By localizing critical minerals value chains through industrial clusters and green technology manufacturing, SAR countries can move from raw exports to value-added production – driving growth, job creation and clean energy leadership. With around 700 clusters, South Africa can unlock economies of scale, attract investment and scale green technology manufacturing for the energy transition.2.6 Industrial cluster development CASE STUDY 6 Richard’s Bay IDZ One illustrative example of industrial clustering is the Richards Bay IDZ, a state-owned industrial development company located in the KwaZulu-Natal province of South Africa. This industrial cluster consists of small, downstream manufacturing businesses located together with provisions for world-class infrastructure, competitive input costs and tax incentives. Major industries such as energy and agricultural processing are co-located along with mineral beneficiation.57Impact of Richard’s Bay IDZ cluster Supports the co-location of multiple downstream industries with shared infrastructure, including mineral beneficiation. South32, an Australian company, operates the largest aluminium smelter, Hillside Aluminium Smelter, within the cluster.58 Challenge Infrastructure deficits: Lack of adequate transportation, energy and water infrastructure has negatively affected the development of industrial projects and efficient processing of minerals. Regulatory hurdles: Complex regulations and administrative clearances can create difficulties in running downstream processing businesses. Underinvestment: Limited access to capital for developing downstream beneficiation facilities and industrial operations has stunted industrial growth. Solution59 Tax incentives: Tax incentives offered to downstream facilities can help reduce the cost of operations and make zones more investor friendly. Shared infrastructure: Transportation, utilities and waste management facilities are all provided in a consolidated manner to support efficient industrial operations. Simplified administrative processes: The regulatory regime can be streamlined and customs-controlled areas (CCAs) established. Cluster development: Clusters for smaller, downstream manufacturing businesses can be formed around existing industries to promote synergies. Impact60 Investment attraction: Richards Bay IDZ has drawn major investments, including the $4.5 billion Nyanza Light Metals plant backed by Africa Finance Corporation, the African Export-Import Bank, the Industrial Development Corporation and the Department of Trade, Industry and Competition of South Africa. Employment generation: The KwaZulu Natal Titanium Beneficiation Complex is expected to create over 3,000 jobs. Export competitiveness: Beneficiation of raw materials facilitated by Richards Bay IDZ is expected to produce 80,000 tonnes of titanium dioxide annually, 85% for export and 15% for local use. Economic diversification: The development of Richards Bay IDZ has also helped diversify the local economy beyond raw mineral exports.61 Securing Minerals for the Energy Transition: Finance for Southern Africa 23

Securing Minerals for the Energy Transition 2025