 So you'll forgive me. When I use PowerPoint, it never works. So let me start with a little bit of background on how I came to be involved in mineral value chains. I also wanted to put on my stopwatch so that I'm a good boy. About four years ago, Susan Shibangu, the Minister of Mineral Resources, was engaged in a heavy battle with the mining industry over the mining charter and the legislation and so on. And I was in Parliament and was witness to the battle going on, which was quite intense. And in the course of that battle, what emerged very clearly was that South Africa is indeed very well endowed, perhaps the best in the world of minerals, and yet its manufacturing sector was very weak and indeed in decline. And this contradiction between the wealth on the one hand and the relative weakness on the other puzzled me a great deal. And I thought that all the arguments about the mining charter and MPRDA and so on were not really getting to the heart of the matter. Why was it that a country with such enormous resources firstly had so much poverty and inequality, but even worse than that, so such a weak industrial manufacturing sector? And I developed an insatiable curiosity about this and found it terribly interesting. And having an engineering background, my first step was to look at geology and say, is there a geological problem to explain this contradiction? And that inquiry led me nowhere at all. And then I thought, well, maybe it's metallurgy, namely how are minerals processed, you know, smelting and all that. And I got in touch with metallurgists and the Metallurgical Society of South Africa and began to ask questions about whether there was some problem with the way minerals were processed. And that didn't take me very far either. And so together with the Industrial Development Corporation and the United Nations Economic Commission for Africa, we convened a number of conferences where we invited industry, government, experts and so on and we discussed first beneficiation in principle. And that produced some insights in what was going wrong in the value chain. And then another conference which we called the Interface Between Mining and Manufacturing, which was even better. And many case studies came forward from industry, from both from mining. Chamber of Mines was there and from manufacturing. Case studies emerged on how the mineral value chain operates in South Africa. And we began to see where the difficulties lay with respect to particular minerals. And those case studies are recorded and they're being used now and developed further in order to try in a very practical way to understand why a particular mineral of which we have the world's major resource like manganese, why that isn't turned into something downstream. And so the whole question of the mineral value chain was, we started to examine it then, this is a few years ago, and to try and uncover what on earth was going on. And of course the curious thing about that exercise is that every expert you asked for an opinion on what was not working in the value chain gave you a different answer. One expert would say it's electricity, it's energy, another one would say it's transport. If you speak to BHP Billiton with all the manganese that they've got of which they export 75%, 25% goes to Arsalaumetal. If you speak to BHP Billiton they will tell you the problem is transnet who won't give them a contract and the port charges which are so high that, and we were told just last, was it last week by Arsalaumetal that to take a shipment from Freirenecheng to Durban costs the same as from Durban to China. So this is a kind of information we were gathering and continue to gather which is to try and explain why the upstream and downstream of our mineral value chain is relatively, let's say, not as good as it ought to be. And so we pick up answers and it's quite incredible the way, the more investigation you do, the more interviews you do, the more different answers you get, you get answers about transport, you get answers about labour, labour markets, about energy, about red tape in government, about skills shortages, it's quite incredible. There is no single view that I've come across where you can say as a body of opinion in industry or in mining or even in government where there's an understanding of why our mineral value chains are not more effective. And so this justifies the research that I'm busy with now and I'm doing some work for the United Nations Economic Commission for Africa which has commissioned me and the team of people to do a study on the mineral value chains in South Africa but in the context of the region and of Africa as a whole. As you all know the African mining vision and numerous documents now from the African Union and the African Development Bank and the ECA who are working together on these things is now quite forthright about the need to understand mineral value chains in particular in Africa but indeed all value chains. Now one of the difficulties we came across in our discussions right from the beginning was policy documents from the Chamber of Mines which said that they are doing beneficiation and they distinguish between mining beneficiation and manufacturing beneficiation and they also say that the mining industry is a unique industry with particular dynamics and issues and that it's a standalone industry, that's the argument and they say they do mining beneficiation which of course is true in the sense that they do processing of all kinds and so on and only recently I've come up with an argument which is the counter attack to the Chamber of Mines position and my counter attack at the moment is this I accept that the mining industry is a unique industry it has unique capital, unique skills and unique processes and so on and one must understand that the industry has certain needs and requirements and that must be understood by DMR and indeed by everybody else but the product of that exercise once an ore becomes a metal then it becomes a social issue and it's a matter for the country as a whole so while the mining industry specializes in mining and they've got all the skills and the capital they needed to do that but once a product emerges from that process of processing then there's a national issue about what happens to the product and I've driven them to the wall to say since the Constitution says that minerals beneath the soil belong to the people of South Africa with a state as a custodian then the product of the processing is also a matter for the national interest especially as it is so critical for the economy and it cannot be simply exported in the way that most mines are doing at the moment and therefore that's where the debate lies at the moment Mining does its job, it produces metals but what happens to the metals is a matter of national concern and this is where this debate lies in my view so we're beginning to look at the IPAP minerals and we're looking at what are the obstacles to downstream and upstream processing and beneficiation and the inquiry leads us primarily into economic factors it's about