The Johannesburg Stock Exchange (JSE) hosted an information and knowledge sharing session for the Junior and Emerging Mining Sector on Tuesday, 25 October in Sandton. The sector serves as an important catalyst of economic growth and is a key job creator in South Africa. JSE executives and industry stakeholders shared potential opportunities and current challenges, signalling the beginning of a conversation and very close collaboration into the future.
Dr Leila Fourie, Group CEO at the JSE said, “What is important for us is to continue to support the economy and the big growth node is in the junior mining and the commodities market.” L-R Dr Leila Fourie, Group CEO; Cleola Kunene, head of SME Development and Customer Experience and Valdene Reddy, director Capital Markets at JSE. Image credit: ©Sharyn Macnamara, African Mining
The JSE has a very deep affinity with the mining industry. “We were in fact founded in a mining tent in 1887 during the first South African gold rush to facilitate capital raising, and this was used to transform our country into a mining superpower,” noted Vuyo Lee, director of Marketing and Corporate Affairs at the JSE in her opening address at the event. Lee added, “The junior mining sector – made up of explorers, developers and small and medium sized producers – is not just an essential component of the value chain in mining, but also important to the long-term survival of the mining industry. These players have one thing in common, they require capital and support to grow and flourish.” She pointed out the current dire need to grow the pool of capital that supports the growth of exploration in the sector.
JSE Private Placements
The JSE shared some of the innovative solutions it has rolled out to enable growth and development in the country, and which could assist the junior miners in particular in the future. Sam Mokorosi, head of Origination and Deals at the JSE presented a new fund-raising platform, JSE Private Placements. “This is an offering for unlisted companies who are looking to raise equity or debt as issuers, and for investors who are looking to invest in SME and infrastructure. We are proud to be associated with Globacap Technology Limited, a UK fintech firm, in this offering. We currently have about R3-billion worth of deals in the funding pipeline and investors with over R10-billion to spend on the platform.”
He noted some of the benefits in listing on the JSE – “It is about the deep and liquid capital markets.” Additional capital is available for growth from institutional and retail pools; listing enhances business profiles; acquisitions can be made with shares – “We have streamlined fast-tracked, realistic processes for companies that are looking for dual listings. The JSE also acts as the gateway for expansion into the rest of the continent,” said Mokorosi.
SME development solutions
Cleola Kunene, head of SME Development and Customer Experience at the JSE presented some of the solutions the JSE offers in terms of SME development. “SMEs play a fundamental role in growing the economy, job creation as well as expanding competitiveness and investment opportunities,” said Kunene, noting that the focus is on assisting SMEs in their sustainable growth journey through various acceleration and development programmes.
She ran through, among others, the Accelerator Solution – a customised solution for medium sized companies which has been running for over two years. The companies are handpicked in a rigorous selection process overseen by an independent steering committee and are provided with mentorship, networking, investor readiness, introduction to advisors, training, access to markets, capital raising, as well as a number of master classes.
Kunene pointed out that significant success has been achieved. The pilot cohort and cohort 1 (2021-22) saw 56% revenue growth on average for 16 companies, 32% increase in the number of employees with new jobs created and just under R1-billion capital raised.
Currently the JSE is delving into the support and development of the Junior Mining sector in partnership with the Minerals Council South Africa. Kunene noted, “Our aim is to help fast track access to capital and access to market, but also to assist the entrepreneurs themselves in terms of their own development and the operational expansion of their companies.”
Junior mining’s complex operating environment
Junior mining stakeholders had an opportunity to flesh out the reality of operating in South Africa. John-Ernest Fogwell, CEO of the Junior Mining Association, noted the many issues such as failing infrastructure, a lack of access to reliable power, lack of rail availability, unreliable legislation which lacks transparency, lack of a feasible cadastre system, rising criminality and illegal mining and, very importantly, a lack of access to capital. He noted that these were all a symptom of a sector having been neglected by the powers that be for far too long.
However, Fogwell pointed out the that the junior mining sector is a dynamic, vibrant, innovative sector, with deep institutional knowledge – “We have the DNA to find solutions to survive and thrive. That’s what we do – we got through COVID and now the impact of the Russian-Ukraine war. It is how we use that spirit of innovation going forward through collaboration within the industry that will count. We must stand up and be heard to be taken seriously. Simple, on the ground solutions are required.”
Fogwell thanked the JSE for opening the channels of communication and for their current initiatives to assist economic growth and emphasised that the Junior Mining Association was willing to walk the journey of collaboration with all stakeholders.
John-Ernest Fogwell, CEO of the Junior Mining Association, speaking at an information and knowledge sharing session hosted by the Johannesburg Stock Exchange (JSE). Image credit: ©Sharyn Macnamara, African Mining
Jono Gay, CEO at Chromtech, representing the Minerals Council of South Africa as a member, added, “It is no secret that the operating environment for junior miners has become increasingly more complex. Ironically, the easiest part of our business is actually mining and producing.”
He reiterated the positives in the industry – the incredible technical skill sets, the abundant resources the country possesses and the added value in being able to lean on some of the Mineral Council member majors’ experience. However, he also expanded on some of the major challenges touched on by Fogwell. “The biggest challenge we face is the lack of support from those entities established to serve, safeguard and enable economic activity within our country.” He highlighted lost opportunities and costs due to load curtailment by Eskom making it near impossible to plan or recover and the inability to rely on rail to move product to market with the forced use and damage to road infrastructure, resulting in the net cost of product more than doubling in the last 12 months. He referred to the exponential growth in illegal mining operations as a national crisis. “It’s a fight that cannot be overcome without assistance from various state entities. Junior miners do not have the balance sheet nor the human capital to deal with all of these issues continuously and for new entrants, the road ahead is particularly daunting.”
Backing Fogwell’s sentiments, he noted, “To grow the sector and to maximise the potential that exists within our country, we need to rethink the way we collectively engage. It is through this collaborative and collective discussion and sharing of experiences that we can strengthen the sector. The starting point in my in my view, is honest conversation and thereafter tangible action points to address the fundamental challenges that can be fixed. Entities such as the JSE and the Minerals Council South Africa, that have the ear of government, must apply pressure on key decision makers to help enable an environment that is investor friendly.”
Dr Leila Fourie, Group CEO at the JSE said, “The JSE is grounded in the economy in which it operates. We cannot divorce ourselves from the reality of the commodity cycle of the broader economy, and importantly, of our roots. What is important for us is to continue to support the economy; and the big growth node is in the junior mining and the commodities market.
“This is the beginning of a conversation to talk about what needs to change. The JSE is mindful of the challenges and the fact that the investor base is very institutionally biased and that more work needs to be done to attract speculative investors.
“We need to coalesce, we need to work with you [the juniors], government and investors more broadly. But ultimately, what we would like to signal in this event this evening is that this is the beginning of a conversation.”
Valdene Reddy, director Capital Markets at JSE added, “South Africa has a sophisticated marketplace. The leadership of our companies is very strong relative to other countries and we have a diverse economy.
“We would like to work with you to diversify the investor base and sell South Africa with a narrative that is accountable. The fact that we are all together in one room shows that there is common intent. The JSE is here to converse, to lead and to work alongside the junior miners.”