On 2 March 2021, Fasken’s Global Mining Group hosted a virtual panel discussion which included the South African Minister of the Department of Mineral Resources and Energy (the "DMRE"), the Honourable Gwede Mantashe ("Minister") as part of Fasken’s 11th annual Prospectors and Developers Association of Canada (PDAC) seminar series.
The other members of the panel discussion were: Advocate Thabo Mokoena – the director general of the DMRE; Mosa Mabuza – the Chief Executive Officer of the Council for Geoscience in South Africa; Roger Baxter – the Chief Executive Officer of the Minerals Council in South Africa; Errol Smart – the Chief Executive Officer of Orion Minerals; and Conor McFadden – Fasken Partner. Fasken Partner – Godfrey Malesa, moderated the session.
The theme of the discussion was “Driving Exploration and Industrialization through Localization to Grow Mineral Production”. The session also provided an update on recent developments and opportunities in the South African mineral sector.
We set out the key takeaways from the panel discussion below:
- Covid-19 has changed the way all sectors functioned and reprioritise many facets of business – the pandemic has enabled both government and the mining industry to start working together at reviving the South African mining sector.
- Exploration is expected to become a key focus for South Africa. In order to drive economic recovery and reconstruction in light of, amongst others, the impact of the Covid-19 pandemic on the South African energy and mining sectors, the DMRE, in collaboration with the Council for Geoscience and the Minerals Council South Africa has committed to developing a new competitive exploration implementation plan, with a view at creating an enabling environment in which to expedite exploration and move from capturing 1% of global exploration spend to between 3% and 5% within the next five years.
- The DMRE is attending to the energy crisis and hopes to have the crisis addressed by the end of 2022. The measures to address the energy crisis include implementing the accelerated renewable energy project.
- With regards to the need to designate specific minerals for local beneficiation, the Minister indicated that he believes that South Africa should relax the movement of commodities and the freedom to enter the space of exploration. A key example of this policy direction is the agreement to remove the requirement for companies to have a Black Economic Empowerment partner during the exploration phase from the current Mining Charter.
- The Minister expressed the importance of communication in attracting foreign investment into the mining sector in South Africa and urged mining industry leaders to join the government in speaking positively and telling a positive story about South Africa.
- The DMRE is developing a new and more efficient mining cadastre system, which will log applications for mineral rights. This will replace the existing platform, which the mining industry widely views as dysfunctional.
There was agreement amongst the Panelists that there has been a significant improvement in the mineral policy framework since the Minister took office. However certain areas need improvement such as the tenure of the licence for exploration in South Africa. Currently, the prospecting rights in South Africa allow for a period of 8 years; however this is not conducive to the discovery of massive mineral deposits as it can take about 17 to 25 years to discover a big base metal mine. While policy framework is necessary to drive localization, mining companies also need to play their role and ensure that they deliver on their prospecting and mining works programmes.
The panel discussion also touched on issues of tax incentives for exploration and junior mining companies in South Africa. Although the DMRE indicated that such policies are possible, it did not commit to their enactment.
The recording of the panel discussion is available via this link: https://youtu.be/Lb5H6Hv6Rfs