The reappointment of Gwede Mantashe as Minister of Mineral Resources has elicited mixed reactions. Mantashe took the reins of the mining portfolio in 2018 on a wave of optimism. Markets were buoyed by a Ramaphosa Presidency, with expectations that it would herald an era of economic growth following former president Jacob Zuma’s “nine wasted years” of corruption and incompetence.
But five years down the line the mining industry continues to stumble along. South Africa’s exploration failed to improve, despite Mantashe’s promises that it would reach 5% as a share of global exploration – a level last seen in 2003. It has since dropped to under 1% and has stayed there for the past decade.
This sector has suffered extensive and unnecessary damage from decisions driven by political rather than rational considerations. Rolling back these policy failures would be a golden opportunity for economic recovery – Hermann Pretorius, SA Institute of Race Relations
His reappointment to the portfolio – with petroleum resources as an added function – is seen as “continuity” by the Minerals Council South Africa, which said that it allowed it to “persevere and elevate engagements” for a modern, investment-friendly mining industry.
Hermann Pretorius, an analyst at the SA Institute of Race Relations believes the mining portfolio should have been headed by an independent expert. “Economically, mining is critical to the economy, and it has the capacity and potential to drive massive job creation and attract investment.
“This sector has suffered extensive and unnecessary damage from decisions driven by political rather than rational considerations. Rolling back these policy failures would be a golden opportunity for economic recovery,” he says. Under a Mantashe ministry the backlog in mining and prospecting rights, and mining permit applications and renewals, hit a record high.
At a mining conference in Johannesburg in May, the then Department of Mineral Resources and Energy (DMRE) said progress had been made in processing the backlog in applications in the financial year ending March 2024. However, the speed at which processing is done is not sufficient to keep up with the influx of new submissions.
The extent of the backlog is unclear, but it has previously been estimated to be more than 3,000 prospecting and mining rights with a potential investment value of over R30bn, according to the Minerals Council.
After years of inertia, which significantly delayed the implementation of a new mining licencing system – known as a cadastre, the department announced in January the appointment of the PGM Consortium to design, implement, and maintain the new mining cadastre. However, it took another five months for the department to finalise the service level agreement with the appointed service providers.
With the agreement now in place, work on the new cadastral system should get under way and the industry hopes it will speed up the processing of applications.
Don’t get swept away in euphoria about any positive developments in the immediate future. And don’t be under any illusions – the mining industry won’t become an attractive option overnight – Wilhelm Hertzog, Rozendal Partners
Mzila Mthenjane, CEO of the Minerals Council is optimistic that a fully functional cadastre will undoubtedly lead to more exploration funding coming into South Africa. “It will remove conflicts in terms of the issuance of mining rights and what is available for exploration and create an environment of transparency with little contestation.”
Wilhelm Hertzog, portfolio manager at Rozendal Partners, cautions that the implementation of any IT system, including the cadastre, will take time. “It could be riddled with niggles. Even private-sector companies struggle with implementation, so it won’t necessarily be easier for the government to do it.”
The implementation of a mining cadastral system will therefore be no quick fix to the structural issues affecting the mining sector.
“Any change, or improvement, will take time to implement. Don’t get swept away in euphoria about any positive developments in the immediate future. And don’t be under any illusions – the mining industry won’t become an attractive option overnight.”
Irrespective of who the new mines minister is, implementation problems will persist, says Hertzog, due to entrenched and vested interests, and bureaucracy. “The bigger issue is to make the entire civil service more efficient, and for that, you need skills development among civil servants.”