As mining remains the “backbone of South Africa’s economy”, due care must be exercised when implementing legislative interventions to minimise damage to investor sentiment and avoid curtailing the mining industry's growth, Minerals Council South Africa CEO Mzila Mthenjane notes in a statement published as part of the mining industry's response to the 'Industrial Development Strategy 2026', published by the Department of Trade, Industry and Competition (dtic) in June.

He notes that the strategy creates “huge opportunity”, but there are also concerns with the way the mining sector and the potential impact on mineral exports are presented in the strategy. He cites the proposals for restricted exports of chrome ore and associated tariffs, and the misaligned condition of linking the granting of mining rights to beneficiation, as areas that worry the mining industry.

“Quite simply put, these are not proposals that will attract much-required investment in the mining value chain, such as mineral exploration, the development of new mines or sustained investment in existing operations, and most likely will not invite investment in beneficiation processes.

“Must an investor interested in manufacturing also invest in a mine? Such as an auto manufacturer investing in iron-ore mines and steel mills?”

Mthenjane says mining and beneficiation are separate and distinct economic sectors in the mineral value chain.

He argues that beneficiation must not be imposed on mining, but should rather form part of manufacturing and downstream industrialisation.

As such, he says specific measures must be introduced to incentivise and attract investments to stimulate manufacturing of goods and increase demand for the minerals the country produces and, thereby, diversify the economy.

“The possibilities are endless in this age of innovation and advanced technologies, energy transition, as well as the desperate need for infrastructure development for South Africa and the continent that can unshackle millions of Africans from poverty,” he says.

Mthenjane notes that, through significant and constructive policy reforms in electricity and logistics and the government and business partnership, South Africa is embarking on an economic recovery path.

He says the proposals contained in the strategy could potentially arrest this recovery and reverse the gains earned so far in investor confidence.

“At a national level, we are concerned that government departments such as Trade, Industry and Competition; Mineral and Petroleum Resources; Agriculture; and Transport, which are all essential to creating a vibrant industrial economy, are poorly resourced with a mere collective budget of R22-billion,” he says, noting that this is despite the large economic contribution from the underlying sectors represented by those four departments.

To unlock the economy, Mthenjane argues that the national budget must be increasingly directed to departments that regulate the key levers to grow the number of businesses, big and small, that are engaged in the country’s natural resources, manufacturing and network services.

“We note with concern the limited inter-departmental consultation on the proposals that could negatively affect mining, including restrictions and taxing of chrome exports", he says, referring to them as a ‘blunt instrument’.

Mthenjane argues that beneficiation needs a manufacturing base, stimulated by a clear and long-term economic and social development plan to absorb the minerals produced and a sizeable market for end-products.

He says further market development and competitive opportunities for manufacturing and increasing the industrial base are also presented through coordinated and cooperative regional integration within the Southern African Development Community.

He states that the mining sector does add value to its minerals within its business models to produce mineral materials that downstream local and international consumers can use to make end-products.

He pointed out that manufacturing’s share of contribution to GDP has fallen to about 13% from 24% in 1990.

“The deindustrialisation of South Africa’s economy owing to high electricity costs, and, until recently, disruptive loadshedding, combined with sub-optimal logistics services, water disruptions and failing municipalities making the provision of services expensive and unreliable, have all contributed to the underlying malaise in South Africa’s manufacturing capacity.

“Imposing beneficiation obligations and export restrictions on mining companies will not address those constraints,” he says.

Mthenjane thus argues that lower electricity tariffs, incentives to encourage investments in exploration, well-considered special economic zones that deliver on government commitments, and greater regional economic integration, logistics and development and other incentives, will create bigger and stronger industrial hubs and markets.

He says that expediting private sector participation in electricity, logistics and water to attract much-needed investment and skills capacity in these value chains, while addressing municipal governance, along with tangible progress in reducing crime and corruption, will improve investor confidence and trust towards South Africa.

Mthenjane argues that beneficiation strategies must first consider relevant markets where it makes economic sense and South Africa has realistic chance of building successful minerals-based manufacturing on commercially competitive terms to meet those market and customer expectations.

“Our low economic growth challenge is not because of a lack of beneficiation or our exports of minerals, nor an electricity, logistics and crime and corruption crisis. It is a leadership crisis that has failed to put the interest of the people of South Africa first,” he states.

Mthenjane notes that, with a favourable regulatory and operating environment and integrity in governance, the mining sector will play a leading role in South Africa’s industrial revival without the need for imposition of restrictive and punitive interventions.

He says the Minerals Council is developing an investment and growth strategy for the South African mining industry and is working closely with its stakeholders to create a conducive environment for mining to thrive and impact positively on local communities and the country.

“We look forward to a constructive engagement with the dtic for a whole country play in the Industrial Development Strategy,” says Mthenjane.