Mining in focus
to be a driver of transformation and an
incubator of black-owned and operated
entrepreneurial mining businesses – but
only if policymakers recognise that the
provisions of the mining charter and
implementation guidelines currently
have no basis in the realities facing small,
privately-funded, entrepreneurial diamond
mining businesses.
Marengwa and De Meillon are not
alone in their concerns for the future of
the small or junior diamond sector due to
the consequences of disabling minerals
policy, inefficiency of the Department
of Mineral Resources (DMR) and
the requirements of one-size-fits-all
mine health and safety laws and other
unsustainable compliance-related costs.
Juniors are overregulated
Small diamond producing plants used to be a common sight in the Northern Cape, but these small-scale
miners’ numbers are dwindling.
“There should not be an absence of
regulation,” says De Meillon. “Permits
should be issued efficiently and faster and
to people who have the appropriate skills
and resources to use them. “We can’t comply
with 10-year social and labour plans when
the average life of an alluvial mine is only
one to two years. The transformation of
ownership in the mining industry will only
happen if there is skills transfer. Rather
than putting the emphasis on equity stakes,
the law should emphasise training and
mentoring, which smaller operators could
fund through contributions to an industry-
wide development fund,” he adds.
The need for a mining fund
Marengwa also supports the idea of a
non-governmental Mining Development
Fund for junior miners, to which all mining
companies should contribute 1% of gross
sales. “The fund should be intended to
support black mining entrepreneurs and
business entities in the raising of capital
for projects at the development stage and
develop them to a point until they are stable
and sustainable or attractive for acquisition
by larger companies,” says Marengwa.
“Some funds should be used for the
creation of a BEE procurement company
database. The database should include all
BEE suppliers who offer their services
to small mining companies and provide
support through mentorship programmes.
“In addition, the fund money should be
invested in skills development initiatives
such as holding workshops on topical policy
issues such as the raising of finance, health
and safety and the Mining Charter,” says
Marengwa.
The advantage of this sector that it is less
capital intensive than most other small and
mid-tier mining activities, particularly so
gold and base metals, and hence does provide
opportunities for new black entrepreneurs.
Also, with the growing international
shortage of larger, (+2 carats) high quality
gemstone diamonds, and synthetic gems
putting pressure on the small or middle end
of the market, South Africa’s alluvial industry
should be a growth sector, not in decline.
According to SADPO, the alluvial
diamond sector should be and stands ready
During and after the Cape Town Mining
Indaba held in February 2019, numerous
role players, including existing large
and small company CEOs, potential
funders, practising mineral rights lawyers
and foreign investors and companies,
consistently noted that the charter
required further improvement and was
deficient in respect of the junior and
small-scale exploration and mining sector
‒ notably that South Africa was lagging
in exploration and simply not replacing
the minerals that it was mining, that
junior exploration companies were forced
to comply with the same rules that large
operating companies comply with, which
is a huge barrier, and that junior mining
companies are overregulated.
Most recently, similar views have
again been expressed at the Prospectors
and Developers Association of Canada
(PDAC) conference held in Toronto
at the beginning of March. Key
interventions proposed by the CEO
of the Minerals Council of South
Africa (MC) Roger Baxter, included a
crackdown on corruption and unethical
leadership, a significant improvement
in licensing systems and turnaround
times, and creating a stable, predictable
and competitive policy, regulatory and
operating environment to encourage long-
term investment in mining and restoring
the sector’s competitiveness.
The reality is that exploration is a good
capital raising space for junior black
miners, but the current charter fails to
leverage this.
Rather than putting the emphasis on equity stakes, the law should
emphasise training and mentoring, which smaller operators could fund
through contributions to an industry-wide development fund.
[26] MINING MIRROR JULY 2019
www.miningmirror.co.za