The R400-million fund for exploration in South Africa established by the Industrial Development Corporation and the Department of Mineral Resources and Energy (which is being split into the Department of Mineral and Petroleum Resources and the Department of Energy and Electricity), is "a drop in the ocean" and much more needs to be done to develop junior miners and exploration companies.

"There is a massive funding gap for exploration. Toronto used a flow-through share and tax incentives scheme in the 1960s and now sits with thousands of juniors and early-stage companies," said State-owned Public Investment Corporation (PIC) mining and beneficiation sector specialist Heidi Sternberg.

Grants or tax incentives were needed to build a pipeline of projects that would be needed in South Africa to replace the mines that would close down, she said during mining conference Joburg Indaba's 'Investors’ views on the SA mining sector' panel discussion on October 3.

"Exploration technologies have changed, and the country is under-explored and can have vast potential. This can be especially valuable in areas far from Johannesburg and Cape Town that could benefit from employment and growth," she said.

There was, however, a chicken-and-egg challenge for the country in funding more exploration. There was a category of investors that understood exploration and they were willing to fund exploration programmes.

"However, if there is no exploration or drilling taking place, then the money will not come your way," emphasised natural resources investment company Sprott Resource Streaming and Royalty managing partner Caroline Donally.

Further, while there was a mild flurry of interest in South Africa of late, the country must deliver in terms of better logistics, providing enabling mining legislation, and consistent implementation of regulations to secure investors in its mining sector.

"Good feelings since the elections are insufficient and investors need to see things happening before they take further steps," said asset management business Merchant West Investments director and Regarding Capital Management chairperson Piet Viljoen.

"It looks like there are some positive trends emerging, but we need a lot more evidence before we move further," he said.

"Show us that you are improving, and we will come up with a valid proposition for people to invest in South Africa," concurred Donally.

"The project and ore bodies must be viable before any investment in mining projects. It is the ancillary pieces around this baseline requirement that affect the investment opportunities," she emphasised.

For example, the ease of doing business, moving money in and out of the country, and the ease of moving product out of the country were all areas that influenced the investment case.

"For many US and Canadian investment organisations, it is easier to fund projects in the US or Canada. Therefore, the opportunity must be more compelling than what is present in our backyard," she noted.

Lithium was extensively available across the borders of South Africa and rare earths were also significantly present in Central Africa, highlighted Sternberg.

"If we think about mining in the region, if South Africa can find a way to provide cheaper electricity or for companies to self-generate, this will help to present an attractive possibility for South Africa to be a hub of this industry," she highlighted.

Research undertaken by the PIC had shown that seven of eight mining companies studied in South Africa reduced their carbon emissions during the past year, while the other's emissions remained flat.

"This is an amazing achievement. Some of these companies reduced their carbon emissions by 5% in one year. Mining companies are putting their money where their mouths are and moving towards decarbonisation.

"Our products will need to be greener in the future and mining companies have realised it is imperative to spend money to ensure their products meet these requirements.

Further, while there was little interest in South Africa's copper, with only one new project to come on stream, there was the potential that more exploration could unlock many more projects, Sternberg said.

However, South Africa does not, for example, have a cadastre system in place.

"Until investors can click a button to see who owns what and where; until we can demonstrate that we are making progress in solving challenges in the mining industry, there will be some hesitancy to invest in it," she said.