Regulation was killing mining in South Africa, Peter Major, a director a Mining at Modern Corporate Solutions, told the 19th McCloskey Southern African Coal Conference on Friday.
“Regulation is like a nuclear fallout and it is killing mining in South Africa. I have been in the business for the past 42 years and unless things change we will follow the path of the Democratic Republic of the Congo and Zambia that took a thriving mining industry in the 1960s to the brink of extinction in the early 1990s. Once the politicians stepped out of the way and lifted the restrictions, then the mining industry revived and we could see something similar happening here if regulations are eased,” Major said.
He shared a slide that showed the abstract of a paper in the magazine Resources Policy in June 2019, which asked whether Chinese coal companies should diversify out of coal. The conclusion of the authors was that there was a mixed performance, so diversification was not a panacea for coal companies. Major emphasised that the conclusion of the Chinese authors that “coal enterprises that aim to develop diversification strategies should be cautious”, should be taken on board by South African coal companies.
Other panel members said it was not only regulation that was killing mining, but the lack of capacity at the Department of Mineral Resources and Energy (DMRE).
According to a reply from the DMRE to a Member of Parliament in December 2023, the DMRE had received 2 525 applications for mining rights and permits in the financial year so far, but the DMRE was unable to finalise a single one.
It was also policy uncertainty that hampered investment in mining, 20 years after the implementation of the Mineral and Petroleum Resources Development Act (MPRDA). Although the legislation was aimed at transforming the sector, increasing investment and growing linked industries, poor implementation of the MPRDA over the past two decades has resulted in a gradual tapering off of investment into the mining industry in South Africa.
This has meant that South Africa’s position as the world’s largest gold producer has been taken up by other countries with the consequentially negative impact on the growth of the economy, government finances and employment opportunities.
Investors are, therefore ,withholding their investments for exploration, mine expansions and the development of new mines and the lack of new capital means the industry is slowly bleeding to death.
From the point of view of panel members Nikisi Lesufi from the Minerals Council, Waheed Sulaiman from Menar, Fred Arendse, the President of the Junior Mining Council and Richard Lilleike, the Chief Growth Officer at Exxaro, apart from legislation, the top three constraints on mining was energy security, logistics and crime.
In particular, Arendse said junior miners could profitably mine those mines that had been put on care and maintenance as their cost structure was lower than that of the majors.
BUSINESS REPORT