WILLIAM GUMEDE | Resource nationalism — SA is losing out

US President Donald Trump’s sweeping tariffs on China’s state subsidised exports, China’s restrictions on foreign access to its critical natural resources, and the US search for new mineral sources have unleashed reciprocal resource nationalism around the world.

South Africa’s economy, with foreign policies based on outdated ideology considerations, lacking any coherent industrial policy and with a failing state and crumbling infrastructure, is at risk of suffering heavily.

The US and China are trying to secure control of critical natural resources. Other countries are also seeking alternative supplies if their access to resources is limited. The uncertainty created by trade, security and geopolitical policies have driven many investors to look for assets to hedge their risks, with precious metals being one of the key alternatives.

Many developing country producers of minerals are experiencing political upheavals. For example, Indonesia, the world’s largest tin producer, is facing governance challenges, undermining the global supply chain for the metal. These factors have boosted metal prices.

South Africa has been unable to benefit from rising resource prices because of state failure, corruption and anti-growth policies which have caused deindustrialisation, decapitalisation and deskilling of the mining industry.

As a small sample of the record resource price rises, before gold nose-dived 12%, silver crashed 33% and copper fell 5% a few days ago, all three base metals saw record-smashing rallies in 2025. Gold surged pass $5,000 per ounce for the first time. Silver broke through the $90 mark for the first time.

Copper prices had increased more than 25% in the past three months, reaching more than $13,300 a tonne on the London Metals Exchange. Tin prices also rose to record new levels, pushing up more than 35%. In January uranium prices rose to $85.25 per pound, the highest level in 18 months.

Many countries have rapidly changed industrial policies to secure critical minerals outside China’s supply chains. Some countries are offering the US critical minerals as a strategic change in their industrial policies.

In its new industrial policy the Australian government is exploring a critical minerals strategic reserve, a strategy in which the state stockpiles critical minerals, as China does, providing bespoke financing for the development of new projects and preferential support, including price support, for domestic and allied producers to ensure the viability of commercial projects.

In 2025 the UK government nationalised British Steel to save jobs and downstream industries and manufacturing. The company had been owned by Chinese steel-making firm Jingye, who was planning to stop producing virgin steel.

The US government has taken equity stakes in private domestic mining companies such as MP Materials, Lithium Americas and Atlantic Alumina to secure critical minerals and strategic partnerships and in some instances offering a state guarantee of the prices of many resources.

Some countries have dramatically stepped up their research efforts to find new sources of critical minerals. Japan has started testing seabed mining for rare earth minerals to try to cut its reliance on China’s rare earth mineral global dominance. Japan is also taking shares in critical mining companies in other countries.

South Africa stands out as lacking a coherent, public-private sector pact generated industrial strategy response. Mining production has dropped more than 80% in the country since the advent of democracy in 1994. Threats of nationalisation, a BEE policy that mostly deploys ANC politicians to become partners of white mining companies, the incompetence of ANC deployees in the department of minerals and laws allowing the expropriation of property without compensation have pushed many mining companies not to make new investments or new mining exploration.

The “zama zamas”, or illegal artisanal miners, are controlling abandoned mining shafts as South Africa’s mining industry deindustrialises and informalises in the wake of deindustrialisation and decapitalisation. At the same time, developed and emerging power nations have invested in technology, research and capital to develop critical mineral resources. Many South African mining companies have shut down, moved abroad or sold to foreign firms.

Peter Major, one of South Africa’s most respected mining analysts, has said the combination of minerals department incompetence, deteriorating state infrastructure, corruption, nationalisation threats, policy uncertainty and mining value-destroying BEE strategies have cost South Africa more than half a million mining jobs since 1994 — about 450,000 gold mining jobs and 100,000 jobs in other mining sectors.

In 1980 the mining industry contributed 21% of South Africa’s GDP. By 2024 it contributed only 6% of GDP.

“South Africa’s mining output has remained flat for the past 20 years as companies have been hesitant to invest in new projects or expand existing operations. More worryingly, no new exploration for minerals has occurred in South Africa for the past two decades, resulting in an entire lost generation of mines,” Major told the Business Tech publication last year.

