The newly launched Junior Mining Fund, with R400-million in capital, represents a positive development despite its relative modesty, reports mining industry lobby association Minerals Council South Africa junior and emerging miners desk lead Grant Mitchell.

Implemented by national development finance institution the Industrial Development Corporation (IDC) of South Africa, the fund has to date, delivered R160-million spread over eight projects covering a limited scope of minerals commodities following the first round of applications, which was initiated in June 2024.

These targeted minerals included copper, nickel, graphite, lithium and rare earth elements, which are all needed in new energy applications to reduce fossil-fuel dependency.

“It is hoped that in round two of funding, a broader number of minerals and renewable-energy projects will be included to support South Africa’s transition to a low carbon economy,” he says.

In this context, there has been a significant rise in the construction of renewable-energy projects within the private sector.

Mitchell points to the most recent data published by joint initiative of the Presidency and National Treasury – Operational Vulindlela – which indicates that total private-sector utility-scale renewable-energy projects now number more than 130. Of these, about 70%, or 90 projects, are specifically related to the mining sector.

Combined, the 130 renewable-energy projects contribute about 22.5 GW, with an estimated investment value totalling R390-billion.

“On average, the 90 mining-related projects generate upwards of 15.8 GW at an investment amount of about R275-million,” says Mitchell.

With this level of investment, he says the mining industry is reducing its carbon footprint by cutting its exposure to coal-fired energy sources, as well as addressing any supply and cost-hike risks from State-owned utility Eskom.

Mining, by nature, is an activity that has inherent risks, making it difficult to future-proof the industry, requiring a multi-faceted approach, he says.

The success of junior mining in South Africa is subject to commodity price fluctuations, the need for political stability, policy and regulatory certainty as well as the need for a stable energy supply and reliable, cost-effective logistics.

In South Africa, the business sector has worked with government and Eskom, through the National Energy Crisis Committee, to stabilise electricity supply, with a degree of success being achieved of late.

Superior Support

The junior and emerging miners’ desk at Minerals Council South Africa, together with junior mining houses’ CEO-led Junior Exploration and Mining Leadership Forum (JEMLF), engages with, and supports, the Junior Mining Fund.

The JEMLF also includes three mining associations registered as official council members, which represent hundreds of small mining entities in South Africa.

Support from the Minerals Council South Africa, says Mitchell, includes its intention to conduct continuous research for the industry.

“In 2024, a study into regulatory challenges in the exploration right application process, reaped some of the most notable results,” he says.

Issues the Minerals Council South Africa has identified as “very significant” were the long delays in processing applications, inaccuracies in processing of applications, over pegging of the same mineral on one site, as well as abuse of Section 96 of the Mineral and Petroleum Resources Development Act (MPRDA) which allows landowners to launch spurious appeals to force access agreements and payments.

“All of these issues point to the urgent need to implement a mining cadastre which will bring transparency to the application process,” Mitchell stresses.

On a positive note, South Africa’s extensive minerology was cited as a positive for mining investment, as was the well-developed infrastructure, despite challenges with electricity and rail transportation.

South Africa’s long history of mining, along with well-developed mining schools and institutions that support mining were all viewed as positives for the mining industry, going forward.

In addition, a review was undertaken into the artisanal and small-scale mining policy framework, which will be reflected in the policy revision of the MPRDA, currently being handled by the Department of Mineral and Petroleum Resources.

Mitchell also notes that the Minerals Council South Africa is helping develop the junior mining sector through engagements with the JSE and the IDC in terms of accessing finances, as well as hosting public webinars on strategic policy areas.

“In 2024, we hosted a webinar focussing on exploration which attracted more than 150 delegates,” he enthuses.

Further, workshops are also held with junior mining members of the Minerals Council South Africa, such as one which focused on financing exploration projects undertaken in 2024.

There are also engagements with international organisations such as the global CEO-led organisation ICMM and global finance, insurance and ratings provider S&P.

He asserts that the Minerals Council South Africa also sends strong delegations to events that draw investment and exploration opportunities, like the upcoming Investing in African Mining Indaba, being held next month in Cape Town.

“All of these efforts are to strengthen the voice of the junior and exploration sector in order to ‘future proof’ the sector,” concludes Mitchell.