south africa

“Let’s not forget that a junior has a number of benefits to offer which in almost all cases will ensure long-term sustainability for our existing and for new mine developments.”

The timing I have this month to write my editor’s note is unfortunate – with deadline falling just before South Africa’s national elections takes place.

This article first appeared in Mining Review Africa Issue 5, 2019
Read the full digimag here or subscribe to receive a print copy here.

So my comment on the possible outcome and its impact on the mining industry seems futile. By the time you read this the results will be known and the industry will have reacted accordingly no doubt.

Without delving into specifics, I hope the election result will be the best result for South Africa – which so desperately needs investment to boost its economy, in the mining sector and generally speaking as well.

So, while the ‘chosen’ ruling party may or may not deliver investment security, I wonder if we find ourselves in a situation of too little, too late, or not?

Mining Charter III is eventually in play after a tumultuous period of uncertainty thanks to our former mining minister Mosebenzi Zwane.

At least, for the most part, this version has been accepted by the industry and can be attributed to our current minister Gwede Mantashe who is well-respected in the industry.

Thus far he has delivered well to bring some stability to the sector.

Nonetheless, many of the country’s most well-established major mining houses are already well underway with exit strategies. In fact, some have already ticked that big ‘to do’ off their priority list.

This in my opinion is not necessarily all bad news however, as it has opened the door for small-scale mining houses to make their presence known in the country.

And so I believe we’re on the precipice of a new dawn in South Africa’s mining history.

Let’s not forget that a junior has a number of benefits to offer which in almost all cases will ensure long-term sustainability for our existing and new mine developments.

The most obvious is their significantly small overhead costs which means mines don’t need excessively high margins to support their businesses.

That’s a big plus in a time where commodity prices are sitting on the lower end of the spectrum.

Juniors also rely heavily on the service and supply industry which equates to more business for those companies that support the mining industry – are you seeing the bigger picture?

The reality is that in many instances a mine can be financially unviable under a major but viable with a junior.

Of course, juniors run the risk of not always following procedure or not having sufficient cash to follow the rulebook but if managed, this risk can be largely mitigated.

Nonetheless, they all need investment so my comment in essence has come full circle, and I hope the outcome of the elections will be a positive one, and the missing puzzle piece needed to secure the funds to bring new developments to the mining sector – enabling our junior mining industry to flourish.