A NEW minerals cadastre for South Africa’s exploration and junior mining sector could be a “cut and paste” of other successful examples used globally, said Errol Smart, chairman of the Minerals Council of SA’s junior and emerging miners leadership forum.
“This isn’t rocket science; it’s what industries do around the world all the time. There are proven case studies that a person can cut and paste very quickly,” he said.
Smart, who is also MD of Sydney-listed Orion Minerals, was commenting at the Joburg Indaba, a mining conference, last week. He earlier said in his presentation that he had, with the Department of Minerals & Energy, completed a report for mines minister, Gwede Mantashe, on the adoption of a flow-through share incentive scheme.
The scheme would help mobilise funds for exploration, especially in highly prospective mineral regions, such as the Northern Cape. Smart said mining development ought to be a key component of South African president, Cyril Ramaphosa’s economic recovery plan, due to be made public later this week.
Flow-through shares enable exploration companies to renounce tax benefits that would be due from incurring exploration expenses, and pass the benefit to investors who buy shares in return.
“The simple logic is that for every R100 invested in exploration, R84 is spent locally in the area where you work. R32 ends up in the South African Revenue Service’s (SARS’) hands anyway in 12 months,” said Smart.
“I’m a dumb geologist; I’m not an accountant or auditor, but hell, all you have to do is ask [National] Treasury and SARS to give up R28 of corporate taxes in return for corporates investing R100 in exploration.”
Commenting on the cadastre, Smart said industry and government has to break down boundaries that had kept them apart in the past. “We must get beyond the ‘us and them’.
“The more we work collaboratively, the more we can get an outcome. We know there are technical impediments to overcome, but we have to free up money at a very difficult time,” he said.
“Let’s stop trying to invent our own wheel. Let’s adopt it for the South African environment. Man, a wheel has to be round and have rubber on it. Let’s just make sure we put South African rubber on it and we get going on the track.”
South Africa’s existing mining cadastre has been a failure, mining industry executives have said. PwC, a market research company, said earlier this month it was “broken”. New systems had to be put in place as South Africa only attracted 1% of the world’s global exploration expenditure, according to the Minerals Council South Africa.