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.
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