According to a new report by the Bureau of Economic Research (BER), South Africa's mining industry is failing to utilize one of the world's largest mineral reserves due to administrative inefficiencies, regulatory delays, and policy uncertainty, rather than a lack of resources.
South Africa's mineral wealth is estimated to be between $2.5 trillion (R41 trillion) and $4.7 trillion (R77 trillion). However, according to independent consultant Robert Botha, this resource continues to operate significantly below its potential due to structural weaknesses in the application of the Minerals and Petroleum Resources Development Act (MPRDA).
Botha emphasized that the long-term stagnation of the industry is caused by regulatory friction, political instability, and administrative backlogs, not by the depletion of geological reserves. The report, based on an analysis of the operational mechanisms of MPRDA 28 from 2002 (with amendments) and data from industry participants, proposes possible legislative changes to unlock frozen capital, stimulate initial exploration work, and increase investor confidence.
The legal framework governing South Africa's mineral complex is at a critical juncture due to increased political uncertainty. The report notes that the initial draft of the Mineral Resources Development Act 2025, published on August 13, 2025, was officially withdrawn by state authorities following strong and widespread opposition from industry stakeholders.
Although the withdrawal was acknowledged as a necessary step consistent with previous recommendations, it created a policy vacuum marked by intense speculation and conflicting information regarding the content of the future revised draft.
The situation is complicated by overlapping institutional structures. On June 8, 2026, the Department of Trade, Industry and Competition (DTIC) presented the Industrial Development Strategy for 2026, which aims to change the structure of incentives for the mining sector in exploration, extraction, processing, and investment. This strategy directly calls for a revision of mining legislation to enable the government to set strict conditions for mineral rights allocation to ensure local raw material processing.
Concurrently, the regulatory environment faces constant structural delays. At the Junior Mining Indaba in Johannesburg on June 9, 2026, the Department of Mineral Resources and Energy (DMRE) announced the fifth postponement of the full implementation of the national online cadastral system, moving the target date to March 31, 2027.
Administrative friction within the DMRE acts as an indirect cost to investments in the mining industry. Following the structural transition to state management under MPRDA and failures in subsequent internal administrative systems, such as SAMRAD, which suffered from external information factors, lack of transparency, and application errors, the state has accumulated significant administrative debt.
The financial damage from this administrative paralysis is enormous. According to a targeted industry survey conducted by the South African Minerals Council in 2021 among 21 operating companies, 178 unfinished license applications are stalled, representing over R30 billion in active, planned capital expenditure.
The primary reason for this systemic delay is the absence of mandatory performance standards regulating the state apparatus within the text of the MPRDA. While the Act regularly sets strict, non-negotiable compliance deadlines for private sector applicants, it systematically excludes mandatory timeframes for internal assessment and approval mechanisms by the state.
As developers finalize the revised Mineral Resources Development Act, there is a critical window of opportunity to correct this trend. The state can restore necessary policy certainty to attract long-term global capital by enshrining strict legislative timelines across all licensing processes, codifying judicial precedents to protect capital mobility, and limiting unilateral ministerial powers.
The report concludes that combining these legislative amendments with robust institutional anti-corruption measures will be crucial for restoring a healthy and transparent project pipeline. Ultimately, resolving these constraining factors is not merely an administrative cleanup but a macroeconomic imperative that can cement South Africa's mining industry status as a rising sector.
The administrative and executive turmoil engulfing the Public Investment Corporation (PIC) is both regrettable and deeply concerning. The precautionary suspension of its Chief Executive Officer, Patrick Dlamini, has once again exposed the fragility of governance within one of South Africa's most strategically important state entities.
The current events cannot be viewed merely as an isolated dispute over management. They touch upon a broader question of political economy facing a democratic state. PIC occupies a unique position in South Africa's financial structure as it manages assets worth approximately R3 trillion, primarily on behalf of the Public Service Pension Fund.
The Corporation is the custodian of pension savings for millions of public servants and represents one of the largest institutional investors on the Johannesburg Stock Exchange. Its investment decisions influence infrastructure development, industrial financing, housing construction, private capital, and the overall direction of capital formation in the economy.
