Question NW3569 to the Minister of Economic Development
19 October 2015 - NW3569
Cardo, Dr MJ to ask the Minister of Economic Development
What (a) is his position on developmental pricing in order to stimulate the growth of the domestic manufacturing sector and (b) does the developmental pricing model entail?
Reply:
Developmental pricing refers to arrangements to supply locally-produced inputs at lower than market prices to locally-based downstream producers, in order to stimulate value-add production in a country. It is one of the means that is used to promote beneficiation of minerals so as to expand the national value-chain, grow the number of jobs in manufacturing, deepen the economic development benefits in a country and help to reduce vulnerability of economies that are reliant principally on exports of minerals or agricultural products.
In South Africa, government has supported efforts to beneficiate a greater quantity of locally-mined iron ore through a developmental pricing regime that had been in place for many years.
It is government’s view that pricing of inputs is one element of a number of factors that need to be addressed to expand beneficiation significantly. Other key factors include availability of energy at competitive prices, local know-how or partnerships with international technology partners and availability of key skills. Pricing of raw material inputs remain a critical component in efforts to substantially expand beneficiation of minerals.
-END-