Mission Critical — how SA can win as global mining charts a new path

In the historic shift from a world powered by fossil fuels through combustion to one powered by non- or low-carbon emitting sources, mining is a lead actor. The health of the global economy, let alone the planet, rests in part on how efficiently our mining and metal companies can provide the raw materials necessary for low-carbon technologies, sustainable infrastructure and electric-powered transportation.

Vital to this equation are critical minerals, an estimated 30% of which are found in sub-Saharan Africa. They are essential for the industrial manufacturing of clean energy technologies, including wind turbines, solar panels, batteries and other clean tech products. A recent study by the International Monetary Fund forecast that revenues from critical minerals could reach a staggering $16-trillion over the next 25 years. This includes major uses outside the green transition, not least military applications.

In his address to the Prosper Africa African Minerals Forum in Washington, DC, this week, President Cyril Ramaphosa highlighted the enormous boost in GDP that the extraction of critical minerals could give the region — 12% or more by 2050 — and the even greater gains through investing in mining beneficiation and domestic processing — $24-billion a year in GDP and 2.3 million new jobs.

“As a country”, said Ramaphosa, “South Africa is committed to creating a supportive policy framework for the critical minerals sector.”

To which even casual observers of SA’s mining woes over the past few decades might respond, “…Wait a second!”

This once-mighty industry in South Africa has gone from a global powerhouse to a beleaguered bit-player. Whatever constellation of factors might have contributed to this sorry state, no serious analyst disputes that the government’s chronic under-investment, archaic policies and sclerotic leadership are central to this story.

As we argued a few months ago in this publication, the formation of the Government of National Unity (GNU) offers an unexpected chance for a fundamental reset. Ramaphosa this week said, “Through a combination of driving key structural reforms and leveraging the strengths of key economic sectors such as mining … we aim to improve the business operating environment and attract investment.”

This essay examines the transformative opportunity in the global energy landscape that is within South Africa’s grasp. Just as the country squandered previous mining booms, unless policy and actions are realigned towards growth, SA could be left behind once again in the green transition gathering pace worldwide.

There is, moreover, an emerging regional oil and gas boom in Africa. This presents both challenges and opportunities for the African National Congress (ANC), the Democratic Alliance (DA) and other parties in the GNU, “which have come together to coalesce around a common agenda for economic growth and sustainable development”, according to Ramaphosa.

Resources in transition

The International Energy Agency projects that by 2050 demand for the key transition minerals will rise by:

• Copper – 300-350%;


• Nickel – 275-300%;


• Rare earth elements – 280-320%;


• Cobalt – 300-350%;


• Graphite – 240-270%: and


• Lithium – an astounding 800-1150%.

The true scope of growth will be affected by which of the three energy transition scenarios, as mapped out by their Global Energy and Climate (GEC) Model, wins out:

• State Policies, which gives a sense of the prevailing direction of current policies (ie, significant reductions but far off Net Zero);


• Announced Pledges, which assumes that all climate commitments made by governments and industries will be met in full and on time; or


• Net Zero, whereby the global energy sector achieves net zero CO2 emissions by 2050.

Demand for transition minerals will continue to expand, although at a slower pace than in the past 20 years or so as China’s growth declines and globalisation stabilises to economic growth estimated at below 2.5% while volatility rises.

Demand for minerals for electronic components in consumer goods, from vehicles to phones to connected appliances, will continue to grow.

Similarly, the semiconductor industry, crucial for artificial intelligence and quantum computing, projected to reach $1-trillion by 2030 — up from $556-billion in 2021 — is driving accelerated demand for silicon, gallium, germanium and many others in addition to copper/cobalt/nickel.

Geopolitical tensions have invigorated growth in the defence industry. Titanium for jet airframes will see demand double by 2030. Demand for rare earth elements in weapons systems alone is expected to reach $1.7-billion by 2025.

Read more: Global Just Energy Transition needs a mining boom, SA must get its act together

The overall global minerals market currently amounts to $1-trillion — more than 2.5 times the size of South Africa’s economy. By 2030 it is expected to approach $1.5-trillion, and perhaps as high as $3-trillion by 2040.

