Fundamental challenges present in South Africa’s mining and exploration sector need to be addressed to reinvigorate and promote further development of the industries in the country, according to the outcomes of a panel discussion titled ‘Reviving mining and exploration in South Africa’, which took place at the Joburg Indaba, held on October 4 and 5 at the Inanda Club, in Johannesburg.

While highlighting various barriers that deter exploration investment and efforts in South Africa, the panelists’ consensus was that fundamental issues – which could be resolved in the short- to medium-term – needed to be prioritised.

Key issues include creating a conducive and supportive environment for mining activities, addressing inconsistencies in regulation, swiftly resolving land claim disputes, and making significant improvements to existing infrastructure.

Addressing these issues will assist in increasing investor confidence, and rebuilding trust between the industry and regulators, which will ultimately lead to more exploration development.

Mining industry employers’ organisation Minerals Council South Africa CEO Mzila Mthenjane stated that previous presentations given at the Joburg Indaba industry conference indicate discontent within the sector, primarily owing to the state of the nation and the conditions under which mining companies are forced to operate, as well as various demands the industry encounters.

However, he acknowledged that there is also hope, which he observed in the industry's suggestions and actions to overcome hurdles.

Mthenjane emphasised that industry stakeholders need to pursue action as opposed to inaction with an expectation of change.

He also highlighted the need for industry stakeholders to express their unhappiness regarding the state of the economy and called for industry stakeholders and government to commit to, and prioritise, an economic plan that all parties agree to.

Mthenjane elaborated that such an economic plan should include all relevant stakeholders to address policy concerns and amendments, while also focusing on the development of much needed infrastructure such as roads and railways.

Collaboration Amid Uncertainty
The industry and government need to work together on easily obtainable goals, noted Mthenjane, highlighting the shift that will occur in the economy within 12 to 18 months if mining and exploration permits are approved swiftly.

Law firm ENS COO Otsile Matlou acknowledged Mthenjane’s point, adding that it has been 20 years since the Mineral and Petroleum Resources Development Act (MPRDA) came into force, and despite presenting good objectives, the industry has not developed as significantly as anticipated.

In terms of better developing interactions between miners and government, diversified metals explorer and developer Orion Minerals MD and CEO Errol Smart elaborated that the trust deficit between the industry and the regulator has become a major roadblock, stunting growth in the sector.

He explained that this has delayed developments in the industry despite all stakeholders agreeing on the importance of collaboration.

He expressed concern that previous attempts at addressing the trust deficit, such as the MPRDA, have not been applied in a way that truly resolves the challenge.

Therefore, he calls for a measurable system to manage mining right application processes with an emphasis on the system being a transparent, efficient and predictable regulatory process.

Smart stated that such a system will inevitably boost investment and foster growth within the industry.

Counterproductive Perspectives
Geological research institute Council for Geoscience CEO Mosa Mabuza expressed that exploration is often underappreciated in South Africa, raising the concern that the South African private sector often adopts a reactive approach to commodities demand and decline, often responding at the peak of a boom rather than preparing ahead to capitalise on high demand or high price periods.

He also pointed out that the lack of proactive exploration for resources in South Africa prevents the country from accessing the full potential of its natural resources in comparison with neighbouring countries such as Botswana and Namibia.

Mabuza highlighted a shift in global exploration activities, with exploration being increasingly undertaken by midtier and junior exploration companies, whereas previously it was mainly multinational, or otherwise well established mining companies, that pursued the bulk of exploration.

Further, he also noted that there is a lack of conversion of prospecting rights into actual exploration activity, attributing the phenomenon to a lack of access to funding for exploration, owing to its high-risk nature.

Mabuza suggested that incorporating geological information of potential sites can help derisk exploration investments.

He said that investor confidence could be buoyed if juniors are successful in their exploration projects.

“We need to dedicate our activities and channel them towards ensuring that there are massive discoveries that are made,” Mabuza concludes.