By Chris Bishop
One of the supreme ironies of this Mining Indaba – billed as the place to connect junior miners with investors – is that the representatives of the junior miners themselves came here to complain bitterly that they were hamstrung in their efforts to do so.
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Junior miners are the scouts of the industry, in the frontline of exploration: getting small projects off the ground and often selling them to the major miners on fruition. Around 1500 South African junior miners support 45,000 jobs – yet a report released Wednesday by the Minerals Council South Africa, on Day three of the Mining Indaba in Cape Town, claims 230,000 jobs could be created, through the multiplier, if there were tax breaks, less red tape and more support from investment funds.
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“A lot of people at the Mining Indaba say to us: If only this mining project was just in Australia it would be ten times the value of the market capital price. It is sad,” says Errol Smart CEO of junior miner Orion Minerals one of the presenters of the report.
Smart claimed South Africa was losing projects across the border to more go-ahead mining nations like Botswana and Namibia. He claimed junior miners struggled to wade through piles of bureaucracy at the overstretched Department of Mineral Resources.
“We have got to declutter the system and get red tape out of the way,” says Smart.
Another problem for South African junior miners – in a land of big mining and big government – is that investment funds here have no mandate to invest in their small projects.
Ironically, according to Smart, Australian pension funds invest in South African junior mining projects along with retail investors in Canada who enjoy tax breaks for doing so. All of these factors make it even tougher for the mining scouts on the front line who live with high risk and narrow margins.
“Our members invested R55 billion and earned R54 billion in revenue last year. That shows you that it is a tough gig,” says Smart.
Former finance minister Trevor Manuel promised tax breaks for junior miners more than a decade ago. They never came.
Mmadikeledi Malebe, the deputy director general of the Department of Mineral Resources, said: “We deal with all applications on receipt and we always try to assist junior miners with their paperwork.