Modern Mining December 2022

JUNIOR MINING

governments can use to assess whether their poli cies are attracting or driving away investment. “From a greenfields exploration point of view (an entry point for most junior mining companies), South Africa has lost ground and there is an urgent need to grow this sector, which remains largely stifled by the regulatory environment and massive red tape. If junior miners are to succeed, there is a pressing need to implement a suitable cadastral system.” For years, the mining industry has been imploring the Department of Mineral Resources and Energy (DMRE) to implement a cadastral system that would allow for transparency and speed up the mining license application process, but so far to no avail. According to Mitchell, there is an imperative to find a well experienced, commercially viable com pany to implement a cadastral system for the DMRE. “Once a cadastral system is in place, it will enable miners to apply for mining licenses online, allow min ers to track their application processes and view companies competing for the same application they have set their sights on, and help them to understand why their application has succeeded or not. From an investor’s point of view, investors will have access to which projects are being progressed by which companies. One of the biggest challenges investors face is that there is currently no central database from which to access up-to-date project information. A cadastral system would allow this level of transpar ency and encourage greater investment into junior mining companies.” Mitchell points out that virtually all key mining jurisdictions in the SADC region have online cadas tral systems, with South Africa being one of the few laggards. As a result, much of the foreign direct investment is being channeled into destinations that do have a cadastral system in place. Furthermore, their “mining and exploration rights are being man aged better and more efficiently”. “Our neighbours, Zambia, Mozambique, Botswana and Namibia, have all embraced attractive policy measures, which encourage foreign invest ment into the mining sector. South Africa needs to follow suit.” Sector performance in 2022 According to Mitchell, the junior and emerging mining sector performed on par with the broader industry. Although mining production dropped primar ily due to institutional constraints from Eskom and Transnet, which led to the industry losing out in rev enue from curtailed commodity exports, revenue increased significantly as a result of the commodity boom. “The JEMD is working hard in advocating for the establishing fit-for-purpose regulations for the junior and emerging mining sector, but there is much work to be done,” concludes Mitchell. 

Mitchell explains that while junior members are often qualified professionals, they frequently lack experience in mining and require advice from long standing miners. As such, they have been benefitting from infor mation sharing with the Junior and Emerging Miners Leadership Forum, which is chaired by Orion Minerals CEO Errol Smart, as well as from the Junior Mining Accelerator Programme run by Johannesburg Stock Exchange (JSE), which was established to help junior miners gain greater business insight. According to Mitchell, the JSE is keen to emulate the Toronto Stock Exchange, which boasts 160 listed junior miners and is on a drive to encourage juniors to list on the local bourse. The JSE currently hosts less than ten listed junior companies. Lastly, the JEMD continues to undertake regular research, including snap surveys among its mem bers, aimed at identifying challenges faced by the sector. In this way, the Minerals Council is able to provide the necessary assistance and support, where required. A sector stifled by over-regulation and red tape According to the Fraser Institute’s Annual Survey of Mining Companies 2021 report, South Africa’s attrac tiveness as an investment destination is less than optimal. South Africa was ranked among the world’s

Institutional constraints from Transnet have led to the industry losing out in revenue.

ten least attractive mining destinations for investment, meaning that junior miners’ access to foreign direct investment recei ved a body-blow. The Fraser Institute’s survey ranks countr ies’ attractiveness in terms of pol icy, mineral potential and other metrics to come up with a report card that

Difference between artisanal and small-scale miners  Artisanal miners are defined as those rely ing on rudimentary equipment (pick and shovel) as a mining method while small scale miners adopt mechanised mining methods, including machinery.  As soon as machinery is used, the miner becomes subject to additional legislation.

24  MODERN MINING  December 2022