Differences: Mineral Resources Minister Gwede Mantashe is on a collision course with the mining sector over disused shafts. Picture: SIYABULELA DUDA
Differences: Mineral Resources Minister Gwede Mantashe is on a collision course with the mining sector over disused shafts. Picture: SIYABULELA DUDA

The Minerals Council has hit out at the government’s threat to effect the "use it or lose it" provision in mining legislation, claiming that insufficient exploration was a far bigger concern.

Mineral Resources Minister Gwede Mantashe is on a collision course with the mining sector over disused shafts. Mantashe says companies sitting on such shafts are dragging down economic growth.

His criticism of shafts being put into care and maintenance — a mining industry term for production being halted but shafts being maintained and managed — has become a familiar refrain of his.

"There is a fight I’m taking up with the [Minerals] council. When a company puts a mine in care maintenance, there is a deposit there — they are sterilising that deposit and contributing negatively to the industry," Mantashe said in July at the opening of Sasol’s Shondoni Colliery in Mpumalanga.

Mantashe said large companies that were not mining shafts because it did not fit into their strategic framework had to "put it up for sale to a smaller operator who has smaller overheads to run it".

In the past year Anglo American Platinum and Atlasa placed the Bokoni platinum mine into care and maintenance, and Sibanye-Stillwater did the same with Cooke shafts 1, 2 and 3.

‘Use it or lose it’

Mantashe has said before that the government would consider invoking the "use it or lose it" principle, provided for in the Mineral and Petroleum Resources Development Act of 2002, under which the holder of a mineral right had to develop the project otherwise the right lapsed and the state, as the custodian, would acquire it.

The spokeswoman for the Minerals Council, Charmane Russell, said while the industry body was keen to speak to the minister and the department on the matter, it did not view it as a burning issue.

"What is far more worrying for the Minerals Council, is that there are thousands of exploration permits that have been granted, and yet very little exploration is actually taking place," said Russell. "The future of the industry lies in new projects being proven and coming on stream, and without these the industry will decline."

Research by S&P Global Market Intelligence shows the exploration budget for SA has dropped from $179m in 2010 to $87m in 2017. Over the same period, SA has dropped from the highest in Africa in terms of exploration spend to fourth.

Regulatory uncertainty has been highlighted as one of the key issues hampering exploration, as companies are reluctant to commit to new projects, which require significant capital and long lead times.

Poor mining production numbers continue to weigh on economic growth. According to the latest statistical release from Statistics SA last week, mining production was down 2.6% in May (year on year) and was underpinned by a slide of 16.2% in gold production in particular.

Upon request, the department was unable to provide data on the number of shafts on care and maintenance. Spokeswoman Ayanda Shezi said economic analysts were assessing and consolidating numbers.

The Minerals Council also did not have statistics. "It would be important, we think, to examine such data and to assess and understand the reasons for care and maintenance," said Russell.

Placing a shaft or mine into care and maintenance was not something a company took lightly, she said. "There are significant costs involved, without any income, and there would likely be an intention to reopen at some stage — perhaps when commodity prices have improved, or technological breakthroughs are achieved."

Asked on the sidelines of the Shondoni Colliery’s opening if the shafts in question could be nationalised, Mantashe said: "You don’t need to nationalise marginal deposits."

steynl@businesslive.co.za