Because of deindustrialisation, decapitalisation and detechnologisation, South Africa has been unable to take advantage of its historical gold production knowledge to dominate new, cheaper gold production in other countries.

Steel producer ArcelorMittal SA has plunged into crisis, battered by electricity costs that spiralled more than 800% in 10 years, a state logistics infrastructure decline and a lack of supportive industrial policy that failed to counter state-subsidised steel imports from China.

South Africa holds 80% of the world’s chrome ore reserves, an advantage in ferrochrome production, which is critical in stainless steel manufacturing. Yet the country’s high electricity prices mean China, which subsidises its electricity to critical industries, can produce ferrochrome cheaply, despite the fact that it imports most of its chrome ore.

About 45 other furnaces across the country are either idle or have been closed over the years because of rising electricity tariffs, collapsing state infrastructure and unreliable supply. Samancor has said the government has not provided “any concrete support”, such as electricity tariff relief.

In 2025 Chinese smelters were reported to be handling more than 80% of South Africa’s exported raw chrome ore. Exporting raw material creates less value, less income and less employment. Processing or refining raw material into final products brings more income, employment and associated businesses.

What should be the pillars of a new strategic resource-based industrial policy for South Africa? The country needs a public-private social sector pact driven chiefly by the private sector’s real-economy experience and supported by the state.

Business must lead the effort to put together an industrial policy. This cannot be left in the hands of politicians or state bureaucrats with no experience of the real economy.

Given the state and infrastructure failures, South Africa must provide energy subsidies to critical mineral producers. China subsidises the energy for its key industries. South African companies must also be compensated for state logistics failures by government through tax rebates.

South Africa’s development finance institutions (DFIs) should partner with private sector companies to take stakes in African critical mining operations, in the same way Japanese DFIs and private companies have done as part of the country’s industrial policy, which entails taking shares in critical mining companies in other countries.

South Africa needs to strike a deal along the lines of the Australian deal with the US to supply it with strategic minerals. We must also strike a strategic mineral deal with the EU to provide strategic minerals. South Africa could negotiate with the US and the EU to buy critical minerals produced in South Africa at a certain guaranteed price.

China and the US have taken the lead in exploration, mining and processing African critical minerals, excluding South Africa from the African minerals’ development opportunity. South Africa’s new industrial policy must position the country as a new processor, refining its own and African critical minerals.

South Africa must copy the US playbook, with the state supporting critical resource companies that are struggling, whether through equity stakes, strategic partnerships or guarantees, or actively seeking markets for their products. With electricity prices having increased by more than 800% since 2007, government must subsidise energy costs for all critical resource companies, and give tax rebates to domestic manufacturers and exporters.

The country must become a beneficiation, refining and processing hub for African minerals. This should be done in conjunction with trading partners such as the EU, Japan and other advanced economies that need critical minerals.

South Africa cannot create new refining, processing and beneficiating capacity unless it gets education right, especially science, technology, engineering and mathematics (Stem) subjects at schools and vocational, technical and university science education at tertiary level. As an alternative to BEE, domestic and foreign companies can be asked to strengthen these subjects.

In October last year Australia and the US signed a critical mineral deal in terms of which the two governments will provide public money to private mineral projects in Australia. Japan will also invest as a third-party government.

The Australian-US critical minerals deal offers a blueprint for South Africa to strike a critical mineral deal with the US and with other markets, such as the EU, Japan and India. South Africa can also be a third-party investor in minerals deals between industrial countries and African countries.

South Africa must exempt key critical minerals from BEE policies and allow companies to provide alternatives to BEE, such as the employment of young people, empowering SMEs, developing Stem education in state schools, transferring skills and building new public infrastructure. Catalytic state infrastructure state-owned enterprises and DFIs such as Eskom, Transnet and the Industrial Development Corporation are critical to effective industrial policy. They must be exempted from ANC cadre deployment and BEE procurement.

• Gumede is associate professor at the Wits University School of Governance and author of “South Africa in Brics”. He taught the course “Navigating the Trump Global Era” at the University of Cape Town Summer School last month.