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Covid could have a positive impact on mining in the long run

1 February 2021

Despite challenges posed by Covid-19, varying demand for commodities, reduced export incomes and higher occupational safety costs, there is renewed hope that, as the mining industry is forced to relook 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, this dovetails with concerns about how junior miners are stymied by the lack of access to funding. 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.

Junior miners

I have a particular interest in the challenges facing junior miners which, according to research by the Minerals Council of South Africa, 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 the Minerals Council South Africa is quite laudable, a lot still needs to be done.

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 junior miners. 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).

Technology and regulation

Even the most cynical among us have come to realise that if they don’t embrace the 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. 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.”

The regulator - which has itself been affected by lockdowns and staff shortages as a result of the pandemic - needs to tackle the call to process licences much faster. II 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.

Related people

Yushanta Rungasammy | Co-Head of Corporate & Commercial | South Africa
Yushanta Rungasammy
Partner
Johannesburg
Rembuluwani Nembudani | Senior Associate | Corporate & Commercial
Rembuluwani Nembudani
Senior Associate
Johannesburg