Exploration strategy seeks to bolster SA investment

Sunrise or sunset? A newly released exploration strategy seeks to revive prospecting in South Africa.

  • Government has at last made public a long-anticipated exploration strategy aimed at bolstering waning exploration investment.
  • Although the country has a rich mineral endowment, the difficult operating environment has rendered it unattractive to exploration investors.
  • The strategy expects exploration spend will target metal and minerals required in the global energy transition.

The Department of Mineral Resources and Energy (DMRE) has made public a long-anticipated exploration strategy that aims to attract substantially more exploration investment into South Africa and position it as a key supplier of metals and minerals used in clean technologies.

The strategy and its implementation plan, as published on the department’s website, seek to grow South Africa’s share of global exploration investment from less than 1% currently to 5% in the next five years, which is forecast to be worth $900 million (about R13 billion).

The strategy comes as the government continues to make steady progress on critical reforms that have long been required to save the ailing South African economy. The strategy and implementation plan aim to bolster the mining sector’s contribution to the GDP, consistent with the government’s Economic Reconstruction and Recovery Plan.

In tackling some of the most significant impediments to exploration investing in South Africa, the strategy aims to reignite mineral development, accelerate new mineral discoveries, and propel South Africa back into a competitive position against other countries endowed with minerals.

With gold resources declining, the strategy notes that “the appeal of the South African mining industry lies in the minerals of the future”.

The South African share of the global exploration expenditure has consistently declined since 2003 – a pattern, the documents say, “which does not resonate with the residual prospects of discovering world-class deposits consistent with the quality of the country’s prolific geologic environment”.

But a challenging operating environment littered with red tape and policy uncertainty has increasingly seen South Africa bypassed as an exploration investment destination.

Among the weaknesses the strategy identified in South Africa’s exploration landscape are energy instability; infrastructure challenges; unsatisfactory policy implementation; industrial action and community unrest; and a lack of geo-scientific data at a requisite scale to inform investment decisions.

However, the strategy highlights the demand for specific commodities in the transition to clean energy as a key for South Africa, which has a diverse minerals base.

The meat of the strategy lies in the accompanying Exploration Implementation Plan, which identifies a wide range of barriers to exploration investment and provides corresponding interventions.

Among the numerous interventions, the plan calls for the government to get its house in order and urgently invest in an efficient online application system as well as an efficient and transparent cadastral system that shows who holds which mining rights. The DMRE must also formally invalidate prospecting rights that continue beyond prescribed timeframes, revoke those that are inactive, and maintain an accurate record of valid prospecting rights.

To improve the geoscience mapping of South Africa, the state is to invest in such a programme to de-risk exploration. It is also imperative for the government to ramp up non-interrupted and continuous long-term investment in geosciences, the plan says. It finds the commitment of the established mining industry operating in South Africa to invest in replenishing the pipeline through exploration necessary.

Meanwhile, the state and private sector must consider establishing a junior exploration fund. Further, the exploration of activity-based incentives for minerals of strategic importance should be considered.

It advised that engagement with the JSE by the DMRE and the Minerals Council is necessary to explore interventions to unlock barriers to listing exploration companies on the bourse.

The implementation plan recommends government look to streamline requirements in various legislations – ranging from environment, water, mining, and land use – to enable timeous finalisation of authorisations and security of tenure.

It also, controversially, recommends consideration be given to developing an efficient mechanism to address long-winded appeals and objections, as is catered for in the National Environmental Management Act, so that processing appeals and objections takes a maximum of 30 days.

The document said that the exploration strategy is intended to be an adaptive framework “that is flexible to market sentiment, commodity interest, tailor-made technological and political changes to keep the South African mining jurisdiction competitive”, the document said.