Consequently, instability within PIC has far-reaching consequences beyond its board of directors. It undermines confidence in the state's ability to protect public wealth and weakens faith in institutions that should ensure long-term economic development. This crisis must prompt South Africans to consider a wider question: what is the strategic purpose of our state-owned enterprises within a democratic developing state?
This question extends beyond PIC to include structures such as Eskom, Transnet, Denel, the South African Post Office, and Development Finance Institutions (DFIs). More fundamentally, it calls into question whether the democratic state has developed a clear understanding of what these institutions are meant to achieve in the political economy of South Africa. Ironically, the Apartheid State answered this question with striking clarity, albeit for an immoral and exclusionary project. State-owned companies were deliberately positioned as tools of economic transformation for white South Africans.
Institutions like South African Railways, the Post Office, Eskom, ISCOR, and SASOL were part of a deliberate state strategy to address the socio-economic problems of white people. Through state employment, industrial expansion, skills development, and preferential access to economic opportunities, these institutions consolidated and expanded the white middle class, systematically excluding the majority of Black people from meaningful economic participation. The Black masses, conversely, were limited to providing cheap labour, upon which this racial political economy was built.
The democratic state inherited these institutions along with their significant productive capacity, but it inherited less successfully the strategic coherence with which they were previously utilized. Thirty years into democracy, millions of Black people remain trapped in structural poverty, unemployment, and economic isolation. This reality demands an uncomfortable question: why has the democratic state failed to utilize these same institutions with equal resolve to eliminate poverty, create productive employment, stimulate inclusive industrial development, and uncompromisingly address the plight of poor Black people?
The answer cannot be reduced solely to corruption or poor administration, although both factors undoubtedly contributed. A deeper problem lies at the intersection of politics and economics. It is at this junction that institutional mandates become blurred, political interests compete with development priorities, and governance structures gradually lose their strategic focus.
The judicial commission investigating allegations of state capture, chaired by Chief Justice Raymond Zondo, revealed how this intersection became fertile ground for patronage and institutional capture. Boards of directors, which were supposed to provide strategic guidance, increasingly became arenas for factional disputes. Oversight weakened, accountability deteriorated, and executive power became vulnerable to political interference. Institutions created to advance national development instead became consumed by internal instability and, in some cases, private enrichment.
South Africa cannot ignore these governance weaknesses. Successive administrations have commissioned numerous reviews of state-owned enterprise governance, and the country's problem is not a lack of diagnostic reports, but a deficit in their implementation. President Cyril Ramaphosa must use the current PIC crisis as a moment to fully implement the recommendations of the Presidential Committee on State-Owned Enterprises, which was appointed on May 10, 2010, and chaired by Ria Fiege.
The Committee presented one of the most comprehensive plans for reforming South Africa's state-owned enterprises, covering governance, shareholder oversight, funding models, board appointments, and institutional accountability. Its recommendations remain as relevant today as when they were presented. It is worth noting the historical continuity: President Ramaphosa served as Deputy President when the Committee completed its work and received its report. Thus, the country does not require another investigative commission or another diagnostic study; the report already exists and only requires the political will for its implementation.
Recurring crises in PIC, Eskom, Transnet, Denel, and other state-owned enterprises demonstrate that replacing boards of directors, firing executives, or shuffling leadership alone cannot solve systemic governance problems. Such interventions may resolve immediate administrative difficulties, but they do not correct the structural flaws that continue to undermine the potential of these institutions for development. South Africa's state-owned enterprises must be fundamentally repurposed as true engines of democratic state development. They must mobilize social capital, stimulate industrialization, finance strategic infrastructure, support productive sectors of the economy, create sustainable employment, and expand economic participation. This was the strategic vision that guided the Presidential Review Committee's work, and it remains an unfinished business of democratic South Africa. Nothing else will restore the developmental character of South Africa's state-owned enterprises except the political will to implement the reforms mandated by the government itself.
