SA miners welcome talks – but fear another policy shock

South Africa’s mining lobby group said it’s pleased by discussions with the government over draft legislation to regulate the sector, but remains wary about the potential for an unwelcome shock.

Minerals Council South Africa reacted angrily when the bill first appeared a year ago, complaining that its recommendations had been ignored. The state then partially backtracked by clarifying that exploration activities would be exempt from meeting minimum Black-ownership rules.

“We are encouraged by the nature of the engagements we have had” with the Department of Mineral and Petroleum Resources during the past 12 months, the council’s president, Paul Dunne, told reporters on Wednesday. “However, we do not want to be surprised by a revised version” that “does not reflect the engagements we have held,” he said.

South Africa introduced a mining charter in 2004 to distribute the benefits from mining more widely among the country’s citizens to help repair the economic impact of racial discrimination during apartheid. At the time, that included a minimum Black shareholding target of 26%.

One area where South Africa is faring particularly poorly is exploration, which is essential for identifying the mines of the future. Investment in prospecting has dropped for seven consecutive years and slumped more than 85% in the past three decades, according to data published by the country’s statistics agency.

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South Africa is a major producer of gold, iron ore, coal and platinum-group metals. While the country remains the continent’s top exporter of mineral products, there’s faster growth and more dealmaking in the mining sectors of nations such as Guinea, Zimbabwe and the Democratic Republic of Congo.

Disputes with government and policy uncertainty means South Africa’s mining industry “has not delivered its full potential” in recent decades, according to Dunne, who’s also the chief executive officer of Northam Platinum Holdings. Despite the broadly positive talks with the government, there’s still “a long and challenging road ahead of us,” he said.

The Minerals Council – which counts large firms like Exxaro Resources, Sibanye Stillwater and Harmony Gold Mining among its members – also reiterated the “urgent need” for South Africa to streamline the mining rights’ application process, which is much simpler in other African nations.

The government has repeatedly postponed the implementation of an online registry – or cadastre – that displays all mining and prospecting rights. The delays are making the mining industry “less confident” about the eagerly awaited database, the council’s CEO Mzila Mthenjane said at the same event.

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