How to turn SA’s sunset mining sector into a sunrise industry

As global mining executives gather in Cape Town for the start of the 2026 Mining Indaba, it is not to bask in the sun. Unfortunately, the primary topic of conversation is the squandered potential of the ground beneath their feet.

A peculiar trend has emerged at the indaba in recent years: a gathering held in the Mother City serves increasingly as a platform to discuss the virtues of sunnier mining jurisdictions, like Botswana, Namibia and Zambia.

After years of underperformance and policy own goals, the notion that South African mining is a sunset industry has taken hold.

South Africa slipped in the Fraser Institute’s policy perception index from 20th in 2000 to 70th (out of 82 countries) in 2024, with investors consistently singling out the haphazard administration of regulations and the regular moving of transformation targets as primary deterrents. South Africa is also losing its regional competitiveness, falling to 68th on the Fraser Institute’s investment attractiveness index against Botswana in 20th position.

However, the industry’s decline is largely due to internal, man-made constraints — including policy, and regulatory and bureaucratic obstacles — rather than geological exhaustion. As such, it should be possible to turn the sector around and make South Africa the focus of the indaba once again.

The Bureau for Economic Research (BER) has released a research report, funded by Economic Research Southern Africa (Ersa), that explores the binding constraints that hold the sector back.

Our key finding is that the sector is trapped in a low-level equilibrium, despite sitting on a mineral endowment of global significance. Numerous constraints cost the economy billions in lost mining revenue and opportunities; lifting them could unleash billions in investment and sector growth.

In real terms, the sector was, unbelievably, 11.5% smaller in 2024 than in 1994, having been unable to take full advantage of successive commodity booms. The same thing is happening now as gold has surged within a whisker of $5,600/oz.

This picture feeds into a pervasive narrative of a sector in decline. However, this has mostly been driven by a collapse in gold production. Overall, the sector’s contribution to GDP actually increased from 5.2% in 1994 to 6.6% in 2024. Indeed, if gold is excluded from total production volumes, output rose by 41% from 1994 to 2024 (see graph).

Furthermore, South Africa’s mineral complex is still considered one of the richest in the world, with the largest known deposits of platinum group metals (PGMs) and manganese, and the second-largest chromium deposits. In short, South Africa is rich in critical minerals, the demand for which is expected to quadruple by 2040.

And yet only 9%-12% of South Africa has been geo-mapped at a high resolution, which means its actual mineral deposits are likely to be far greater. Clearly, we should urgently expand high-level geo-mapping and make this data publicly available online.

But for that to happen, the government needs to recognise that South Africa suffers from a mineral exploration crisis and that urgent steps are required to address it. The situation has become so bad that South Africa now spends only about $121m on mining exploration a year — less than 1% of the global total.

In South Africa, the junior miners — the segment of the sector that is funded by venture capital and typically focuses on greenfield exploration (the discovery of new mineral deposits) — are significantly underdeveloped. There are only about 12 junior resource companies listed on the JSE compared with more than 600 listed on the Australian Securities Exchange and more than 1,600 on the Toronto Stock Exchange.

Both Australia and Canada have put incentives in place to stimulate greenfields exploration. Canada has introduced flow-through shares that allow investors to claim back 70%-100% of their investment in junior mining as a tax credit. Australia has something similar. South Africa should urgently follow suit.

But to really swing the dial on mining exploration (both green and brownfields investment), South Africa should establish a cabinet subcommittee to create an urgent turnaround plan (complete with defined targets and specific solutions) with the involvement of key government departments and private sector players. The idea is that it would do for mining what the national energy crisis committee did for electricity and the national logistics crisis committee is doing for logistics.

This plan should have three urgent action points:

• The secondment of extra private sector expertise to accelerate the rollout of the new cadastral system and to clear the backlog in permits (which exceeds 4,000 applications) within six months. The BER’s report estimates that delays in issuing licences cost the sector R30bn-R50bn a year by holding up exploration and new mining projects.
• The withdrawal of all unused and expired prospecting rights (more than 36,000 have been issued but very few executed) to open up new areas and opportunities for exploration.
• Extract a public commitment from the government to process all prospecting rights within three months.

However, even if we incentivise exploration, there are numerous other binding constraints that are crippling the sector. If we don’t resolve policy uncertainty, lift the onerous regulatory burden, restore efficient network industries and do more to combat illicit mining (which cost the sector R60bn in 2025), South Africa will never take full advantage of its mineral wealth.

But instead of reforming, things seem to be moving in the opposite direction. Industry players say there is a high likelihood that the new draft Mineral Resources Development Amendment Bill will make things worse.

The Junior Mining Council, for instance, estimates that regulatory compliance already consumes 30%-40% of juniors’ operational budgets and that the new bill would increase this by 40%-60%. The bill needs to be withdrawn and overhauled.

Without addressing these binding constraints, the sun will surely set on South African mining. But it should be the opposite: the problems facing the sector are well documented, and the remedies are clear and well within our ability as a nation to address. Fix them, and South Africa’s great mineral potential could contribute significantly to faster economic growth. It is a travesty that we are partly missing out on another commodity boom. The performance of our neighbours shows that South Africa can and should be doing much, much better.

• Botha is an independent economics consultant and Bisseker is an economics writer and researcher at the BER.