Every Friday, SAfm’s radio anchor Sakina Kamwendo speaks to Martin Creamer, publishing editor of Engineering News & Mining Weekly. Reported here is this Friday’s At the Coalface transcript:
Kamwendo: Council for Geoscience CEO Mosa Mabuza this week urged South Africans to boost the economy by engaging in exploration.
Creamer: The Council for Geosciences CEO Mosa Mabuza referred to the prospect of exploration being low hanging economic fruit. Now, you can get going on exploration very, very fast and he has already done a lot of geo data. The Council for Geoscience is saying our future is so dependent on mining, but we need to have junior miners come in first and they need to come through the exploration process. He is saying we should set this as our big, audacious goal in South Africa, because it is so important to the future of the economy but is literally not working now.
The people who are graduating as mining engineers now, probably won't be able to retire as mining engineers, because the mining sector would have shrunk to such a proportion over the next forty years, unless we get going on exploration. The Council for Geosciences CEO Mosa Mabuza is urging the country to focus on exploration now, and what needs to be done in place to give mining its rightful horizon. We are the worst mining jurisdiction in the world at the moment when it comes to exploration. You have got the Canadian jurisdiction with thousands of small cap miners. You have got Australia with 600 small cap mining companies. We have got less than ten juniors on the Johannesburg Stock Exchange.
The Council for Geosciences CEO Mosa Mabuza is saying wouldn't it be wonderful if we had an era of new listings of mining juniors on the Johannesburg Stock Exchange again, because he says the prospects for juniors are so good. The world of exploration has changed, the technology has advanced. He is saying even with the Council for Geoscience going around now they are finding metals and minerals that they didn't think were there, critical metals and critical minerals that are in big demand in today’s climate conscious world. The Northern Cape is highly prospective and even in historic mining areas like the Witwatersrand Gold Basin is showing distinctive signs of still being a minerals treasure chest, and he wants that treasure chest to be pursued and turned to positive account.
Kamwendo: The Johannesburg Stock Exchange has designed a new money-raising product to attract junior miners.
Creamer: What has happened now is that South Africa’s National Treasury has made it impossible for provident funds and institutions to invest in small companies. Investment in small to ensure initial public listings is a thing of the past on the Johannesburg Stock Exchange. This is because Asisa, the group that controls all our provident funds and pension fund money, the Association for Savings and Investment, is subject to ultras strict Treasury rules.
They can only consider companies with market capitalisations of R30-billion. The small companies are not getting a show in because the rules says they can't. As an interim, the Johannesburg Stock Exchange has said, let us create a new product. This involves helping to secure funding for private companies that remain private companies. They are not publicly listed. The hope is that as they build up in size they eventually scale up to a level that makes public listing scale the Treasury barriers. The JSE assists by introductions to the big institutions, including, ironically, the Sanlams, the Old Mutuals and the Momentums, who are able to enter through their private equity departments.
They will come and study what is presented to them through the JSE about these juniors and that may then receive financial backing as private companies. They so not get publicly liste, so they don't have initial public offerings on the Johannesburg Stock Exchange, but they obtain funds, money early to build up their enterprises and then once they are built up to the correct level, they can then consider an initial public offering and public listing on the JSE. But it's very unsatisfactory. National Treasury has got to do something about itself. It must look at itself in the mirror, because what it is doing is having serious unintended consequences, and it is in the process of helping to destroy a vital industry in South Africa that was this country’s saving grace during the Covid pandemic.
Kamwendo: Thanks very much. Martin Creamer is publishing editor of Engineering News & Mining Weekly.