Reuters reported that South Africa is drawing up laws to force platinum and iron ore miners to sell "small amounts" of production to local processors at a discount to diversify its economy.
Mr Lionel October director general of the Ministry of Trade and Industry said that the idea is to encourage more domestic metal processing and expand industries such as platinum fuel cell production and auto manufacturing to create new jobs.
The ruling African National Congress is seeking to reduce an unemployment rate that has been stuck at around 25% for years in Arica's biggest economy.
Mr October said that most minerals are exported unprocessed. If the plan to divert some iron ore and platinum to local processors is successful, it could be expanded to copper and manganese.
He said that "Our competitive advantage is access to the raw materials. That is why we must give access to the raw materials at developmental prices."
Mr October told Reuters on the sidelines of the ruling ANC's national leadership conference that "We are proposing amendments to the minerals act that will give the minister the power, as a condition of the license, that a certain percentage of production goes to the downstream industry at a developmental price."
The government plans to submit the draft legislation, which is being drawn up by the mining ministry, to parliament next year but has not set exact percentages for the amounts to be sold locally or the market discount.
In platinum, South Africa is looking to set up a special economic zone for processing, giving companies breaks on taxes and land.
October said South Africa is in talks with platinum processors from Japan to move to the zone and produce items such as catalytic converters used to reduce automobile emissions and platinum-based fuel cells, which are seen as a green technology.
The implications could be profound for metals markets as South Africa sits on top of around 80 percent of the world's known platinum reserves.
South Africa's iron ore market is dominated by Africa's biggest iron ore producer Kumba Iron Ore, a unit of Anglo American, and the continent's biggest steel maker ArcelorMittal South Africa.
