SA has slipped into irrelevance in terms of global mining exploration. The fund will not fix that, but it will help. From Moneyweb.
Just days after President Cyril Ramaphosa unveiled his 10-point plan to revive the economy, which includes rebuilding the chrome and manganese sectors, the Public Investment Corporation (PIC) announced it has set up a R1.35 billion fund to help launch early-stage mining projects.
The fund is aimed at projects that are already well advanced, and will take them from post-scoping to the ‘bankable feasibility study’ stage.
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“This strategic allocation enables the PIC to support the growth of South Africa’s mining sector through indirect investments, primarily by deploying capital through private equity, venture capital, specialist mining funds, and joint ventures and partnerships,” says the PIC.
The R1.35 billion will be invested across diversified commodities, geographies, and development stages.
“This approach aims to mitigate the high-risk nature of early-stage mining investments while delivering attractive returns for PIC clients.”
At least half of the projects must be based in SA, although funds will also be available for deployment elsewhere in Africa.
To qualify for funding, the project size must be between R100 million and R400 million, with preference given to those aligned with black economic empowerment (BEE).
Funding is available for minerals that support the government’s Just Energy Transition goals, including copper, cobalt, nickel, lithium, graphite, manganese, and rare earth minerals.
Catching up
The new fund comes at a time when SA’s standing in global mining exploration has fallen into irrelevance.
In the early 2000s, the country accounted for roughly 5% of global exploration spend, but that has dropped to below 1%.
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The PIC’s latest initiative comes after the Industrial Development Corporation and the Department of Mineral Resources and Energy announced a R400 million fund to support exploration by junior miners – but what’s needed is more than R10 billion if we are to get back to 5% of global exploration.
‘Not enough’
“SA needs to spend about seven or eight times that [R1.35 billion] annually to regain its 2003 position of attracting 5% of global exploration spend,” says Paul Miller, CEO of AmaranthCX.
“And, of course, this fund is not the early-stage funding so desperately required, as it is post-scoping study, pre-definitive feasibility funding.
“It’s a welcome initiative, of course, but only root-and-branch policy reform will take SA back to 5% and there seems no political appetite for that, even as radical solutions are accepted in other sectors such as bulk logistics and energy.”
Speaking at the recent Joburg Indaba, Anglo American CEO Duncan Wanblad said SA remains underexplored because it had an unsupportive exploration policy for 20 years.
A generation of mines has been foregone as a result of these unsupportive polices, he added.
Policy
Exploration is the riskiest part of mining as there is no guarantee of success.
Minister of Mineral and Petroleum Resources Gwede Mantashe is under pressure to relax BEE requirements and other regulations seen to be suffocating investment, particularly in early-stage projects.
Recent proposed amendments in the Draft Mineral Resources Development Bill, which was released in May for public comment, requires ministerial consent for any changes in shareholding of mining companies, including foreign ones.
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One of the main objections to the draft bill is that it mandates BEE for prospecting and mining rights, when all prior indications were that this would be omitted.
Requiring BEE partners for exploration projects which are highly risky is regarded by many as irrational and counterproductive.
Only R779 million was spent in 2024 to find the mines of the future, wrote Miller in MiningMX. “That wouldn’t even fund one mid-tier Canadian company’s drilling season. Meanwhile, the backlog of applications of various types sits in the region of 2 500. The long-promised cadastre system remains offline.”
SA’s exploration crisis is largely man-made, adds Miller. Mining rights go to insiders, work programmes are unenforced, and applications vanish into the shadows unless “helped along”.
“This isn’t just dysfunction. It’s institutional capture by inertia, favours, and quiet corruption.”
