The department of mineral resources & energy has shortlisted five service providers to roll out an automated mining rights licensing system which will speed up and enhance the process.
Speaking at the Mineral Council of South Africa's 133rd annual general meeting on Wednesday, mineral resources & energy minister Gwede Mantashe said the lack of a reliable cadastral system was a hurdle for investment in South Africa's mining industry.
"It has been a challenge for some time, and we have been committing to the Minerals Council that we will get a cadastral system. I can tell you we have shortlisted five providers. We want to have a provider, or providers, so that the licensing process is accelerated.”
A minerals cadastre lists available mining or prospecting rights, properties under a mining or prospecting right, and the ownership and expiry of currently held rights.
There are 2,185 mining permits outstanding. The department’s Mpumalanga office alone has 1,584 outstanding. About 1,449 prospecting rights are outstanding, with 577 in the Northern Cape and 433 in Mpumalanga.
It is not pride for us to have stockpiles of coal, stockpiles of manganese, stockpiles of iron ore because our infrastructure is dysfunctional. We have to resolve that
— Gwede Mantashe, mineral resources & energy minister
Mining Weekly reported minerals and energy deputy director-general Hilda Mhlongo as having told parliament last week that a contract for the cadastral system, facilitated by the State Information Technology Agency (Sita), would be signed in July.
Outgoing Mining Council CEO Roger Baxter said having a transparent and efficient cadastral system would turn around the department's poor performance on the issuing of licences.
"The biggest focal point is in Mpumalanga, where it seems outstanding applications have ballooned again. These are prospecting rights, mining rights, mining right renewals, mining permits and prospecting right renewals and section 11 transfers of ownership that are outside the normal statutory time in which they should have been issued. It is a large number. Having an official online cadastral system is a good starting point. That is how most countries help resolve licence backlogs," Baxter said.
South Africa was deemed by the authoritative Fraser Institute to be one of the world’s 10 worst countries for mining. In its annual survey ranking 62 mining jurisdictions based on their geological attractiveness (minerals and metals) and government policies that regulate and administer mining activities, the Canadian think-tank found that the country scored poor in almost all indices.
It also cited unnamed executives of major mining companies who lamented “onerous ownership requirements for exploration and operation” as deterrents for investment. Another unnamed global mining executive told the researchers: “There is a lack of transparency in the mineral cadastre system that deters investment.”
Mantashe conceded that the severity of load-shedding and the dysfunctionality of the rail system and ports have directly impacted on the mining sector's performance. He said the government was working to resolve the energy crisis and other factors that impede the growth of the sector.
"It is not pride for us to have stockpiles of coal, stockpiles of manganese, stockpiles of iron ore because our infrastructure is dysfunctional. We have to resolve that. We have to improve the possibility of no load-shedding,” he said.
Rail and port weaknesses led to a 30-year low in coal exported through the Richards Bay Coal Terminal, which was only able to process 50-million tons last year.
Mantashe urged miners to be firm with Transnet as they are its biggest customers.
"What is important [is that] the industry cannot be a beggar when dealing with Transnet. You are the biggest customer of Transnet; you are a source of revenue for them. When they deal with you, you must assert yourself. They must appreciate that they are dealing with the biggest customers.”
Minerals Council chair Nolitha Fakude wrote a stinging letter to Transnet board chair Popo Molefe in December, calling for the axing of group CEO Portia Derby and chief executive of the freight rail division Sizakele Mzimela.
The council has repeatedly pointed out that Transnet’s woes have cost its members R85bn in potential bulk commodity export earnings over the past two years. The state has also lost billions in potential tax revenue.
Baxter said miners trucked 10-million tons of export-bound coal last year, but they were seeing some improvements on the manganese line.
"They do not have the same challenges they have on the coal or chrome lines. The consequence is that when rail fails, a lot more goes on the road, and that is not necessarily helpful from a country perspective. The biggest issue on the chrome side is maintenance backlogs, and you have issues around the availability of loco fleets.”
The council was working with Transnet to get to the bottom of the issues, he said.
Baxter said they were also waiting for feedback on a recent trip undertaken by public enterprises minister Pravin Gordhan to China to try to release stuck Transnet locomotives and spare parts.
“The Chinese locomotive deal is not the only thing that will resolve South Africa’s rail challenges. There is a set of other complex issues around maintenance of track and other areas the council has been working with Transnet on. Short term, it is about stabilisation."
The council named Mzila Mthenjane as its new CEO. Mthenjane replaces Baxter who steps down at the end of the month.
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