Exploration, exploration, exploration. That’s the answer to how SA’s mining sector can restore its global attractiveness, according to Bongani Motsa, acting chief economist, Minerals Council South Africa. ‘SA needs to incentivise mineral exploration and combine this with stable policy. There is no need to keep tweaking policy, including the mining charter, every now and then,’ he says.

‘Our view is that mining is a sunrise sector. Given SA’s huge reserves across a number of key commodities, our belief is that the mining sector in SA has significant potential. We also have a well-diversified portfolio of minerals with approximately 53 minerals that are commercially mined in SA.’

Servaas Kranhold, head of natural resources at BDO South Africa, also believes in the potential of SA’s mining industry when he says ‘the basics remain in a moderate positive’.

‘Although it’s in a sunrise for certain minerals, it’s in a sunset for other minerals,’ he says. ‘We need to consider our substantial mineral reserves, including those critical for the global energy transition to position SA mining into a sunrise industry.’

Staying with the sun metaphor, gold has been the shining star of the mining sector in 2025. The price of gold has risen nearly every month of the year and, according to Nasdaq.com, is on track for its biggest annual gain in 46 years. By end-2025, gold had soared to a record high of more than $4 500 per ounce, up from an average of around $2 300/oz for the 2024 calendar year. As a result of strong gains in gold and platinum stock, mining companies have delivered stellar results on the JSE, with the overall metals and mining sector up nearly 100% between January and December 2025.

Historically, SA’s economy was built on gold, with the country being the world’s top gold producer. In the 1970s, SA accounted for more than 70% of global output, almost all from the Witwatersrand Basin, but this has dwindled to below 3%. On the upside, SA produces about 70% of the world’s platinum, 35% of palladium and nearly all rhodium and iridium.

According to PwC’s SA Mine 2025 report, platinum group metals (PGMs) experienced two distinct phases in 2025. ‘Prices remained under pressure through Q1, prompting widespread cost-cutting and retrenchments among major producers,’ says the report. ‘From Q2 onward, platinum prices rebounded sharply, reaching decade-high levels and signalling potential short- to medium-term recovery for the sector.’

The Minerals Council describes the past 12 months as ‘mixed’. Although gold and the PGMs (in the second half of 2025) have done really well in terms of prices, production has not followed an increase in process. Chrome and manganese are doing well in terms of production, says Motsa; however, he isn’t sure if this will last – considering the fact that steel production in China from January to September 2025 was 5.7% down, compared to the same period in 2024.

‘The outlook for the precious metals category looks positive, especially gold, given the volatility emanating from the US,’ he says. Typically, gold is in high demand as a safe-haven asset during geopolitical tensions and uncertainty. PGMs, which are used in automotive catalytic converters and for jewellery, are also likely to remain in demand. Motsa explains why. ‘Internal combustion engines are here to stay, at least for now under US President Donald Trump. Fortunes will likely change, though, once he’s out of office and someone like the Democratic governor of California, Gavin Newsom, occupies the Oval Office.’ He adds that platinum jewellery is looking positive in China, with demand remaining buoyant.

Despite ongoing structural and cost challenges, SA’s mining industry continues to create jobs, attract foreign exchange earnings and shape the country’s economic and social fabric. The contribution of mining to SA’s GDP is roughly 6% (R442.7 billion in 2024), down from 7.6% in 2021. The real mining GDP has declined in eight of the last 13 quarters, says the Minerals Council. Its State of Mining report, issued in July 2025, noted that mining gross operating surplus (which is a broad measure of profitability) in Q1 2025 was the lowest since early 2020. As a result, corporate tax also fell from R81 billion in 2021 to R44 billion in 2024, reducing the fiscal contribution that flows directly into government coffers.

Crucially, mining companies employed more than 470 000 people in 2024 and spent R195 billion in wages – 5% of all wages paid in SA. Furthermore, the Minerals Council states that an additional 400 295 people are employed as direct suppliers of goods and services to the industry. ‘This gives a total formal employment impact of 873 779 people, supporting 3.5 million people in an economy where four out of 10 adults don’t have formal employment,’ says the council. The industry prides itself on being a source of well-paid jobs: the average annual wages within the mining sector were R577 597 for high-skilled workers, R328 996 for semi-skilled workers and R246 924 for those in low- and unskilled roles. Additionally, mining companies invested a total of R3.9 billion in community projects, improving healthcare, housing, education, and local enterprise in mining communities.

