PATRICK LEYDEN AND LAUREN PAXTON: Could the pen be mightier than the sword in regulating illegal mining?
03 February 2025 - 05:00
byPatrick Leyden and Lauren Paxton
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SA’s mining industry has long been a cornerstone of the country’s economy, with a rich history of gold, diamond and platinum mining. However, the industry has also been plagued by illegal mining activities, which not only pose safety and environmental risks but also contribute to the loss of billions of rand in revenue each year — estimated at R60bn in 2024.
Stilfontein gold mine, in North West province, ceased operations in 2013. Since its closure it has been a hotspot for illicit mining activity, with illegal miners — “zama zamas” — attempting to extract residual gold deposits from the abandoned mine shafts.
After the government’s recent attempts to rescue illegal miners who were trapped underground, many industry stakeholders have called for illegal mining to be combated through regulation of artisanal mining, which involves small-scale, informal mining operations. SA’s legal framework provides for mining permits for smaller scale operations, but artisanal mining requires something more bespoke.
Trade union federation Cosatu and its largest affiliate, the National Union of Mineworkers have led a drive to legalise artisanal mining to ensure these miners are protected and contribute their share of taxes to the national fiscus. However, this is a complex and challenging task.
Artisanal mining is a big sector in SA, with thousands of small-scale miners operating across the country. These miners often work in informal settings, using rudimentary equipment and techniques to extract minerals from abandoned mines, tailings dumps and other areas. The miners work without proper safety equipment or training, which frequently leads to severe injuries and fatalities.
Last week mineral & petroleum resources minister Gwede Mantashe released statistics for mining occupational health and safety that showed the number of mineworkers who died on the job during 2024 was at a record low of 42, a figure that shows progress but is still too high for an industry that has set its goal as “zero harm”. These statistics do not include illegal mining fatalities.
Artisanal mining is generally better suited for alluvial or surface mining, in relation to minerals such as gold, platinum group metals, diamonds and gemstones. But unlike other jurisdictions that regulate artisanal mining to various degrees of success, SA’s gold and platinum group metals deposits are deep underground. Minerals that are found closer to the surface such as coal, vanadium and iron ore are not conducive to artisanal mining as they need to be mined in large quantities to yield equivalent gold returns.
Rescued miners are processed by police after being brought to the surface after months underground, in Stilfontein, January 14 2025. Picture: REUTERS/IHASAAN HAFFEJEE
For example, to generate the returns on one ounce of gold, artisanal miners would need to produce about 24 tonnes of coal, 27 tonnes of iron ore or more than one tonne of vanadium at current spot prices. It would, therefore, not be as simple as limiting artisanal mining licences to surface operations, particularly given the allure of gold deposits in abandoned mines.
One of the concerns surrounding artisanal mining is that mining companies are required to advance an environmental rehabilitation guarantee aimed at ensuring the environment around the mine is rehabilitated if, for example, the mine becomes insolvent. This would be extremely costly for small-scale miners and if not properly enforced would likely lead to extreme environmental damage as many would not have the expertise to properly rehabilitate the area.
Furthermore, criminal syndicates control illegal mining operations in SA, making it challenging to regulate the sector without legitimising their criminal operations. The government must balance the need to regulate artisanal mining with the need to prevent the legitimisation of criminality, as it would be a step in the wrong direction to simply award artisanal mining licences to the syndicates. Legitimate artisanal mining permits holders would also need to be protected against possible violence, intimidation and extortion by these criminal syndicates.
Another obstacle is the labyrinth of existing tunnels and mine shafts from disused or abandoned mines, making it difficult to monitor mining activities and enforce any new regulations. The department of mineral & petroleum resources is already experiencing a backlog and struggling to timeously process mining right and/or permit applications.
By introducing an additional permit or licence that may be applied for by any individual or small-scale company with little to no red tape involved, the department would receive and need to process thousands of additional applications. Compounding this issue is that these licences may also present an attractive opportunity to many of SA’s unemployed, a figure totalling about 19-million.
A draft policy paper dealing with artisanal and small-scale mining, published by the department in May 2021 and finalised on March 30 2022, suggests that the existing legitimate mining companies should bear some of the burden of regulating artisanal mining. This would be implemented, according to the draft policy, through coexistence between artisanal miners and the legitimate mining companies by participation by the parties in “tributing agreements” which would provide for tribute and buyback arrangements, technical support, equipment leasing schemes and opportunities for artisanal mining to process and refine their ores.
In principle this may be sensible, though for the existing mining companies and investors it is imperative that security of tenure in relation to existing rights and infrastructure is protected and maintained. If existing mining companies are to assist, it should be implemented on a voluntary and incentive basis.
Ultimately, regulating artisanal mining in SA is a daunting and challenging task but has the potential, if implemented correctly, to help combat illegal mining. To mitigate the risks and challenges mentioned above, regulators should consider limiting artisanal mining permits to predetermined designated areas, introducing a mechanism in terms of which artisanal miners make financial provision for rehabilitation, and establishing a central purchasing entity to which all minerals produced by artisanal miners can be sold.
The additional administrative burden associated with monitoring, policing and enforcing these regulations may also require the establishment of dedicated artisanal mining departments within various government agencies, including the SA Police Service and department of mineral & petroleum resources.
