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WHOSE MINERAL RESOURCE IS IT?

Tinashe Mupasiri

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Investing in African Mining Indaba, is the world’s largest mining investment conference, which brings together the actors and value players in the mining value chain, to spark change and drive investments dedicated to the capitalisation and development of mining in Africa.

This year’s conference to be held in Cape Town from 6– 9 February 2023, runs under the theme: ‘Unlocking African Mining Investment: Stability, Security and Supply’.

Being the 28th edition of the conference, it comes at a time when South Africa’s economy is threatened by severe power outages due to load shedding (planned power outages) by Eskom, South Africa’s state owned and sole power generating company, which relies heavily on coal-fired power stations to generate power.

South Africa is the seventh largest coal producer globally and the mineral resource is in abundance and the country has a long history of intense coal mining, with about 77 percent of South Africa’s primary energy needs being provided by coal.

This is unlikely to change significantly in the next two decades owing to the relative lack of suitable alternatives to coal as an energy source. Many of the deposits can be exploited at extremely favorable costs and, as a result, a large coal-mining industry has developed.

By international standards, South Africa’s coal deposits are relatively shallow with thick seams, which make them easier and, usually, cheaper to mine, an aspect that has seen Mining activists recently calling out for the shutdown of the Richards Bay harbour in KwaZulu-Natal, stating that the everyday transportation of coal from South Africa to Europe is accelerating load-shedding yet ‘our coal’ serves Europe.

The call for the shutdown of Richards Bay harbor, compels one to ask a very pertinent question that begs an honest and considered response, if one is to unlock investment for Africa’s mining sector. No one can doubt the importance of mineral resources in human civilization and any right to such an asset and does confer on the holder significant wealth only if certain conditions are observed.

The importance of the rule of law and respect of the rights of mankind to their property cannot be understated for it is true that the existence of mineral resources does not in and out of itself produce income but effort is required to transform mineral resources into one form of value and then into cash.

The need for capital to produce income is and should be obvious to all and with respect to mineral resources, the creator required that human beings put something on the plate not just to reveal the existence of minerals but the size and quality before any extraction and processing activity could be done.

At what point does a mineral resource hidden beneath the earth’s surface, which human beings and animals share in common, become ‘our mineral resource’, but you never hear a lion or elephant say ‘our coal’ or ‘our gold’?

For one to prospect for a mineral resource, a Prospecting License is required prior to the physical search of a mineral resource and the one intending to prospect for a mineral resource must also be able to prove that they have adequate financial resources and technical competence and experience to carry out effective reconnaissance operations.

Mineral resource exploration requires intensive capital to be undertaken. Why would the department of mineral resources issue a prospecting license to an individual and when the individual who has committed capital to exploration of a mineral resource, then say ‘our mineral resource’ when a mineral resource is discovered, without any contribution whatsoever to the cost of exploration?

It is the individual who bears the cost of labor and expertise required in exploration, the equipment and machinery, security, food and medical provision for the personnel and other related costs.

The future of Africa’s mining sector is only secure when the seed in the form capital sown by an individual, produces an outcome and that outcome being the individual’s who has provided the investment to produce the mineral resource.

To ensure stability, security and supply of mineral resources in the African mining value chain, it is fundamental to develop a shared understanding on the causal link between the rule of law and development, as absence regard for property rights, development will always be a mirage. No sane investor would in their right mind unlock capital and place it where one’s investment is not secured.

A question one is compelled to ask that requires interrogation at the forthcoming Investing in African Mining Indaba, if there is to be any meaningful development in the continent’s mining value chain would be; whose mineral resource is it?

Tinashe Mpasiri can be reached on whatsapp +27788888131 or email: [email protected]

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