The government is considering partnering with the private sector to establish a junior exploration fund as part of its efforts to encourage a conducive business environment for mining exploration in the country.
The Department of Mineral Resources and Energy (DMRE) in its Exploration Implementation Plan 2022 said it aims to attract R13-billion annually in the sector by 2025.
However, the department flagged the “glaring lack of investment in green-field exploration activities in South Africa by both established mining companies and emerging junior companies”.
The near non-existent listing of exploration companies on the JSE was also listed as one of the factors limiting exploration resources, coupled with low interest by banks in supporting green-field exploration.
To counter this investment drain, the department has laid out a plethora of proposals that seek to make the sector sustainable and globally competitive.
They include the following:
- Industry players must jointly explore fiscal instruments that can be considered in supporting exploration development in South Africa.
- There must be sustainable state investment in a detailed integrated multidisciplinary geoscience mapping programme to de-risk exploration as well as improve investment attractiveness and confidence.
- The state and private sector to consider, on the balance of evidence, the establishment of a junior exploration fund.
- Exploration activity-based incentives for minerals of strategic importance in South Africa should be considered.
- The government said it will engage with the JSE and the Minerals Council to explore necessary interventions to unlock barriers to the listing of exploration companies, if necessary within three months.
DMRE said the exploration implementation plan aims to secure over 5% of global exploration expenditure within three to five years from the current 1% and
bolster the mining sector and the economy.
“The plan proposes re-imagination of South Africa’s exploration investment landscape and introduces a necessary exploration-driven paradigm-shift to revive the mining industry and the economy of the republic of South Africa.”
South Africa has the world’s biggest deposits of platinum group metals, battery metal vanadium, chrome and manganese. The blueprint was published on the same day as the Fraser Institute’s annual survey, which ranks countries’ attractiveness in terms of policy and other metrics.
South Africa slipped sharply down the ranks when measured in the Investment Attractiveness Index, falling to 75 out of the 84 jurisdictions surveyed. This compares to 60th out of 77 in 2020 and 40th out of 76 in the previous year.
Minerals Council spokesperson Allan Seccombe said the council will study the government’s plan for the industry.
“While we have early concerns with the quality of the drafting of the Exploration Strategy for the Mining Industry of South Africa, we also note there are numerous changes to the draft plan that was agreed to in January 2021, and which we need time to examine and understand before we are able to comment.”
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