markets, it's about prices, it's about competition it's about labour, it's about all those things very importantly and each area has to be examined pretty rigorously but there are also other problems and this is where the research is leading us to a degree and that is the institutional arrangement of South Africa and we are now convinced that if you focus only on the economic factors the markets issues, the pricing issues, transport issues, skills all those things which are standard issues covered by economic economists and you do not examine the institutional environment in which those things are operating, you're missing half the plot and so in the course of lots of investigations and interviews one comes down to three main problems and this is the heart of what I see as the obstacles to South Africa benefiting to the maximum of its mineral wealth and this is not to say that we should not export mineral wealth no one is arguing that, there's no either or about it in fact it's both and I think for example Billiton which produces, which has the biggest smelters in the world for manganese, as I say export 75% of the manganese and 25% goes into steel, domestic production so what are the three main problems because one is trying to identify, going back to my very first question of four years ago, what are the obstacles to South Africa being a highly industrialized country with the mineral base being a major element and I identify three problems the first one is a lack of coordination both within departments and between departments and this is acknowledged in many cases but it's not, for example in the Sims report there is one paragraph in the huge Sims report which says coordination is a major problem but I think it deserves more than a paragraph and it deserves quite serious attention because if we're going to really maximize the benefits of the mineral value chain then coordination within departments and between departments is vital the second obstacle is in the private sector there are very serious problems of pricing within the private sector there's import parity pricing for example I mean we've discussed this a great deal but there's also a short termism culture and at present time the private sector is not committed to the long, many in the private sector to the long-term development of South Africa and as we all know they're sitting on a lot of capital and there is a quick culture of quick fixes and quick returns which is very damaging and you can't operate on quick returns in a mineral value chain because you require long-term investments and you require to take a long view, training etc etc and mining is not a short term exercise and so the whole question of price distortions along the whole value chain and the short term view of business is a major problem finally there is another major problem, my third and that is the relationship between business and government I think we all know and you read about it in the papers every second day that there is an uncomfortable, let's use a euphemism an uncomfortable relationship between the private sector and government although there are all sorts of exercises which take place from time to time there's the PICC, there's the new PAKISA development which is clearly very welcome and could be quite important where government and business and others sit down and work through policy but nevertheless there is a degree almost of confrontation between certain elements of the private sector especially the mining industry and government and it seems to me that the reason for that is partly a denial that South Africa is a mixed economy and it's going to be a mixed economy for quite a long time if you acknowledge that the South African economy is a mixed economy with a large state sector and an even larger private sector then what follows absolutely is that the two have to find a way of interacting for the benefit of the national interest and I'm afraid that that is not happening but curiously in this engagement or lack of engagement or rather unhelpful engagement between government and the private sector there are all sorts of misconceptions for example I find in talking to chief executives in the mining industry and in industry that they feel intimidated by government so you know yesterday we were told about the MEC complex and so on well when I talk to Mr MEC you know he's terribly timid you know and when you say why are you so scared to speak out he says well we need tenders we're subject to regulation, we're subject to legislation we're subject to taxes these institutions in government actually have a lot of powers so you know if you want to nationalize the mining industry you know before you do that please examine the powers that DMR actually has which are very substantial and if you speak to lawyers who understand the mining law and the way DMR works through inspectors and policing and all that you can see that actually there is a huge dependence of these industries on government and despite that dependence on government somehow the relationship doesn't work out to the maximum benefit of the national interest and I want to inquire why similarly the state of course depends on the private sector the state isn't, you talk about a mining company but you know the state is not going to be able to do without the Chamber of Mines for a long time so it puzzles me why at a political level and even if you like at an ideological level we as a country are unable to resolve the question of what kind of mixed economy we are what are the interrelationships that are required in a mixed economy why we don't have the flexibility that people like China exercises who handle the mixed economy very successfully as we see and so on and it seems to me that this question of the interrelationship of the state and the mining industry in particular has to be examined very carefully to look at all the dynamics and so on so the point finally just to say that I think a great deal of systems research is needed to examine the totality of the relationship as well as the detail analysis of particular mining chains on particular minerals how does chrome work why is it that China produces ferrochrome which we used to produce here we have in South Africa we have smelters that can turn chrome into ferrochrome those smelters have shut down in the main and that chrome is exported to China which makes the ferrochrome and then re-imported back to us why is it that we can't produce rails for railways it has to we have to send the iron ore to China who make rails and then bring it back here I mean think of the costs of transportation there's so many examples where we export our primary products which have been processed to some degree and we export it to overseas and then it comes back in the finished form my father gave me a gold ring which unfortunately some robbers took away from me that gold ring was South African gold made in Italy for goodness sake if we can't make a gold ring but we can make nuclear weapons then there's some contradiction somewhere and I wish you'd help me sort it out thanks very much