Latest news with #MineralsCouncilSA
Daily Maverick
3 days ago
- Business
- Daily Maverick
Industry sees red after Mantashe says no BEE for mining exploration, contradicting draft Bill
A new mist of uncertainty has shrouded mining policy just as progress is being made on other fronts such as the looming rollout of the long-awaited mining cadastre to address the applications backlog for mining and prospecting rights and permits. The draft Mineral Resources Development Bill (MRDP) has stirred a hornet's nest in the mining industry and with the ANC's GNU political partner the DA, and its ill-conceived nature was on full display on Wednesday when Minister Gwede Mantashe confusingly said the BEE requirements for exploration were not there and would be removed if they were. 'Now, and in the future, there's no provision for BEE on exploration,' Mantashe, the Minister of Mineral and Petroleum Resources (MPR), said during a media briefing at the conclusion of the AGM for the Minerals Council SA, the main body representing the country's mining industry. That's neither the Minerals Council's reading of the draft Bill nor Daily Maverick's interpretation of it. 'We raised this point over and over in our engagements with the department that the amendments must specifically exclude prospecting companies from empowerment requirements … Yet in this draft Bill, none of that is included,' Minerals Council CEO Mzila Mthenjane said in a statement on Tuesday. The thing about prospecting – or exploration – is that it is an extremely high-risk activity that onerous BEE rules will severely curtail. And without exploration, the South African mining industry has no viable long-term future. Daily Maverick asked Mantashe to clarify this afterwards and he responded by saying: 'If there is a BEE requirement in the Bill for prospecting, it must be removed.' So, the industry's complaints on this front are not falling on deaf ears, though it has raised concerns that its inputs were not included in the draft. And a new mist of uncertainty has shrouded policy just as progress is being made on other fronts such as the looming rollout of the long-awaited mining cadastre to address the applications backlog of mining and prospecting rights and permits. Overall, the industry is not happy with the Bill, which once again moves the goal posts at a time when investors are crying for certainty for a sector that remains crucial for South Africa's low-growth and high-unemployment economy. 'When we ask ourselves this question, does this Bill promote investment and create jobs, we see it has some serious short-comings,' said Paul Dunne, the CEO of Northam Platinum, who was re-elected as president of the Minerals Council SA. 'They are both substantive in nature and technical … Council is a very considered, professional advocacy group. We represent at least 99% of the mining industry in this country and our submission [on the draft Bill] will be made public when the right time comes, and we will engage very, very robustly with the department and the minister on this issue,' he said. The good-natured Dunne added: 'The minister knows us very well. We are very tough. And minister, we are coming.' That raised a chuckle from the audience and Mantashe, but it is no laughing matter – except for lawyers, who are going to giggle all the way to the bank. The draft Bill raises the almost certain prospect of arduous and time-consuming legal and court battles – another obstacle to the investment that the mining sector and wider South African economy desperately need to reach faster levels of growth and job creation. It has also raised hackles in the GNU, which is supposed to be the ANC's main governing partner. One bone of contention is embedding the Mining Charter into the legal framework, which could once again unleash the 'once empowered, always empowered' debate which the industry has already won in court. But fresh legal scraps could loom on this front. This played out in the courts when Gupta stooge Mosebenzi Zwane was the minister in charge of mining, and the term refers to the industry's contention that once a company reached a required BEE ownership threshold that should be set in stone even if black shareholders decided to sell their stakes – which is the point of owning shares. The government at the time held that mining companies needed to endlessly keep topping up BEE stakes, a state of affairs that would dilute value and repel foreign as well as domestic investment. 'By expressly including the Mining Charter as law and not simply policy, the Bill allows for the rapid overturning of t'once empowered, always empowered', opening the door to the need for constant injections of new BEE investors, a feature which would on its own make investing a lossmaking prospect,' MP James Lorimer, the DA spokesperson on Minerals and Petroleum Resources, said in a statement. 