Exploration is the start of any mining value chain and increasing investment in exploration is fundamental to South Africa using its mineral resources to drive development of its industries and economy, mining leaders said during the sixth edition of the South Africa Investment Conference, on March 31.
South Africa has mined its mineral resources on an industrial scale for more than a century, but has forgotten how to fund and sustain exploration. It needs to reintroduce exploration into its DNA, said mining industry organisation Minerals Council South Africa CEO Mzila Mthenjane.
“Critical minerals [which are growing in demand for use in energy storage and electronics] only require the same conditions as other minerals to be developed. There is no need to have a new conversation around critical minerals.
“In addition to the hard infrastructure, such as electricity and transport, supporting the development of mines requires long-term policy certainty, as it typically takes between 13 and 15 years following the start of exploration to start a mine, which will then operate for a further 30 to 40 years.
“It takes significant amounts of capital to extract minerals and policy certainty is needed to provide security of tenure to assure investors of returns,” he said.
The Mineral Resources Development Bill, which the council had provided input on, presented the opportunity to provide the policy certainty around security of tenure for exploration and mining, and underpin growing confidence and a shift in sentiment, said Mthenjane.
If this could be achieved, significant capital could flow into mining and support confidence for investments in the beneficiation of extracted minerals and their use in various industries and sectors, he said.
Meanwhile, there was no guarantee that exploration would find reserves that were feasible to mine, hence the need to speed up exploration in South Africa to discover the much-needed resources for the future, said mining company Kumba Iron Ore CEO Nompumelelo Zikalala.
While multiple discussions on the policy front were encouraging, there was a need to increase exploration investment in the country. Data showed that South Africa had attracted only 1% of global exploration spending in 2023, she said.
The review of South Africa‘s key mining law the Mineral and Petroleum Resources Development Act and the eventual introduction of the delayed cadastral system should help to increase this number, she added.
Further, Kumba owner, multinational mining company Anglo American CEO Duncan Wanblad had committed R600-million to the Junior Mining Exploration Fund, which was administered by industrial development finance agency the Industrial Development Corporation, adding to the R400-million provided by the Department of Mineral and Petroleum Resources, she reported.
“We believe in investing in exploration, which has a role in driving inclusive growth, and in supporting junior exploration companies, hence our investment in the fund. More players must be encouraged to invest in exploration in South Africa,” Zikalala said.
The question facing South Africa was not a debate about the upstream and the minerals, as the country and the region were richly endowed with critical minerals, but how the country and region could move from being extractive economies to being manufacturing hubs, said chemicals and mining explosives company AECI chairperson Philisiwe Sibiya.
“For example, we can use our manganese to steadily move up the value chain by manufacturing battery components and then growing.
“However, we must also be scientific about this. The beneficiation space in which we can participate is vast and we must identify where we are strongest and most competitive and then steadily move up towards the middle of manufacturing value streams,” she said.
South Africa‘s industrial cluster, which had created multinational companies including AECI and chemicals companies Sasol and Omnia, was in critical jeopardy. The country had to consider how to strengthen its industrial sector to be able to move towards manufacturing for battery value chains, she said.
Further, for new value chains to function efficiently, a regional approach needs to be taken.
“The debates about country-specific strategies miss the fact that the main potential of critical minerals to underpin development of value chains is through regional cooperation,“ she added.
Meanwhile, Mineral and Petroleum Resources Minister Gwede Mantashe, who had opened the panel discussion by highlighting the establishment of the Junior Mining Exploration Fund, assured investors and delegates that the government aimed to ensure policy certainty.
“We are amending the primary legislation of mining and we are taking into account all the views heard today.
“Exploration is the start of how we begin to add value through our mining. It has a critical role in South Africa‘s mining and development strategy and, through partnerships, we can crowd-in private capital to invest in exploration,“ he said.