South Africa’s chrome sector, like its …

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Mining consultancy AmaranthCX has compiled a detailed map of the South African chrome mining sector using Google Earth and other sources. It shows at least 20 spiral or wash plants that are not in a legitimate or regulated mine. The suspicion is that some of these facilities are processing illegal ore. The industry estimates that more than 10% of South Africa’s chrome exports are offline.

First published in the Daily Maverick 168 weekly newspaper.

AmaranthCX shared the cards with DM168. This follows from the extensive mapping of South African coal production, which, among other things, showed companies with obvious mining rights in the vicinity of protected areas.

The chrome mapping project also raises environmental and social red flags. In one area in Limpopo, chrome was mined in rural residential areas next to residential houses. The scale is large and significant, and heavy equipment has clearly been used, but the whole process does not seem to be in order. How can mining take place right next to a house?

The mapping project has shown that there are at least 20 spiral structures that are not on a legitimate mining operation. Chromium is processed in such plants and this begs the question of where this ore comes from. Because, according to the chrome industry, a considerable amount is being illegally exported from the country.

“It’s incredibly worrying for the chrome industry – it is estimated that illegal mining could account for up to 50,000 tons of chrome ore exports per month,” replied ChromeSA, the main industry group, to questions from DM168. ChromeSA also said it was likely there were more spiral lines than AmaranthCX’s results suggest, which “keep popping up to process material.”

According to the Minerals Council South Africa, the production of the regulated chromium industry in South Africa in 2020 was 12.2 million tons, of which 46% or about 5.6 million tons were exported. Illegal chromium is estimated by the industry to be more than 10% of regulated exports. In other words, it is estimated that around 600,000 tons of chromium, which is not subject to taxes and royalties, is stolen for export every year. Chromium is mainly used to make steel and alloys, which suggests that much of the illegally mined product ends up in China. South Africa accounts for more than 60% of the world’s chrome production.

“It goes mostly to China and there are also shipments to India … Illegal chrome mining is linked to organized crime because it is carried out on a large scale,” said Louis Nel, a security advisor specializing in illegal mining DM168.

It certainly seems to be the case that a thriving illegal sector has taken root.

“The card suggests that SARS does not collect all mineral fees and other taxes. She suggests that the Department of Natural Resources and Energy (DMRE) has lost control of the chrome fields and that normal policing is ineffective because of the inability to hide from excavators and dump trucks and the digs they are doing. The South African state has lost sovereignty over parts of the chrome field, ”said AmaranthCX founder and director Paul Miller DM168.

The DMRE confirmed on February 18, the third time it emailed questions about the issue, but has not yet provided an answer. The Ministry of the Environment, Forestry and Fisheries referred inquiries to the DMRE.

Illegal chrome poses a number of challenges for legitimate industry players, including paying taxes, implementing social and work plans, and complying with environmental regulations. These include Anglo-American Platinum, Assore, Bauba Resources, Northam Platinum, Sail, Sibanye-Stillwater, Siyanda Resources, and Tharisa.

South Africa also lacks a publicly accessible online mining cadastre, which usually contains information on existing mining rights, including their geographic location. The presentation revealed that this is now a priority and is at the top of Minister Gwede Mantashe’s agenda. An update is expected in six months.

“The legal operations are responsible for rehabilitation and the security of their rights, among other things, but this obviously does not hinder the illegal mining operations. And as the reserves of certain rights were exhausted, there was a conflict between mining rights holders and illegal miners over material to which both claim, ”said Chrome SA.

However, enforcement is not always easy as there are gaps large enough for an excavator to drive through. Even industry struggles to monitor its limits.

“It is not illegal to move, sell, or process chrome ore, so DMRE and SAPS have limited ability to take action,” ChromeSA said. “Mining rights are usually given according to operating boundaries – these are large, and even if a legitimate company is mining a right, they may not be on the entire property and illegal miners could be operational without the knowledge of the mining right holder. Illegal miners use the readily available environmental impact assessment and prospecting information to locate the seams for mining. “

The DMRE clearly has capacity problems. On February 24th, the Ministry of Natural Resources gave a presentation to Parliament on its permitting system. There was a backlog of 5,326 applications for mining rights, prospecting rights, mining permits, renewals and assignments or the sale of rights. The backlog in prospecting rights alone was 2,485.

Mpumalanga, where most of South African coal is located, and Limpopo and North West, where most of the chrome is found, are the worst offenders. In Mpumalanga the order backlog for applying for subscription rights is 1,001, in Limpopo 536 and in the northwest 467.

In a follow-up presentation on Wednesday March 3, the DMRE said that “a team … is currently finalizing a turnaround strategy for Mpumalanga” and is finalizing the “recruiting process to fill critical and vacant positions.”

It also said it was currently considering the possibility of publishing granted rights. The fact that such rights are not in the public domain underscores the transparency problems that arise here. The DMRE should report on the progress in three months.

“The department does not publish anything on its website other than an out-of-date listing of operating mines – a subset of the mining rights granted – on its website,” Miller said DM168.

South Africa also lacks a publicly accessible online mining cadastre, which usually contains information on existing mining rights, including their geographic location. The presentation revealed that this is now a priority and is at the top of Minister Gwede Mantashe’s agenda. An update is expected in six months.

Transparency issues, whether related to mining rights or illegal chrome exports, are one of the reasons South Africa fell from 40 in 2020 to 76 in 2019 to 60th out of 77, as measured by the Fraser Institute’s annual investment attractiveness index in Canada jurisdictions that focus on exploration investments. Transparency counts in the eyes of investors. Still, there appears to be confirmation with DMRE that there are serious issues that need to be addressed. You have to start somewhere. DM168

This story first appeared in our weekly newspaper Daily Maverick 168, which is available to Pick n Pay Smart Shoppers for free at these Pick n Pay Shops.

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