Mining Weekly

South Africa needs to urgently develop a vibrant junior mining sector and establish a conducive policy environment to attract investment in new exploration projects to ensure the long-term sustainability of the country’s mining sector.
This is according to banking group Nedbank Capital mining and metals head Paul Miller, who was addressing delegates at the SADC Africa Mining conference, which took place at the Electra Mining Africa 2016 trade show last week.

He said active mines were by their nature always in terminal decline, as the resources they mined were finite. However, Miller pointed out that South Africa had been very fortunate to have had a number of long-life mines, which had been in operation for over 100 years, such as the Cullinan and Randfontein mines.

Nonetheless, he stressed that, for South Africa to ensure the sustainability of its mining sector, new mines had to be developed in the country. This meant that new orebodies had to be found and explored in the coming years.

“There are currently not many vocal advocates for the development of new, greenfield operations in South Africa,” he said, attributing this to investors wanting to protect their existing investments and being averse to exposing themselves to greater risks.

Moreover, Miller noted that mining majors were primarily focused on weathering the current challenging economic climate and depressed commodity prices. He lamented that, as far as he was aware, no mines in South Africa were currently spending resources on off-mine exploration projects.

He further remarked that industry institutions were speaking only in the interests of existing operations, and not focusing on the needs of yet-to-be-established operations.

Therefore, Miller called on junior miners to take bold steps to ensure the future of the mining industry. However, he emphasised that, for juniors to succeed, three things needed to be in place, namely good mineralised geology (which South Africa possesses), strong capital-raising markets (currently lacking) and a conducive regulatory environment (currently lacking).

A lack of the

latter two elements made it an unappealing investment destination for many investors.

He added that investors were more upbeat about investing in politically unstable mining jurisdiction, such as the Democratic Republic of Congo, as they viewed its risk-to-reward ratio as more favourable than South Africa’s.

Miller also told Mining Weekly that South Africa could not make excuses about the fact that it had to compete with neighbouring and regional countries, as the business of attracting foreign direct investment was by its very nature competitive.