South Africa's critical minerals: The case for local beneficiation

Metals beneficiation - turning platinum into hydrogen fuel cells, manganese into battery materials, iron ore into steel, coal into chemicals and chrome into stainless steel, can seriously transform the economy, but a supportive, clearly defined, costed industrial strategy, with much higher levels of research and development, is required, said Minerals Council South Africa acting chief economist Bongani Motsa.

He said in an address to the Investing in African Mining Indaba being held in Cape Town on Wednesday, that South Africa has a list of 21 minerals and metals on its critical minerals list, and five are considered highly critical: platinum, manganese, iron ore, coal, and chrome.

The "moderate to high criticality list" has another five minerals: gold, vanadium, palladium, rhodium and rare earth elements. The third category, "minerals with moderate criticality" has 11 minerals that are abundant in South Africa's geology; and are central to industrialisation, energy security, and global competitiveness.

Motsa said that of the five highly critical minerals, only 3% of local sales of platinum between 2020 and 2024 was beneficiated in South Africa, 11% or 6.9 million tons of total iron production was beneficiated, 14% or 2.7 million tons of total production of manganese was converted into a higher value, 69% of total coal production was used for power generation and to make chemicals and synthetic fuels, while the data on chrome was shaky.

"From this list it is clear we have done well in coal beneficiation," said Motsa.

Platinum is typically used in catalytic converters, jewellery, medical devices, and increasingly in hydrogen fuel cells—positioning South Africa in the clean energy transition. Manganese is used in steelmaking and battery technologies, particularly in electric vehicles. Iron ore, the backbone of steel production, feeding construction, infrastructure, and manufacturing.

Motsa said the main reason for beneficiation should be to solve the problems as a country, including issues of energy, infrastructure (road, bridges, dams.

Current challenges to beneficiation include capital inadequacy - beneficiation plants require billions in upfront investment, often beyond local financing capacity; high energy costs - beneficiation is energy intensive, and South Africa's electricity tariffs undermine competitiveness; rail, ports, and logistics constraints raise costs and reduce reliability; it requires policy certainty; while global competition is a factor - countries like China dominate mineral processing, making entry into markets difficult.

Citing Finland as an example, Motsa said three key financial instruments to boost beneficiation were public private investment vehicles, innovation funding, and financing provided to derisk large capital projects.

Circular economy principles needed to be embedded, recycling needed to be encourage encouraged as was secondary use of critical minerals to sustain industrial supply.

"Together, these instruments have allowed Finland to move beyond raw mineral exports, positioning itself as a European hub for battery materials, clean energy technologies, and advanced manufacturing inputs."

He said countries that had generally experienced sustainable economic growth, on average spend between 3% and 5% of GDP on research, development and innovation. In 2024, South Africa spent R56 billion which was the equivalent of 0.8% of GDP.

"The choice before us is clear: remain a supplier of raw commodities or become a global leader in mineral-based industries. Beneficiation is not just an economic strategy - it is a national imperative," he said.

Shamini Harrington, Senior Executive Environment, Health, ER and Legacies at the Minerals Council South Africa, said an integrated, one-stop mining licensing system, covering mining, environmental, water and land-use approvals — would reduce fragmentation, uncertainty and duplication and provide greater certainty to investors, while still upholding environmental and social standards.

She said  that while coherent government policies were critical in facilitating responsible mining, decarbonisation, investment and global competitiveness, the industry was constrained by fragmented policies, complex permitting procedures and administrative inefficiencies.

"This dissonance undermines certainty and elevates investment risk," she said.

She said water was emerging as a strategic risk in the mining industry, with growing scarcity posing a threat to business sustainability. Mining activities were anchored to the spatial locations of mineral deposits, which are mainly found in watershed areas that experience water stress and cannot be transferred to areas with greater water supply, thus necessitating long-distance water movement. She said the mining industry had alreadu played a central role in major public-private water infrastructure initiatives.

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