolling out programmes for its members to support their growth, technology development, and competitiveness. “Our short-term goal is to increase local content, which will ultimately require a dedicated incentive, especially with regard to capex. This means we also have to increase factory-floor and manufacturing competitiveness, and look at innovation, technology, quality, and pricing,” MEMSA CEO Dr Paul Jourdan comments.
About $2 billion worth of mining capital equipment a year is imported into SA, with the Southern African Development Community (SADC) representing another $2 billion annual market, translating into a niche market larger than that of the European Union. “This represents an enormous opportunity for MEMSA to leverage in terms of import displacement,” Dr Jourdan points out.
MEMSA’s formation was first motivated by the Resource Capital Goods Development (RCGD) study by the Department of Trade & Industry (DTi), which investigated the potential of mining’s backward linkages or supply chains. The 2015 Mining Phakisa provided further impetus, with the road to a fully-functional organisation paved by a successful application for dti Cluster Development funding, which matches member fees on an 80:20 basis.
MEMSA’s offices in the Mandela Mining Precinct gives it daily access to partners such as the Minerals Council of South Africa, the Department of Science & Technology, the dti, and the South African Minerals’ Processing Equipment Cluster (SAMPEC), with project collaboration being the norm.
The focus on capital equipment is essential to usher in a new age of mechanisation in the South African mining industry, as the old model of using cheap migrant labour is no longer sustainable. Contrary to the popular view that mechanisation will result in significant job losses in the mining industry, research shows it will instead generate additional employment opportunities.
“On the other hand, mechanisation based on locally manufactured equipment has the potential to maintain employment levels. For example, if you install a completely mechanised equipment set, from drifter drills to roof bolters and load-haul dumpers, which can all even be controlled remotely, you will employ nearly the same number of people,” Dr Jourdan stresses.
“A focused, comprehensive, and progressive localisation strategy will go a long way to mitigate the technical and socio-economic challenges faced by the South African mining industry at present,” MEMSA Chairperson Freddy Mugeri points out.
“As MEMSA we believe that, while the sources of intellectual property (IP) and innovation are global, manufacturing must be localised deliberately in South Africa and SADC, especially with regard to the manufacture of all inputs related to mining.” These include capital goods, spares, components, consumables, and services.
MEMSA aims to promote the local manufacture of goods based on local and global IP and innovation, and the export of these goods. The benefits here are shorter supply chains to the mines themselves, shorter learning curves, and quicker customisation of equipment in terms of local mining conditions, a higher level of input in local currency, an optimised exchange rate with hard currencies, the creation of next-generation jobs, and skills development in both the manufacturing and mining sectors.
A strong local mining goods manufacturing sector will naturally expand into other sectors of the economy, like agriculture and construction, and further strengthen tertiary sectors such as banking, hotel and tourism, and national security.
Member benefits are manifold, from increased exposure to potential clients and key decision-makers and influencers, support for export strategy and execution, and support for access to research, development and innovation (RDI), and business development. “There are also several opportunities for members to lower their cost of doing business,” Mugeri adds. For example, members have benefited from free quality training and advice on IP law and strategies, while high powered delegations from the dti , DST and IDC have presented their offerings in terms of funding and finance. Twenty one factory team leaders are currently being trained in lean manufacturing techniques to improve competitiveness in the supply chain. Meanwhile MEMSA is working with the Mandela Mining Precinct and Minerals Council of SA to establish a dedicated test mine where newly developed equipment can be objectively assessed.
Membership has grown from an initial 13 to 22 member companies ranging from emerging to large enterprises; more than a third are majority black-owned.
“This year our members exhibited successfully at the launch of the Mandela Precinct on 14 September, which was attended by senior mining executives, as well as national government ministers.” The launch exhibition showcased South African capability in manufacturing and innovation, and products on show ranged from software modelling ventilation systems, to enormous low profile drill rigs for safely mining narrow reefs of ore.
Mugeri concludes: “We wish to see a vibrant mining-equipment manufacturing sector that will survive the life of South Africa’s mines, and export to rest of Africa and the world. This is how we can transform our mineral wealth into jobs and skills in manufacturing and other sectors.
“The economic and political environment is such that these are very achievable ideals. Local and international OEMs will certainly support us if we continue on this policy trajectory.” Some large local and international OEMs have already made sizable commitments to local manufacture.
For further information about MEMSA, visit https://memsa.org.za/.
Formally established in 2016, the Mining Equipment Manufacturers of South Africa (MEMSA) is an industry cluster organisation aimed at advocating for and promoting the interests of its members and the mining equipment manufacture industry in South Africa. MEMSA is housed in the Mandela Mining Precinct in the heart of Gauteng, South Africa’s primary mining equipment manufacturing region.
Elizabeth Jansen van Vuuren
Tel: 011 358 0001
Images will be uploaded during the day to https://memsa.org.za/launch_images/