Asked about the most pressing challenges constraining SA mining, Motsa repeats his call for exploration. ‘The major challenge is lack of exploration and exploration incentives,’ he says. ‘As an activity, exploration is a high-risk business, and government would help by derisking it, that is, by offering incentives.’

Exploration is the lifeblood of future mining activity, says the Minerals Council, voicing concern that SA’s expenditure on mineral exploration was only R781 million in 2024, down from a peak of R6.2 billion in 2006. It’s hardly surprising that investor confidence is low when the Fraser Institute ranks SA only 68 out of 82 jurisdictions in its global mining investment attractiveness index (published in July 2025). This is even lower than the previous year’s 64th place (out of 86). As Miningmx points out, the index considers Burkina Faso a more attractive mining destination than SA, despite being run by a military junta and having a jihadist insurgency operating within its borders.

Part of the problem hampering SA mining exploration has been the sector’s outdated, dysfunctional cadastre system. After many delays and massive backlogs, the new online cadastre finally went live in the Western Cape in October 2025, with full national implementation to follow. Regulatory uncertainty has been a persistent constraint, which the draft Mineral Resources Development Amendment Bill – gazetted for public comment in May 2025 – aims to resolve. However, the bill has been sharply criticised by industry stakeholders for not being sufficiently clear and investor-friendly.

Other ongoing constraints for SA mining include the infrastructure challenges of electricity, water and mine to market, says Andries Rossouw, PwC Africa energy, utilities and resources leader. ‘Appropriate skills development needs to happen for a workforce of the future,’ he says. ‘The licensing regulatory processes need to be transparent and enhanced for speed and effectiveness.’

The challenges also include the long mining lead times (greater than 15 years) as well as environmental and social impacts on local communities, says Kranhold. ‘However, the opportunities are waiting for us by developing local processing, beneficiation by adding value, development of research and development in our local market, recycling of materials and regional co-operation to build resilient, sustainable value chains.’

Undoubtedly, great promise lies in SA’s abundant supply of critical (sometimes called ‘green’) minerals that could turn the mining industry into a key enabler of the continent’s and the world’s energy transition, according to Kranhold. For example, lithium, cobalt and nickel are needed to build batteries for electric vehicles (EVs) and energy storage, he says. Rare earth elements are used in magnets for wind turbines and EV motors, defence and electronics. And copper is used in power transmission for renewables and infrastructure.

The Department of Mineral and Petroleum Resources (DMPR) is aware of this potential and released a Critical Minerals Strategy in May 2025. The intention is to make the most of SA’s ‘highly critical’ minerals, especially the lesser-known ones (vanadium, palladium, rhodium, rare earth elements) that are listed as ‘moderately to highly critical’.

‘The Critical Minerals Strategy is based on well-studied input and is a complete document which provides a useful basis for policy development,’ says Kranhold. ‘Although it would be encouraging if our government treated the strategy points as a basis for further negotiation with industry stakeholders to ensure that various actions do in fact occur to meet the strategy.’

Motsa suggests that SA can learn from how Finland approached the development of its mining sector. ‘They started by identifying the products they required as a country and then followed by how they could leverage their mineral endowment to manufacture those products.’

For SA, where energy supply and cost are major problems, vanadium batteries could be a solution for energy storage and grid capacity level. ‘That’s one major opportunity for SA,’ says Motsa. ‘The same approach can be adopted with the other minerals in the other categories.’

Looking ahead to 2026 and beyond, Rossouw says that the ‘energy transition, 4IR and general population growth mean that more mining is required to support the global demand for commodities. South Africa is blessed with phenomenal mineral resources, which provides for opportunities to deliver into the growing global demand. The industry is therefore poised to benefit from long-term positive fundamentals if it can address its local challenges.’

Ultimately, it comes down to exploration again. ‘In order to capitalise on its potential, SA needs to unlock its exploration potential to find new resources and create a cost-competitive enabling environment for mining,’ he says.

By Silke Colquhoun
Photography by iStock