The global demand for African minerals is evident. However, the key question is whether this demand will sustain the old model of resource extraction or help create a new geography of production, capabilities, and value retention directly in Africa, as noted by Pedro Manuel Moreno.
A significant part of the world is interested in what resources Africa can provide: copper for power grids, cobalt and graphite for batteries, and minerals for data centers, energy systems, and advanced manufacturing. Nevertheless, a more important question is what Africa is capable of building itself.
Between 2022 and 2024, more than half of the world's economies were heavily dependent on primary commodities, with the highest levels of concentration observed among vulnerable economies, including many African countries. Dependence on the export of unprocessed raw materials subjects states to price fluctuations, external shocks, and fiscal pressure. Natural wealth can generate export revenues without ensuring sufficient industrial processing.
Developing manufacturing, services, suppliers, technologies, and skills allows economies to become more resilient and diversified. The central issue is not simply what countries extract, but what volume of value and opportunities they are able to retain. Investment, trade, and production networks are being reconfigured around digital infrastructure linked to artificial intelligence, semiconductors, critical minerals, and energy transition technologies.
Strategic sectors accounted for 44% of the cost of 'green field' projects in 2025, compared to 16% in 2020. These sectors determine where future production capacity will be created and who will benefit from the next generation of trade. Although Africa already holds a central place in this economy, centrality in supply does not guarantee centrality in production.
If investments only strengthen extraction without developing local capabilities, the next production map will reproduce the old commodity exchange model: resources are in one place, but production and value are elsewhere. Critical minerals represent the intersection of the old history of commodities and a new opportunity for development, as they underpin the technologies driving energy and digital transitions.
Only the demand for lithium, for example, is projected to grow by more than 350% between 2024 and 2040. However, increased demand alone does not imply development; the crucial factor is where value is created and retained, and who builds industries around it. In 2025, the Democratic Republic of Congo supplied 74% of global cobalt production, with processing and refining also highly concentrated. Most of the value is generated after the minerals leave the ground.
Without targeted action, critical minerals could become the next 'commodity trap': mineral-rich countries will supply the next industrial era, while others handle processing, manufacturing, innovation, and capturing greater profits. Adding value is not just moving from extraction to processing; it also includes suppliers, services, skills, infrastructure, and regional markets. Each country must define its competitive advantages and gradually build capacity.
Pedro Manuel Moreno saw this in the case of Madagascar during a recent visit. This country is a major producer of nickel, cobalt, graphite, and ilmenite, yet most of the revenue from these resources is captured outside the country. UNCTAD's work has identified opportunities to link mineral wealth with the processing of food, textiles, chemicals, plastics, and supplier industries, which can create formal jobs. Mineral production can support a broader manufacturing base rather than remaining isolated export activity.
Earlier this year, UNCTAD presented similar assessments for Zambia and Namibia. The analysis identified 412 products in Zambia and 353 products across 23 sectors in Namibia, along with the potential to create thousands of jobs in both countries. These figures transform broad discussions into a practical agenda: added value can be mapped, assessed, planned, and linked to real companies, sectors, and markets.
Africa should not be viewed as a passive supplier of raw materials for the energy transition, AI infrastructure, or advanced manufacturing anywhere else. If the world needs African minerals, partnerships must foster the development of African industries. This is not a call to exit global trade, but a question of the conditions under which trade and investment promote development.
Investments should be judged by what they leave behind: suppliers, skills, infrastructure, jobs, links to domestic and regional firms, and a clearer path from extraction to production. Added value must also be seen as a regional and global agenda, as many African markets are too small to sustain complex industrial ecosystems independently. Partnerships in critical minerals must go beyond mining agreements; they must support technology transfer, processing, manufacturing, standards, infrastructure, and finance, otherwise, they risk only supplying others without changing the development trajectory of producing countries. This is not about isolation or resource nationalism; it is about ensuring that trade and investment contribute to building production capacity where the resources are located. Dependence on raw materials is not destiny, but overcoming it requires building that capacity at home.
