Socio-economic and techno-economic factors associated with establishing a titanium machining industry in South Africa, a qualitative study

Thesis (MEng)--Stellenbosch University, 2017.ENGLISH ABSTRACT: South Africa is a key producer of titanium raw material, but has very little exposure in downstream industries. The purpose of this study is to investigate what impact a titanium machining industry would have on the country, to show whether the South African government should invest in establishing such an industry. This was done by investigating South Africa’s present position in the titanium market, investigating the countries present socio-economic climate and looking at the techno-economic aspects involved; part of this included defining a concept model for an “ideal” machining cell. To determine interactions between all these factors and show the impact of titanium machining, a soft systems approach was followed focusing mainly on a single machining cell, like the one modelled, and the impact it has on the local community. This impact is negligible on a country scale, but significant for the local economy. The multiplier effect is used to argue that it can be extrapolated to a larger machining industry, and the impact this would have on a broader titanium industry. The goal is for titanium machining to create a market for and drive development of a primary titanium metal industry. The socio-economic situation in the country provides lots of opportunity for titanium machining to address challenges facing the country, including: . The country’s resource intensive economy – by creating a viable downstream industry, the country can better capitalise on its available titanium resource; fourth largest mineral reserves and second highest mine production. . The poverty cycle – titanium machining can address unemployment (through job creation) and education (through in-service training) on a small scale. Benefits of breaking the poverty cycle also extend to dependents of employees, affording them a chance for education, proper healthcare and an improved standard of living. The greater potential benefit would be derived from the expansion of upstream industries. The technical capabilities for titanium machining exist in South Africa as demonstrated by the production of parts for the aerospace sector by private companies; and the research and projects carried out by the CSIR, various universities and industrial partners under the Titanium Centre of Competence. Considering manufacturing in South Africa, the latest Deloitte manufacturing competitiveness index, the country dropped to 27th out of 40 nations. The decline is attributed to growing labour costs without a commensurate increase in productivity, small domestic market, energy crisis, and lack of available infrastructure among others. Government needs to create an environment in which the sector can thrive, and to focus on long term issues and greater collaboration with labour and business. In future, gearing a titanium industry towards the industrial sector needs consideration as this provides a much larger market than aerospace and medical sectors, where most research to date has focused. It is also the most significant sector in China, one of the country’s strategic trade partners. The soft systems model along with the “ideal” machining cell will need to be refined, quantified and rigorously tested with an industrial partner.AFRIKAANSE OPSOMMING: Suid Afrika is ‘n groot produsent van titanium rou materiaal, maar het baie min blootstelling in die verdere verwerkings industrieë. Die doel van die studie is om ondersoek in te stel na die impak wat titanium masjinering industrie sal hê op die land, en te bepaal of die Suid Afrikaanse regering moet belê in die vestiging van so ‘n industrie. Die studie ondersoek Suid Afrika se huidige posisie in die titanium mark, die huidige sosio-ekonomiese klimaat en kyk ook na die tekno-ekonomiese aspekte wat betrokke is. ‘n Deel van die studie het ingesluit die definiëring van ‘n konsep model vir ‘n “ideale” masjinering sel. Om die wisselwerking tussen al die faktore te bepaal en die impak van titanium masjinering te toon, is ‘n sagte stelsel benadering gevolg waar daar gefokus is op ‘n enkele sel, soos voorgestel in die model, asook die impak wat dit sal hê op die plaaslike gemeenskap. Die impak is minimaal as gekyk word na die hele land se ekonomie, maar het ‘n groot impak op die plaaslike vlak. Die vermenigvuldigings effek is gebruik om die argument te toets op die effek wat dit sal hê op die breër titanium industrie. Die einddoel is dat titanium masjinering ‘n mark sal ontwikkel vir ‘n primêre titanium metaal industrie. Dis sosio-ekonomiese situasie in die land skep baie geleenthede vir titanium masjinering om huidige uitdagings aan te spreek, insluitende: . Die land se hulpbron intensiewe ekonomie: deur die ontwikkeling van ‘n lewensvatbare titanium industrie, kan daar beter gebruik gemaak word van die beskikbare titanium hulpbronne, die vierde grootse mineraal reserwes en tweede hoogste myn produksie. . Die armoede siklus: titanium masjinering kan werkloosheid aanspreek (deur ontwikkeling van werksgeleenthede) en opleiding (in-diens opleiding) op ‘n kleiner skaal, voordele om die armoede siklus te verbreek word uitgebrei na die afhanklikes van werknemers, waar hulle beter opvoeding, gesondheidsorg en ‘n hoër standaard van lewe kan bekostig. Die groter voordeel gaan kom uit die uitbreiding van die verwante industrieë. Die tegniese vermoëns van titanium masjinering bestaan reeds in Suid Afrika soos bewys in die produksie van die parte vir die lugvaartbedryf deur privaat maatskappye, en die navorsing en projekte wat deur die WNNR, verskeie universiteite en industriële vennote onder die Titanium Centre of Competance gedoen is. Die redenasie om vervaardiging in Suid Afrika te oorweeg, spruit uit die laaste Deloitte vervaardigings indeks waar Suid Afrika gedaal het tot 27ste uit 40 lande. Die daling word toegeskryf aan die groeiende arbeidskoste sonder dat daar ‘n noemenswaardige toename in produktiwiteit is, klein huishoudelike mark, energie krisis, en gebrek aan beskikbare infrastruktuur, onder andere. Die regering moet ‘n omgewing skep waar die sektor kan groei en fokus op die langtermyn probleme asook groter samewerking tussen die arbeidsmag en besigheid. Vir die toekoms is dit belangrik om oorweging te skenk aan die ontwikkeling van die titanium industrie aangesien dit ‘n groter mark kan bedien as net die lugvaartbedryf en mediese sektore, waar die meeste van die ontwikkeling op gefokus was. Dit is ook een van die belangrikste sektore in China, een van die land se strategiese handelsvennote. Die sagte stelsel model saam met die ideale masjinering sel kan getoets en verfyn word saam met ‘n industriële vennoot en ook gekwantifiseer word