It is not only SA’s enormous backlog of unprocessed mineral rights, which mineral resources & energy minister Gwede Mantashe describes as a “nightmare”, but the bureaucratic red tape and time to get approval that is holding back the industry.
Mantashe made the astonishing statement during the Minerals Council SA annual general meeting last week just a few months after his departmental officials told parliament there was a backlog of 5,326 mining and prospecting rights as well as mineral right transfers.
“We are working hard to improve our mining licensing system. It’s a nightmare for us,” Mantashe said, without giving details of what is proving so difficult.
Mantashe has been in his role since the start of 2018. Under his leadership the regional offices in Mpumalanga, where the highest number of unprocessed rights are found, and Limpopo were shut and their functions assumed in Pretoria to address corruption and maladministration.
However, fundamental problems remain in the regional offices despite his commitment to spurring into life the moribund exploration sector and encourage investment in mining.
The department officials also bemoaned shortages of printers, ink and paper in regional offices that were curtailing the processing and acceptance of applications, which speaks to a lack of efficient management of the ministry and its operations.
The council noted earlier in 2021 investments totalling R30bn are stalled in red tape, with more than 170 applications languishing in the department. Talks are under way between the council, companies and the department to expedite their approvals.
The council’s 80 members account for 90% of SA’s mineral production by value. The sector generated R373bn towards GDP in 2020.
Council CEO Roger Baxter used the platform to highlight another shortcoming in the department’s handling of mineral applications, comparing SA to its neighbour Botswana, a country that relies heavily on its diamond production for revenue, though there are other minerals in the arid, landlocked country that are attracting interest.
Clear process
In Botswana, it takes 40 days to get a prospecting right and 20 days for a mining right under the Mines and Minerals Act it enacted in 1999 and has left unchanged since then, said Baxter.
“It is a clear and very simple process and there is very limited discretion in the hands of the bureaucracy. The rules are clear, the taxation, environmental, planning and other requirements are clear and non-discretionary,” he said.
In SA, by contrast, it takes 245 days to secure a prospecting right and 355 days for a mining right, Baxter said, pointing to the fluid nature of SA’s mining regulations and policies.
“In the last 25 years SA has experienced enormous changes to its mining laws and framework. Some of this has been necessary, of course, but the changes should be sensible, clear, predictable, and stable and, ultimately, they need to be globally competitive,” he said.
“We are simply not competitive,” he said, adding improved conditions for the industry could lift mining's contribution to GDP to 10% from 8% in 2020.
The council is engaged in a court battle with the department over the third iteration of the Mining Charter that Mantashe gazetted towards the end of 2018, with deep unhappiness among mining companies over certain clauses in the charter that, among others, compel them to reach 30% black ownership targets with renewed mining rights or once they have been transferred.
Outgoing council president Mxolisi Mgojo had an interesting take on the charter that Mantashe’s predecessor Mosebenzi Zwane gazetted in 2017 and that was successfully challenged in court and discarded by Mantashe.
Gupta family
“That version of the charter, if implemented, would have caused very serious damage to the industry, and also would have put various tools of state capture in his [Zwane’s] hands,” Mgojo said.
Zwane has been identified as one of the alleged key players in former president Jacob Zuma’s coterie as a facilitator to siphon funds out of state coffers to politically connected beneficiaries as well as oversee the transfer of Glencore’s Optimum colliery to the Gupta family, close associates of Zuma.
The council took the highly provocative step of declaring publicly in 2017 it would no longer deal with Zwane, who was the minister of the minerals department.
The council then started speaking to people in the governing ANC it perceived as understanding mining and not holding hidden agendas. Its first meeting in 2017 was with Mantashe, who was then secretary-general of the party.
“The constructive discussions held then have continued since his appointment as minister in early 2018. The minister immediately set about trying to rebuild the bridges with the mining industry,” Mgojo said.
Mgojo said the department would soon issue a request for proposals to replace the universally unpopular online digital mineral application system, Samrad, which Mantashe has pointed out has not worked properly for a decade.
“Work has begun on the development of a new mining cadastre to replace Samrad, to which the industry has offered its full support,” said Baxter.
“Having a digitised and more automated online mining cadastral system that promotes greater transparency, enables accurate geospatial location of prospecting and mining rights and that helps speed up the licensing system is crucial,” he said.
Baxter shrugged off criticism from Mantashe that there was no need to always approach the courts to resolve differences between the council and the department.
“In a constitutional democracy such as ours, we think it is entirely appropriate — and in all our interests — that such certainty is obtained and achieved through the courts when necessary,” Baxter said.
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