Report details SA junior mining crisis

South Africa is one of the major mining jurisdictions with a shortage of junior miners and exploration companies, and this bodes badly for the future of the industry.

New one Report published by Minerals Council SA This week provides an update on junior mining in South Africa, taking a critical look at the many obstacles to its growth as well as providing recommendations to give it a much-needed lift.

Junior and emerging miners are important for South Africa. They open up entrepreneurship for historically disadvantaged groups and promote exploration as junior miners often take the risk of prospecting. And without exploration, you won't have mining for long.

The report finds that a thriving junior mining sector has the potential to create 50,000 direct jobs and 350,000 secondary jobs over the next decade.

“By fostering a supportive environment, junior miners can boost exploration, a function previously driven by larger companies. This exploration is vital to finding the next generation of large-scale mines. A thriving junior sector could create thousands of jobs, contribute significantly to the tax base and help create a new generation of mining capitalists,” the report said.

But, among other things, junior miners can hardly compete with illegal miners.

The report clearly states, “It is easier to run illegal small-scale operations than to comply with all legal requirements, and there are little or no consequences for illegal miners.”

In short, running a Zama Zama operation for a crime syndicate is easier and more lucrative than going through the difficult efforts of setting up a legal syndicate. It seems that crime pays.

At first glance, it may seem that junior mining is booming in South Africa – but this is misleading.

The report said that in 2024, 77% of the 2,065 mining licenses and permits granted by the Department of Mineral and Petroleum Resources (DMPR) were for junior, small-scale or micro miners – but they generate only 11% of mining revenue. A total of 453 miners were classified as “junior”, 920 as “small-scale” operations and 208 as “micro” operations.

A junior miner is defined as someone with an annual revenue turnover of between R162.5-million and approximately R644-million. Micro operations have fallen below R3.5-million, with small-scale operations falling roughly in the middle.

Micro operations for things like sand production are generally small mines and the report said many such businesses feel they should come under the Public Works Department.

And it is on the JSE where the junior cupboard is clearly bare. There are only 12 junior mining companies listed on the JSE – defined as those with a market capitalization of less than R1-billion. In contrast, the Toronto Stock Exchange has 883 and Australia has 720.

The purpose of the listing is to raise capital and on this front, South Africa's juniors are being starved.

The sector's difficulties have been further compounded by the decline in exploration investment in South Africa.

“Although South Africa attracted more than 8% of global exploration expenditure in 2001, this share is expected to decline to less than 1% in 2025,” the report said.

There are several factors that explain this situation. There is a slow roll-out of a proper mining cadastre, which has unnecessarily dragged on for years. The lack of this online portal highlighting the state of the mineral rights game – which was always on the verge of launch since last year – remains a major barrier to mining investment.

“A key shortcoming is the absence of a comprehensive mineral rights cadastre system…Most neighboring countries, such as Botswana, Namibia and Zimbabwe, have implemented such systems, which helps increase transparency and reduce corruption risks,” the report said.

Indeed, while the DMPR has data on mining licenses and permits issued, the report said that as of the end of last year it still did not have that data for potential licenses, which also helps explain the unfolding cadastre disaster.

Stand up and deliver: you are mine!

Then there is the area of ​​outright criminality that is undermining the junior mining industry.

“Incidents of mines being hijacked by organized crime syndicates are increasing. Calls to the SAPS sometimes go unanswered, and mining companies have taken measures to protect their operations by private security,” the report said, without providing data.

“The threats are no longer small and random; they are highly organized, and in the places where they attack, criminals have hijacked mines by bringing in large earthmoving machines costing millions of rands. Managers are no longer safe, and many management teams have personal security details.”

The report said such issues are high on the radar screens of foreign investors.

“While roadshowing for investors in North America in 2025, junior miners report… they do not see the value of investing in an industry plagued by crime, where the regulator issues multiple licenses for the same prospecting area, and then they have to fight for it in court for several months,” the report said.

Its recommendations include allowing junior players to restart some abandoned mines and more than 30 mines that are not currently producing but are under care and maintenance. Such operations are much less expensive than building a mine from scratch.

It also recommends adopting the Canadian model of flow-through share incentives to promote junior listings on the JSE. This allows the initial purchaser of shares to claim a tax deduction on the amount invested and is credited with raising 70% of the capital for exploration in the Canadian stock markets.

And, of course, the damn cadastre needs to go live! DM