SA’s unemployment rate has ticked up again to 32.9% for the first quarter of 2025. Fourth-quarter GDP growth at the back end of 2024 was only 0.6%, and there was little growth in productive or labour-absorptive sectors. GDP growth is not a great measure of how an economy is doing, especially if the negative externalities generated by productive activity are not accounted for. Nonetheless, it tells us that the value of goods and services being produced in the country is not increasing anywhere near fast enough to create the kind of employment opportunities necessary to provide dignity and hope to a citizenry who rightfully expect that democracy would have delivered more development dividends by now.
In a country as geologically rich as ours, we have rightly expected stronger broad-based development. Despite decline, the mining industry still accounted for 474,876 jobs in 2024. With an estimated average dependency ratio of 10:1, we can safely assume that nearly 5-million citizens (a 12th of the population) are reliant on mining jobs. Beyond the contribution to employment, the industry generated R43.6bn in corporate taxes to the fiscus, as well as R21.5bn in VAT and R16bn in royalties in 2024. Employees across the sector provided R36.1bn in PAYE to the SA Revenue Service (Sars). Given that our tax base is shrinking, and an increasingly smaller portion of citizens account for most personal income tax that feeds the fiscus, this contribution is significant.
Despite this apparently positive data — a snapshot in time — the underlying reality is that our mining industry is not in good shape. We — Good Governance Africa (GGA) in partnership with Mining Dialogues 360 (MD360°) — hosted a series of dialogues with industry stakeholders from 2023 to 2024. No participants disagreed with the terminology that the industry is in crisis or on “life support”. Part of the executive summary reads as follows: “Without the lifeblood that is investment, it will not be possible to realise the sector’s growth prospects, nor will the sector be able to play its part as the driver of economic development and transformation that it otherwise could. Concerns exist about the mining sector’s underperformance and its capacity to remain globally competitive, attract investment, create jobs, and promote sustainable economic development. This raises the daunting prospect that without sweeping changes, further decline is likely and many of the gains made thus far regarding transformation and redistribution could be lost.” We were understating the case.
Over the same time that we were working with MD360º, two GGA colleagues and I tried to understand the relationship between mining and industrialisation in SA since 1996. Our working hypothesis was that Dutch Disease may be in play — mineral exports driving up currency values, rendering tradable exports relatively uncompetitive. Manufacturing value added to the economy, and manufacturing’s total employment share, have both declined drastically since 1996. However, the two elements normally at play in Dutch Disease — the resource effect (mining drawing resources away from other sectors) and the spending effect (government overspending its revenues on white elephants) — were not obviously manifest. The picture was complicated by state capture and associated ills such as extended load-shedding and electricity sector collapse.
Even if Dutch Disease were in play, the ironic solution is not less mining but more — mining which could drive manufacturing growth. This is different to the argument that just because one has minerals, one should add value through downstream “beneficiation” — we don’t have sufficiently reliable or price-attractive power with which to do that anyway. Rather, we need to find opportunities to exploit in global value chains. A recent World Bank Report states the obvious fact that a low-carbon future “will be very mineral intensive because clean energy technologies need more materials than fossil-fuel-based electricity generation technologies. Greater ambition on climate change goals ... requires installing more of these technologies and will therefore lead to a larger material footprint.” This is good, in principle, for SA’s future. It is complicated, though, by the fact that — of the 474,876 employees in the sector — at least 150,000 are employed in coal. As a Business Day report recently put it: “As SA gradually winds down its coalfields in favour of a more eco-friendly energy mix, the majority of coal workers risk being unable to transfer their skills to non-mining sectors.”
This means that, in addition to reskilling coal workers in SA, the country really must do more to attract investment into the sectors that will feed global energy and transport transitions in the direction of a lower-carbon future. Of course, the production of — and processing associated with — aluminium, graphite, nickel, cobalt, copper and lithium has a sizeable ecological footprint. But its combined contribution to global warming is likely to be lower than the mining and burning of the fossil fuels that it supplants in our overall mineral input.
