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Minerals Council developing exploration strategy

30th August 2019

By: Nadine James

Features Deputy Editor

     

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Minerals Council South Africa was in the process of developing a draft exploration strategy to present to the Council for Geosciences (CGS) and the Department of Minerals Resources and Energy (DMRE), Minerals Council CEO Roger Baxter told attendees of the Afriforesight Future of Metals Conference earlier this month.

The Minerals Council has also established an Exploration Leadership Forum to assist in the realisation of this goal.

He explained that the exploration pipeline was weak, despite South Africa still hosting “incredible geology”, adding that the industry as a whole was wasting the country’s mineral potential “by not getting exploration right”.

Baxter noted that South Africa only attracted 1% of the world’s investment in exploration and 90% of that comprised “sustaining investment” used by existing, established companies shoring up deposits around current shafts.

He added that the country should be attracting 5% of global exploration investment – at the very least.

Baxter told Mining Weekly that the Minerals Council was “developing our view of what a draft strategy should look like”, after which the Council would engage with the CGS and the DMRE to “see what ideas they are prepared to adopt or think about to take things to a different level”

.

He noted that one of the key focusses of the strategy could be around establishing a supportive environment for exploration companies.

“Earlier this year, I went to the Prospecting and Developers Association of Canada conference . . . and they have 1 400 venture capital exploration companies listed on the TSX – we’ve got 12 [listed on the JSE].

“If you look at venture capital funding in South Africa, it’s a lot smaller than conventional funding . . . but banks don’t lend to exploration companies because it’s a one in 2 000 chance of finding a deposit.”

He suggested that the industry learn from the Canadians sand Australians and ensure that there are no encumbrances to developing an exploration pipeline.

Some of these “encumbrances” include bureaucratic issues that should be resolved, such as the fact that attaining environmental approvals through the One Environment System takes up to 300 days.

“If you apply for a 1 500 m2 licence area in Botswana . . . it takes a month for the permit to be issued,” he noted, adding that within the existing framework, Botswana enabled explorers to “drive quite a good reconnaissance programme”.

In contrast, in South Africa, “you have to apply for 150 prospecting rights and deal with 150 landowners to achieve the same level of exploration . . . tenure – for want of a better word”.

He also pointed to challenges related to the trajectory of the electricity price and the confusion around the next phase of the Carbon Tax, adding that a significant amount of mining investment was on hold because of these and other lingering uncertainties, including the fact that the issue of continuing consequences for mining right renewals had yet to be resolved.

“Until government starts understanding the way investment committees work in the boards of private companies, we’re not going to change the game.”

He added that the Minerals Council was also looking to establish an investment committee incubator to assist in developing an approach that could drive new investment in the mining industry. The Minerals Council had also jointly established a competitiveness task team with government to further facilitate growth and development.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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