Corruption and incompetence are causing the mining license crisis

Henry

Gwede Mantashe, Minister of Mineral Resources and Energy (MBE), recently confirmed in response to a parliamentary question that his department has not finalized any of the 2,525 exploration and mining license applications in 2023.

No licenses were therefore issued in 2023. In total, 4,486 license applications still need attention.

One of the main reasons for the department’s inability to handle applications for exploration and mining licenses is the lack of a workable cadastral system. The system is an online portal that contains mineral and exploration information and enables a mining house and explorer to submit their license applications electronically.

When Mantashe took over the department from the totally incompetent Gupta minister, Mosebenzi Zwane, in 2018, the expectation of all players in the mining sector was that Mantashe, as a former miner, would be the knight on the white horse who would return mining to its former glory. revive

One Saturday morning in May 2020, Mantashe requested my help with research for his MBA dissertation. Mantashe indicated that he undertook the MBA to empower him with knowledge to straighten out the department. Mantashe also referred to numerous MBE regional offices that he had temporarily or permanently closed due to the prevalence of corruption and poor service delivery.

I was, somewhat naively, quite impressed with Mantashe’s MBA motivation and this Monday at the office I share Mantashe’s ambition with Flip Buys, chairman of the Solidarity Movement. Flip knows Mantashe well because Flip, as general secretary of the then Mineworkers Union (and the later Solidarity) worked closely with Mantashe who was then general secretary of the National Union of Mineworkers (Num) from approximately 1998 to 2006. In response to my comment, Flip just shook his head and said that Mantashe was not going to fix the department.

Unfortunately, Flip’s hunch was right and the department continued to decline under Mantashe.

The decline of the department can be observed simply by visiting the head office in Sunnyside or a regional office and noticing that a high performance culture does not exist there and noticing that many officials sit around and do nothing.

Expert senior DME officials, who had been working at the department since the previous dispensation and were totally committed after the 1994 transition to campaigning for the development of the mining sector under the new political order, are disillusioned and overworked. The capable old hands in the department bear a heavy burden due to a large number of incompetent and unreliable colleagues and they are also of the opinion that the department has deteriorated under Mantashe.

The crisis with overdue license applications is therefore no surprise, because in addition to a host of incompetent officials in the department, corruption regarding license applications is rampant.

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About two years ago, a mining expert became interested in taking over a liquidated chrome mine in the Rustenburg area and applied for a mining licence. The applicant saw the potential of the mine and knew that under the right management the mine could be operated successfully and the 400 affected employees could be re-employed. Despite the fact that he met all the requirements to obtain a mining license, the relevant DME official in the provincial office in the North West did not want to grant him the license unless he paid R1 million in bribes.

When the applicant refused to pay the bribe, the DME official was surprised because he could not get the license at a discounted price – some of the big mining houses would reportedly even pay R5 million in bribes to obtain or renew a license. The latter situation is indicative of a business sector that is also declining along with the state.

The story gets even worse. The applicant approached two regional leaders of a prominent mining union representing the majority of workers at the mine for help. These two union leaders happened to know the DME official and were more than willing to conduct the negotiations on behalf of the applicant. They then returned with the good news that the DME official would like to issue the licence, but the additional payment that had to be made under the table would then amount to R2 million.

The applicant finally approaches Solidarity for help and we contact a senior official at the department and bring the license corruption to his attention. The response was that the license bribery practices are well known at the relevant office, but that it was simply too dangerous to inquire about the license application in question. The recommendation was that the applicant should formally apply for the license and once the application is rejected, the applicant should appeal the decision. The appeal application would then be heard by respectable senior officials at head office and favorably considered if everything is correct. The license was finally approved at the department’s head office.

Back to the cadastral system: Minister Mantashe has been promising for the past three years that his department, together with the State Information Technology Agency (Sita) and a preferred IT developer, is working hard to develop a new license application system. At each follow-up feedback session by Mantashe, the deadline for implementing the system is postponed. This follows after pres. Last year in February during the annual African Mining Indaba, Cyril Ramaphosa announced that the government was in the process of purchasing a cadastral system that is available “off the shelf”.

One of the executive managers of the Minerals Council of South Africa indicated in a conversation that the department could easily purchase the same existing cadastral system that is successfully in use in Namibia, Botswana and Canada, among others. The Minerals Council even offered to purchase and implement the system at its expense. However, the department refuses to accept the council’s offer, or to acquire the existing system because, according to the Minerals Council’s executive manager, there is limited opportunity for self-enrichment if a process that includes numerous service providers is not followed. In the case of the route that the DME follows, there is also the danger that a system of substandard can be developed which will be full of defects and will be accompanied by growing pains.

Meanwhile, without the issuance of exploration and mining licenses, there can be no growth and development in the waning mining sector. This means that no new jobs are created for existing miners and that affected workers have no transfer opportunities in cases where mines are mined out. Secondly, this means that youth unemployment is also increasing because no new jobs are being created. This is a recipe for accelerated social decay in mining communities and an increase in unrest and illegal mining operations.

It will then be interesting what Mantashe and Ramaphosa will say on February 5 during the opening of this year’s mining indaba about the status of the cadastral system.