Creating a thriving environment for exploration and junior miners

PROJECTS

CREATING A THRIVING ENVIRONMENT FOR EXPLORATION AND JUNIOR MINERS

South Africa’s mineral wealth potential is impressive; however, due to various challenges, South Africa’s mining industry has not been able to maximise its potential in terms of mineral exploitation. By Dineo Phoshoko

Policy and regulation, the issuing of exploration licences and transparency are just a few of the many problems currently facing the exploration industry. Junior miners often have to bear the brunt of the shortcomings in exploration.

During the Junior Indaba, a panel discussing how government policy and legislation can be reformed to promote junior mining and exploration in South Africa took place. Given the current state of exploration in the country, the topic was very fitting. Chairing the panel was Lili Nupen, director, NSDV. She was joined by: Errol Smart, MD and CEO of Orion Minerals; Mosa Mabuza, CEO at the Council for Geoscience; and Roger Baxter, CEO of Minerals Council South Africa.

Nupen encouraged and challenged the panellists to put forward some positive solutions. “I think we’ve had a decade

PROJECTS

of complaints and the narrative of being rather negative, which is understandable.”

Regulation and legislation

Sharing her views on the current regulation and legislation, Nupen believes that, as a country, South Africa has first-world mining legislation with a sophisticated policy. She noted that it was a one-size-fits-all policy for both junior and major miners, and asked Smart whether there was a need to perhaps amend the regulations for the junior mining sector and encourage investment in the process.

In his response, Smart mentioned that the country’s national mineral reserves had been depleted over the past 20 years, which have not been supplemented. “Minerals are still in the ground. People have voted with their cheque books and left.” He further added that the issue was not a lack of minerals or an unwillingness to conduct exploration. Smart acknowledged that, to a certain extent, the MPRDA (Mineral and Petroleum Resources Development Act [No. 28 of 2002]) is a good piece of legislation; however, the issues lie within the way it is applied in the industry. Smart believes that if regulations were applied according to the MPRDA, then junior mining exploration companies would not experience peripheral issues such as getting environmental approvals in time, accessing land to conduct exploration, and dealing with municipalities.

Smart also mentioned that the time frame provided for exploration was another aspect of the legislation in need of reconsideration. He proposed that exploration be given at least 20 years, especially if massive deposits were found. “You are creating an asset for the national economy in the future. By not having the certainty that you can explore long enough to turn it into a meaningful mining operation, nobody starts. That is something that I believe has to change,” Smart said. He also touched on ambiguities surrounding the Mining Charter. “We have to take away the uncertainty.”

Transparency through the cadastral system

Transparency around mineral rights and the status of some of the mineral rights issued is another challenge facing exploration in South Africa. A mining cadastre could potentially solve some of the problems relating to the transparency in mineral exploration. In the context of mining, a cadastral system would make crucial information publicly available, such as the ownership of mining rights, status of mining rights applications, and the geographical location of mineral reserves. There has been a lot of talk about implementing such a system for South Africa’s mining industry; however, nothing has come to fruition so far.

Nupen mentioned that the Council for Geoscience, industry and the Department of Mineral Resources and Energy are collaborating on the cadastral system to be implemented in the country’s mining industry. She asked Mabuza for a status update on the cadastral system and what was holding back the system from being implemented.

In his response, Mabuza said that he was encouraged by the fact that Minister Gwede Mantashe of the DMRE recognised the importance of having a cadastral system in place. He further noted the launch of the Geoscience Data Portal. “The access to geological information remotely with that ease makes all the difference,” Mabuza said. “The one last step that needs to be taken as a country is making the information on the licensing status readily available. There is absolutely no reason why this information should not be available readily in the open,” he added.

Mabuza explained that this licensing status information entailed a demonstration of the time frames, what minerals are available or unavailable, lapsing period of issued licences, as well as the geoscientific information associated with the prospecting rights. “In my view, all of them are linking towards administrative efficiencies. We have long witnessed the delays in the environmental authorisation as well as water-use licences.”

Sharing similar views to Smart, Mabuza mentioned that the policies, mechanisms and legislative instruments exist, yet their implementation continues to be a challenge. “We’ve been meddling with policy for too long. I don’t agree that we have to go back and change policy again. What we need is implementation of this policy.”

Comparing like for like

Alluding to Mabuza’s comments, Nupen concluded that the issue is clearly an administrative one. She further asked how other developing countries managed to get around administrative challenges when it comes to exploration. “We are not a firstworld country. We cannot compare ourselves to Canada and Australia. Let’s look at other African countries: how has Botswana done it, how has Namibia done it?” Nupen asked. She further suggested looking at the deeming provision some countries have included in their legislation. A deeming provision holds that after a certain period, if no objections are made to an application, it is deemed as an approval, regardless of whether or not a decision has been made.

PROJECTS

She proceeded to ask Baxter how South Africa could draw from the experiences of other countries and their jurisdictions to address backlogs and delays. In his response, Baxter pointed out that the time frames stated in the legislation needed to be considered. “Whilst one has a legislative framework, which is the backbone of how the legislation should work, you do have a regulatory framework, which ties in the time it takes to get a prospecting right. If you look at it, 352 days is the exact time frame in South Africa – and in Botswana, it takes 40 days,” Baxter lamented.

“We need to make sure that our timing horizons are brought in with global leading practices,” he added. He did acknowledge attempts to reduce time frames in other areas of licensing, such as the water-use license that has been reduced from 300 days to 90 days. Baxter echoed Mabuza’s sentiments regarding policy and regulation. “CEO Mabuza is absolutely right in that there is the framework in place, but when we start getting into the application, we need to move away from red tape to smart tape.”

Baxter also highlighted that South Africa has the potential to compete on the same level as countries such as Australia. “Even a company like Orion Minerals is sourcing its capital from Australia, so we’re in competition and we can do these things at global best practice level if we set our minds to it.”

In essence, the panel discussion revealed that there is nothing inherently wrong with South Africa’s mining policies and regulations: the major problem lies in their application. The problems can be attributed to government’s administration and internal capacity constraints, so the sooner these get sorted out, the better for all junior miners and the mining industry at large. According to Baxter, proper engagement was one the most effective ways to find solutions that are practical for South Africans.