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Covid 19 Might Offer Renewed Hope For Sa's Mining Industry

Covid 19 might offer  renewed hope for SA" mining industry.

Like many resource rich countries, South Africa has built its economy on mining. And, like its international counterparts, the local mining sector has faced the damage of Covid19 induced closures.  There are numerous factors that have increased the pressures on miners' balance sheets. They include varying demand for commodities, which has led to reduced export incomes, as well as higher occupational safety costs. Despite these challenges, prominent mining lawyer Yushanta Rungasammy, director and cohead: Corporate &Commercial at law firm CMS South Africa, believes there is renewed hope that, as the industry is forced to reconsider how it operates, this could lead to an overall better outcome in the long run. "Yes, the pandemic has slowed progress on the core issues for the industry in South Africa, being progress with adopting technology and progress with dealing with the various issues causing challenges in the industry. This dovetails with concerns about how junior miners are stymied by the lack of access to funding," she explains. "It isn't all doom and gloom, though. The slowing down of mining activity as a result of the pandemic has created an opportunity to rethink and redefine the priorities that the industry needs to focus on."

 

This is reflected in, among others, the agenda for this year's Investing in African Mining Indaba, with its substantial focus on sustainability during a time of crisis, and the overarching theme of how the mining industry has been affected by Covid19. Rungasammy  says this means the local industry has a chance to face some core concerns and address them with a much longer term focus than previously envisioned. "In particular, it is exciting to see a much broader recognition of the imperative to address junior miners' needs, a greater openness in the sector as a whole to adopting new technology, and a renewed commitment from the regulator to streamline bureaucratic processes." Assisting junior miners and embracing 41R According to research by Minerals Council South Africa, junior miners hold up to 80% of licences in South Africa but deliver only about 8% of the total revenue generated by the local industry, often due to a lack of funding to progress beyond the basic exploration phase. "The sheer amount of time it takes to secure a mining license and the struggle to secure capital funding to move from exploration to actual mining activities have both been brought sharply into focus during the pandemic. While the work of the Junior and Emerging Miners' Desk established by Minerals Council South Africa is quite laudable, a lot still needs to be done," she says.

 

Rungasammy believes this is an opportunity for the government and the private sector to engage on the various challenges and to be creative around the programmes that can be introduced to assist  COVID19 RECOVERY. The slowing down of mining act a result of the pandemic has created opportunity to rethink and redefine the priorities that the industry needs to focus  junior miners. She explains that using new technologies will result in greater efficiencies, reduced production costs and greater profits, and will unleash the mining industry's full economic potential. At the same time, it also has the potential to set the sector up for future success, in that new technologies will advance South Africa's move into the Fourth Industrial Revolution 4IR . "Even the most cynical among us have come to realise that if they don't embrace 4IR, South Africa's mines will find it hard to compete against international mines that have access to better information about their underground inventory, clearer insights into their distribution channels, and more ready access to international customers," she says. "South Africa's mining industry can meet these challenges head on and emerge in a much better position tomorrow, if we make wise decisions today."

 

Rungasammy is keen to see how the regulator which has itself been affected by lockdowns and staff shortages as a result of the pandemic will tackle the call to process licences much faster: "I am hoping that we will see a greater openness to submitting applications in electronic form, without the need for expensive hard copies, and a more transparent view of where a particular application is in the process."3s  Yushanta Rungasammy is optimistic about opportunities for the mining industry during the pandemic   

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Portrait ofYushanta Rungasammy
Yushanta Rungasammy
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Johannesburg