Junior Miners struggle against system in SA


Voices at the recent Junior Mining Indaba in Johannesburg, South Africa, indicate that the intention of nurturing a junior mining sector was not happening as previously planned and discussed.

“There is a strong sentiment among junior mining companies that they are marginalised and excluded from the action,” says Mark Wanless, principal geologist and partner at SRK Consulting (SA).

Mark Wanless SRK Consulting partner and principal resource geologist.
Image credit: SRK (SA)

Wanless says the message from speakers is that they are strongly opposed to Mining Charter 3 and have not seen any benefit from Mining Charter 1 or 2.

“They would like smaller firms and start-ups to be exempt from BEE requirements, as having a large BEE shareholder with limited funding capacity is a big hurdle when seeking capital funding from investors,” he says.

There is also a sense that government and the Department of Mineral Resources has stifled business by over-regulating the sector and by setting unrealistic hurdles for mining and exploration companies to acquire prospecting licenses.

“The DMR has no usable portal where explorers or investors can find out who requires which prospecting licenses, and what licences are available,” he says. “The application process is quite opaque, time-consuming and expensive; previously, it was possible to get a prospecting license for a nominal fee on the same day.”

Geological information should be easily available to explorers but is not – as there is no proper geological survey; while the Council for Geoscience holds valuable information, it has no efficient and accessible way to share it.

He notes that many junior miners feel that the way the DMR works leads investors to believe that South Africa is a risky place to invest money in exploration; they also say that corruption within the DMR is a major headache, as bribing officials is apparently ‘normal’ in order to ensure an application is processed.

“Factors like these have made fundraising on the Johannesburg Stock Exchange for mining projects within South Africa very difficult – despite attempts by the JSE to provide a fast-track, cheaper listing process for junior miners,” says Wanless. “Getting funding from outside South Africa is equally difficult, given the regulatory environment and
the difficult permitting process; there is little appetite for high risk investment.”

He highlights, however, that there were a number of presentations at the Indaba which confirms that South Africa remains a very good place to conduct exploration work – as there is substantial geological potential.

“These illustrate that we have so many world-class ore bodies – like the Witwatersrand goldfield and the Bushveld complex – that many of the smaller but still good quality deposits have been under-explored or overlooked,” he says. “The country has a wealth of skills and experience in mining, providing plenty of potential to revitalise the
industry; the prevailing opinion at the Indaba, though, was that government and unions are getting in the way of exploration and smaller mine developers.”

Marcin Wertz partner and principal mining engineer SRK Consulting (SA).
Image credit: SRK (SA)

According to SRK (SA) partner and principal mining engineer Marcin Wertz, it is significant that junior mining companies have recently formed their own alternative association to champion their interests.

“This is a sign that they feel their voices are not being heard, and that the stakeholders currently negotiating the Mining Charter do not represent them,” says Wertz. “They see today’s large mine companies as representing global players who have options elsewhere, the trade unions as serving their employed constituents rather than potential new entrants to the labour market and see government being ideologically opposed to free enterprise.”

He notes that exploration spend in South Africa is very low – just 14% of Africa and 2% of worldwide spend – and we could learn from mining regulations in West Africa, which are tailored to explorers while ours are tailored to producers.


Acknowledgement: Mining Africa Online




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