Cape Town – South Africa’s mining and manufacturing industries, once the backbone of the economy, have been in steady decline for the past two decades.
Load-shedding, policy uncertainty, and declining business confidence have severely impacted output and employment, limiting their ability to absorb the country’s large unemployed population, according to Daily Investor.
A crisis of confidence
Business confidence has dropped significantly since 2006, with corporations sitting on R1.4 trillion in cash rather than investing in local manufacturing.
The Daily Investor report notes:
“Declining business confidence in the country since 2006 has resulted in many companies preferring to keep their cash in the bank rather than invest in manufacturing capacity.”
Only 77% of the country’s manufacturing capacity is currently in use, reflecting weak consumer demand and poor investor sentiment.
Mining under siege
According to mining analyst Peter Major of Modern Corporate Solutions, South Africa’s mining industry has suffered due to regulatory uncertainty, infrastructure failures, and threats of nationalisation. Once one of the world’s top mining jurisdictions, the country now ranks among the least attractive globally.
Frequent policy shifts, including changing Black Economic Empowerment (BEE) requirements and the looming threat of state ownership, have deterred investment.
Over 6,000 mines have been abandoned, exacerbating economic decline.
“You can imagine—investing billions into projects over a century, only to be threatened with state ownership. New investment stopped. Exploration and expansion stopped. Why put money into something the state owns?” Major said.
Legislative changes have further complicated the investment landscape.
“Initially, a BEE partner had to own 25% of a mine, but that quickly increased to 30%. Then, they mandated that 70% of a company’s expenditure had to go to BEE suppliers. These constant changes, combined with nationalisation threats, drove capital away.”
Alaming decline in mining output
According to Cratos Asset Management, South Africa’s mining production declined by 2.7% year-on-year in January, surpassing expectations. On a monthly basis, production fell 1.2%, against a projected 2.8% drop.
SA’s mining production ⛏️ fell by a better-than-expected -2.7% y/y in January. On a monthly basis production was down -1.2% vs the -2.8% expected.
Contributors
• Iron ore (-15.1% & contributing -2.7%)
• PGMs (-3.8% & contributing -1.1%)
• Coal (-4.4% & contributing -1%)
•… pic.twitter.com/bH8Zm5ltL1— Cratos Asset Management (@CratosAM) March 13, 2025
Major contributors to the decline:
- Iron ore: -15.1% (contributing -2.7%)
- PGMs (Platinum Group Metals): -3.8% (contributing -1.1%)
- Coal: -4.4% (contributing -1.0%)
Investment pullback a “horror show”
Adding to the crisis, StatsSA’s latest figures reveal that capital expenditure in mining declined by nearly 10% last year, while mineral exploration remains stagnant.
Hugo Pienaar, chief economist at the Minerals Council South Africa, described the situation as a “horror show” for the industry.
“The combination of the fixed investment number down by 9.6% in real terms, and the minerals exploration number, is a bit of a horror show for our mining sector,” Pienaar told Business Live.
He emphasised that mining companies have significantly cut back on investment and exploration, further threatening the sector’s long-term sustainability.
With declining investment, policy instability, and a worsening business climate, South Africa’s mining and manufacturing sectors face an uncertain future, leaving thousands of jobs and economic growth at risk.
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