Leveraging SA’s rich natural endowments and maximising emerging global energy trends calls for innovation, collaboration and decisive action. There is a need to adapt to a shifting global paradigm and the transformative potential of green hydrogen, to unlock economic growth.
Our country is uniquely blessed with natural endowments. Our Bushveld Igneous Complex holds more than 80% of the world’s known reserves of platinum group metals (PGMs), a treasure trove that has long been the backbone of our mining and manufacturing sectors. For decades, PGMs such as platinum, rhodium and palladium have fuelled our automotive and industrial processes, supporting a thriving midstream and downstream ecosystem.
According to automotive business council Naamsa, from 2018-2022 we exported R14.1bn-R23.9bn worth of catalytic converters, mainly to the EU and UK, making this the largest automotive component export from SA. And despite the current turmoil in global trade, these remain reliable trading partners.
Yet the landscape is evolving. While our traditional markets have underpinned our economic success, global shifts towards stringent environmental policies are changing demand patterns. Therefore, to secure our future we must not only build on our legacy but innovate new value chains that leverage our natural resources.
In the wake of the Paris Agreement and the rigorous environmental standards set by our international partners, the old models of industrial growth are giving way to cleaner and more sustainable technologies. The decline in conventional catalytic converter demand is a strong signal that we must diversify our approach.
Related to PGMs, the domestic chrome value chain has been facing major headwinds occasioned by rising energy costs and reduced chrome ore prices. This is presenting an existential threat to the ferrochrome industry. To resolve these challenges we have established a working group with industry to improve the operating environment for long-term sustainability of the ferrochrome industry.
The geopolitical tension between the US and China is creating a climate of uncertainty that will force the stainless steel industry to adapt to a more complex and potentially less efficient global trade environment. I urge the industry to be alive to these developments and swiftly position itself for opportunities that may arise.
Interestingly, the new US tariff structure exempts some of SA’s metals exports, including manganese, uranium, chrome and coal, as well as the scrap of these materials and stainless steel. This tells us that the tariffs are more targeted than what was initially assumed.
This global shift challenges us to reimagine how we harness our resources. It is not a time for retreat but for reinvention, a call to pivot from the technologies of the past to those of the future. We have the unique opportunity to transform challenges into avenues for growth by investing in alternative applications of PGMs, particularly in emerging clean energy technologies.
The introduction of a 30% tariff on all exports from SA to the US, now on hold for three months, will have an acute effect on this sector. If we are to overcome what is certain to be a tumultuous few years ahead, we have to put our heads together and drive a solution-orientated agenda.
Rising global tension offers SA an opportunity to become an anchor in the shifting global supply chains. Our country’s strategic location geographically, our mature capital markets and our significant industrial base make for an attractive investment proposition as our global partners look for stability and security of supply.
At the same time we must take advantage of some of the paradoxes that are inherent in the current global disjuncture. The lag in technological capability of Western Europe and the US in electric vehicles, as well as the continued investment in hybrid vehicles, creates an opportunity to harness these markets in parallel with investing in innovation for a different energy future. The complexities of the transition provide space for innovation, which we must use with existing resources as we transition to new solutions.
Notwithstanding some of the global trade headwinds, our PGM resources may be the critical leverage in some of the trade discussions that will emerge out of the current turmoil. The SA government’s recent trip to Japan, led by deputy president Paul Mashatile, demonstrated this point. In Japan we have a reliable and respectful partner that is willing to work with us to expand our collaborative areas in developing green hydrogen and its associated value chain.
Recognised as a catalytic sector that can unlock significant economic growth, green hydrogen is central to the transition to a net-zero energy system. With SA’s vast renewable energy resources, land, wind, solar and hydro power, and our global concentration of PGMs, we have a strategic advantage to become a global producer of green hydrogen. This also includes drawing lessons in how some of the cost drivers have hindered the pace of development of the green hydrogen economy in other countries.
At the heart of this revolution is SA’s green hydrogen commercialisation strategy, which rests on the following critical elements:
- Prioritisation of exports: we will target the export of green hydrogen and green chemicals by leveraging Fischer-Tropsch technology, ensuring that our resources drive international market leadership. In addition, we are working on designating the Boegoebaai special economic zone in the Northern Cape to facilitate exports to the global market, building a regional value chain with our neighbour Namibia.
- Stimulating domestic markets: by developing projects along the entire value chain, we aim to stimulate local demand and build robust domestic markets for green hydrogen.
- Developing local industrial capability: our focus includes ramping up production of fuel cells, electrolysers and ammonia, capitalising on our PGM resources to build a competitive industrial base.
- Securing financing: a concerted effort will be made to crowd in and secure financing and investment to support these transformative initiatives. The recent SA-EU summit is testament to this, with investment commitments amounting to R100bn in clean trade and green technologies.
- Proactive socioeconomic development: we are committed to maximising the development impact by enhancing skills, promoting economic development and ensuring social inclusion.
Our vision also encompasses several other key opportunities. By converting existing industries and energy grids to use green hydrogen as a power source, we can create a foundation for a greener economy.
Research by my department and the Industrial Development Corporation indicates that if we are to avert a cataclysmic economic decline in the sector, we have to put support mechanisms in place for fuel cell technology and its associated manufacturing opportunities.
Producing hydrogen fuel cells and related technologies will facilitate the conversion of heavy vehicle fleets, including buses and potentially minibus taxis, into cleaner, more efficient modes of transport. At the same time, mass-producing green hydrogen for export promises significant revenue while also benefiting domestic consumption.
The production of ammonia for the food industry will further diversifies our portfolio, reinforcing SA’s role as a leader in the green hydrogen revolution. By aligning our policies with the Hydrogen Society Roadmap and the green hydrogen commercialisation strategy, we are not just preparing for the future — we are defining it.
We need to reaffirm our commitment to driving SA’s industrial transformation through three interlinked strategies. First, by leveraging our PGM legacy by building on our natural resource advantage to support both current and emerging industrial applications.
Second, by adapting to global green imperatives by embracing innovation and pivoting from traditional technologies to sustainable, clean energy solutions. And third, by championing green hydrogen through a comprehensive commercialisation strategy that transforms our renewable assets and PGMs into engines of economic growth and job creation.
This will be founded on an industrial policy framework that requires the appropriate partnership between the state and industry, with policies that are designed to support industry as it seeks to navigate a complex global market.
• Tau is trade, industry and competition minister.
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