An employee monitors the processing of iron ore. (Photo: Nadine Hutton / Bloomberg via Getty Images)
The procurement process to replace the dysfunctional licensing system for the Samrad mine has finally been initiated by the Ministry of Natural Resources and Energy. The system is accused of lagging behind in processing more than 5,000 mining and related rights applications.
June 1st, Department of Natural Resources and Energy (DMRE) Director General Thabo Mokoena promised at an investor conference that the department would publicly publish the tender for a new online mining cadastre to replace the completely useless Samrad system for registering mining rights applications. That would have been around mid-June, but six weeks after that timeframe, the DMRE finally announced on Friday, July 30th, that it was starting the procurement process. The delay isn’t exactly geological – South Africa’s mineral resources have accumulated over eons – but it underscores the DMRE’s apparent inability to deliver vital items on a publicly set schedule.
Finding a workable replacement for Samrad is crucial. DMRE Minister Gwede Mantashe said at another mining conference earlier this year that Samrad “is our biggest concern as a department”. Investors seeking mining, prospecting, and allied rights often raise their hands in despair when trying to navigate a system that appears to be inappropriately designed. Which begs the question of what it was designed for in the first place.
A replacement would be an online mining cadastre, a publicly accessible online portal. It provides comprehensive geological information about a country or mining jurisdiction, provides information on issued mining permits, including expiration dates, lists available mining or prospecting rights, and so on.
Such a system brings much-needed transparency to the sector and significantly reduces the opportunities for corruption. South Africa’s poor performance on this front is widely viewed as a barrier to investment and explains why so little exploration is currently taking place here – less than 1% of global exploration spending – despite the enormous wealth of resources that remain in the ground even after several times over a century of mining industrial scale.
This wealth of resources is also responsible for South Africa’s record trade surpluses and record profits made by mining companies operating here. But little of this massive injection of money goes into things like exploration or new mines. Hence the urgency to replace Samrad – it is a timescale that cannot be geological.
“The DMRE has started the procurement process for a new modern system that aims to simplify and make more efficient the provision of services for the investors in the mining industry and the public,” the DMRE said in a statement late Friday.
“The system is expected to provide a responsive technology layer that enables modern workplace functionality and transparency, is easily accessible to users, and ensures compliance with our laws. We believe this will shorten the processing time for granting exploration and mining rights. “
That would certainly be welcome.
The DMRE added: “The fundamental aim of this system is to attract investment in the mining sector and to boost the economy. The State Information Technology Agency (Sita) has started the process of obtaining the system. The process for appointing a service provider is expected to be completed by the end of October 2021. “
Hence, the end of October is the stated deadline and Sita tenders typically have various BBBEE requirements that could exclude international companies that actually have a track record in this complex area. After the debacle of Karpowership SA about the questionable provision of “emergency power” for South Africa’s ailing power grid, the DMRE is unlikely to want to screw it up. But the DMRE’s track record in dealing with emergency or urgency measures certainly leaves much to be desired.
Let’s see whether the service provider is selected by the end of October and whether the preferred bidder is up to the task. DM / BM