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ENSight

natural resources and environment

Junior Indaba 2021 | Day 1 key take aways

Promoting exploration

  • In order to promote exploration, the availability of geoscience information is absolutely critical. Work is being conducted by the relevant stakeholders such as the Council for Geoscience to make geoscience data digitally available.
  • The Exploration Strategy is viewed as a key document that will open the floodgates of investment. The Exploration Strategy must still go through internal government processes before it is released to the public for comment and then to Cabinet for their final approval. The DMRE will do what it can to expedite the process.
  • Although expenditure in global exploration has declined, it is expected to increase.
  • Africa still has the appeal of having great geology and great opportunity when compared to other markets.
  • The African Continental Free Trade Area creates opportunities for partnerships and investment.
  • Hot commodities in Africa: PGMs, lithium, copper and gold.

Regulatory challenges and uncertainties

  • The DMRE recognises the shortfalls of the online SAMRAD system and is investing in a new modern cadastre mining system to replace SAMRAD within the next six months. The new system will contain accessible and reliable information on the precise location of mining titles available to the public and investors. The Minerals Council has been consulted and the tender will be issued by the end of next week.
  • The DMRE’s position with respect to the B-BBEE requirements for prospecting rights has been made clear in Mining Charter 2018: empowerment is not a requirement and the message has been conveyed to regional offices.

Trust, partnerships and relationships between stakeholders in the mining industry

  • The trust deficit between investors and industry on the one hand, and the DMRE on the other hand, is improving during the current Minister, Gwede Mantashe’s term of office, as various actions are being taken by the DMRE to improve backlogs in mining title applications, the SAMRAD system and to encourage exploration.
  • It is vital for everyone in the mining sector to work together.
  • Government is having a frank conversation with relevant stakeholders to address bottlenecks in the mining industry, including the Minerals Council regarding the challenges, which government understands as being three critical issues: (i) regulatory certainty; (ii) investment in competent geology; and (iii) access to funding.
  • Conversations and collaboration are taking place. Industry and regulators are working together to find solutions. Mining communities and employees must be brought into projects.

Tips for junior miners

  • With respect to the demand for minerals of the future, South Africa must consider and assess its mineral deposits. There is a role for junior miners, who are associated with ingenuity, with respect to minerals of the future. Junior miners must be goal-oriented and set clear outcomes to achieve their goals.
  • The profile of an investable junior mining company is one that has good grade projects with good margins at sensible commodity prices. They must mine critical precious metals which are important for the 4th industrial revolution. Commodities such as gold and base metals are key for investors.
  • Key elements for success for junior miners are: (i) finding the right resources; (ii) technical teams that have the relevant technical expertise; (iii) know what your potential investors are looking for; (iv) relationships and networking; and (v) know how to package the business.
  • The Northern Cape may have previously been neglected, but it has great potential to be the next copper province of SA. Copper is the new gold as it is used in renewable energy projects and vehicles associated with the clean energy transition.
  • If you can find a solution to pollution issues associated with mining, the economic gain is huge – there is money to be made in re-mining or processing of historic mine dumps.

ESG and investment in mining projects

  • ESG factors have been critical to many mining projects for over 10 years, but mining companies do not always tell the market how they practise ESG.
  • ESG has become a non-negotiable for many foreign investors.
  • ESG requires us to focus on the empowerment of women in the mining industry, which is not just about targets; it is also about culture.
  • The youth is the future of the country and must try be positive even in moments of despair. Established players must plant the seeds for youth involvement.
  • Coal has been carved out or reduced substantially from many international funds.
  • Solutions that are South African built are required and South African projects should also look to South African funding for projects.
  • International investors often wish to invest in larger scale projects, which can be incompatible with mining permits (ie, one of the government solutions intended for junior miners).
  • COVID-19 has enabled local partners on the continent to step up and fill leadership gaps on traditionally international run mines – this trend will continue after COVID-19.

Dalit Anstey
Natural Resources and Environment | Associate
danstey@ENSafrica.com
+27 66 474 4466

Zinzi Lawrence
Natural Resources and Environment | Associate
zlawrence@ENSafrica.com
+27 66 476 0776