Government geoscientists are desperately underfunded, which is depriving South Africa of the geological potential that is essential for minerals exploration.

There is an absence of investment in large, regional geological exercises and master’s students are not being trained in the countercyclical times, when the industry is not doing well.

Instead, government makes its geoscientists pay for their own salaries by working on other country’s geological potential.

Exploding the myth that government fosters junior mining, Nedbank Capital mining and metals investment banker Paul Miller also denounces:

• a superb locally developed mineral rights cadastre system being spurned by South Africa’s Department of Mineral Resources (DMR), which has opted instead for its own cumbersome system that lacks transparency;
• South Africa’s inept regulatory environment for junior miners;
• ction 12 J of the Income Tax Act, which has not incentivised a single investment in exploration; and
• the DMR’s “back-door” approach of conducting meetings opaquely in hotels and far-flung coffee shops to resolve prospecting rights disputes.

Despite the Mineral and Petroleum Resources Development Act (MPRDA) expressly encouraging new entrants, the DMR lacks the know-how to encourage junior mining.

Essential for junior miner development is the overlap of geological potential brought about through exploration, a supportive regulatory environment and access to capital markets.

“Without these three circles overlapping in the middle, you can’t have a junior mining industry,” he said.

On the development of geological potential, Miller said: “Our government geoscientists are desperately underfunded. Government is not investing in geophysical surveys and large regional geological exercises and training master’s students in the countercyclical times, when the industry is not doing well.

“Instead, government makes its geoscientists pay for their own salaries by working on the geological potential of other countries.

“Our geoscientists are working across the rest of the continent for other countries and for multilateral agencies.

“So, plainly, we do nothing to encourage our geological potential,” he told this week’s Junior Indaba conference at the Turbine Hall, in Johannesburg.

He condemned the regulatory environment as being ‘Fifafied’ and decried the demands of DMR officials that the batteries of cellphones be removed during discussions to allay DMR suspicions that the meetings might be recorded.

“You have to meet people in hotels in Midrand to resolve prospecting right disputes. You have to go to Middelburg to speak to people in coffee shops because there’s a back door to the DMR,” he chided.

Transparency was the only way to fix perceptions of corruption.

“We have the best cadastral system in the world, developed in Cape Town and sold to 17 other countries.

“Google it. Namibian cadastral system, Tanzanian cadastral system, Ugandan cadastral system. Google it now. You can see who has what in those countries right now, from where you’re sitting,” he averred.

But, in South Africa, one had to drive to Pretoria and apply to find out about the holders of mineral rights, which ostensibly meant making out 25 000 separate applications to work out what prospecting rights had been issued to whom and where.

Miller lambasted the DMR’s cadastre system as a manifest failure of the South African Constitution’s imperative for transparency and bemoaned Section 12 J of the Income Tax Act for not having succeeded in incentivising a single rand of investment in an exploration company.

Creamer Media’s Mining Weekly can report that the locally developed FlexiCadastre, which Miller praised as something that the DMR should use, was developed by Spatial Dimension of Cape Town and is currently being applied in dozens of global mining jurisdictions by a myriad of government and corporate entities.

The South African private-sector-developed cadastre technology currently manages eight-million square kilometres of land in countries including Zambia, Tanzania, the Democratic Republic of Congo, Kenya, Uganda and even Greenland.