Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News and Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: At long last, South Africa has taken the decision to create a special government fund for junior miners.
Creamer: The junior miners are now going to have available to them about R200-million. That comes from the Industrial Development Corporation (IDC) and also the Public Investment Corporation (PIC). This should give some momentum that has been badly needed for exploration in South Africa.
To really get the big momentum you also need to attract foreign direct investment. I am still wondering, the jury is still out on the incentives that the Treasury has put out this 12J, will it really attract the risk capital we need to make sure that our mining doesn’t decline to nothing in the next 10-years. When you look at what is done with the flow-through model in Canada and the incentive schemes in Australia, are risk capital venturers going to come to South Africa or will they put their money elsewhere?
I still think that there is a lot of unintended consequence with what the Treasury has put up as an incentive for risk capital. We see at the Junior Indaba that a lot of this money was being misdirected into shopping centre development. That seems crazy, because there is a reality in South Africa that we’re overshopped, we don’t really need more shopping malls. Shopping is a wealth consumption activity. What we need in South Africa is wealth creation.
Kamwendo: The government this week legitimised the work of hundreds of illegal zama-zama diamond miners in the diamond city of Kimberley.
Creamer: This was an incredible achievement, because we have had this scourge of illegal mining, which often leads to death and destruction. What has happened now, the Deputy Minerals Resources Minister Godfrey Olifant has succeeded in legitimising the zama-zama activity in the Kimberley area. Now, fortunately this is on surface.
When we deal with a deep dark and dangerous underground situation that we have in Gauteng, I think there is going to be a different approach. It was fortunate that in Kimberley there was a deal done with the private sector, which is Ekapa Mining Joint Venture and they have now given access of 500 hectares of ground plus a tailings dump to formalise illegal miners, who have now been declared Kimberley Artisanal Miners. There is a lot more to this than meets the eye.
As the Deputy Minister, was saying there was a recent transaction that was followed where the illegal miners sold a diamond to a formal mining company for R3-million. That was a good find that these illegal miners came across and they got their R3-million. But the formal miner then just went off and tendered that through the official tendering processes in Kimberley and got himself R21-million.
Now, with the legitimising of the activities of the zama-zamas they can themselves go through the official tendering and trading channel, so their margin in order to take care of their risk, because they work at risk, is becoming better. That is the whole thing with the exploration as well, it is high risk, but it can be high reward.
Kamwendo: Strong calls were made at this week’s junior mining indaba for full transparency of government mineral rights allocations.
Creamer: If we are going to get this exploration going, there has got to be full transparency. At the moment there is just opacity. We are so bad with this modern technology that our competitors in Africa here, they are able to show the world what exploration potential there is digitally and online. People can sit in New York and study what is happening in Mozambique and what is on offer.
That is not happening in South Africa, even though they tried over and over, our system is not trusted. There are so many gatekeepers if you try and get rights looking for some sort of share of the action. People call it bribery and they don’t often come with full proof. They are now calling for full transparency every time the government allocates mineral rights, it should be publicised.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News and Mining Weekly.