Mining is still dwarfed by the oil and gas sector’s $7-trillion. Projections see that sector reaching $9.3-trillion by 2030. The gap is then expected to narrow, but uncertainties around technological shifts, policy changes and economic conditions make long-term projections challenging.

Overall demand for transition and strategic minerals will outstrip supply.

By 2030, it is estimated that existing mines and projects under construction will meet only half of the projected lithium and cobalt and 80% of copper requirements. This supply gap is exacerbated by long lead times for new mining projects, declining ore quality, geographical concentration of resources in more fragile regions and growing environmental and social pressures on mining operations. The investment shortfall is stark, with estimates of a gap of $180-billion to $270-billion in critical mineral projects to 2030.

Outlook for South Africa’s resources

South Africa’s minerals endowment presents opportunities but also risks.

On the opportunity side of the ledger: the country holds 87% of the world’s platinum group metal (PGM) reserves, crucial for hydrogen fuel cells and catalytic converters. Its 80% share of global manganese reserves is significant for traditional steel production and emerging battery technologies. With 72% of global chromium reserves, South Africa is a key player in the stainless steel industry.

The country’s 13% share of global vanadium reserves offers potential in grid-scale energy storage applications. South Africa accounts for around 40% of global chromium production and 70% of global platinum output. As the world’s second-largest producer of titanium minerals, it is well-positioned to supply this key material for aerospace and advanced manufacturing.

On the risks side: the country’s copper reserves, estimated at 13 million tons, represent only about 2% of global reserves. While South Africa has an estimated 400,000 tonnes of rare earth oxide reserves, this will not be sufficient to compete significantly in that market.

The country’s position in lithium is also precarious as, despite potential lithium resources in pegmatite deposits, it is not a major producer. The country’s nickel reserves and production are modest. Cobalt production is not significant. It lacks a strong presence in graphite production. These gaps extend to other minerals crucial for emerging technologies and the energy transition.

As for its other minerals, South Africa is the world’s seventh-largest iron ore producer, but accounts for only 3% of global production. Its coal reserves are sufficient for more than a century, with a production of over 230 million tonnes in 2022 serving the domestic thermal market. Gold production has stabilised after declining over the past decade, but the country is now only the eighth-largest producer, with 3% of global production. However, 30% of global reserves are held by the country. Diamond production stood at 9.7 million carats in 2022.

Global demand for these minerals presents a mixed outlook. Iron ore demand is expected to remain stable, driven by infrastructure development in emerging economies. Coal faces declining global demand due to climate concerns. Gold demand is projected to remain strong, supported by its safe-haven status and use in electronics. Depressed demand for natural diamonds has raised stark questions about the industry’s long-term future.

Amid the negative pressures facing SA’s traditional mineral heavyweights — gold, diamonds and coal — there’s also recycling. PGM recycling, primarily from spent auto-catalysts, accounts for 25% of global PGM supply, with 19% of platinum, 23% of palladium and 28% of rhodium demand met by recycled material in 2023. This trend is set to increase as more end-of-life catalytic converters enter the recycling stream.

For chromium, recycling of stainless steel could affect South Africa’s 40% share of global production. Manganese recycling, while currently limited at 37%, has potential for growth in steel and aluminium recycling streams. The low environmental footprint of recycling — only 1% of PGM production impacts are attributed to recycling — makes it an attractive alternative to primary production. This shift towards circular economy practices threatens to erode South Africa’s market share and reduce demand for its newly mined materials.

Imagining a turnaround

Before outlining how the GNU might help SA mining deliver on the promise of the current boom, it bears restating briefly the scale of the industry’s decline in recent decades and its principal causes.

From controlling 80% of the JSE’s market capitalisation and nearly 50% of global mining capitalisation in the early 1980s, South African mining now accounts for less than 3% of the global mining industry’s value. The once-globally dominant mining houses have disappeared or internationalised.

The now London-based Anglo American remains the last major player but has significantly reduced its domestic presence. This process is ongoing, as witnessed by Anglo selling down its stake in listed platinum miner Amplats. A new generation of smaller players has emerged.

