South Africa still has undiscovered mineral deposits, says mining consultant

As the mining sector in South Africa continues to struggle with falling commodity prices, consultant John Bristow suggests that the solution lies in the junior mining and exploration industry. A replenished enthusiasm for exploration, combined with some tweaks to the regulatory framework, would, according to Bristow, solve many of the sector’s problems.

The mining sector has always been a pillar of sorts for the South African economy. Although it has now diversified considerably, the country has been heavily dependent on mining revenues from gold, platinum and coal in the past, and continues to rely on them for approximately 10% of its GDP. As a result, the country has become a hub of the mining industry for firms across the world.  

Heavy reliance on these non-renewable reserves has resulted in severe depletion of most of the country’s orebodies. To make matters worse, a dip in the price of precious metals such as platinum and gold has caused a dent in the revenues of the sector, amid a broader economic slowdown in the country.

While economic dynamics will determine the outcome of the latter, John Bristow, CEO, President and COO of Minera Ricardo Resources suggests a solution for the depleting reserves. Bristow, who has a PhD from the University of Cape Town, suggests that South Africa has been too premature in writing off the possibility of finding lucrative new reserves.

In essence, Bristow suggests a return to exploration and junior development to spark entrepreneurship in the sector, which will in turn combat the problem of depleting reserves. He admits the unlikeliness of finding any monumental new reserves, but emphasises the importance of optimising small and mid-tier deposits, even if only six to ten of these are found.

To support his argument, Bristow notes that 50 to 60 mineral deposits are discovered around the world annually, 50%-60% of which are discovered by junior companies. Moreover, such companies contribute significantly to their country’s economies across the world. For example, Australia has as many as 600 listed mineral companies and Canada has 231, while South Africa currently has only 22 - none of which are valued at more than $10 billion in terms of market capitalisation.

In his words, “Juniors should represent the backbone of a healthy industry… a healthy industry consists of exactly that… a positive synergy between entrepreneurs, junior explorers (to discover new assets) and developers… and senior mining companies.” He added; “Junior companies can ensure that mineral project pipelines are maintained.”

However, alongside fostering a vibrant entrepreneurial environment, Bristow believes that regulatory reforms are critical to bridge the current gap. In essence, he advocates for a simple and pragmatic mining policy, managed with emphasis on quick and accessible information, as well as a five-year transformational plan for the sector. Without such a policy, Bristow predicts the demise of the mining industry within the next five years.

In conclusion, Bristow adds, “South Africa has a treasure-trove of untapped geology and mineral wealth, a wealth of entrepreneurs and skills, and a huge range of leading-edge internationally recognised mineral development companies and service-providers.”