By Grant Mitchell, head of Junior and Emerging Miners Desk at Minerals Council South Africa

Exploration is essential to sustain the long-term survival of the mining industry, just as much as research, development and modernisation is essential to the survival of the manufacturing sector.

Grant Mitchell, head of Junior and Emerging Miners Desk at Minerals Council South Africa

Grant Mitchell, head of Junior and Emerging Miners Desk at Minerals Council South Africa. Supplied by Minerals Council South Africa

Internationally, exploration is a big industry. According to S&P Global Market Intelligence, the total funds raised by junior and intermediate companies in 2023 was USD11.62-billion (down 4% from 2022), with juniors’ exploration budgets sitting at USD5.6-billion (down by 5% since 2022).

Currently, the global focus on exploration is for critical minerals – defined as those that are driving the new green technologies such as lithium, copper and nickel – which are attracting investment, with lithium exploration, for example, increasing by 77%.

South Africa is endowed with many of these critical minerals, and the country’s potential to play a meaningful role in supplying them to its domestic manufacturing base and to international consumers can only be realised through greater levels of exploration. The country is, however, lagging behind international trends in prospecting for critical minerals.

South Africa’s share of global exploration dollars has been consistently below 1% for three consecutive years and nowhere near the more than 5% two decades ago.

The country was once the primary investment destination for exploration dollars in Africa. It is now in third position behind Mali and the Democratic Republic of Congo, with Zambia closing in on South Africa’s third ranking. In fact, a recently discovered major copper deposit in Zambia bodes well for the future of its mining sector.

Whilst there have been discoveries in South Africa on already-known deposits such as the Northern Limb of the Bushveld Igneous Complex, which is rich in platinum group metals (PGMs), chrome and base metals, there has not been a new world class discovery since the Venetia diamond deposit in 1980.

Most of the country’s exploration activity at the moment is brown fields, which entails further exploration of known deposits by existing mining companies.

So why is South Africa regarded as largely closed for business in green fields exploration by new entrants?

The answer is a mix of issues, including the opaque, slow and inefficient administration of exploration rights, a minerals and mining policy framework which is viewed as not enticing for exploration and mine-development investments, while South Africa’s elevated levels of crime serve as a deterrent as well.

Exploration is inherently risky, with relatively small numbers of deposits advancing into mine development and operations. Coupled with the country risks, South Africa is simply not on the global radar at the moment despite its fantastic mineral deposits and potential when critical minerals are highly sought after.

To mitigate these issues the Exploration Implementation Plan, a plan developed by three social partners – the Council for Geoscience, the Department of Mineral Resources and Energy, and the Minerals Council – was launched in early 2022, setting an ambitious target of attracting 5% of global exploration dollars in a five-year period.

The plan identified solutions to key constraints to reignite exploration spending. These included the development and implementation of a modern, transparent digital mineral rights management cadastre system, the introduction of tax incentives to stimulate investment in exploration, longer time frames in exploration permits to assess complex geological formations, a better system to manage interactions between landowners and exploration companies, and the consistent application of policies across provinces.

The question is: has there been progress in implementing the solutions?

There are some green shoots. Early in 2024, the DMRE announced the appointment of a consortium to develop and implement a new mining cadastre to replace the dated and dysfunctional system implemented in 2011.

The consortium includes a combination of a well-known Canadian service provider, Pacific GeoTech Systems, with two South African partners, MITS Institute and Gemini GIS and Environmental Services (GGES), to design the mining cadastre and to implement it, providing a critical portal for investors to easily lodge and manage their applications.

The second development is the announcement of a Junior Mining Exploration Fund to be administered by the state-owned Industrial Development Corporation in partnership with the Council for Geoscience and the DMRE. Aimed directly at empowered companies – a stipulation is that applicants must be 51% empowered – it provides a springboard to access capital markets for worthy projects, despite the relatively small size of the fund of R400-million.

These are both positive steps in the right direction, but there is more to be done. The Minerals Council is in regular talks with the DMRE and the Council for Geoscience on further measures to stimulate investment in exploration and to ensure the future of South African mining as the world transitions to a low-carbon future. South Africa is host to the minerals the global economy needs. By creating an environment conducive to investments in exploration, mine development, mining and processing, it opens the door to value creation and an industrial stimulus for South Africa’s economy and its people. Mining matters, and exploration is fundamental to ensuring it matters for longer.