SA NEEDS
JUNIOR MINERS
The South African mining industry needs to stimulate the junior sector,
writes Duncan Bonnett, director at Africa House.
S
ome fifteen years ago, the head of an Australian junior
mining company with operations in the DR Congo
was asked why his company was not also looking at
prospects in South Africa? His short reply was “South Africa
knows nothing about junior mining and there are not nearly
enough incentives anyway.”
Junior mining is closely connected to early exploration. It
is highly dependent upon the accordance of concessions,
tax incentives and the ease of raising capital. It is bedevilled
by factors such as political and regulatory uncertainties
and complex labour relations. Junior mining is high-risk,
but Canada and Australia have been successful in creating
support mechanisms for their juniors who are active in mining
operations in numerous African countries. Canadian, Australian
and other international junior mining houses take advantage of
incentives attached to registration with the Toronto, Australian
and AIM (London) stock exchanges.
Meanwhile, junior mining activities have increased considerably
in a wide range of African countries including the DR Congo,
Ghana, Côte d’Ivoire, Burkina Faso and Tanzania. The rise in
demand for ‘rare minerals’ such as graphite and vanadium have
given further impetus to junior/exploration initiatives. A good
example is junior graphite mining in northern Mozambique and
southern Tanzania.
Despite the slow pace of junior mining development in South
Africa, some observers believe in an upsurge from 2019 and
2020. They base their predictions on increased greenfields and
brownfields exploration across the country reinforced by an
improved regulatory environment. Junior mining houses have
been operating and are still active. Orion Minerals for example,
is exploring for base metals in the Northern Cape and Sitatunga
Resources will be opening a manganese mine in the same
province soon.
There have been attempts to stimulate junior mining and
exploration in South Africa. In 2015, the Minerals Council
South Africa set up a Junior and Emerging Miners Desk to
provide technical and other support to junior aspirants. A
number of mining funds such as the Anglo Khula Mining
Fund have been established to allocate funding for emerging
black miners. However, the high risk has resulted in a number
of these funds concentrating on brownfields rather than
greenfields projects. Juniors have difficulty in meeting
funding thresholds. The Minerals and Petroleum Resources
Development Act (MPRDA) has been criticised for its lack of
focus on junior mining. The debates surrounding the Mining
Charter have also drawn attention away from the need to
boost junior mining in the country.
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African Mining January 2020
South Africa’s share of African exploration has dropped
substantially over the past fifteen years to something less
than ten percent. The concept of junior mining in this country
is intertwined with the promotion of black-owned mining
companies and what is termed ‘emerging miners’. Many of
these do not have the capital, nor in some cases, sufficient
experience required for meaningful exploration. In the
past, exploration was the prerogative of the major mining
companies and not stand-alone juniors. Deep level mining
peculiar to South Africa required substantial capital that the
big companies could provide.
Duncan Bonnett, partner and director at Africa House.
www. africanmining.co.za