The bottleneck and the lack of a cadastre are two sides of the same coin that has jammed up investment into South Africa’s exploration sector. South Africa accounts for less than 1% of the global expenditure in exploration activities, a sign of a sunset industry. If prospective prospectors cannot get their permits, they cannot explore. It’s that simple.
The backlog of 5,326 applications for mining rights, prospecting rights, mining permits, renewals and cessions or the sale of rights came stumbling into light early in 2021 during a Department of Mineral Resources and Energy (DMRE) presentation to Parliament. Business Maverick and other media outlets have repeatedly asked for an update.
In October 2021, the DMRE revealed to Business Maverick that it had processed or adjudicated 607 applications, 114 for mining rights and the remainder for prospecting rights. It still remained unclear what the exact size of the backlog was but mining industry sources have said they believed that progress has been made.
The DMRE fleshed out further details during the round-table discussion.
“We indicated at the time that we had a programme to reduce that backlog and we cannot be irresponsible in reducing that backlog. We have to be fair to all the applicants. And we believe that we’ve done that,” said Tseliso Maqubela, the deputy director-general of minerals and petroleum regulation.
He went on to say that since that parliamentary presentation early in 2021, the department had adjudicated more than 1,000 prospecting rights and more than 400 mining rights.
“That is a lot of work and the resources have not increased,” he said, also noting the challenges presented by the Covid-19 pandemic and its impact on workflows. “If we try to do more than that, given the complexity of the work, we will make mistakes.”
Asked afterwards for clarity, Maqubela said the backlog had been reduced by about 1,400 which would bring it to less than 4,000. That still seems like a large number but at least there is movement in the right direction.
Much of the entanglement also stems from the useless Samrad system for lodging rights applications which Mantashe has long decried and admitted is a failure.
The solution lies in a functioning mining cadastre, which is the global gold standard. An online portal that is open to the public, it provides comprehensive geological data about a country, information on mining and prospecting permits that have been issued and expired, that sort of thing. Among other things it brings badly needed transparency to the sector, reducing opportunities for corruption.
Deadlines for bids for the cadastre contract expired in August 2021, but there has apparently been little progress.
Patricia Gamede, the DMRE’s acting director-general, said the main obstacle lay with the State IT Agency (SITA), which falls under the Department of Communications and Digital Technologies and provides IT service support to all government departments.
Without going into too much detail, Gamede said: “Currently we are trying to do away with the Samrad system and we have had advertisements based on new service providers… (But) We’ve got a problem now with SITA, it’s not been able to assist us because at one point they didn’t even have a board themselves… The problem we are having right now is with SITA.”
So, she said, she had asked her minister to take up the issue with SITA’s minister, Khumbudzo Ntshavheni.
Mantashe then interjected, saying: “Because of your pressure (Business Maverick’s reporting), I signed a letter to that minister (Communications) this morning.”
Pressure, it must be said, has also been applied from many other quarters. The main industry body, the Minerals Council South Africa, has had endless engagements with the DMRE about the cadastre issue and even offered to pay for part of it.
In a related development, the DMRE this past week finally published a long-awaited five-year exploration strategy. Its success will hinge in large part on replacing Samrad with a functional cadastre.
“Government must immediately invest in an efficient and transparent cadastral system,” the strategy pointedly says.
It aims for South Africa to account for 5% of global exploration spend – a five-year target that was initially floated four years ago. It calls for public-private partnerships and envisions a role for the Council of Geoscience, though details remain scant.
“The South African share of the global exploration expenditure has consistently declined since 2003 and remained below 1% over the past decade. This pattern does not resonate with the residual prospects of discovering world-class deposits consistent with the quality of the country’s prolific geologic environment,” the strategy notes, laying out the crux of the problem.
Underscoring this woeful state of affairs, South Africa has for the first time fallen into the bottom 10 of attractive mining destinations, according to the Fraser Institute’s latest Annual Survey of Mining Companies for 2021.
“South Africa is slipping sharply down the ranks when measured in the Investment Attractiveness Index, falling to 75 out of the 84 jurisdictions surveyed,” the Minerals Council South Africa said in a statement.
This “serves as a warning that we are headed in the wrong direction when it comes to attracting investment to the country’s resources sector”.
The stakes are very high – some would say the long-term prospects for South Africa’s mining sector hang in the balance – so hopefully Mantashe has got the ball rolling. DM168