Is there a future in South African Mining? Could there be an African Mining Renaissance again?
I get asked often does Mining in South Africa have a future? I suppose you have to be from South Africa to know, the future is huge, and it’s a well refined engine. Not only is it huge, there is a great deal of untouched exploration within South Africa and Africa in general. Unlike Canada which has done aerial surveys of most of prolific areas, shares the intel due to Government requirements to prove work to keep claims, all digitalised, African mining has not hit the digital age yet. It hasn’t even wet its toe in the world of information, potential, and anomalies. In actual fact, more will be forgotten about African mining in the coming decades due to an aging population of Mining Engineers who wrote the original reports and did the original work on properties for the majors retiring or leaving the country, or sadly the planet for that matter.
Documentation of the African mining sector and digitalising of work done in my opinion can start an African renaissance of mining. We all know that Canadians, Australians, South Africans, and Chinese have dominated this scene for some time, but never have had to share as much about their work and exploration in Africa as they have in their own respective Countries.
So why has there not been a major project put in place to make African mining digital? Mining departments typically have been treated as a “gateway” or “toll booth” to the mining sector versus a money generating department within Government. For the most part, the budgets have not been put into place, and there hasn’t been enough transformation of old guard geologist and bureaucrats running the departments – protecting the value of what they do know versus building the value in what they don’t know. With the convergence of IT across Africa this is bound to change over the next decade. A new level of jobs for African’s will come from this, a new home for intelligent IT driven economies merging with existing profitable mining sectors. From energy to exploration, from digitising knowledge bases to online staking of properties and ready available Government controlled data that can be paid for online to build desktop reports or choose the next major exploration.
In addition, the mining sector has been predominantly controlled by the majors – those who have the money. Access to capital for the mining exploration sector or “green fields” has been relatively unconventional as they do not qualify to list on a stock exchange, there isn’t a strong crowd funding base, and it costs a lot of money to actually do the exploration which in itself has risk.
The Canadian approach of subsidising exploration by tax incentives through the “flow through” investment schemes has been a major driver for Canadian companies to access capital for mining exploration. In addition, the stock exchanges (as there were many at one time, Vancouver Stock Exchange, Toronto, Alberta, Montreal) allowed for the incubation of junior exploration and mining companies. This public listing process and capital raising grandfathered into the amalgamation of the exchanges and the introduction as well of the Canadian Stock Exchange, CNSX/CSE. This also drove a standard of reporting (NI43101) which gained investor confidence into the sector within Canada. Within the 80’s and 90’s technology projects began discussion, and by the mid-90s most Provinces in Canada could also allow for digital staking of properties. Within the data files available in the system where layers of reports from as far back as could be registered discussing all work, assays, exploration and other to define the geographic and geological “picture” of what was in the vicinity a person or company would sake in for a fee. The ease of information, the quality of the packaged historical data, and the recent work published of surrounding finds and work created an engine for “making” junior exploration programs appear to be feasible for the investing public and other mining firms. The combination of tax breaks, junior exchanges, a standardised packaging and reporting of company’s assets drove a renaissance in Canadian mining.
When one looks at the rich and diverse nature of mining assets across Africa, often even politicians asked why more mining investments and exploration don’t occur. The answer is the “if we have it they will come” scenario doesn’t work when the World and industry knows “kind of” what you have but don’t have a clear layered and packaged picture of what’s there or the incentives to explore. In addition, local exploration and mining companies face the same challenges, expending funds to purchase old reports and data, and having to try to convince investors to redrill in areas prolific for their quality of product, because the information just isn’t easily available to the public or the companies themselves. One suggestion would be to enforce all existing mining companies and historical companies to give all their research and data for the purpose of building such a library and software. Possibly this could be done on the basis of a tax break for exposing their trade secrets and knowledge. Furthermore, tax incentives to companies to continue to report. In addition to reporting, investors who invest should be given tax breaks for the risk they are taking in “developing the countries database” of information in the process of trying to find a mine. Some headway has been made with the creation of tax relief investments into Venture Capital Corporations (12j’s), however, the majority of these invest in Brown Fields, of which there is still little focus on exploration. Although incentivised tax wise to invest, it doesn’t solve the obstacle of access to capital for exploration.
The issue is this becomes now a matter of policy. Many years ago I expressed that such a project could be pushed forward if an African Mining Association came together and pushed for the harmonisation of disclosing information per Country and on a continental level, as well as harmonising mining practices, employment, and environmental responsibilities. Probably too ambitious to look at the entire continent for such an association but possibly on a regional country by country basis with alliances and standards that are harmonised but independent.
If you discussed this today with a politician in South Africa, they would immediately tell you, but we have the Chambers of Mines. The Chambers of Mines is ideal as a participant, but the mining companies and a frontier of IT professionals need to push the development and evolution of Mining in Africa at all levels. When the time comes that South African mining industry comes together as a whole, supports the digital transformation and open freely available data on the Country, and eases and expedites the process of gaining such information, making a claim, and accessing capital, a new era of jobs, funding, and development within this sector will in fact make a new mining renaissance.
SA Mining has been clouded over by employment issues, political instabilities, and white-monopoly thinking of keeping secrets that they have not yet developed as a the mining leader they are and could be due to focusing on maintaining an order versus creating a new order of exploration, mining, and subsequently investment. It is my opinion there is a huge future in mining in South Africa, but we have a lot of work still yet to get there.
Written by Ryan Gibson, Ryan@businesslistingsgroup.com
Business Listings Group is a boutique UK consultancy working with start-up companies, access to capital, exploration firms, Cannabis companies, and policy. The executives of Business Listings Group have been involved with listing over 1000 companies directly on exchanges and over 3000 listings globally on stock markets. In addition, the company has been actively involved with mergers and acquisitions within the mining, cannabis, IT, and financial services sectors. Specialising in training companies, installing best practices, enabling access to capital, and merging or joint venturing with ideal target relationships. A process based on creating a new category of due diligence and match making which develops must-have assets and must-have relationships as a pinnacle selling point for the firms engaged with BLG.