POSITIVE SIGNS FOR JUNIOR MINERS

In 2022, junior miners generated some R88-billion in revenue, up from R54bn in 2018. This means that proportionally, the junior mining sector output increased more than that of the overall mining industry during this period, Minerals Council South Africa (MCSA) CEO Roger Baxter told the Junior Mining Indaba in Johannesburg. He says with this sector, every R1bn spent on exploration can potentially contribute around R1.2bn to the country’s gross domestic product – through direct, indirect and induced impacts.

Key Priorities For The Dmre

■ The implementation of an online mining licensing system.

■ Elimination of the mining licensing backlog.

■ Supporting artisanal and smallscale miners.

■ Supporting exploration by junior emerging miners.

■ The development of a critical mineral strategy for South Africa.

“Research conducted by the Minerals Council indicates that a majority of mining and prospecting rights are currently held by junior and emerging companies. With this in mind, the council has held substantive engagements with the Department of Minerals and Energy (DMRE) and the Council for Geoscience to develop an Exploration Implementation Plan,” he says.

“This has resulted in an acceptable dra document, replacing the internationally accepted ‘first applicant’ principle in granting exploration rights with a ‘meritocratic’ system instead.”

Baxter notes that a proper audit is also needed regarding dormant rights, and more needs to be done about the inadequate time frames for exploration rights – given complex geological settings and di iculties in securing financial backing.

“Of critical importance too is the implementation of a functional and transparent cadastral system. Here, the council has been encouraged by Minister [Gwede] Mantashe’s assertion that SAMRAD [the SA Mineral Resources Administration System] is a failed system.”

He says the Minerals Council has instead “advocated for the deployment of a commercially available, transparent, proven, online cadastral system, one that is widely used in Africa and in other mining jurisdictions”.

“This is crucial, as an e icient, corruption-free cadastral system is critical to unblock the rights backlog,” he says, adding that the latest data from the DMRE indicates a substantial backlog in mineral rights, currently topping 5 000.

South Africa is also rich in clean energy minerals, he says, pointing to platinum group metals, vanadium, copper, manganese, chromium, cobalt, nickel, titanium, tungsten and zinc.

“Remember that the model used by exploration companies is to find and rapidly prove deposits that can be sold to bigger miners. Therefore, making exploration easier will bring in new participants and provide a pipeline of minerals to mine for generations.

“When one considers the potential job creation tie to mining, processing and manufacturing opportunities, along with the boost this will provide to South Africa’s export earnings, taxes, royalties and overall fiscus, easing the process makes perfect sense. Unfortunately, there is currently no South African government support for critical minerals exploration and mining,” says Baxter.

Dmre Outlines Industry Challenges

According to Jacob Mbele, Director General at the DMRE, when one looks at the performance of the local mining sector, there are several international and domestic factors negatively a ecting both production and mineral sales.

“We all are aware that of these, the international factors include soaring energy prices due to the ongoing geopolitical dynamics in Europe. On the other hand, domestic factors include the continuous power supply disruptions, and logistical bottlenecks due to ine iciencies in our rail network and our ports,” he says.

“Analysis of production data reveals that mining production in the country shrank by about 2.6%, year on year, in March 2023. This was following a 7.6% slump in the prior month. This has ultimately marked the 14th consecutive month of contraction in mining activity.”

He notes that it has been estimated that the lost opportunities and costs resulting from logistical bottlenecks are around R50bn a year, based on delivered tonnage measured against targeted tonnage.

“The areas that need the most focus in support of junior and emerging miners inlcude the turnaround times for both prospecting and mining applications, as well as exploration support, access to finance and access to the logistics network.

“From the DMRE’s specific point of view, we have embarked on a process to eradicate the backlog in applications for prospecting and mining rights.”

Mbele is quick to add that over the past nearly two-year period, the DMRE has managed to reduce this backlog by about 50%. He says it is now directing its e orts and resources towards tackling the backlog in those regions with the highest volumes of applications, namely Mpumalanga and the Northern Cape.

“We believe the implementation of the cadastral system, which is currently in the process of being procured, will help us

– Baxter

WHAT DO VENTURE CAPITAL-FUNDED JUNIORS NEED TO BE SUCCESSFUL IN SA?

■ A predictable and competitive policy and legislative framework that is much more business-friendly and in tune with the business models of small venture capital-funded juniors.

■ A transparent, e icient and online o -the-shelf cadastral system to enable pre-competitive exploration information to be available online to juniors locally and abroad.

■ A regulatory system that is much more globally competitive, with prospecting rights and renewals issued within three months by the sustain this intervention going forward, as well as provide the transparency necessary for ongoing investment.”

Furthermore, he says, “We have agreed to work together with the MCSA to ensure we improve South Africa’s standing as a mining investment destination. The DMRE would like to give assurance about its commitment to supporting junior and emerging miners.

DMRE (the current year is far too long).

■ A taxation system that encourages some extra venture capital investment in exploration by individuals or companies using the flow through share scheme methodology.

■ Extra incentives to explore for critical minerals.

■ A workable artisanal and small-scale mining policy and legislation.

■ Support and mentoring programmes from the MCSA for juniors.

“This commitment will be visible in the streamlining and strengthening of administrative capacity to ensure transparency, shortened turnaround times, and more e icient processing of mining and prospecting licences.”