South Africa

BUSINESS MAVERICK: Government pledges to tackle serious mining application backlogs

In a follow-up presentation to MPs, officials from the Department of Mineral Resources and Energy pledged to loosen the logjam in mining applications and address transparency issues that are deterring investment.

The Department of Mineral Resources and Energy (DMRE) clearly has capacity issues. On 24 February, the department gave a presentation to Parliament on its licensing system. It revealed a backlog of 5,326 applications for mining rights, prospecting rights, mining permits, renewals and cessions or the sale of rights. 

The backlog for applications for prospecting rights alone was 2,485. 

Without prospecting and exploration, you don’t get new mines built. So, in the long run, there is no new investment, job creation or new commodities production to lift exports and feed into gross domestic product.

Mpumalanga, Limpopo and North West are the worst offenders. In Mpumalanga, the backlog for prospecting rights applications is 1,001. Limpopo is 536 and North West, 467. 

There are also concerns that some of these rights have been granted in ecologically sensitive areas, a cause for concern raised previously in this publication.

In a follow-up presentation on Wednesday, the department said “a team… is currently finalising a turnaround strategy for Mpumalanga” and is finalising the “recruitment process to fill critical and vacant positions”. 

The department is due to report back on progress in three months.

It also said it was “considering the possibility of publicising granted rights”. The fact that such rights are not in the public domain underscores the transparency issues at play here.

“The department publishes nothing, except an out-of-date listing of operating mines — a subset of granted mining rights — on their website,” Paul Miller, director of mining consultancy AmaranthCX, told Business Maverick.

South Africa also lacks a publicly accessible online mining cadastre, which typically provides information on things such as existing mining rights, including their geographical location. This has been flagged as a key concern among investors. 

It emerged in the presentation that this is now a priority and is high on the agenda of mineral resources and energy minister Gwede Mantashe, suggesting there is much-needed top-level political support for transparency initiatives. An update is expected in six months’ time. 

The problematic Samrad system, which the mining industry widely regards as broken, could well face the chop.

The mining industry has offered to help fund the new cadastre system, according to its main industry body, the Minerals Council SA.

“The Minerals Council has offered to contribute partly to the cost of a new cadastre system, provided that the associated costs are reasonable and the Samrad system is completely discontinued. 

“We continue to engage constructively with the DMRE to find solutions to issues that hamper the growth of exploration and improve efficiencies around the issuing of licences and permits,” the council said in an emailed response to questions from Business Maverick.

A lack of transparency is among the reasons South Africa has fallen to 60th out of 77 in 2020 — from 40th out of 76 in 2019 — on the Canadian-based Fraser Institute’s annual investment attractiveness index of mining jurisdictions, which focuses on exploration investment. 

In the eyes of investors, transparency counts.

Still, there appears to be an acknowledgement at the department that there are serious problems that need to be addressed. It’s a start, at least. DM/BM

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