• Leyden is a partner, and Paxton an associate, at Herbert Smith Freehills.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
PATRICK LEYDEN AND LAUREN PAXTON: Could the pen be mightier than the sword in regulating illegal mining?
SA’s mining industry has long been a cornerstone of the country’s economy, with a rich history of gold, diamond and platinum mining. However, the industry has also been plagued by illegal mining activities, which not only pose safety and environmental risks but also contribute to the loss of billions of rand in revenue each year — estimated at R60bn in 2024.
Stilfontein gold mine, in North West province, ceased operations in 2013. Since its closure it has been a hotspot for illicit mining activity, with illegal miners — “zama zamas” — attempting to extract residual gold deposits from the abandoned mine shafts.
After the government’s recent attempts to rescue illegal miners who were trapped underground, many industry stakeholders have called for illegal mining to be combated through regulation of artisanal mining, which involves small-scale, informal mining operations. SA’s legal framework provides for mining permits for smaller scale operations, but artisanal mining requires something more bespoke.
Trade union federation Cosatu and its largest affiliate, the National Union of Mineworkers have led a drive to legalise artisanal mining to ensure these miners are protected and contribute their share of taxes to the national fiscus. However, this is a complex and challenging task.
Artisanal mining is a big sector in SA, with thousands of small-scale miners operating across the country. These miners often work in informal settings, using rudimentary equipment and techniques to extract minerals from abandoned mines, tailings dumps and other areas. The miners work without proper safety equipment or training, which frequently leads to severe injuries and fatalities.
Last week mineral & petroleum resources minister Gwede Mantashe released statistics for mining occupational health and safety that showed the number of mineworkers who died on the job during 2024 was at a record low of 42, a figure that shows progress but is still too high for an industry that has set its goal as “zero harm”. These statistics do not include illegal mining fatalities.
Artisanal mining is generally better suited for alluvial or surface mining, in relation to minerals such as gold, platinum group metals, diamonds and gemstones. But unlike other jurisdictions that regulate artisanal mining to various degrees of success, SA’s gold and platinum group metals deposits are deep underground. Minerals that are found closer to the surface such as coal, vanadium and iron ore are not conducive to artisanal mining as they need to be mined in large quantities to yield equivalent gold returns.
For example, to generate the returns on one ounce of gold, artisanal miners would need to produce about 24 tonnes of coal, 27 tonnes of iron ore or more than one tonne of vanadium at current spot prices. It would, therefore, not be as simple as limiting artisanal mining licences to surface operations, particularly given the allure of gold deposits in abandoned mines.
One of the concerns surrounding artisanal mining is that mining companies are required to advance an environmental rehabilitation guarantee aimed at ensuring the environment around the mine is rehabilitated if, for example, the mine becomes insolvent. This would be extremely costly for small-scale miners and if not properly enforced would likely lead to extreme environmental damage as many would not have the expertise to properly rehabilitate the area.
Furthermore, criminal syndicates control illegal mining operations in SA, making it challenging to regulate the sector without legitimising their criminal operations. The government must balance the need to regulate artisanal mining with the need to prevent the legitimisation of criminality, as it would be a step in the wrong direction to simply award artisanal mining licences to the syndicates. Legitimate artisanal mining permits holders would also need to be protected against possible violence, intimidation and extortion by these criminal syndicates.
Another obstacle is the labyrinth of existing tunnels and mine shafts from disused or abandoned mines, making it difficult to monitor mining activities and enforce any new regulations. The department of mineral & petroleum resources is already experiencing a backlog and struggling to timeously process mining right and/or permit applications.
By introducing an additional permit or licence that may be applied for by any individual or small-scale company with little to no red tape involved, the department would receive and need to process thousands of additional applications. Compounding this issue is that these licences may also present an attractive opportunity to many of SA’s unemployed, a figure totalling about 19-million.
A draft policy paper dealing with artisanal and small-scale mining, published by the department in May 2021 and finalised on March 30 2022, suggests that the existing legitimate mining companies should bear some of the burden of regulating artisanal mining. This would be implemented, according to the draft policy, through coexistence between artisanal miners and the legitimate mining companies by participation by the parties in “tributing agreements” which would provide for tribute and buyback arrangements, technical support, equipment leasing schemes and opportunities for artisanal mining to process and refine their ores.
In principle this may be sensible, though for the existing mining companies and investors it is imperative that security of tenure in relation to existing rights and infrastructure is protected and maintained. If existing mining companies are to assist, it should be implemented on a voluntary and incentive basis.
Ultimately, regulating artisanal mining in SA is a daunting and challenging task but has the potential, if implemented correctly, to help combat illegal mining. To mitigate the risks and challenges mentioned above, regulators should consider limiting artisanal mining permits to predetermined designated areas, introducing a mechanism in terms of which artisanal miners make financial provision for rehabilitation, and establishing a central purchasing entity to which all minerals produced by artisanal miners can be sold.
The additional administrative burden associated with monitoring, policing and enforcing these regulations may also require the establishment of dedicated artisanal mining departments within various government agencies, including the SA Police Service and department of mineral & petroleum resources.
• Leyden is a partner, and Paxton an associate, at Herbert Smith Freehills.
HEIDI STERNBERG: Stilfontein disaster should be a catalyst for change for abandoned gold mines
MARIANNE MERTEN: Hard turn to the right, dehumanisation ahead
Mantashe tells Vavi that government cannot be responsible for illegal miners’ deaths
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