The timing of the overall decline since 2004 strongly suggests that ANC policy and misgovernance are the main culprits.
By Ed Stoddard
One of the several targets that Minerals and Energy Minister Gwede Mantashe has missed is the goal he stated in 2019 to have South Africa account for at least 5% of the mining sector’s global exploration budget “within the next three to five years”. The latest 2022 data underscore just how far short this target has fallen. We [Daily Maverick] recently reported on S&P Global’s World Exploration Trends 2023 report (which covers 2022), pointedly noting that South Africa was not even mentioned in the text made available to journalists. South Africa has all but vanished from investment radar screens when it comes to exploration.
Further data that S&P Global gathered for 2022 shows that South Africa last year accounted for 0.80% of global exploration expenditure. So, three years after Mantashe aimed for 5% within three to five years, South Africa is not even close. Indeed, it’s still below 1%.
But Mantashe is a member of a party and a Cabinet where accountability and performance demonstrably mean nothing, and he presides over a department where standards appear to be pretty low.
It’s revealing to note that the last time South Africa accounted for over 5% of the mining sector’s global exploration budget was in 2004 and it has generally been downhill from there, falling below 1% in 2020 — the year after Mantashe laid down his 5% target — and remaining stuck there.
The timing of the overall decline since 2004 strongly suggests that ANC policy and misgovernance are the main culprits. That was the year the Mineral and Petroleum Resources Development Act (MPRDA) came into effect, giving rise to the original Mining Charter with BEE and other targets that are onerous from an investment perspective.
There have since been updates to the charter and legal wrangling over concepts such as “once-empowered, always empowered” — which means that once a company reaches its required black ownership target threshold, it does not have to top up again if black shareholders sell their stake.
BEE requirements for exploration were scrapped under Charter Three, but it has not been implemented yet. And industry sources say that “activist officials” in the department interpret the charter in such a way that foreign applicants for exploration or prospecting rights are made to feel unwelcome. This has included insisting on BEE requirements for exploration even after Charter Three was supposed to have dispensed with them.
Exploration is vital because, without it, you won’t have new projects and new mines. It’s as simple as that, and South Africa, after more than a century of industrial-scale mining, still has plenty of untapped and undiscovered mineral wealth. South African mining production in 2022 fell by more than 7%, part of a long-term trajectory into the abyss.
The other massive obstacle to exploration, which we have reported on extensively, is the DMRE’s useless Samrad system for mining rights applications, which had a backlog at one point of more than 5,000, speaking to the department’s dysfunction.
The DMRE has been promising for years to replace Samrad with a proper mining cadastre, which provides the public with easy online access to the state of play of mining rights in a country as well as its known resource wealth. A functional one also allows for mining rights applications to be made and tracked with ease.
Many African countries, including neighbouring Botswana, Namibia and Mozambique, have recently adopted a ready-made, off-the-shelf platform operated by Colorado-based Trimble. In 2015, Trimble acquired Spatial Dimension. Founded in Cape Town in 1999, this unit has been at the forefront of Trimble’s cadastre offerings and is seen as the gold standard by the mining industry.
But the DMRE wasted years trying to get a made-to-order system, raising suspicions that it was not very interested in transparency. That tender was so badly done that it was effectively torpedoed by the State Information Technology Agency (Sita) and now the department has promised to acquire an “off-the-shelf” cadastre. In mid-February, Mantashe said it would be issued by the end of February. When that deadline was reached, the DMRE said the middle of March — so, like now.
As we went to publication, there was still no sign of it, but the damage has been done, as the 2022 data painfully show. Meanwhile, the DMRE has “been seized” — to use one of its top expressions — with the need to tender for a media monitoring system, which would include an “early warning system” for “incoming media-launched attacks”. It also wants to measure the “tone” of individual journalists and publications.
Rome is burning, but the DMRE is worried about its reputation, which it has soiled itself. And so we have this ridiculous fiddling. It also turns out that a similar tender was issued in 2019, and we still await the DMRE’s response to our queries on what became of that.
Returning to the S&P findings, South Africa was last top of the exploration charts for Africa in 2011. In 2022 it was fifth, with Mali and DRC, as we previously reported, at the top. Mali, of course, has “issues”, including a Jihadist insurgency. And yet it’s a more attractive exploration destination than South Africa.
But hey, the DMRE is worried about media coverage of its shortcomings and failings. That shows where its priorities lie.
This story first appeared in Daily Maverick