This is because it is easier to run big companies in the local business environment than small ones.
South has been endowed with some of the best ore bodies in the world and stands out as the country with the world’s deepest mines. In addition, nearly all the mining companies in the world have roots in South Africa.
In order to make the South African mining space favourable for junior miners, ten regulations need to be scrapped for every one that is contemplated. There are as many as 214 pieces of legislation that apply to small listed mining companies here, which implies that junior miners either break the law or go out of business.
You simply can’t start a mining company in this country, as big government and big business have created a space where only they can exist. One factor that makes the small business environment challenging is the fact that the discussion about labour focuses on wage, instead of on job creation.
What is more, the regulatory system is dysfunctional: the owners of the approximately 2 000 active prospecting permits in South Africa aren’t finding new ore bodies and the permits aren’t being circulated. If the system was functioning effectively, we would either have a great number of new miners or we would have prospecting licences changing hands.
The government took mining rights away from the ‘Anglos’, but is not taking them away from people who are not working it.
So how do we eat this elephant problem we have created? One way of achieving this is through regulatory certainty, but take caution: junior miners need practical, viable certainty as they cannot live with bad certainty like major miners are able to do.
Where the regulator has the ability to delay something, it also has the ability to fast-track it. The trade-off of time and money is critical in the junior exploration space as a six-month delay of a junior’s project means the end of it, while a major miner like Harmony could survive an 18-month delay in the transfer of mining rights.
Exploration is undertaken on behalf of the people of a country. If the government does not incentivise people to conduct exploration here, they will naturally go and do it elsewhere. There is no space for true exploration in South Africa. If Hans Merensky lived today he would be in jail. Exploration is simply not taking place; we are now the least active in exploration in the world.
We are running out of ore bodies in the country, with less platinum and diamonds being produced, while there have been no major discoveries in South Africa in the last five to eight years. This all points to the fact that the system is not working.
Exploration data should become public property when exploration licences expire. If South Africa had a national database of geological exploration information, we would not have to undertake early exploration at all. But the data that had existed in the past no longer exists for those who don’t pay for it. South Africa was once one of the most explored countries in the world, but now we are falling behind.
There is simply no junior sector in South Africa where the elephant droppings must produce some dung beetles.
I have been active in the junior miner sector for the past ten years; my involvement in the sector reads like a horror story. Delta Mining, Lesego, Blyvoor, ConsMurch – I think admitting to five big mistakes is enough. But I am going to keep on coming, until I find a success story. I am committed to remaining in the junior mining space until I am successful!
I am the Chairman of The 2017 Junior Indaba. Registration is now open for Junior Miners from explorers, developers and investors in junior mining to join us at the table at this year’s event. www.juniorindaba.com taking place on 7th & 8th June in Johannesburg.
Don’t miss this opportunity to join in the lively and engaging indaba where thinking is shared and opportunities and solutions sought with equal vigour.