South Africa’s junior mining sector revenue has grown strongly since 2018 and the global energy transition holds even further promise, with, for instance, the Northern Cape a treasure trove of energy transition minerals waiting to be exploited.
This was according to Minerals Council South Africa Junior and Emerging Miners Desk director Grant Mitchell, who said at the Mining Indaba yesterday that that the Minerals Council could no longer just be viewed as an industry body for the very large mining groups, as had been the case in previous years.
The organisation now has 38 junior mining company members out of 77 members. Of the junior mining companies, five are exploration companies and do not generate turnover.
He said in 2018 the junior mining sector was estimated to have generated some R54 billion in turnover and employed some 10% of the entire industry’s workforce.
Their latest estimates were that this turnover had risen to R88bn in 2022, although, he said, the exact reasons for this increase were not yet known, but the rise in coal prices would almost certainly have been one contributing factor..
“The opportunities for the junior mining sector are huge. The Northern Cape is a treasure trove of green minerals that needs to be explored,” said Mitchell.
He said the government needed to move as swiftly as it could to acquire a functioning cadastral system, because the further development of the junior mining sector was not possible without this system.
South Africa is the only Southern African Development Community country that does not have a functioning cadastral system, and these systems are the entry point for junior mining operations and development.
President Cyril Ramaphosa said yesterday that the Department of Mineral Resources and Energy had indicated that the process of procuring an off-the-shelf cadastral system that would need to be customised for South Africa, was already underway.
Mitchell said once the system was acquired, it would probably take another 6 months of training and other work to get the system fully functional. He said some form of tax benefit for junior miners should also be investigated.
He said junior miners were facing the same logistics issues as the large mining groups, and his own survey of CEOs indicated that while the mining companies preferred to use rail because it was more efficient, they were currently forced to transport their ore by road. For example, the use of trucks to move manganese ore added some R500 of additional cost per ton, he said.
Mineral Council economist Henk Langenhoven said that 40% of the 60% of turnover growth of the junior mining sector since 2018 was attributable to price increases, which left some 30% of revenue growth that was a better performance, than the larger mining groups. He said junior mining companies also now pay 16% of the sector’s total wages and salaries and “they are beginning to make an impact”.
“Mining starts with exploration. Junior and exploration miners are the pipeline for the growth of mining,” Langenhoven said. He said it was vital to upgrade the support for the junior mining sector, and so attract investment to the sector.
Langenhoven said initiatives were underway with the JSE to attract more junior mining companies to the bourse, as this sector was under-represented on the stock exchange, and some innovative junior mining financing options may be made available out of this initiative.
BUSINESS REPORT