A senior South African official said the country’s mining sector is rife with problems including illegal drilling, rights sold on without permission and companies having competing claims to the same plot.
The mining ministry has imposed a six-month halt on new prospecting bids from the start of September to overhaul mining laws, iron out irregularities in the way rights are awarded and audit existing exploration and drilling contracts.
Acting Chief Inspector of Mines David Msiza on Tuesday described the initial results of that audit as “disturbing” in a speech presented on behalf of Minerals Minister Susan Shabangu, Reuters reports.
The audit found cases of fronting, which led to “bogus transactions”, and identified rights holders who had no idea of where their rights were located, while others failed to start prospecting as laid out in contracts, he said.
South Africa is the world’s biggest producer of platinum and ferrochrome and the fourth-largest gold miner. While the mining sector’s influence on the economy has declined since the end of apartheid in 1994, it is still one of the top employers. Overall, the amount of new mining prospecting applications suggested a boom in the sector, which was not supported by evidence on the ground, Msiza said.
“Even in seams or mineral complexes with known mineralization, such as Mpumalanga and Limpopo, this hive of exploration activity did not take place,” he told the annual general meeting of the Chamber of Mines, the main industry body.
“We discovered a significant number of rights which never progressed to the ‘issuing’ stage,” he said.
Disputes over mineral rights have added to the woes of mining firms already struggling with power shortages, rising electricity and wage costs, a strong rand and stricter safety rules. Msiza said all transgressors would lose their rights.
“Those who are found to have transgressed will be dealt with in the appropriate manner,” he said.
Out of 26,000 mining-related applications received since a new industry law came into force in 2004, there had been fewer than 120 cases of double-granting of rights, he said. Amid industry concerns about corruption in the mining ministry, the government is introducing an online licence application system, which will allow bidders to track their progress.
Some people in the mining sector, however, are sceptical about the ministry’s ability to resolve the mess and are worried about a perceived lack of leadership from President Jacob Zuma. Several disputed deals have triggered a volley of criticism at Zuma’s government.