Small-scale mining operations find it difficult to tunnel a path into South Africa’s mainstream mining industry, reports Meshack Mabogoane
Attempts by small and medium enterprises (SMMEs) to carve a significant niche in the mining and minerals sector are fraught with such minefields that “constructive intervention” by the government may be more necessary to level the playing field than in any other sector.
Though small-scale mining operations have always been a feature of this industry — the Kimberley pioneers were pick, shovel and burrow operators, and there are also medium and independent companies listed on the Johannesburg Stock Exchange (JSE) — entry into the industry is extremely difficult.
These problems have been the subject of partisan discussions by various stakeholders in the past. Last Friday the first open and more inclusive meeting to discuss mining and minerals policy formulations was held in Pretoria under the chairmanship of Minerals and Energy Affairs Minister Pik Botha. The meeting dealt only with basic procedural matters.
Though there had been suggestions, by hitherto unrepresented groups, such as the National African Federated Chamber of Commerce (Nafcoc), small miners and traditional leaders, to be included in the steering committee, this was rejected by the minister on grounds that it would delay the process of putting together the Green Paper, dependent on public inputs, that would culminate in a White Paper and legislation in late 1996.
The steering committee consists of representatives from the Department of Minerals and Energy Affairs, the parliamentary sub-committee, employers’ organisations, unions and the Mineral Policy Steering Committee.
Despite the exclusion of small mining groups from the steering committee, though accommodated in the working committee, lots of discussion and much work have gone on relating to the problems and prospects of this group.
Small-scale mining has been identified as having low capital costs, high employment potential and could effect a fuller utilisation of the mineral wealth by the exploitation of scattered, numerous and otherwise uneconomic mineral resources which large mining houses have either abandoned or consider too small for their scale of operation. It has the potential to redress the racial and business imbalances in the mining sector which is dominated by a few conglomerates.
The main problem area is minerals rights, the key to exploration or development. The major mining houses have the lion’s share of these rights. But a recent Chamber of Mines discussion paper admits that there is “evidence that some of the large mining companies include in their holdings, deposits that are amenable to small-scale mining”. And large companies, including Anglo American and Genmin, have begun to identify and shift suitable deposits by auctioning mineral rights to small- scale operators.
But both the government, including tribal authorities, and private individuals, or surface owners, also own these mineral rights. Efforts to resolve the minerals rights issue would hinge on the need for government to review its handling of state owned mineral rights.
The chamber claims “that there is good evidence the state’s portfolio includes areas suited to small- scale mining (but) that the state’s management of its portfolio has not been conducive to achievement of this potential” of aiding small operators.
The African National Council (ANC) document stresses the need for a “system of licences or rights with a specified time period (that) could be immediately introduced over state-held rights to avoid sterilisation of our mineral resources”. This could ensure a turnover of exploration properties and encourage new investors.
Also needed are land reforms, discouraging holding land with mineral rights for speculative purposes and doing away with the “practice of freezing potential mineral wealth in areas of privately owned mineral rights”, as the ANC discussion paper suggests.
A Small Mines Bureau (SMB) has been proposed by the National Union of Mineworkers (Num) and the Minerals and Energy Policy Centre (MEPC), a think tank, both to offset the powers of the main mining houses and to champion the specific interests of this group.
Its functions would include “networking with and mobilising funds from existing government structures such as the Department of Minerals and Energy Affairs, Mintek, the Council for Scientific and Industrial Research, and the Industrial Development Corporation”.
It would develop a support system that would provide financial schemes, technical advice, exploration support, skills and management training, and research and development.
The chamber, while silent on such a bureau, nonetheless suggests that the “small-scale mining sector should be developed through finance and support of the Small Business Development Corporation or similar funding organisation” to promote sound economic and business principles.
Although this may augur well for small-scale operators, there are still hurdles to overcome. These hinge on health, safety and the environment.
Mining is a hazardous business and could have a damaging effect on the environment. Moves by unions, government and employers to tighten up on health standards and the campaigns of the green movement would not be compromised even for small operators.
The chamber’s document is emphatic that the inspectorates of the departments of Mines and Energy Affairs, Health and Labour “should systematically target medium and small scales to ensure that they follow the same minimum conditions as set in existing laws and regulations”. And that “micro-mining should be controlled and supported but not encouraged unless it stands a good chance of transformation into a viable, medium-scale enterprise”. And both NUM and MEPC insist on stringent measures even with small and medium operators.
Whatever lies ahead for open discussions on the overall mining and minerals policy formulation in general and for small/medium mining in particular the proposals that have been made by the major stakeholders are solid enough skeletons on which to put legislative and practical substance.