Sibanye-Stillwater was formed from Gold Fields’ unbundled assets. Harmony Gold acquired AngloGold Ashanti’s last South African mines. African Rainbow Minerals, Exxaro, Seriti and Thungela were born from black economic empowerment. These new entities have established themselves in the domestic market, but their global footprint and market capitalisation are significantly smaller than their predecessors.

What happened? Is the decline mostly due to waning gold production and insufficient mining of other minerals to compensate, as some analysts would have it?

Only partly. Indeed, gold grades have steadily decreased from highs of 5% and above to around 2.5% now. While these grades are still comparatively high, gold is held deep underground — requiring extensive, long-term investment. And this is where South Africa has failed. Badly. Its ranking in the Fraser Institute’s respected Investment Attractiveness Index for mining jurisdictions has dropped to 57th out of 62 assessed in 2022, down from 40th in 2019. For the country famously described in the 1980s as the “Saudi Arabia of minerals”, this is not a stumble; it’s a free-fall.

Critics who dismiss the surveys as inherently “anti-South African” or “neoliberal” should themselves be dismissed. The survey measures investor sentiment, which, unsurprisingly, strongly correlates with actual investment.

Net investment has dwindled to near zero in South Africa, with the sector’s fixed investment declining by 45% between 2010 and 2023. This contrasts starkly with global trends. For instance, Australia, once a peer mining jurisdiction, saw investment grow by 13% in the same period; Chile, 22%. Ivory Coast and Ghana have seen mining investments surge by over 200% in the past decade.

South Africa’s share of global exploration expenditure has plummeted from 5% in 2003 to less than 1% in 2022. Meanwhile, Canada and Australia each consistently attract more than 10% of global exploration budgets. South Africa’s exploration share has fallen from 35% of the continent’s total in 2000 to just 7% in 2023, with Burkina Faso, Ivory Coast and Ghana attracting more exploration investment.

Transformation pains

If the overwhelming consensus among experts is that government policy and leadership are largely to blame, that does not mean that transformation was a mistake. Since 1994, it has been a moral, political, social, and even safety imperative, entirely justifiable given the racialised and exploitative character of the industry under apartheid. Ramaphosa was right to warn in the same speech this week that the “extraction of critical minerals must not perpetuate colonial-era patterns of exploitation”.

The point is that transformation need not have come at the expense of competitiveness and growth. Even its strongest supporters would have to acknowledge that transformation became fetishised in practice. It should never have become the only meaningful metric by which the government assesses the socioeconomic contribution of mining.

Other metrics, like size, matter deeply. A much smaller mining sector has meant fewer jobs where there already were few; less money to hydrate desiccated local economies; lower property values where few assets exist; declining local government revenues; and less stable communities.

So too competitiveness. A metric focused on productivity might have pointed to new opportunities for expansion; instead, most mining in South Africa has been consumed by battles for survival, evidenced by the recent slashing of jobs across the industry.

For all the necessary good that transformation in mining has done, few could dispute that it has served as a political smokescreen behind which decline has been excused and accountability sacrificed.

Mining policy

In a single decade, there have been three versions of the Mining Charter. The first was a voluntary commitment, which the government subsequently made compulsory, and has since sought to make into law despite the numerous issues that still exist over its interpretation. The 2018 version was challenged in court by the Minerals Council, leading to a 2021 ruling that set aside key provisions.

Then, there’s the overall mining policy, the Mineral and Petroleum Resources Development Act (MPRDA). The government is now trying to get transformation written into it, turning the Mining Charter into law. The long-mooted amendments may revisit aspects of the lapsed 2013 MPRDA Amendment Bill, which briefly became law until it was reversed because it was found unconstitutional.

All of this is to say: the industry has been waiting for more than a decade for the government to make up its mind.

Investors require policy certainty. They need rules that are known and reasonably stable. The GNU, harnessing a wider range of voices and talents, has a chance to affect this desperately needed certainty.

But it is only part of the equation. The quality of that policy is just as important (Cuba has policy certainty, and no one invests there). Truth be told, the industry would trade a bit of certainty for an injection of policy that is sound, innovative and internationally competitive. The dwindling band of Marxists and nativists in government cannot be allowed to thwart global investors or resources giants who are interested in investing in South African mining operations.