On this note, the SA government will soon publish its “critical minerals strategy”, which has received endorsement from the cabinet. The term “critical” has unfortunately come to mean whatever proponents of a certain worldview want it to mean. Thankfully, however, minister in the presidency Khumbudzo Ntshavheni told the media that “the strategy aims to maximise the country’s potential in the global market of critical minerals, particularly those crucial for the country’s just energy transition plan and the ones [in which] the country holds comparative advantage. These include PGMs [platinum group metals], lithium, cobalt and rare earth elements, which are vital for technologies like electric vehicles, renewable energy and other green initiatives.” She went on to say that “key pillars of the strategy focus on exploration and beneficiation; investment; localisation; streamlining regulations, fostering innovation in mining technologies; building workforce skills; improving transport and logistics infrastructure, and incentivising investment”.
As mentioned already, terms like “beneficiation” should be carefully evaluated, along with “localisation”, as these deter investors who end up considering jurisdictions with less politically loaded and onerous requirements.
In addition to the Critical Minerals Strategy, a new set of amendments to the country’s principal mining legislation have just been gazetted as the Draft Mineral Resources Development Bill, 2025. The original Mineral and Petroleum Resources Development Act (MPRDA) was tabled in 2002 and enacted in 2004. It presented a radical departure from the previous regime’s attempts to keep mineral wealth in the hands of the already privileged. However, it has been fraught with difficulty and associated with a raft of investment-deterring regulations. In 2008, an amendment bill was tabled, but this bill was only passed in 2013, and that only after amendments to it had already been tabled. Those amendments were eventually shelved, and the 2008 amendment act has been in operation since 2013. Despite the 2013 amendments being shelved, they signalled a desire on behalf of the government to be far more interventionist in the industry and to delegate extensive discretionary powers to the minister. That always makes investors nervous as it generates uncertainty in the operating environment.
As participants in our dialogues were at pains to remind us, mining is a long-lead-time game. Exploration itself puts capital at risk, and often it is upward of 15 years before a commercially viable reserve comes to full production. Every company tries to evaluate where future demand might lie, something that has become increasingly challenging as battery and transition mineral technologies evolve. Once future demand dynamics are roughly established, the question is where best to invest each scarce dollar. Each invested dollar represents an opportunity cost; a dollar that could have been invested in another opportunity that may yield greater dividends in time.
Considering this global competition for investment, SA must do everything it can to build both an operating environment and a specific legislative and regulatory environment that viably competes for scarce investment dollars.
Our report was clear that amendments to the MPRDA and other regulations are indeed a necessary means towards this end. However, they would also be insufficient unless broader structural concerns were addressed. For instance, you can have the best legislation in the world, but it is basically meaningless alongside expensive and unpredictable electricity supply, deteriorating logistics infrastructure and management, and an institutionally inept state. To be blunt, investors do not only consider the letter of the regulatory environment, but they also pay close attention to how those laws and regulations are administered. Moreover, if they cannot easily move their products to market, or perceive that the operating environment will be politically volatile, even the most favourable investors may be persuaded to spend their dollars elsewhere.
We had expected to see several inclusions in the bill that are currently lacking in legislation.
The first was recognition of sub-industrial scale mining, be it artisanal, small-scale mining (ASM) or what has become known as junior mining. The bill now overtly recognises it. Ostensibly, the introduction of a licensing regime for ASM operations looks like a good thing, as do measures introduced to combat unlawful activities. However, the ASM Policy published for implementation in the Government Gazette as far back as March 2022, has major shortcomings and, in our analysis, is unlikely to resolve the ASM “problem”. Junior mining needs to be properly recognised in law (and exempted from certain provisions too onerous for non-majors to absorb). Junior miners currently hold most of the prospecting and mining rights and take on the biggest risk given their prominence in the exploration space, precisely the domain in which we require the biggest investments to create a future pipeline of minerals and metals for the industry. The bill has positively responded to expectations regarding ASM by introducing clear permit types. While this is a step forward, implementation remains key, as does a tailored legal framework for junior miners who still lack strategic recognition despite their critical role in exploration.
