Mineral resources & energy minister Gwede Mantashe’s department has finally taken steps to put in place a new system to enable mining exploration and has cut its backlog in processing mining and exploration licences by half, raising the prospect that SA could start to attract more investment in new mining projects.
The department’s Tseliso Maqubela said the government expects to conclude the procurement process for a new mining cadastral system by the end of this year, and this time it will opt for a system that is in use in many other mining jurisdictions — not the bespoke system it tried the last time.
The procurement process is under way and the State Information and Technology Agency will be going to market within a short time, he said.
It is expected to conclude the process by no later than the end of this year.
New mining exploration in SA has been hamstrung for more than a decade by the department’s failure to put in place a transparent, online cadastral system that would enable prospectors to see who owns which exploration right in which area, and apply online.
The mining industry has long called for the department to buy one of the off-the-shelf systems that can be quickly installed and works successfully in other countries such as Botswana. An earlier effort by the department to procure a complex system of its own design failed, leaving it reliant on inefficient paper-based processes, which are highly open to corruption.
Mantashe has said he wants to attract 5% of global mining exploration spend; SA currently attracts less than 1%. Anglo American CEO Duncan Wanblad commented this week SA is one of the most underexplored mining jurisdictions globally.
Briefing the media on Monday at the Investing in African Mining Indaba in Cape Town, Mantashe said the department had made strides in eradicating the backlog in processing applications for mining and exploration licences. He had committed to eradicating the backlog, which ran to thousands of applications, by the end of financial year 2023/2024.
Maqubela said the backlog had been reduced by 50% but it would never get to zero because “everyone wants to mine coal now”. The department is receiving hundreds of new applications in Mpumalanga as well as in the Northern Cape, where miners are looking for minerals such as lithium and chrome.
Power crisis
Mantashe rebuffed suggestions that there is no growth and investment in SA’s mining sector, saying it is growing and young black investors are doing well. In his keynote address to the Indaba, however, he emphasised the toll SA’s power crisis and its ailing transport logistics system are taking.
The Indaba comes in a context in which SA’s mining output and investment have been sliding despite the boost provided by the commodities boom of the past couple of years.
The Minerals Council SA said on Monday that the mining industry contributed almost R90bn to government revenue last year, including R73.6bn in corporate income tax and R14.2bn in mining royalties.
It contributed more than R900bn to exports, about 40% of SA’s total exports, and was one of the few sectors that had grown employment.
However, Minerals Council figures show that while high prices boosted sales revenue and taxes, mining production fell 6% in the year to November because of power and transport logistics constraints. The council estimates SA lost R51bn in mining exports last year because of Transnet’s poor rail and port performance, which meant producers often could not get their output to market.
Mantashe himself cited power supply disruptions and logistical bottlenecks on SA’s railways and at ports in his keynote address and invited those at the indaba to help the government with ideas on how to tackle these.
While he is widely seen as pro-coal and antirenewables, the minister highlighted Gold Fields’ new 50MW solar power plant at its South Deep Mine, which he said had helped Gold Fields increase production 10%. It was enabled by the lifting of the licensing requirements for own generation.
“Gold Fields is an example of innovation and foresight that led to different outcomes from the rest,” Mantashe said. But he reiterated his previous comments that the most logical option to stop load-shedding is to focus on tackling Eskom’s declining energy availability factor, saying that while renewable energy is a good idea for the long term, load-shedding has to be attended to in the short term.
The mining industry — which recently called on Transnet’s board to axe CEO Portia Derby — has established a joint structure with Transnet and it said it was making progress with Transnet on the coal, manganese, iron ore and chrome lines. Mantashe supported the joint initiative.
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