'The Bill is poorly thought out. It is contradictory and unclear in several places. It grants new powers to the Minister to rule the industry according to his own whim.' What this means More policy confusion and uncertainty at a time when South Africa needs both to extract wealth, investment and job creation from its rich minerals endowment. It will also test the GNU and likely trigger a tsunami of legal challenges for South Africa's already stretched court system. The ANC is acting like it has a two-thirds majority in Parliament on this front and has yet to be pulled back to Earth by the laws of political gravity. Mantashe on Wednesday reminded the industry of its racist past, and that is no bad thing – in an age when US President Donald Trump is parroting fascist-inspired lies about 'white genocide', hard historical truths need to be confronted head-on. The South African mining industry was the economic bedrock of apartheid, subjecting an overwhelmingly black migrant labour force to ruthless exploitation. But the times are changing and the industry – partly in response to government regulation and union demands but also wider concerns among investors foreign and domestic – has made strides from the indignities of the apartheid past on a range of fronts, including ownership, wages, communities, health and safety. BEE as a mantra has not delivered a utopia while enriching a relatively small elite, and it is also starting to look like a fossilised relic in an age when – despite the Trump administration's efforts to turn the tide – capital is largely looking for kinder, gentler returns. The Bill, for now, is not law and open to public comment. Break out the popcorn for the fireworks. DM
News24
20-05-2025
- Business
- News24
If SA pursues unfriendly mining laws, our investment crisis will deepen
Neglecting the growth potential of South Africa's mining industry in favour of prescriptive, and unwelcoming mining and trade laws would further deepen negative perceptions of the country as an investment destination, writes Minerals Council SA CEO Mzila Mthenjane. The mining industry's contribution to South Africa and its people is — and has for a century been — a cornerstone of our economy despite the regulatory, administrative and operational difficulties that have prevented it from reaching its full potential. The mining industry has its role to play, for without it, the potential to beneficiate minerals would not be possible. However, once the minerals are mined, the country needs to support the development of a downstream value-chain that can take these minerals and value-add them into products that are sold above the prevailing metal trading prices in the standard markets. This is what true beneficiation looks like; and achieving this is not the responsibility of mines but sits within an enabling environment that should be provided by government policy to harness private sector capital beyond mining and foreign investment and expertise. South Africa has a long history of mining and adding value to mineral ores, and there remains more opportunity for further beneficiation and fabrication of the minerals that are mined in South Africa. Since 2007, gold jewellery fabrication in South Africa has dropped from 7.5 tonnes of gold to less than one tonne (Jewellery Council., 2015). The statistics show that since the implementation of the Precious Metals Act, 2005, beneficiation (fabrication) of precious metals has declined in all sectors except gold coin fabrication. Even gold coin fabrication expansion was not attributable to an enabling Act, but due to the bullish market in gold. Eskom has since its founding in 1923 used locally mined coal to provide electricity to grow the biggest and most sophisticated economy and industrial base in Africa. Sasol's coal to liquid fuels processing is another example of value addition from this commodity. A century ago, Rand Refinery opened, becoming the world's largest single-site gold refinery, producing Krugerrands since 1967 to lead the world in bullion coins, creating additional demand for South African gold. More than 60 million ounces of Krugerrands have been sold in the past five decades. This is beneficiation at work within the country; but it is limited to a very select few businesses. Rand Refinery, among others in South Africa, including Metal Concentrators, produces gold bars and semi-fabricated products used in jewellery manufacturing supporting the beneficiation economy. However, there is not nearly enough manufacturing in this portion of the value-chain to make a meaningful impact on demand for the precious metals that are mined. Major platinum group metals (PGMs) producers are engaged in the complex chemistry of smelting and a two-stage refining process to produce the six metals in PGMs sought after around the world by the automobile industry, jewellery, medical products and industrial processes. There is future potential for PGM demand for hydrogen energy. Our local autocatalytic converter industry, at full capacity, had a share of about 19% of the global market. By the early 2000s, South Africa was a leading