Speaking to Business Day on the eve of the Mining Indaba two years ago, one participant said if mineral resources & energy minister Gwede Mantashe were to announce he had appointed a service provider to sort out SA’s collapsed cadastral system, “the angels will sing”.
The 30th annual Mining Indaba opens in Cape Town next week. Mantashe has at long last chosen a preferred bidder and the minister will surely miss no opportunity to sing about it. The angels, not so much.
For this is no quick fix for SA’s mining industry and the dearth of exploration and investment that limits its potential and risks ending its life prematurely. And the cadastral story is one that’s at the heart of the paradoxes in SA’s hosting of the Indaba.
Increasingly the gathering is about mining in Africa, not in SA. Our neighbours are pulling far ahead of us in terms of their attractiveness for investment. Their mining ministers are the drawcard for the international mining players who descend to drink and party their way around the Cape, not Mantashe.
Increasingly too, the Indaba is about the critical minerals required for the energy transition and Africa’s key role in providing these. But while SA’s critical minerals potential rivals that of some of its neighbours, it risks falling far behind them when it comes to exploiting that potential.
And if President Cyril Ramaphosa does what he did the last time, which was to go off his Indaba script and attack business and labour for shouting from the rooftops instead of “getting in the ring”, that risk can only rise.
The department of mineral resources & energy describes the cadastral system as a mining licensing system, but it is more than that, or should be. It’s an online mapping system that should capture who has the licence to prospect, explore or mine which parcel of land for what mineral, enabling those seeking licences to see what’s available and the department to award and register licences.
That at least is how it works in other countries, many of which have installed transparent, high tech, modern systems in recent decades that make it quick and easy for licences to be applied for and adjudicated. The SA debacle goes back to 2011 when the department installed a system called Samrad that was a disaster from the start. Though it was ostensibly online it was essentially paper based. The delays to applications are legendary — it recently emerged that the department managed to process precisely zero of the thousands of applications submitted in 2023. The stories of dodgy dealings behind the scenes are legendary too.
Without a functioning cadastral system mining exploration is simply not possible. No surprise that SA’s mining exploration has languished in recent years at under 1% of global exploration spending, falling over the past two decades from over 20% of Africa’s exploration spending to just 8%. That’s despite Mantashe’s repeated promises to get us to 5% — a target that would require a tenfold increase in SA’s exploration spending.
Mines have finite lives, so no exploration puts in question the long term survival of the industry, not to mention its ability to generate new investment or even support existing jobs and skills in the industry in the shorter term. The licensing mess is just one of the many reasons fixed investment in mining in real terms is still way below its level of a decade ago, despite a recent pickup.
But fixing licensing would help enable new investment, in new ore bodies. And after various false starts and false promises, the department’s announcement this week that is has chosen a preferred bidder for the licensing system is a welcome step forward. But it is only the very first step. The contract has yet to be signed — and the government has a tendency to choose preferred bidders and then take forever to sign.
Disturbingly, while the department promised a year ago that it would buy an off-the-shelf system, as many of our neighbours have done very successfully, its media release says the new service provider will design the system, not just implement. The Canadian partners leading the consortium have 23 years of experience delivering online systems all over Canada, Colombia and Greenland; whether they know what they are in for with the department in SA is not clear.
It’s also not clear how long it will take to capture the thousands of documents in multiple regional offices, nor how what there is of the old online system will mesh with the new. But it’s progress, even if SA has a long way to go to match the 30 days it takes to get a licence application accepted or rejected in Botswana, or in neighbours such as Namibia and Tanzania with similarly efficient and transparent systems and a more welcoming regulatory environment more generally.
The guest list for the Indaba reflects the world’s chase for Africa’s critical minerals, with senior minerals, climate and security officials heading to Cape Town from the US, UK and French governments as well as Saudi and others. Hardly any African heads of state are on the list this year, which may say something about their attitude to SA, but mining ministers from across the continent will be there, as will the global mining majors and the investors.
It’s the cobalt, copper, lithium and the rest they are after, in the Democratic Republic of Congo and elsewhere. The Indaba provides a platform for African countries to try to negotiate the terms on which they will allow international investors to mine their riches in a way that doesn’t relegate them to the colonial status of the past.
SA is also at that table: its platinum group metals, manganese and gold are all needed for the new technologies of the green transition and it has copper, nickel and many other “green” deposits yet to be explored. Indeed, Anglo American CEO Duncan Wanblad in 2023 described SA as one of the world’s least explored mining regions.
Despite its riches many see SA as essentially uninvestable. Nobody is going to put in big money for the long term without a secure supply of electricity. Nor will they invest if they have no confidence that the country’s railways and ports can be relied on to get mining exports to market, or that its law enforcers can be relied on to prevent criminal attacks on the sector.
SA is competing with other, more attractive African jurisdictions for investors’ mining dollars. The Indaba is a showcase. But Mantashe and Ramaphosa will have nothing to show unless they can convince the guests that the government has a sense of urgency, and will do what it takes to make it easy and profitable to mine here.
• Joffe is editor-at-large.
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