Business
Mantashe drops BEE prospecting rule in bid to revive SA mining
At a time when South Africa’s mining industry is fighting to rediscover its spark, Mineral and Petroleum Resources Minister Gwede Mantashe has announced a significant shift in policy.
Speaking at the annual Investing in African Mining Indaba in Cape Town, Mantashe confirmed that companies will no longer be required to have Black Economic Empowerment participation during the prospecting stage of mining.
For an industry that has watched investment dry up over two decades, this is more than just a technical tweak. It is a calculated attempt to change the mood.
Why prospecting matters more than people think
Exploration is the earliest and riskiest phase of mining. Companies spend millions searching for deposits without any guarantee that a viable mine will ever materialise.
Mantashe described exploration as the lifeblood of mining. His argument is straightforward. At the prospecting stage, no economic value has yet been proven. Imposing ownership requirements before any revenue exists raises costs and deters risk capital.
Under the revised approach, BEE requirements will only apply once a project moves into production, when actual value is being generated. According to the minister, this is not a retreat from transformation but a pragmatic move to stimulate exploration and expand the pipeline of future mines.
He added that fresh geological data suggests there is still substantial untapped mineral potential beneath South African soil. The challenge, he implied, is getting companies to drill for it.
A sector struggling to compete
The backdrop to this decision is sobering. South Africa was once a global mining powerhouse. Gold defined the country’s economy for decades. Today, output has declined sharply, and the country ranks poorly as a mining destination compared with international peers.
While the recent precious metals boom, especially in platinum, has brought some relief, analysts argue that South Africa has not benefited as much as it could have. Exploration activity has been limited for years.
Industry critics often point to the Mineral and Petroleum Resources Development Act of 2002 as a turning point. The legislation altered mineral ownership structures and introduced a more complex regulatory environment. Combined with policy uncertainty, infrastructure challenges, and long-standing concerns around nationalisation rhetoric, investor confidence has taken repeated knocks.
Mining analyst Peter Major has publicly questioned how much investment has flowed into the country since those changes were introduced. His view reflects a wider frustration in boardrooms abroad, where capital competes globally for friendlier jurisdictions.
Not the end of transformation
Importantly, Mantashe stressed that Black participation remains central to the sector. The shift simply delays the requirement until production begins.
This announcement also lands amid a broader review of B-BBEE policy by the Department of Trade, Industry and Competition, led by Parks Tau. The department is undertaking a two-phase assessment to determine whether existing legislation is delivering meaningful economic participation or primarily benefiting a narrow group.
Draft changes to the B-BBEE Codes of Good Practice were published at the end of January. Among the proposals is the creation of a centralised Transformation Fund. Instead of identifying their own enterprise and supplier development beneficiaries, businesses could contribute to this fund, which would then allocate support to qualifying enterprises.
The 3 percent net profit after-tax spending target would remain. However, companies could potentially score more points by contributing to the central fund than through individual supplier arrangements.
The review aims to close loopholes and curb abuses that have fuelled public criticism. In recent years, BEE has often been associated in public debate with cronyism and elite enrichment rather than broad-based empowerment.
A gamble on confidence
For Joburg’s financial community and mining houses alike, the real question is whether this adjustment will be enough to restore investor confidence.
South Africa is navigating a global commodity cycle that should favour resource-rich economies. Yet without new discoveries, there is no future production. And without regulatory certainty, there are no new discoveries.
By easing the burden at the riskiest stage, Mantashe is effectively betting that exploration capital will return. If it does, the long-term impact could be significant. New mines mean jobs, royalties, and renewed economic activity.
If it does not, the policy shift may be remembered as a well-intentioned but insufficient step in a much bigger structural challenge.
For now, the message is clear. South Africa wants explorers back.
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Source: Daily Investor
Featured Image: Polity.org.za
