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Matels industry |
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... Examining the global strengths, weaknesses and opportunities of the metal/minerals industry 2 2. ... This paper seeks to explore the way in which the South African minerals/metals industry, is impacting and being impacted by the global world. ... Examining the global strengths, weaknesses and opportunities of the metal/minerals industry If there were one industry that has faced significant challenges over the past decade, it would be metals. ... This inability to control prices represents one of the weaknesses of the metals industry (www. ... The precious-metals industry is very capital intensive. ... The upside of requiring vast sums of capital in this industry serves as a deterrent to new entrants, while the down side is the exorbitant costs incurred for already existing and established industry players (www. ... Yet another weakness is the fact that the metals industry does not accrue the synergies and efficiencies that could be achieved through vertical integration. The metals industry is not vertically integrated like other industries such as oil and energy. In the metals industry, the companies that mine the gold (or any mineral) typically do not refine it, and refiners rarely sell it directly to the public. The industry encompasses three types of firms: 1. ... The mining industry, which directly impacts the metal industry has experienced increasing costs, a decline in tonnage and the grade of the ore mined, and a drop in the gold price. Such uncertainties surrounding the productivity and profitability of the metal gold is creating a significant weakness within the metals industry (www. ... One of the most unmistakable and greatest fortunes that directly translates into a major strength for the South African metals industry rests in the fact that South Africa has been abundantly blessed with an immense supply and multitude of minerals/metals namely gold, manganese, chrome, platinum-group metals (PGMs), vanadium and aluminum but to name a few (Exact statistical references are made later in the paper). ... Although such strengths are not directly inherent to the metals industry, they most definitely contribute to the efficient functioning of metals production and trade. Without such supporting infrastructure, our metals industry would be far less effective in its functioning, therefore such strengths in related sectors are translated into strengths for the metals industry. Also, the metal industry has plenty of opportunities for speculators and others for income investors. ... Threat of New Entrants - Financing is a principal barrier to entry in the precious-metal industry, which is heavily capital intensive. ... As a result, unless the prerequisite of extensive capital is secured, of which the likelihood of such occurrences in significant numbers is minimal, the prospect of new entrants does not pose a major threat to the metals industry, but rather this barrier translates into an industry advantage. ... Power of Suppliers - The only supply-side issues that the metal industry faces deals with the procurement of raw minerals. ... Availability of Substitutes - Substitutes for the precious metals industry include other precious metals such as silver and platinum. ... This is to say that, the metals industry is vastly segmented by the numerous sorts of metals available, and depending on the application properties of the metal, the extent to which it may be substituted with other minerals varies by degree. ... Supporting and related industries refer to those industries that provide the inputs that allow the primary activities of metal production to occur –that is referring to suppliers- (Hill 2001:380) and to those which are related to the metals industry because the metal is used in the production of another final product, respectively. The concept of supporting and related industries is particularly diverse with regard to the metals industry, the reason for this being that there are so many minerals and metals that make up what this industry represents. ... Departing from the point of supporting industries (suppliers), the one and only industry to provide the inputs required by the metals industry would be that of mining. ... The mere existence of such absolute abundance of endowments is a major strength to our metals industry. ... However, as with all sectors, the mining industry is not without its weaknesses. Profound and unfavorable changes that the mining industry has experienced have been caused by both local and international conditions. ... Cost increases in the gold mining industry have been significant and recent statistics indicate that this trend is continuing, while both the tonnage and the grade of the ore have also declined. ... The mining industry is plagued by increasing regional competition, labor unrest, rising costs, and declining ore grades (www. ... A problem that emerges is that just as the benefits of the mining industry (being the supporting industry) can spill over into the minerals/metals industry (Hill`2001:141), so too can the troubles. And the trouble here is that as the productivity and profitability of the mining industry declines, ripple effects will be felt within the metals industry because costs will increase as supply costs escalate and as resources become scarcer. ... The ability for South African firms such as OroAfrica to successfully export into developed markets overseas is crucial to the metals industry because consumer demand for gold jewellery is an important element in the health of the gold market -and resultantly the metals industry- in the future. ... One new application for gold in industry is as a catalyst. ... Another related industry for the metal gold is the pharmaceutical industry. ... Such silicones are used for adhesives in the paper and construction industry. Platinum is also used in the nitric acid industry, which in turn is predominantly used in the production of fertilizers. ... So too, the surge in computer sales was largely responsible for an expansion of demand for platinum from the glass industry, due to a strong demand for liquid crystal displays. Other applications within the glass industry include TV sets and computer monitors, glass substrates or hard disks and the production of glass fiber. Besides having applications in the automotive, electrical and glass sectors, other industry applications include the following: Table 3. ... Rhodium (85%) is predominantly used in the auto industry with small amounts being consumed in glass-making. ... Such derived demand has resulted in an enormous amount of industry becoming related to the metals industry. ... One should also not forget the related sectors as a result of the logistics of the industry. Such industry would include metals machinery, metals warehousing and the transportation of metals. ... Once again, because of the diversity of the metals industry, the potential for exports varies with the type of metal. ... Major demand drivers for metal industry in India include: Higher infrastructure spending - It is an indisputable fact that the infrastructure situation in India is poor. ... So it is with the South African metal industry. ... The mere existence of such resources is no guarantee of world leadership in the industry. Rather the industry has to be managed in every efficient and effective manner as well as needing support structures in place. ... However, having identified that aluminum is the one and only metal in which India is truly well endowed (9% of world reserves), one can rest assured that India will put their all behind channel their efforts into ensuring that their aluminum industry capitalises on as much opportunity as is possible. The metals industry in Bahrain is also primarily limited to aluminum and the associated downstream industries. Aluminium is Bahrain’s oldest major industry after oil & gas. ... Today the industry accounts for 18% fifth of gross domestic product. ... Such a competitive position is indicative of the prior point made -that the mere endowment of a resource is not sufficient for success but that support needs to be provided to the industry. The UK metal industry is exceptional in that it can supply into any application in any market in the world. ... Britains steel industry has improved its productivity performance by nearly 10% each year for the last 20 years. ... Then there is METFORMEX, a new initiative to promote the UK metal forming industry to overseas markets. ... So too, a new metals centre of excellence – welding together scientific expertise with industry know-how to identify gaps in research and development – is to be set up in Britain. The National Metals Technology Centre (NaMTeC) will bring together industry, science and academia to create an unusual network and facility for UK metal producers, fabricators and users. Initiatives such as this contribute towards enhancing a country’s competitiveness and giving them the edge in industry because they act as a source of support. It is said that such metal centres of excellence will “steel” the industry for the British in the future. ... South Africa has deposits of tantalite in the Namaqualand belt in the Northern Cape but this metal industry has failed to get off the ground due to low ore grades, lack of funds and poor cash flow, coupled with marketing difficulties, low tantalite prices and high transportation costs. ... Recommendations The metal industry is an industry which is vital to the South African economy. |
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