source of ferrochrome, ferromanganese and ferrovanadium, all used in the global steel industry. With increasingly expensive and erratic electricity supply since 2008, high transport and labour costs, our global competitiveness has eroded, rendering it unable to withstand downturns in prices as China aggressively expanded its local ferroalloy industry. Today, we have ferrochrome furnaces operational because of persistent operational constraints. South Africa is now exporting record volumes of chrome and manganese ore, mainly to China, which has become the largest maker of ferrochrome and a major producer of ferromanganese. Local diamond beneficiation, once employing more than 3 000 cutters and polishers now has barely 300 remaining, has been in decline. The growing discourse in the government and in the economy about beneficiation of mineral production must be considered against the lived reality of the mining and manufacturing sectors. Deindustrialisation in South Africa has been underway since 1993. The GDP share of manufacturing has declined from 21.4% to less than 13% in recent years. It is only when specific conditions are met, including that a large offtake contract or a sustainable market is secured and the binding constraints on beneficiation are removed, that punitive measures on the mining industry have any chance in boosting in-country beneficiation that is globally competitive. Higher levels of beneficiation can only be achieved through the reduction in burdensome red-tape and policy, which has had a proven strong negative effect on local beneficiation as we've seen in the diamond industry. An overly legislated environment has added compliance cost, dissuaded much needed international investment, and has caused wide-spread job losses without any upside benefits. The pending Mineral Resources Development Bill, as well as possible regulations from a department like Trade, Industry and Competition (dtic) must as far as possible avoid imposing any restrictions or sanctions on the free flow of mineral exports. In the absence of concrete evidence that restrictions on mining activity will 1) not harm primary mineral extraction, and 2) support more in-country beneficiation, we favour an incentive-based approach to achieve higher levels of beneficiation. Future beneficiation on commercial grounds will only be possible through securing investment and growth in exploration and primary mining. The Minerals Council is a firm supporter of beneficiation to maximise the benefit of South Africa's minerals and create jobs and wealth for the country and its citizens, but pragmatism and a firm grasp of economic realities must prevail in creating an attractive operating environment for fabricators to beneficiate local minerals. Fixing the underlying constraints of expensive and erratic electricity supply and inadequate and expensive transport logistics, as well as enhancing the level of manufacturing skills, will go a long way to halting -- and potentially reversing -- the trend of closures of smelters in South Africa's ferroalloys industry, a key factor in reduced load shedding. The deindustrialisation of our economy needs urgent intervention through structural reforms to encourage and support private sector participation and reverse the constraints leading to business closures and curtailed investments in industrial processes. While the Minerals Council is encouraged by the progress to date, in some cases an enabling environment remains absent for mining and beneficiation. In remote and rural areas where the bulk of mining happens, the dysfunctionality of municipalities makes daily operation difficult and unattractive for investments for any companies considering setting up businesses. The inability for licences to be validated and companies to be vetted through licencing offices makes compliance an increasingly challenging problem across the value chain and ultimately deteriorates the image of beneficiated minerals made in South Africa. The Mineral Resources Development Bill's amendments are a pivotal point for our mining industry. The Minerals Council has in all engagements with the Department of Minerals and Petroleum Resources advocated for investor-friendly, pragmatic regulations to encourage growth of the mining industry through increased exploration, mine development and investment in existing mines. Given our mineral endowment, the number of new greenfield mining operations in South Africa is disappointing. It would be a tragedy if the growth prospects for the South African mining industry and expansion for fabrication were ignored in favour of a more onerous, prescriptive and unfriendly mining and trading legislation that entrenches negative sentiment towards our country as a prospecting and mining investment destination. Over-regulation of beneficiation in the value chain will continue to constrain and reduce the amount of value that South Africa receives for its minerals and the jobs that the industry could stand to create.
