Mining firms hindered by long delays for licences
September 22, 2006
By Justin Brown
Johannesburg - The mining industry, especially junior mining firms with new projects, is facing extreme delays of up to two years in getting prospecting licences, which leads to extra costs.
The delays in issuing licences resulted in shareholders of junior mining companies becoming disenchanted and losing interest in projects in South Africa, Foreign Investors Mining Association (Fima) convener John Blaine said yesterday.
Fima represents 10 foreign mining companies with interests in South Africa.
"There have been extreme delays of up to two years in issuing licences," he said.
But Jacinto Rocha, the deputy director-general of mineral regulation of the department of minerals and energy, said that those who claimed there had been major delays in issuing licences must prove it.
Blaine said that exploration firms not being issued with licences resulted in exploration work coming to a complete halt and caused extra costs to mining firms. The delays led to large firms applying their exploration spending elsewhere.
Relative to Australia and Canada, South Africa has a very small junior mining sector.
The mining industry has also blamed the decline in investment in the mining sector partly on the Minerals and Petroleum Resources Development Act.
At last week's mining summit, Bernard Swanepoel, the chief executive of Harmony Gold, said that South Africa's regulatory framework was a key constraint, along with exchange-rate volatility, that was limiting the growth of the local industry.
Chamber of Mines economist Roger Baxter said the world was experiencing a once in a lifetime commodity boom, while at the same time investment in the local mining industry was declining.
But Rocha disputed this and said that major investment in the industry continued, as evidenced by Gold Fields announcing this month that it would invest R4.7 billion in the country.
Baxter said South Africa had not caught the wave of the commodity boom due to infrastructure constraints that had limited iron ore and coal exports, rand volatility and regulatory red tape.
The red tape came in the form of mine permits as well as environmental management plans, especially environmental trust funds and water licences, for instance.
Anglo Platinum is taking the department of minerals and energy to court for refusing to issue four prospecting licences.
In contrast, two junior companies, Pamodzi Gold and Ridge Mining, said they both had reasonably smooth experiences in obtaining prospecting licences.
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