The department of mineral resources & energy says it has made progress in processing the large backlog of mining licence applications in the financial year to end-March.
It processed about 2,900 applications last year. But, said one official, this was not enough to keep up with the number of new applications being filed.
“As we process those 2,900 applications, we get in 3,000 new applications. The bulk is for mining permits in Mpumalanga. This province alone accounts for about two-thirds of the backlog,” said Tseliso Maqubela, deputy director-general for mineral & petroleum regulation at the department.
The department has been struggling for years to clear a backlog of applications for mining rights, prospecting rights, and mining permit applications and renewals.
There is some uncertainty over just how large the backlog is, but the Minerals Council SA has previously estimated the backlog at more than 3,000 prospecting and mining rights with a potential investment value of more than R30bn.
Speaking at the Junior Mining Indaba hosted by Resources 4 Africa in Johannesburg on Tuesday, Maqubela said the new cadastre system, which will replace SA’s dysfunctional and outdated SA Mineral Resources Administration System, will help the department speed up the processing of applications.
Many of the mining right applications in Mpumalanga, for example, were for areas that were already covered by other mining or land rights. With an online and reliable cadastre, the department would be able to reject such applications without having to first go through lengthy administrative processes, he said.
“We are hoping the new cadastral system will help us reject those applications outright so that we don’t go through all that administrative work only to see the application cannot be processed.”
Maqubela said final agreements to implement a new cadastre system in SA were signed on Monday.
The department announced in January that it had appointed PGM Consortium to design, implement and maintain the eagerly awaited new online mining licensing system.
Another concern, he said, was that very few of the applications that were approved materialised into mining and prospecting projects. “What happens to all the prospecting rights we approve? We need to do an audit to see how many of the applications we process actually lead to projects,” he said.
Some projects never got off the ground, said Maqubela, because they get blocked by communities protesting their development.
SA’s share of global exploration spending has dropped to below 1% from a peak of 5% in 2003 and it has remained stubbornly below 1% for more than a decade. In addition, most of the exploration and new project development that is taking place is being done around existing mining areas by major companies.
One of the reasons for the decline has been SA’s outdated mining licence application system, which means potential prospectors and miners wait years to obtain the necessary regulatory approvals. But the industry has also said that other structural challenges, such as the energy and logistics crises, made it less attractive for investors compared with other mining jurisdictions.
The latest Fraser Institute survey of mining companies shows SA ranked 64th out of 86 jurisdictions as a preferred investment destination.
Errol Smart, CEO and MD of junior copper miner Orion, who also spoke at the event, said it was good news that the service level agreement with the PGM Consortium had been concluded and that work on the new cadastral system could now get under way.
This could “springboard” the mining industry to attract more investment. Some of the most attractive opportunities in SA were brownfields projects at mines that were shut down but still held economically viable ore bodies.
“We have brownfields sites that can be developed into big mines again quite quickly, but for that to happen the whole system needs to work.”
The recent improvement in Eskom’s performance and moves by the government to allow private participation on Transnet’s rail network were encouraging, said Smart. “I think we are seeing real progress.”
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