South African mining sector bears the brunt of depressed mineral prices as tariffs loom

Mineral and Petroleum Resources Minister Gwede Mantashe said the prices of minerals that dominate South Africa’s mining export basket remain depressed.

“Whereas minerals such as coal, platinum group metals (PGM), manganese, and chrome have been excluded from the tariffs imposed by the government of the United States of America, the inclusion of diamonds and iron ore in the 30% reciprocal tariffs on imports from South Africa threatens our export earnings and has the potential to damage the global economic growth,” Mantashe said.

He made the statement when he delivered his 2025/26 budget speech in the National Assembly.

Mantashe said the mineral endowment that the country was blessed with, the South African mining industry continued to prioritise the pit-to-port approach to mining, in contrast to local beneficiation.

The minister also said the industry continued to export the benefits and jobs that ought to accrue to the nation.

“Our engagements with the manganese and chrome producers are beginning to take shape with concrete proposals being considered to promote the creation of value-added products close to the point of production including ensuring consistent, reliable, efficient, and affordable electricity supply; implementation of an export tax; and the introduction of quotas to restrict the amount of raw minerals that can be exported from our country.”

He said a Ministerial Task Team was developing a plan to revive the smelting sector and ensure its long-term sustainability.

“The plan will focus on several areas, including the proposals put forward in our engagements with the manganese and chrome producers,” he said.

This was in reference to the challenges faced by the ferroalloy sector that have resulted in 30 out of the 59 chrome furnaces in the country being either shut down or placed under care and maintenance,

Mantashe said in 2024, the mining industry’s export earnings totalled R674 billion, comprised of R586.4 billion from primary minerals and R87.5 billion from processed minerals, representing a decrease of 0.6% from R678 billion in 2023.

He observed that the mining sector employed 484,837 mineworkers during the same period, marking a significant decrease of 0.9% from the 489,022 of the previous year.

“It is worth noting that most of the job losses were in the PGM sector in which profitability has been weighed down by low prices. This is the reality that we are battling with. Government reforms including stabilising electricity supply and the gradual improvement of the ports and rail system, will help improve the investment climate in the mining sector."

The minister stated that his department continued to review and strengthen the mining and petroleum regulatory framework to improve the business environment and enable new and greater investments in these sectors.

“I am, therefore, pleased to report to you that since our last tabling of the budget last year, the department has finalised and published for public comment the draft Mineral Resources Development Bill. The Bill, which seeks to review and strengthen the areas of the Act that have been identified as ambiguous and those that have been challenged legally, is currently undergoing comprehensive consultations with stakeholders before processing it to Parliament.”

mayibongwe.maqhina@inl.co.za