Future Mining

One of the authorities in South Africa on mining is the Chamber of Mines. This employers’ organization is tasked by its members to promote the business of mining in the country. It is not a government agency nor does it report to the government since it is an independent and powerful group.

The main goal of the Chamber of Mines is to protect the interests of its business members, that is the mining companies but at the same time conforming to government regulations and laws.

According to the Chamber of Mines, the mining industry created more than 1 million jobs for South Africa. Half of these jobs are indirect employment to the mining industry such as jobs in jewellery-making, export, and manufacturing of mining by-products, among others. The Chamber also claims that it contributes to 18% of the country’s GDP and earns foreign exchange through investments and direct mining. This foreign exchange is vital for ensuring that the Rand stays strong: without a strong Rand, all imports, from electronics to sports equipment will become more expensive.

These and much more is true about the Chamber of Mines but it does beg the question about how far big mining companies would go as members of the Chamber of Mines in their quest for profit.

From an objective point of view by the Fraser Institute, South Africa is number 54 out of 93 in mining policy attractiveness. This means that mining conditions in the country is improving since last year it was at number 67. It is still far from having desirable or equitable mining conditions especially for workers but the fact that the country is willing to undergo scrutiny from an outsider is commendable.

Canadian company, Fraser also said in their report that there are still a lot of lucrative opportunities in South Africa. It states that aside from the precious minerals and metals, there are also semi-precious stones and many raw materials yet to be discovered.

The government has formed a 2020 New Growth Plan known as the Mining Industry Growth Development and Employment Task Team (Midgett) where mining plays a prominent role. It is expected to utilize more local materials for development and encourage economic growth in complimentary businesses like construction, finance, tourism, and utilities.

The focal points of Midgett are:

• Protection from the global economic crisis
• Transform the industry with long term results
• Empowerment for the Black South Africans owning mining companies so it increases to 26% by 2014
• Nationalization of Mining in the country as far as royalties, licensing, and ownership is concerned

In August 2012 the South African President, Jacob Zuma, said the government will start being more pro-active with regards to mine ownership. He also said he is considering taxing windfall profits. A new policy regarding these will probably be in place by December this year, he says.

Use It or Lose It Legislation

Another new law from the Mining Act of 2006 states that mining companies have to use what they mine or they lose the rights to mine. This is meant to prevent companies from exploiting the land and hoarding whatever they can find. In the same manner, companies with mining rights should also start mining instead of sitting on the rights otherwise it will be taken away from them and given to another.

All mining companies, especially the junior mining companies are subject to periodic reviews. Their performance will determine whether or not their mining rights will be renewed. The objective of the government is to give more to the people through small-scale mining rights but to prevent them from turning around and selling the rights for instant profit.