Zama zama operations easier than legal mining: New report details woes of SA’s junior miners

South Africa stands out among major mining jurisdictions for its dearth of junior miners and exploration companies, and this bodes ill for the industry’s future.

A new report published by the Minerals Council SA this week provides an update on junior mining in South Africa, casting a critical eye on the many constraints to its growth while providing recommendations to give it a much-needed lift.

Junior and emerging miners are crucial for South Africa. They open an entrepreneurial path for historically disadvantaged groups and boost exploration since it is junior miners who often take the risk to go prospecting. And without exploration, you don’t have mining in the long run.

The report finds that a flourishing junior mining sector has the potential to create 50,000 direct jobs and 350,000 secondary jobs over the next decade .

“By fostering a supportive environment, junior miners can drive exploration, a function previously driven in-house by majors. This exploration is vital for discovering the next generation of large-scale mines. A flourishing junior sector could create thousands of jobs, contribute significantly to the tax base and help create a new generation of mining capitalists,” the report says.

But, among other things, junior miners can hardly compete with illegal miners.

“It is easier to operate an illegal small-scale operation than to comply with all the legal requirements, and there are few or no consequences for illegal miners,” the report pointedly notes.

In short, running a zama zama operation for a crime syndicate is easier and more attractive than going through the arduous motions of establishing a legal one. Crime, it seems, pays.

At first glance, it might appear that junior mining is thriving in South Africa – but this is deceptive.

The report says that in 2024, of the 2,065 mining licences and permits awarded by the Department of Mineral and Petroleum Resources (DMPR), 77% were for junior, small-scale or micro miners – but they only generate 11% of mining revenue. A total of 453 were given to miners classified as “junior”, 920 for “small-scale” operations and 208 for “micro” operations.

A junior miner is one defined as having an annual revenue turnover of between R162.5-million and about R644-million. Micro operations fall below R3.5-million, with small-scale falling broadly in between.

Micro operations are typically small quarries for things like sand production and the report notes that many such businesses feel they should fall under the Department of Public Works.

And it is on the JSE where the junior cupboard is glaringly bare. There are just 12 junior mining companies – defined as having a market capitalisation of under R1-billion – listed on the JSE. The Toronto Stock Exchange, by jarring contrast, has 883 and Australia’s has 720.

A listing is aimed at raising capital and on this front, South Africa’s juniors are being starved.

The sector’s woes are further underscored by South Africa’s collapse of exploration investment.

“Although South Africa attracted over 8% of global exploration expenditure in 2001, this share has diminished to less than 1% in 2025,” the report notes.

There are a number of factors that explain this state of affairs. One is the slow-motion roll-out of proper a mining cadastre, which has needlessly dragged on for years. The lack of this online portal that shines a light on the state of play of mineral rights – which for the past year always seemed to be on the cusp of launching – remains a formidable obstacle to mining investment.

“A significant deficiency is the absence of a comprehensive mineral rights cadastre system... Most neighbouring countries, such as Botswana, Namibia and Zimbabwe, have implemented such systems, which serve to enhance transparency and reduce corruption risks,” the report notes.

Indeed, while the DMPR has data on mining licences and permits issued, the report says that as of late last year it still did not have that data for prospecting licences, which also helps to explain the unfolding cadastre disaster.

Stand and deliver: you’re mine!

Then there is the the area of outright criminality which is undermining the junior mining industry.

“Incidents of mines being hijacked by organised crime syndicates are on the increase. Calls to SAPS are sometimes unanswered, and mining companies have put measures in place to protect their operations by private security,” the report says, without providing data.

“Threats are no longer small and random; they are highly organised, and mines are hijacked by criminals bringing large earthmoving machines, costing hundreds of millions of rands, to sites they attack. Managers are no longer safe, and many management teams have a personal security detail.”

The report says such issues are high on the radar screen of foreign investors.

“In doing roadshows to investors in North America in 2025, junior miners report... they do not see the investment value in an industry infested by crime, where the regulator issues multiple licences for the same prospecting area, and then they must fight this in court for many months at huge cost,” the report says.

Its recommendations include allowing junior players to reboot some derelict mines and more than 30 mines that are currently not producing but are under care and maintenance. Such operations are far less costly than building a mine from scratch.

It also recommends the adoption of the Canadian model of flow-through share incentives to boost junior listings on the JSE. This permits the initial purchaser of the share to claim a tax deduction on the amount invested and is credited with raising 70% of the capital for exploration on Canadian bourses.

And, of course, the damn cadastre needs to go live! DM