DMRE obstructing mining development

South Africa’s mining sector has enjoyed a satisfactory start to 2023, with January’s total mineral sales of R63 billion matching the highest ever January figure recorded in 2021. It was also 9% higher than last year’s January sales and 150% higher than in January 2016.

An interesting feature of South Africa’s mineral sales data is the significant shift that has occurred in the composition of the top-six commodities over the past two years. In January 2021, platinum group metals (PGMs) were solidly in the number one position, followed by gold, iron ore, manganese ore and manganese ore. Now, two years later, coal has moved into the top spot, relegating PGMs, gold and iron ore by one position each, whilst chromium ore has leap-frogged manganese ore into fifth place.

Looking into the likely future trends for South Africa’s mining commodities, the Economist Intelligence Unit (EIU) expects base metal prices to edge upwards this year, led by policies in China aimed at boosting construction and manufacturing activity.

Against the background of global efforts to combat climate change, especially by European Union member states, combined with a relatively bullish outlook for global growth by the International Monetary Fund (IMF), the chances for significant precious metals demand growth are also quite rosy. Hopefully, the current constraints faced by mineral exporters with regard to the country’s energy and logistics infrastructure will not deter the mining sector from expanding its output in the rest of the year.

DMRE must get its act together

Unfortunately, the incompetence of the Department of Mineral Resources and Energy (DMRE) remains an obstacle in the way of exploration and new mining development. According to a spokesperson for the Minerals Council of South Africa, mining exploration is virtually at a standstill.

An additional problem relating to the absence of a functional mining cadastre in South Africa, which has been undermining the sector for several years, is the potentially negative knock-on effects for developers of renewable energy projects, particularly in Mpumalanga, where capacity still exists to connect new projects to the grid.

According to Paul Miller, a director at AmaranthCX, who has conducted extensive mapping of the coal mines and projects in Mpumalanga, the absence of a cadastre make it very difficult for renewables developers to comply with a legal requirement to identify any mining or prospecting rights on, or within two kilometres of the proposed development.

This requirement states that any developer of a non-agricultural project must apply to the Minister of the DMRE or a delegated local official for permission to proceed with the development. The relevant official must also identify and then consult with all affected rights holders, a process that can take up to six months to complete.

Bureaucratic delays are exacerbated by the DMRE’s own Geographic Information System (GIS) data which is spread across the South African Mineral Resources Administration (Samrad) system, but described by private sector mining experts as dysfunctional.

According to geological data experts, this obstacle could be removed if the DMRE were to periodically extract the full geodatabase file from the ArcGIS system that underlies Samrad and make it available for download on its website. Apparently, this could be done in a couple of hours at no additional cost to the department.

The refusal of the DMRE to assist the South African mining sector with developing the industry is curtailing the quest for higher growth and job creation, as well as obstructing efforts to restore energy security. It needs to get its act together – pronto!