SA Mining: Recovering From A Legacy Of Lost Opportunities

Over the last 10 years, South Africas mining industry has been struggling for survival. Will interventions such as the redrafted Mining Charter be enough to revive this embattled sector?

- David McKay

Despite having re-mortgaged his house and selling everything else he owned, Sifiso Nkosi quickly ran out of money. That’s how it is in the mining exploration game where it costs R1 000 to R1 500 per metre to drill the earth, and where potential resources – considered to be shallow – require several hundred metres of drilling.

And that is just for knowledge. Paying for that knowledge can be a painful exercise when what you learn is that there are no minerals.

“To cut a long story short, we entered into a joint venture to try and get people to come and assist for the expansion,” says Nkosi of his plan to drill for anthracite in KwaZulu-Natal. “They were not there to assist for the expansion; they were there to add into their portfolio so they could go outside and still attract more capital using us as an asset that’s written into their portfolio,” he says.

The lack of available capital is the single most important restriction for aspirant miners in South Africa. In the case of Nkosi, and his Nthuthuko Exploration and Mining, the outcome was disappointment, but he is not deterred. “I left a very successful IT career, the highest-paying career [line of work] in the whole world right now, for a career with uncertainty. But you’d rather die for a cause you’re called to than to live for someone else’s,” he says.

As a percentage of SA’s gross domestic product (GDP), mining comprised some 8%, or equal to R335bn in 2017.

But this does not quite tell the whole story of SA mining’s position in the economy. Gross fixed investment in mining grew to R80.9bn in 2017, compared to R67.6bn in 2016, an increase representing 18.2% of private and 10.8% of total fixed investment in the economy, according to Minerals Council of South Africa (formerly the Chamber of Mines) data.