Second, we expected that the various sections of the act that are widely thought to deter investment would be removed. These technical details are clearly recorded in our report, but some are worth expressing in summary: The nature, registerability and bondability of rights is unclear or ambiguous — possessing a right does not always serve as collateral for raising finance to the uncertain nature of the right. Excessive administrative discretion is granted to local decision-making authorities, leading to inconsistent decision-making both within and between provinces. Principles of administrative justice are currently lacking from the MPRDA’s formulation — clear timeliness for processing rights applications needs to be built into law. Perhaps most importantly, there are various elements of the law that undermine perceptions of security of tenure. For instance, all minerals found in an ore body on the same land should be included in the granted right. The current situation has led to some bizarre instances of rights being granted to mine one mineral on the very same ore body that is currently being mined for a different mineral.
Also, section 100 of the act that relegates empowerment requirements to regulation through charters should perhaps be revisited to clearly reflect court rulings that a company “once empowered” is “always empowered”. The less that can be arbitrarily imposed through non-legislated regulation the better. This goes for being able to transfer rights easily as well. A final thing in this list is that there can be no transparent and accountable minerals governance without a functional online cadastral system. This was promised in February to be delivered by June; the clock is ticking. Contrary to expectations, the bill does not materially reduce discretionary powers or improve the registerability and security of tenure of rights. The absence of mandated time frames and persistent ambiguity in ministerial oversight is therefore likely to undermine investor confidence unless this is addressed in the final tabled version of the bill.
A third major element we expected to see was a clearer vision for the mining industry and what it can contribute to SA’s development. We identified significant disjuncts between the 1998 White Paper’s ambitions, for instance, and the final formulation of the MPRDA, which lacked the instruments by which growth was to be achieved. At first glance, it seems that the bill is silent on this, meaning that these disjuncts persist. There is no reason, considering new geopolitical and geoeconomic realities, mining sector stakeholders shouldn’t inform an amended MPRDA that more closely satisfies the aspirations of investors, the state, the workforce and the communities in whose midst mining takes place. No overarching strategic vision for the role of mining in SA’s development is articulated in the gazetted bill, which risks perpetuating the long-standing disjunct between policy ambitions and legislative instruments.
Fourth, we expected that there would be explicit recognition (and appropriate related change) in respect of how the MPRDA coheres with legislation such as the National Environmental Management Act. Miners are perennially frustrated at how complex and laborious the process of applying for various environmental permits and mining rights can be. While the bill does introduce some procedural alignment with the National Environmental Management Act (Nema), the dual track permitting complexity appears to remain unresolved.
Beyond the specifics of the various provisions of the act that cause confusion or frustrations to miners and investors alike, amendments — even those that address core problems — are likely to be meaningless unless accompanied by substantive changes to how mineral governance is practised. We note in our report that “many industry stakeholders contend that it is the way in which the MPRDA has been implemented that has contributed as much to the negative investor perceptions and uncertainty as the content of the regulatory framework itself.... Inconsistent, and in some instances allegedly irregular interpretation and application of the MPRDA and its regulations, especially at regional office level, were cited as having had a negative impact on investor perceptions and investment flows.”
Finally, we want the government to understand minerals governance from a systems perspective rather than as a merely bureaucratic function, as if it could be divorced from broader economic, environmental and social considerations. The country faces multiple challenges from unemployment to biodiversity loss. Mining can play a role in addressing these multiple challenges but only through a rational strategy that is both investment-enhancing and practicable. Coal faces inevitable downscaling, while minerals for a climate-friendly transition can be a boon for the country, provided they are extracted in a socially and environmentally responsible way.
We can close no better than by reiterating the report’s conclusion: “Rekindling investor interest and securing new investment in exploration will be vital if the industry is to realise its growth prospects and play its part as the driver of economic development and transformation that it has been and can continue to be. Addressing and overcoming existing constraints to investment in mining is however imperative and has become a matter of national interest. Failure to do so comes at a substantial opportunity cost in terms of what has been foregone and what will continue to be lost given SA’s enormous mineral wealth and latent growth prospects.” South Africans must now do everything possible to ensure that the amendments are changed to reflect a new and better vision for mining.
• Harvey is a director at GGA and Perkins is MD of Mining Dialogues 360.
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