A GNU that actively embraces foreign interest, explores how best it can support capital deployment policy and rolls out the proverbial red carpet — that is not selling your country out. By increasing investment and facilitating the diffusion of technology, South Africa will be helping its own.

Implementation woes

As for implementation, the numbers speak for themselves.

As of December 2023, there was a backlog of 2,525 applications for mining rights, exploration and prospecting licences for FY2023/24 alone, highlighting severe administrative inefficiencies. The South African Mineral Resources Administration cadastral system remains dysfunctional despite repeated promises to replace it.

Similarly, the establishment of a specialised police unit to combat mining-related crime and the development of a comprehensive Mineral Investment Promotion Framework, both promised, are nowhere to be seen. State-owned enterprises under the Department of Mineral and Petroleum Resources’ (DMPR’s) purview have shown alarming levels of mismanagement.

PetroSA, in particular, has been embroiled in multiple controversies. In December 2023 it announced a controversial R3.7-billion deal with Russia’s sanctioned Gazprombank, raising concerns about potential violations of international sanctions and lack of transparency.

Read more: Rival bidder takes PetroSA to court over Gazprom-Equator tenders

Corruption and infrastructure

Corruption allegations, especially at regional DMPR offices, have led to calls from the mining industry to weed out corrupt elements. The Special Investigating Unit is probing 12 cases of corruption in mining rights allocations, involving billions of rands.

A questionable R21.6-billion deal was awarded to EquaTheza (formerly Equator Holdings) for offshore gas development, despite the company reportedly lacking the necessary financial resources and technical skills. The Auditor-General reported that PetroSA lost R11.5-million when it sold diesel to a “fictitious company”, further highlighting the extent of financial mismanagement within the entity.

It is widely alleged that misgovernance at PetroSA influenced the recent decision by oil supermajor TotalEnergies to pass on one of the world’s largest natural gas discoveries of the past few years, writing off nearly $500-million in the process, and leaving the remaining owners to find the several billion dollars and world-class technical expertise required. They are unlikely to find these in South Africa. Or in Russia. Or even in China.

The technical expertise required for that project can’t be arranged by an old comrade for a bargain price.

Read more: TotalEnergies takes its foot off the gas – why SA lost a huge energy deal

Then there are the infrastructure failures, which cripple operations daily. Transnet’s rail network, once the envy of Africa, now limps along, choking mineral exports. In 2023, rail volumes for export coal fell by 9% to 47.16 million tonnes, far below the system’s capacity of 77 million tonnes. This inefficiency cost the industry an estimated R50-billion in lost revenue.

Eskom’s load shedding was so routine that mines have been forced to build their own power plants just to keep the lights on. In 2023, the mining sector lost an estimated R50-billion in production due to power cuts, according to the Minerals Council.

The electricity situation has improved dramatically in 2024, thanks in no small part to the dogged efforts of the ANC’s electricity minister, Kgosientsho Ramokgopa, whose Cabinet remit was wisely enlarged by Ramaphosa to include energy. Whether the palpable improvements in the all-important “energy availability factor” would be sufficient to cope with halfway decent economic growth is, sadly, not a question SA is confronting currently.

New blood, new hope

One of the government’s go-to excuses for mining’s fall — “coordination problems” — is long past its shelf-life. There are promising signs that it is beginning to lose purchase in some ministries under new GNU leaders, who are instead encouraging a “can-do” mentality among staff.

It is for this new blood in the government — of whatever political stripe — to demand that South Africa seizes the vast opportunities afforded by the energy transition. The country’s vast reserves of platinum group metals, manganese and chromium — all critical for renewable energy technologies and electric vehicle batteries — can be leveraged to huge overall economic benefit.

If the antiquated approach of the government’s combative mining dons holds sway, however, the sector will continue to be ignored by global investors. And another fortuitous chance for South Africa to leverage its mineral wealth — this time its vast reserves of PGMs, manganese and chromium, all critical for renewable energy technologies and electric vehicle batteries — will be missed.

