The Junior Mining Indaba, an annual two-day event in Johannesburg organised by Resources4Africa, always exudes a certain brash confidence that is tempered by the harsh realities of South Africa’s woeful investment environment.

If anything, this year’s event has underscored the grim reality that by almost any measure, South Africa is falling even further behind the global exploration curve.

Let’s start with the applications backlog for prospecting, mining and related rights. That is now back up to more than 5,000, making a mockery of the Department of Mineral Resources and Energy’s (DMRE) past statements that the bottleneck was being slashed. 

This is a key obstacle to exploration and other kinds of mining investment and explains why South Africa, which accounted for more than 5% of global exploration expenditure in 2004, now attracts less than 1%.

Read more in Daily Maverick: Mantashe’s missed mining target — SA still accounts for less than 1% of global exploration spend

It was first revealed in February 2021 that the backlog amounted to more than 5,000, and in November last year, the DMRE said it had been whittled down to 2,625. 

Read more in Daily Maverick: DMRE says mining rights application backlog slashed, looks to neighbours for cadastre solution

But now it seems that the overall number is back to more than 5,000.

“Two weeks ago, our parliamentary committee was told that the number was over 5,000. I asked why, and the response was that applications for permits had not been counted,” James Lorimer, the DA shadow minister for mineral resources, told Daily Maverick on the sidelines of the conference.

In short, a clown show of note.

South Africa’s junior mining sector, which is crucial for exploration and the industry’s future, is still being buried under the mounting slag heap of state failure and there is no light at the end of this tunnel.

The main reason for the application snag is South Africa’s utterly useless Samrad system for processing application rights.

After years of foot-dragging, the DMRE says it plans to appoint a service provider in July to establish a proper mining cadastre for South Africa.

A mining cadastre is an online map portal that displays a country’s mineral wealth in a way that is easily accessible to the public. It also shows the state of play of mining rights and allows companies to easily apply for such rights.

Read more in Daily Maverick: Explainer: A mining cadastre and public transparency

“What I can indicate is that we are moving at speed,” Jacob Mbele, the DG of the DMRE, told the conference.

He also said the department was aiming to clear the application queue by the end of this financial year.

When it comes to such assertions from officials at the DMRE, a dose of scepticism is always in order.

“It’s very difficult for juniors to get a prospecting right, and it’s the same old story… there is not a proper cadastre system. We have had companies that have had to shelve their project because investors become gatvol and they take their money elsewhere. A delay of two years or longer is just unacceptable,” Grant Mitchell, the head of the Junior and Emerging Miner Desk at the Minerals Council, told Daily Maverick.

“Because you can’t work online, they demand that documentation be sent by courier to Pretoria. We are working in the last century,” he said.

SA can’t compare

Junior mining plays a key role in the global pipeline of mining projects. As Roger Baxter, the outgoing CEO of the Minerals Council told the conference, the business model is simple.

“They go out and find a deposit and then they might sell it to a major,” he said.

That’s what junior miners typically do – they take the risk, roll up their sleeves, and go out and find stuff that they can hopefully sell to a big company.

The jarring juxtaposition with jurisdictions such as Canada and Australia shows just far South Africa is falling behind the exploration curve. 

Mitchell said the Toronto Stock Exchange (TSX) had listings for about 1,200 junior miners, and the ASX in Australia had 700. The JSE has around a dozen – in South Africa, the term has a wider meaning which includes mid-tier producers.

The TSX Venture Exchange alone had 47 new mining listings in 2022, according to Baxter’s presentation to the conference. And the Maple Leaf is fluttering over global exploration drives amid a scramble for the green metals crucial to the energy transition.

Of the more than 5,300 mineral exploration projects operated by TSX and TSXV-listed companies, 48% are outside Canada and 6% of those projects are in Africa.

Canada and Australia are both in the top four mining regions or jurisdictions in terms of attracting exploration spend, according to S&P Global’s World Exploration Trends 2023 report – a report in which South Africa did not warrant a mention.

Read more in Daily Maverick: Global mining budgets rose in 2022, but SA has dropped off the radar

And, of course, South Africa is near the bottom of the rankings in the Fraser Institute’s rating of the investment attractiveness of mining jurisdictions.

In South Africa, about 90% of exploration is defined as “brownfield”, which generally refers to advanced projects or existing operations probing their ore bodies further. Only about 10% are actually looking for new stuff. 

And yet, South Africa has a mineral endowment that surely rivals that of Canada and Australia. South Africa accounts for 70% of the world’s known platinum group metals reserves and 80% of manganese and still has a mother lode of gold which is very deep and waiting for technological advancement to unlock it.

The Northern Cape alone is believed to have base metals galore waiting to be uncovered.

At the Minerals Council AGM last week, Minerals and Energy Minister Gwede Mantashe offered his thoughts on this state of affairs, with a barbed reference to South Africa’s dismal Fraser Institute ranking.

“The Fraser Institute is not rating the department (DMRE), it is rating the sector. We don’t take responsibility and we absorb the pain for that,” he said.

“In Canada, I discover that CEOs promote the sector but we don’t have that view in South Africa. We are half-hearted about it. It is the sector that makes itself.”

This was vintage Mantashe – blaming the private sector while refusing to take responsibility for his department’s glaring shortcomings.

Of course, the DMRE owns the train smash that is South Africa’s stunted junior and exploration sector. Canadian mining CEOs don’t operate in a failing state, while that is the deck of cards that has been handed to South African mining CEOs – and take your pick when choosing the Joker.

Whether it is the DMRE’s inability to process mining rights applications in a timely and transparent manner, Eskom’s failure to keep the lights on, Transnet’s woes and growing security concerns, South African mining CEOs simply do not have the same story to tell as their Canadian counterparts. DM