Mining exploration spending in SA has hit its lowest level in almost two decades, an analysis of S&P Global Market Intelligence data shows.
Data from the financial information and analytics firm demonstrates that SA’s share of global budgeted exploration spend dropped 20% from $97.4m (R1.4bn) in 2019 to $77.4m in 2020 — its lowest level since 2002.
In 2002, when the Mineral and Petroleum Resources Development Act was passed, exploration spending was $68m.
“It is now abundantly clear that investors in minerals exploration have not responded positively to minister Gwede Mantashe’s rushed 2018 Mining Charter III, nor President Cyril Ramaphosa’s entreaties to invest in SA,” said Paul Miller, director of AmaranthCX which conducted the analysis. “This suggests a more fundamental reform of SA’s mining investment policy is required.”
Notwithstanding the minister of mineral resources & energy’s claim that Mining Charter III has brought policy certainty to investors, Miller said exploration spending in SA in 2020 accounted for just 0.95% of the global total — “a devastating statistic for what was once the greatest mining country on earth”, he said.
There has been a 7.8% decline in overall exploration spending in Africa to just more than $1bn in 2020, accounting for 12.4% of global exploration spend. SA’s share of African exploration spend continues to decline and is now at a two-decade low of 7.66%. As a result SA has now dropped into sixth position on the continent, behind the Democratic Republic of the Congo, Ivory Coast, Burkina Faso, Mali and Ghana.
S&P Global Market Intelligence appears the only source of publicly available SA exploration spending data.
Most advanced mining jurisdictions track and publish detailed exploration-related statistics as an important leading indicator of the health of their overall mining industry, Miller pointed out. Those exploration statistics do not only reflect spending but also operational metrics such as metres drilled per month,
“Here in SA the DMRE [department of mineral resources & energy] neither tracks nor regularly reports any exploration statistics, so there are no alternative data trends to consider. It is believed that there are between 4,500 and 5,000 granted, and therefore ostensibly active, prospecting rights, but without any officially published statistics it is impossible to determine how many prospecting rights are actually being worked,” he said.
Mantashe in 2020 pledged to revive mining exploration in SA with an aim to attract at least 5% of global spend. A new exploration strategy, devised through negotiations between the Minerals Council SA, the Council for Geoscience and the department is in the works.
Miller is among those advocating the development of a proper cadastre for mineral rights which most other mineral-rich countries have. Such a cadastre makes available information relating to mining or prospecting rights for properties and, ideally, all historical prospecting data too.
The department has promised the release of its exploration strategy in February.
Miller said the Minerals Council SA is in a strong negotiating position as the government needs the council’s endorsement for its promised exploration strategy, however, he said the council has nothing to lose by walking away from endorsing an obviously suboptimal outcome, as its members do not invest in greenfields SA exploration at present.
“For there to be any improvement to SA’s current dismal exploration performance, a far deeper legislative and regulatory reform programme, coupled with material improvements in administrative efficiency is required,” Miller said.
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