On-The-Air (27/08/2021)

27th August 2021 By: Martin Creamer - Creamer Media Editor

On-The-Air (27/08/2021)

Every Friday, SAfm’s radio anchor, which this week was John Gericke, speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:

Gericke: The Industrial Development Corporation is involved in intense discussions aimed at boosting exploration.

Creamer: Exploration is key to South Africa’s economic future. We’ve got a fantastic mining industry currently, which is helping the country enormously with taxes in its hour of need. But this will not be the case in the decades ahead unless exploration is successfully introduced.

South Africa has been dreadfully bad on the exploration front. Botswana, Namibia and other countries in the Southern African region are well ahead of us. We just don’t know how to attract exploration investment and now the IDC has recognised that, and wants to do something about it.

The IDC, as a State-entity, wants to try and create an exploration fund, an innovative exploration fund, so that the high-risk involved with exploration can be lessened.

And so they’ve been trying to champion a new way of doing exploration financing in South Africa, but they’re going to need a lot of help because we can see that mining companies are also no longer listing on the Johannesburg Stock Exchange.

We’ve got 40 mining companies listed on the JSE. We used to have 140 – we used to be the biggest. Nobody wants to list anymore because equity finance is no longer easy to obtain, owing to savings being controlled a different way and controlled largely by members of a savings and investment association called ASISA. To get those savings into equities is now very difficult.

We need to really look ahead and we see that the Economic Transformation Committee of the African National Congress (ANC) has recognised the importance of mining companies listing, and it has called for incentives for mining companies to list, especially those involved in exploration, on the JSE.

They should be incentivised to list, as happens in other mining jurisdictions such as Canada and Australia. If you go to Toronto and see those high skyscrapers – most of them are built on successful mining investment. If you go to Perth, the big urban infrastructure is underpinned by mining. We are falling behind very badly, and need to catch up.

Gericke: Yet another mining company has come to the rescue of South Africa’s tax intake, this time Sibanye-Stillwater.

Creamer: Sibanye-Stillwater absolutely shot the lights out with their latest half-year results. This is just another example of the mining industry providing taxes to the fiscus on a huge scale. Just the half-year tax that they’re going to hand over to the Receiver of Revenue is a whopping R10-billion-plus.

The profits of Sibanye-Stillwater were up 160%. The latest sets of mining results are showing how much mining can do for an economy – particularly our economy, which is struggling at the moment.

Post-Covid, we need to encourage companies to get on the Johannesburg Stock Exchange. We know that there are plenty of companies here that are listed in Australia, but they’re mining here. They’re listed in the UK, but they’re mining here. They need to dual list on our exchange, so we’ve got to get them to do that.

Hopefully, with the IDC coming in, as well as the Minerals Council South Africa looking at this, and the Department of Mineral Resources and Energy also wanting to promote exploration, alongside the Council for Geoscience, future mining will be assured.

We saw with Kumba Iron Ore that the iron-ore price went through the roof, they also did extremely well and also paid a lot in taxes. All mining companies that are reporting now are making sure that South Africa, during this Covid crisis, is going to at least be able to cope as they’re all contributing large amounts of tax.

But a relook at everything is important because another mining company, Richards Bay Minerals, now want to boost their communities, and they have gone all out to do that.

They have four  host communities that they support, some of them are shareholders that receive twice-yearly dividends; others are part of corporate social investment arrangements. But look at what’s happened. There have been two murders.

Human resources executive Ronnie Nzimande was murdered in 2016, and in May, general manager Nico Swart was shot dead, despite Richards Bay Minerals providing funds for the benefit of host communities.

Richards Bay Minerals now want everything checked by external and independent auditors. They’ve now agreed with the Amakhosi and the community structures, and there will from now on be full transparency so that everybody can see where every cent is going.

Money that is meant to help host communities, sometimes doesn’t seem to get a chance to do so. To ensure that monies are well spent, independent auditing will from now on be strictly enforced.

Gericke: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.