SA could unlock almost R100bn of investment by the mining industry if it cleared the red tape holding back the new mining and renewable energy projects the industry has planned.
The Minerals Council SA estimates companies in the sector have R30bn of capital projects awaiting regulatory approval, but a backlog of 4,500 outstanding mining and prospecting licences at the department of mineral resources & energy is preventing them from going ahead.
In addition, Minerals Council SA CEO Roger Baxter said, mining companies have now committed to 4GW renewable energy projects worth R65bn in new investment. The government opened the way to these projects when it announced a licence-fee exemption up to 100MW. However, it takes 18 months to get the environmental and other approvals required to get projects ready to go. The council is working with the government to try to fast-track the process.
Baxter was briefing journalists in Cape Town on Monday morning at the start of the four-day Investing in African Mining Indaba, the traditional annual gathering of the industry that is happening in person for the first time since February 2020. It is expected to attract more than 3,500 delegates, including heads of state and senior officials, along with foreign and local investors and mining company CEOs and executives.
Speaking to Business Day, Baxter said it takes more than 350 days for mining and exploration licence applications filed in SA to be processed compared with about 40 days in Botswana. The industry has made repeated calls to the department to purchase an established mineral licensing or cadastral system for SA that can replace the current, dysfunctional one. A cadastral system is an online platform that processes prospecting mining rights and licences.
The department is still in the process of soliciting bids for the development of such a system. At the indaba minerals & energy minister Gwede Mantashe admitted that there is no timeline yet for implementing a new mining online applications portal, the SA Mineral Resources Administration System (Samrad).
The department’s acting director-general, Patricia Gamede, said there has been no progress from the side of the State IT Agency (Sita) with issuing tenders for service providers to develop a new system.
SA has plummeted to the bottom 10 in the rankings of the latest Fraser Institute survey, which measures 84 jurisdictions on their attractiveness as destinations for mining investment. However, Baxter said, the Minerals Council has established that no SA mining companies have been surveyed by the Fraser Institute, which sends questionnaires to 7,000 companies globally. They are primarily exploration companies, and SA has few of those.
Baxter said SA’s ranking is unfair, but his view is that SA’s ranking will still be in the bottom half of the index, given the regulatory and infrastructure barriers to investment in SA mining. The Minerals Council has set up a joint task team with the government to address SA’s low rankings on the metrics the Fraser Institute uses as well as ways to improve the survey’s SA data.
Mantashe criticised the report, saying it provides “results that are confusing”, such as rating SA among the best for availability of labour, but at the bottom for investment attractiveness. These results are due to poor research into mining conditions in African countries. The authors interviewed executives in other jurisdictions such as North America and Australia, but conducted only a “desktop survey” in Africa, he said.
“When international institutions assess our areas [in Africa], they must talk to our executives and not base their findings on desktop studies,” Mantashe said.
The minister did concede that SA has to “work hard to improve internal factors” such as processing exploration right applications.
Mining slumped over the past two years as the Covid-19 pandemic disrupted mining activity, but its recent performance injected more money into the fiscus. The cash injection helped the government to support needy citizens with a basic income grant.
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