South Africa’s exploration spend is waning, in stark contrast to the plethora of mineral resources it holds, and contradictory to the trend in other countries, especially some of the country’s similarly mineral-rich neighbours.

This was noted by speakers during the ‘South Africa’s Mining Outlook for 2023’ webinar hosted by Creamer Media on March 1.

The webinar focused on exploration, with particular emphasis on how to increase global exploration spend in the next five years.

Facilitating the event, EY Africa corporate finance lead Sandra du Toit said that, as commodity prices started softening somewhat from some of the highs that had been experienced in the last year, while cost pressures and more expensive funding started to become a problem, EY was of the view that there might be a pullback in exploration. 

Botswana Diamonds MD James Campbell outlined that a vibrant exploration drive in any country was predicated on prospectivity, that is, rich geology, which South Africa boasts in abundance.

Moreover, he pointed out that, in light of new technology and new thinking, there was scope for more mines to be developed in the county.

However, Campbell noted that, allied to prospectivity, was the need for consistency, simplicity and efficiency in terms of application of the rule of law.

“From an exploration perspective, you need security of tenure,” he emphasised.

From the supply side, he highlighted the need for access to funding.

From more of an individual perspective, he indicated that, aside from the obvious need for technical competence, there was the need for curiosity for the subject area and the history and politics around it; that one must be a jack of all trades; and to have a risk-appetite, given that exploration is a risky game, with explorers often putting their own money into projects.

Minerals Council South Africa board member and Orion Minerals CEO and MD Errol Smart reiterated Campbell’s point about the country’s considerable mineral enrichment.

However, despite this, Smart said exploration in the country was not booming and had instead deteriorated, which he said showcased something about the operating environment.

Echoing some of Campbell’s points, he highlighted the need for a stable, predictable, user-friendly and functional regulatory regime.

Smart averred that, probably the biggest shortcoming for the country compared with other global mining jurisdictions, was the lack of a management system from government – a mining cadastre.

Such a system would provide transparency, he said, which was necessary to gain exploration investment.

This is especially the case with greenfield exploration, which requires considerable capital and long lead times and, therefore, requires security of tenure.

He outlined that the new exploration policy document spoke to this, indicating the need for more appropriate tenure. However, he said the policy had yet to be added to regulations.

One positive thing about the county noted by Smart was that it had a very predictable and user-friendly mineral royalty and tax system, which had been stable.

The next important aspect South Africa needed to tackle would be to make geoscientific data and historical data available, Smart averred, with this tying in with efforts by the Council for Geoscience.

Following on this point, Council for Geoscience CEO Mosa Mabuza said exploration started with geology and that it was the council’s responsibility to map, at a scale and pace applicable to today’s world, in order to get the investment community excited about the country’s resources.

Importantly, he said that, as Campbell had indicated, exploration was risky and only good geology would considerably de-risk a prospect.

Mabuza pointed out that the council had, last year, launched an online data portal, which had attracted an encouraging 40 000-plus hits in the past few months.

However, he said the council was legally empowered to undertake exploration, but that it had been struggling with the modalities of undertaking exploration.

He also shared the other speakers’ views that the country’s quality geology was at odds with its levels of greenfield exploration.

Therefore, he said, the council had started undertaking exploration and that it wanted to bring to the fore the discoveries it had made.