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The metal bull run continues

Almost all commodities had a great year in 2020 — oil is the exception. The money is on a good 2021 too

Lisa Steyn has written a mining and commodities outlook article (paywall) in this week's (14 January 2020) Financial Mail. In brief, prices are looking good and existing SA miners are pumping cash. And then she quotes Paul Miller of AmaranthCX and it is like the Grinch that Stole Christmas...

"For Paul Miller, director at AmaranthCX, the biggest concern now is whether there will be much mining at all in the years ahead, given that exploration investment in SA has all but dried up.

"We’ve gone from attracting 35% of all Africa’s exploration spend to less than 8% since the Mineral & Petroleum Resources Development Act (MPRDA) and the first mining charter were introduced. That equates to less than 1% of global exploration spend in what used to be the greatest mining country in the world," says Miller. "To Mantashe’s credit, the penny has dropped that we haven’t had proper greenfields exploration in SA for 30 years because we haven’t been able to attract exploration investment. [The government] has realised it’s a problem."

An exploration strategy has been promised in the first quarter of the year and is now being hashed out behind closed doors by the department, the Council for Geosciences and the Minerals Council SA.

Miller worries about the lack of transparency in the development of the plan — "that the rest of us are going to have to like it or lump it when they release it", he says.

"The minerals council has historically been an incredibly poor advocate for the future of the industry. It has represented its members’ interests, which is to try to protect their sunk capital in existing mines," he says.

"The MPRDA and the mining charter were negotiated on that basis — by people who have existing sunk capital, not people who are looking to invest new capital in exploration. As a consequence, 20 years in we discover there’s been no new exploration — and our mines now have about 15 years left, after which they will mostly be done."

Miller says the new exploration strategy will be dead in its tracks if it does not include as a main element a transparent online mining cadastre (a set of records showing the extent, value and ownership of land).

But even if a transparent online cadastre is included, he says, a far deeper "root and branch" reform of the regulatory environment is required if SA is to compete to attract investment."

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