Somewhat paradoxically, South Africa also has to rethink its approach to the regional oil and gas boom, happening in parallel with the surge in interest around critical minerals. The World Bank estimated that Africa accounted for 40% of the world’s natural gas discoveries between 2010 and 2020.

The energy expert Chris Yelland recently warned that South Africa faces a “gas cliff”, an acute shortage of supply that could have major socioeconomic and job-loss implications, and even threaten key industrial sectors that rely on natural gas and methane-rich gas. This looming crisis makes the TotalEnergies saga even more egregious.

Read more: Eskom and Sasol race against time to find new natural gas supplies for SA as ‘day zero’ approaches

In our piece published in July, we offered a few suggestions to help make the SA mining industry attractive to global investors once again, echoing much of what the Minerals Council of Africa has been advocating for years.

Below is an expansion on those recommendations that bear urgent consideration, lest SA miss another golden opportunity to secure major economic and development gains from the efficient use of its natural resources.

Overhaul the regulatory framework: Streamline licensing processes, implement a functional digital cadastral system, and provide clear, stable policies that balance transformation goals with investor certainty. The separation of the MPRDA into distinct legislations for mining, petroleum and natural gas represents an ideal moment to take a fresh, clear-eyed view of legal frameworks best suited to each essential sector. In the meantime, against the backcloth of the TotalEnergies debacle, the President should not assent to the so-called Gas Bill, which has been beset by environmental concerns, governance issues, and fears over its implications for the country’s energy transition.

Prioritise critical minerals: Develop a comprehensive strategy to promote the exploration and production of minerals crucial for the energy transition, including PGMs, manganese and rare earth elements. Mintek, South Africa’s respected national mineral research organisation, is drafting a position paper on the subject in consultation with academics, the Minerals Council and other stakeholders. One hopes that it is not only world-class but, crucially, is also realistic and leads to action.

Embrace renewable energy: Align mining policies with South Africa’s climate commitments, incentivising the development of minerals needed for renewable technologies. Among the defenders of coal, which provides roughly 85% of South Africa’s current energy needs, are many thoughtful analysts who recognise the need to transition to cleaner energy sources but advocate for a gradual approach, over 20 years or more, so economic growth is not undermined by power shortages.

But we contend that the immediate economic case (especially when fully accounting for externalities) for a massive government push into renewable energy, which will draw vast Western funding into projects, is a no-brainer. Yes, pragmatism is required for baseload. That is where natural gas could be an obvious option for coverage, provided the right lessons are learnt from TotalEnergies’ departure.

Reform state-owned enterprises: Implement rigorous governance measures in entities like PetroSA, considering partial privatisation where appropriate to improve efficiency and attract expertise. It’s not that SA doesn’t have the frameworks in place; it’s that few departments have paid attention to them. With the Department of State Enterprises gone, the Department of the Treasury should be the policeman here. And obviously, overhaul the Department of Mining and Petroleum Resources.

Combat corruption: Establish an independent anti-corruption unit specifically for the mining and energy sectors, with powers to investigate and prosecute without political interference, including the eradication of rampant illegal mining.

Invest in skills development: Create partnerships between government, industry and educational institutions to build a skilled workforce capable of driving innovation in mining and energy.

Improve infrastructure: Prioritise the rehabilitation of rail and port infrastructure to enhance mineral exports, potentially through public-private partnerships.

Attract foreign investment: Create targeted incentives for foreign direct investment in the exploration and development of strategic minerals and offshore resources. Capital-starved companies operating mining assets in South Africa are unlikely to survive without foreign investment. Some job losses are inevitable where there are improvements in productivity, but SA mining can’t survive the former without the latter. To run existing projects at higher efficiencies with lower-cost production and greater stability, SA needs to draw in advanced capabilities from abroad, where required. Investment is key to unlocking overall growth in mining and creating better and more sustainable employment.

Promote beneficiation: Develop policies that encourage local value addition in the mineral supply chain without imposing unrealistic mandates that deter investment. DM

Claude de Baissac is the founder and CEO of Eunomix, an advisory firm focused on investment climate, strategy, risk management and development. Dr Terence McNamee is a non-resident Global Fellow of the Wilson Center, based in Washington, DC.