Challenges and prospects for small-scale mining entrepreneurs in South Africa

Abstract

Small-scale mining entrepreneurs are confronted with a variety of challenges during both the start-up and growth phase of their businesses not only in South Africa, but all over the world. Most small-scale mining entrepreneurs are not able to take advantage of the opportunities that are available to them. This retards the growth of their businesses. The aim of this study was to investigate the challenges and prospects for small-scale mining entrepreneurs in South Africa, the support structures available to them as well as the factors that could make them successful. The research problem in this study is that the mining sector is biased towards more established companies and against small-scale mining entrepreneurial operations, which marginalises small-scale mining entrepreneurs. Despite being a significant source of revenue for South Africa, the mining sector does not directly benefit the historically disadvantaged people. Notwithstanding government interventions, small-scale mining entrepreneurs face numerous challenges during both the business start-up and growth phase of their businesses with very few prospects of succeeding. This is a qualitative study that uses a series of face-to-face interviews with mining entrepreneurs in South Africa to generate data. Given that small-scale mining entrepreneurs are in most cases part of the informal sector and difficult to locate, a database of small-scale mining entrepreneurs was obtained from Mintek. Initially, 21 small-scale mining entrepreneurs were randomly selected to participate in this study. However, it soon became apparent that ten of them were no longer in business. This meant that the sample was reduced to eleven mining entrepreneurs, located in four provinces: Free State, KZN, Mpumalanga and Limpopo. The findings of this research reveal that small-scale mining entrepreneurs are handicapped by a lack of financial and technical resources, and therefore cannot purchase capital items. It seems that there are good prospects for small-scale mining, particularly in open markets. However, they are unable to exploit these prospects because they lack the necessary finance. Although there are support structures to assist them, they find it difficult to meet the criteria for loans or overdraft facilities from financial institutions. Although these mining entrepreneurs have benefited from the support they have received thus far, they need equipment and commitment to their businesses to remain successful. A series of recommendations are made to guide small-scale mining entrepreneurs already in business, prospective small-scale mining entrepreneurs and other stakeholder’s interested in transforming the industry.