Junior & Emergent Miners support programme: Department of Mineral Resources briefing

Meeting report

Junior & Emergent Miners support programme: Department of Mineral Resources briefing
Mr Mthokozisi Zondi, DMR Acting Chief Inspector of Mines, DMR led delegation but Ms Setepane Mohale, DMR Chief Director: Mineral Promotion and International Co-ordination, presented and led the discussion.

The briefing on the DMR Junior Miners programme gave background on junior miners and which mining activities were targeted by DMR; the programme outcomes and outputs and current status; its strategy and critical success factors; gave examples of DMR junior mining projects and outlined the way forward.

Junior miners were located as a mid tier business within the overall sphere of mining activities - midway
between large multinational operations and the artisanal and small-scale miners. In some jurisdictions it was also based on turnover and number of employees. DMR wanted junior miners to be active across the
entire value chain of mining, i.e. - prospecting and exploration, development, extraction and finally closure/reclamation activities once mining stops.

DMR identified seven opportunities for new entrants in the mining sector - small scale artisanal, prospecting and development, mining operations, active BEE equity participants, mining product and service suppliers, beneficiating and environmental rehabilitation and re-mining. Currently junior miners are involved mainly in prospecting and development coupled with mining activities.

DMR identified five strategic outcomes to fast-track the development of junior miners: increased investment and job creation; vibrant small and medium scale enterprises; rural development; economic diversification; and the economic empowerment of woman and youth. This could be achieved by unblocking bottlenecks in the mining lifecycle, development of a Mining Toolkit to help junior miners and by providing direct financial and non-financial support. The programme so far has been confined to desktop studies, however DMR have started engaging various stakeholders to finalise the programme readiness by 30 June 2017. These stakeholders included the Industrial Development Corporation (IDC), Public Investment Corporation (PIC), BEE entrepreneurs, and the promotion of junior miners at the Mining Indaba.

DMR has identified six critical success factors (Strategic Pillars) for the success of junior miners in mining: access to finance; skills; technology and R&D; geological information; compliance with regulations; and access to markets.

Access to finance was the most important critical factor and it was explained in more detail. An example of copper exploration investment trends was used to demonstrate the alignment of capital expenditure with the price of copper - as prices increased, so did the expenditure. Access to funding from traditional institutions is governed by the risk appetite of these institutions, with exploration seen as high risk (i.e. no or little funding available) to mining construction and production whereas debt and corporate funding were more accessible.

DMR introduced an Australian model called “The Exploration Aggregator Model” that it wanted to adapt to local conditions for use as a de-risked financing guideline for junior miners to enable them to bridge the risk gap between them and financial institutions. It would involve multi-disciplinary teams from the DMR, Development Bank of Southern Africa (DBSA), Public Investment Corporation, Council for Geoscience and the private sector. This should provide and manage the screening process for finance for junior miners in a more
equitable way so that they were not disadvantaged.

Two junior mining projects - one in KZN (75-100% BEE) and the other in the Free State (50-75%) - were
discussed in terms of financial and other support. The coal exploration project in KZN project required R70m to complete exploration and to determine the economic viability to mine the coal. The mine would employ in excess of 450 people when operational. The Free State project would mine heavy minerals (such as ilmenite, rutile, zircon) and required R380m for drilling and sample analysis and could employ 100 people when operational. In terms of current DMR guidelines, the KZN project would be the preferred candidate for support and would request further work from the Free State project to improve its economic viability.

The presentation was concluded with some key DMR actions for the immediate future:
- relaunch the support programme for small scale miners (do more with less)
- strengthen and finalise the Exploration Aggregator Model for local use
- publish and communicate the Tool Kit or junior miners
- increased focus and outreach to rural communities involved in mining
- career awareness for youth, small business association outreach.

Discussion
Mr J Lorimer (DA) was concerned about what he called the “state health” of government, in its ability to provide quick assistance to people. He was especially concerned about red tape that caused bottlenecks. He asked what the difference was between local junior miners and their counterparts in Australia or Canada.

Adv H Schmidt (DA) asked the following questions:
- could institutions like MQA could not be used to help improve junior miner skills;
- was it not better to have anti-cyclical investments so that organisations could be in better position when boom cycles commenced;
- if the “flow through process” such as that used in Canada could not be used here to stimulate junior miner access into the industry;
- what the difference was between artisanal and small scale miners.

Mr M Matlala (ANC) wanted further information on the programme in other provinces and if DMR knew about the youth programme being initiated by Traditional Leaders in provinces like Limpopo. The latter could be incorporated in DMR’s youth programmes.

Mr Z Mandela (ANC) asked for more clarity on:
- what was meant by rural development, how will it work, will tribal authorities be consulted;
- the investment values, employment numbers and the programme timeline for youth and woman empowerment, how many woman and youth would benefit and when this would commence;
- were there opportunities for people with disabilities;
- the $$$ sign in the Exploration Aggregator Model - why not ZAR?

Ms Mohale responded that most of the programme was still work in progress and DMR needed guidance from the Committee that would help in finalising the programme. DMR understood the frustration some people experienced with blockages in the system and would do more to ensure a smoother and quicker turnaround time. Regulatory compliance had to be enforced and some small scale miners were not always fully compliant. DMR would endeavour to help with this.

The $$$ sign was displayed because the model was Australian, once the model was adapted to local conditions it would show a ZAR sign. Cyclical or counter-cyclical investment depended on the commodity and based on DMR investigations most investments are aligned to price signals like the one shown for copper.

Artisanal miners were occasional and seasonal subsistence miners (i.e. sand mining when there was no work in agriculture), while small scale miners were full time miners usually with permits. The “flow through process” was more difficult locally than in other jurisdictions like Canada due to different local conditions, that is, here it had to be broad based while in Canada broad based did apply. This issue would be addressed in the near future via consultation with stakeholders. DMR had conducted nine small scale mining seminars, one per province to engage with and inform communities, youth, traditional leaders on opportunities in mining. All departmental programmes were aligned to the NDP Vision 2030 timelines. At this stage it was difficult for DMR to provide specific detail on job numbers, investment values and specific support as it was still gathering data and finalising the overall programme. Once this work was completed, it would provide the information to the Committee. The programme would also include youth, woman and people with
disabilities.

Mr Matlala asked if the briefing material (once the programme was finalised) would cater for people using sign language.

Mr Zondi replied that this would require a lot of resources.
 
The Chairperson agreed but said that what was required was the report had to be user-friendly, in terms of the entire language system, especially at entry level where language was often a problem. He was critical of the user friendliness of the SAMRAD system at this entry level. He requested a list of the junior miners DMR had consulted with, as the Committee wanted to engage with them.

Mr Zondo replied that DMR would provide this in writing by 27 May.

The Committee’s draft operational plan for the year was made available to members, but discussion was postponed to take place later.

Meeting adjourned.