Exploration shortfalls and infrastructure risks cloud mining’s growth outlook

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DUDUZILE RAMELA: Let’s take a look at the mining industry. Surging global demand for critical minerals, shifting commodity prices and evolving regulatory landscapes shaped the year that was in the mining sector for the African continent in 2025.

Here at home, the Minerals Council of South Africa today released its Facts and Figures Pocketbook, which paints a nuanced year for the industry.

Bongani Motsa is acting chief economist at the South African Minerals Council, and he joins us for more on this research. Thank you very much, sir, for your time on Moneyweb@Midday.

Let’s start with your overall characterisation of the report, a year of highs and lows for the mining industry in South Africa.

BONGANI MOTSA: Absolutely, Dudu, and thank you for having me. Absolutely true. I think it’s a mixed picture because you have, for example, the PGMs (platinum group metals) and gold performing exceptionally well in terms of prices.

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But in terms of production volumes, what we’ve seen is, especially these two commodities are not responding to higher prices.

So naturally, you have a situation where when prices go up, production also goes up in line with the increased prices. But that’s not what we see. Also, what we’ve seen is the fact that the chrome, as well as manganese, have experienced significant growth. But, of course, this is from a very low base.

Maybe something also to touch on is the fact that employment is up by 2000. That is as of quarter three, 2025.

Then finally, I just want to talk about exports, because we have the full-year export data for 2025. What is interesting is that export earnings are a billion rand lower than in (2024), so let me just stop here for now.

DUDUZILE RAMELA: On the domestic front, mining is estimated to have contributed some R439.2 billion to GDP in the country. A very positive sign.

BONGANI MOTSA: It is a positive sign, Dudu. When we look at it in the context, for example, of what we ultimately contribute to the fiscus, because that’s a nominal number.

What we as economists then look at is the real numbers. If you were to take out the price effect, how is the sector performing? I can tell you that if we take out the price effect on those numbers, then you can see that it is a sector that still is performing below potential.

DUDUZILE RAMELA: What is curbing the potential or curtailing the potential?

 BONGANI MOTSA: There are a number of factors.

I think especially since 2007, we have experienced a shortage of electricity in terms of real electrons, but also, we have experienced a significant increase in electricity tariffs themselves. They’ve been increasing way more than CPI (consumer price index) inflation.

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Also, you’ve had a situation where you have logistical constraints in the form of Transnet, those challenges started in 2015 or thereabout and reached a climax during Covid. As we speak post-Covid, I think Transnet is still recovering, both in terms of the rail efficiencies as well as port efficiencies.

Then also, the regulatory environment.

What miners want is a stable and predictable policy and regulatory environment. The challenge is that what we’ve seen in South Africa is that policy keeps changing.

The tweaking here and there. That does not augur well with mining investors. If we were to have stability, especially on that front, we do think that we would have mining at least going up to its potential.

Listen/read: Can SA’s mining sector adapt to the Just Energy Transition?

But perhaps the other aspect is exploration. I’m sure you’ve heard that in the early 2000s, as South Africa, we used to contribute about 5% of global exploration expenditure. We are now at about 0.6% of global exploration expenditure.

Our view as the Minerals Council is that exploration is a high-risk activity, where you’re not really guaranteed (a return). If you invest R100 million in exploration, you’re not guaranteed that you’ll get R100 million there.

Our view as the Minerals Council is that government can meet us halfway by incentivising exploration.

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That’s what’s happening in other jurisdictions, such as Canada and Australia, which are key mining jurisdictions.

However, even though they are key mining jurisdictions, in terms of the mineral portfolio of endowments South Africa is still way up there, still way on top. So just unlock exploration and then you will see the industry performing almost to its true potential.

DUDUZILE RAMELA: What does this then mean in light of everything that you have just said? To my understanding, it paints a very complicated picture, more so where critical minerals are concerned. We are a country that wants to more so in the value chain, concentrate on the downstream effects of critical minerals.

Listen: Mining Indaba 2026: Redefining critical minerals

But it would seem that there must be a number of things that need to be in place. There is what is called a critical minerals race, demand is high, are we ready to supply?

BONGANI MOTSA: Yes and no. Yes, in the sense that we have the mineral endowment. I’m sure you’ve heard about the potential of the Northern Cape, for example. But again, we need to explore more, but also in terms of rail and electricity infrastructure in the Northern Cape, we’re not up there, let me put it that way.

If there was significant investment in infrastructure, both in terms of electricity – transmission lines more specifically – as well as Transnet rail.

It’s very difficult to make a business case based on potential.

I can tell you that that would be very difficult, especially for Transnet to invest in railways, (if the business case) is very shaky.

But also, talking about critical minerals, I think one thing that we have to really, really work on as a country is, of course, we talk about beneficiation as a country, even as the Minerals Council, we do sponsor beneficiation.

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But I think the problem is that you have these binding constraints, electricity being a major issue. However, also you need to develop those industries that will basically consume or add value to the minerals, instead of just exporting the raw minerals.

We can look at it this way, what is the key challenge that we as South Africa are facing? You can agree with me that it’s energy, energy, energy.

So why don’t we then identify key critical minerals that would help us as a country to meet our energy challenges, both in terms of generation to transmission, perhaps to some extent distribution as well. But we have to adopt a value chain approach.

DUDUZILE RAMELA: You are at the Mining Indaba, which is kicking off today. Your main intervention, from what we are hearing, would be on exploration. Our levels of exploration are not nearly where they need to be. So one assumes that that will be the main intervention at the Mining Indaba this year.

BONGANI MOTSA: Yeah, it is one theme or topic that we are basically talking about, among several others.

Remember, we’ve been talking about exploration since 2018, as the Minerals Council, it has been our main focus to say that if you want to see the industry grow, unlock exploration.

Also, we are talking about the general policy and regulatory environment, and we’re saying that what we need as miners is stable policies and regulations that enable investment, not just in mining, but generally.

We want policies that enable or attract investment.

It’s not just about attracting foreign investment, even the investment that’s already existing domestically, I’m sure you’ve heard that there is about $1.8 trillion in savings by the private sector. That would also unlock those kinds of resources.

I’ve spoken about exploration; I’ve spoken about the regulatory environment, I think the other thing that we’re talking about, our focus is electricity.

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Of course, we’re disappointed to learn that Nersa (National Energy Regulator of South Africa) has approved the generation RAB (Regulatory Asset Base) for Eskom, which means electricity tariffs this year and next year will increase by an average of 8%, or at least more than 8%.

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That compromises our global competitiveness as mining, as well as manufacturing, the key exporting industries. It does compromise our global competitiveness.

DUDUZILE RAMELA: Thank you so much, sir, for your time on Moneyweb@Midday. Bongani Motsa is acting chief economist at the Minerals Council of South Africa.

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