By Sharyn Macnamara
Mining exploration in South Africa, key to the survival of the mining sector and by extension the economy, has lagged for the past 20 years. Junior and emerging mining is essential to growth in this sector and requires the urgent attention of government, if South Africa is going to take advantage of available global investment.
L-R: Bongiwe Mbunge, lead partner in ESG and Thinus de Vries partner at Mazars; Sharyn Macnamara of African Mining; Errol Smart, MD and CEO Orion Minerals and chair of Junior Explorers and Emerging Miners’ Forum and Grant Mitchell, head of Junior and Emerging Miners Desk at Minerals Council SA; Godfrey Mocwane, CEO at New Venture Mining Investment Holdings (Pty) Ltd; Mantengu Group CEO, Mike Miller; and Mandy Malebe, CEO at Lethabo Exploration. ©African Mining, incorporating Mining Mirror
In the last quarter of 2023, Mazars and the African Mining, incorporating Mining Mirror publication hosted a round table discussion, delving into the complexities of some of the long-standing challenges junior and emerging miners face in South Africa. The round table discussion was held at the Mazars Innovation Centre, Melrose Estate Johannesburg with a mission to break barriers through face-to-face conversation. “The objective of our discussions today is to table challenges in the junior and emerging mining sector, face them head on and suggest possible positive solutions to drive exploration and mining production in South Africa,” said Thinus de Vries partner at Mazars, opening the discussion.
Errol Smart, MD and CEO Orion Minerals and chair of Minerals Council SA Junior Explorers and Emerging Miners’ Forum at the Minerals Council, chaired the discussion. Party to the discussions were Mandy Malebe, CEO at Lethabo Exploration; Godfrey Mocwane, CEO at New Venture Mining Investment Holdings (Pty) Ltd; Botlhale Seageng, representative of the DMRE; Mantengu Group CEO, Mike Miller; Bongiwe Mbunge, lead partner in ESG Mazars and Grant Mitchell, head of Junior and Emerging Miners Desk at Minerals Council SA.
Prerequisites for healthy exploration
Where best to start, but with an open and pragmatic mindset and the authentic business journey and personal experiences of explorers and miners in this sector with their boots firmly on the ground, but in the thick of the mire that is currently the reality and the complexity of the sector locally. Opening the discussion, Smart said, “I suspect that a lot of the pain points aired today are symptomatic and unless the underlying root causes are addressed, we will not solve the current challenges,” however, in the same breath he added, “We must become part of the solution!”
Some time back now in 2018, Smart accepted the position of chair of the Junior Explorers and Emerging Miners’ Forum at the Minerals Council, to do precisely this – together with Roger Baxter who pushed for the lobbying of the interests of this all-important sector of the industry. The Minerals Council has been labouring for years since, to be a strong voice for the juniors and explorers who arguably hold the key to sustainability and growth in the South African Mining industry.
Having worked globally, both as an explorer and a producer within the mining sector in first and third world countries, Smart introduced the discussion setting out what, in his experience and in his view, are the universal prerequisites for a vibrant mining industry – let alone the requirements of a Junior mining sector: a rich mineral endowment being the first requirement; a supportive, transparent and consistent regulatory environment being fundamental; availability of primary infrastructure being an incentive; and access to funding, being critical.
Chair of the discussion, Smart set the scene with a slide showing South Africa’s share of global exploration budgets. Despite the aspirations set by the DMRE in its 2022 Exploration Strategy for the mining industry to secure a 5% share of global exploration expenditure, the country’s performance has been dismal, dropping year on year and stagnating at around 1% since 2017.
Does South Africa have these exploration essentials?
“There is no argument that South Africa has the mineral endowment for a healthy exploration and junior mining sector – it is what we do with it that counts! And this is, of course, within OUR control,” he enthused. As part of a democracy, the mining industry is in control of its own destiny. “Moreover, in general, miners are innovators,” added Smart, “we will always find a way to solve challenges eventually, but unfortunately the repercussion is that it wastes time and energy that could be better spent on exploring and actually producing the minerals essential to help build the ailing South African economy and provide employment.”
He pointed out that where one finds a successful junior mining sector globally, is usually where one finds a co-existing, supportive regulatory environment offering laws and regulations that work seamlessly together and do not contradict one another. Unfortunately, this is not the case at home.
Homing in on our local reality with regards infrastructure, he pointed out that although South Africa has its challenges; the groundwork (which has worked in the past) and the foundations for fully functional and efficient power, rail and water supply are in place – in fact, the South African junior sector here has the upper hand on this level when compared to other parts of the world like the Australian outback. “Juniors are by their nature risk takers and plan makers. In South Africa, although we would like to plan for 95% availability, we currently receive 60–70% availability, which is still better than none at all.”
Funding, he said, is critical, however “Money will find the opportunity – and there are all sorts of avenues from royalty streaming finance, and drawdown financing, convertible bonds and notes, while using the JSE and other exchanges also offers avenues of access.” So there are ways one can solve the funding issues, without having to rely too heavily on the ‘powers that be’.
The question then is – why the downturn in exploration over the past 20 years? Smart noted the current imperative, “Exploration must be kickstarted – South Africa is drawing on its reserves and mining more marginal resources and reserves. If we do not discover more minerals, we are not going to develop them, and at some point, the industry will die. There is good stuff that has not yet been discovered and nobody’s investing in it because it’s high capital, long lead time, big risk. The fact is that South African mining production has plateaued, and levels are on an alarming downward trajectory . We know mining is a cyclic industry, but although the last three years have shown record profit margins, it is not sustainable. The industry is now in the red and the first step is to shut down additional local exploration because nobody’s got money to drill!
“So, it worries me desperately, that over the last four years when the industry locally and globally was in the best position possible; despite having paid record dividends and taxes and having saved the local economy during COVID, our position has deteriorated substantially, and I don’t know if we’re going to save it again!”
Smart acknowledged the fallen junior and emerging miners and comrades who have not been fortunate enough to have made it to the table because of the tough economic circumstances in South Africa. He noted the experience of the miners at the table and his hope that some of the failures and lessons learned by previous comrades would be brought to the table through discussion; and that they might, together with the revelation of experiences of miners at the round table, be brought to the fore to make a positive difference for those coming through the ranks currently, so that the status quo can be turned around.
“The quickest way to turn our ailing economy and the decline in mining production around and to create jobs is to start exploring. Bring foreign investment into South Africa, deploy it in employing people to drill and sample and to fill essay laboratories. Exploration in rural areas is a wealth generator, and the impact is self-explanatory!”
Watch this space for feedback from the boots on the ground – toiling to make a difference in our economy – in the African Mining fortnightly bulletin:
Register to receive our bulletin here: https://www.africanmining.co.za/mining-africa-digital-registration