The African National Congress (ANC) launched the Economic Transformation Committee’s (ETC) Reconstruction, Growth and Transformation document. The document refers to various sectors such energy, infrastructure and mining.
The document outlines current challenges face by the mining industry which include a lack of investment in the mining industry and declining exploration activity, particularly early stage exploration. Furthermore, the document also summarises interventions and reforms for the industry. Increasing R&D in the mining industry and increasing mining exploration to ensure long-term expansion are among the interventions mentioned in the document.
The Minerals Council South Africa (MCSA) acknowledged the document’s proposed approaches to reinvigorate the county’s mining industry. In a statement the Council stated that it was is pleased that the document acknowledged the falling levels of investment in exploration and the job losses the industry has faced in recent years. “A consequence of the dearth of exploration spending is that fewer new jobs are created to replace those which are lost. Despite this, the document reaffirms that South Africa remains ‘a global mining powerhouse’,” the statement read.
In outlining the interventions required to translate the industry’s comparative advantage into a competitive advantage, the ETC suggests that regulatory disputes and uncertainties be resolved with immediate effect. The Council agreed that regulatory certainty is imperative if South Africa is going to attract investment in the industry.
“We also welcome the increased focus on innovation and junior mining, both of which are key to extending the country’s mineral legacy. We are particularly pleased by the ETC’s suggestion that listings of mining companies on the JSE be encouraged and South African retail investors willing to invest in mining exploration should be incentivised as is the case in other mining jurisdictions,” said the statement.
This is a significant proposition which will give junior mining companies a fighting chance when competing for investor funds. The junior mining sector is a key to further growth and employment in the industry, yet the ability to develop new projects has become exceedingly difficult with hundreds of companies trying to access a shrinking pool of funding and investment opportunities.
South African junior mining companies, through the Minerals Council Junior and Emerging Miner’s Desk, have been lobbying for the introduction of tax incentives or concessions for exploration. “What we would like to see is the introduction of tax incentives or capital gains tax advantages for investment in exploration. We would also encourage the government to support the establishment of an exploration fund. Exploration incentive schemes implemented in other successful mining jurisdictions like Canada have boosted those countries’ mining investment ranking.”
“For too long, South Africa has lost out to new investment in mineral exploration because we don’t have the financial incentives designed to unlock investment and kick-start exploration. We look forward to seeing concrete proposals and to a booming junior sector in the near future,” the statement concluded.