LUBABALO CENGANI | Deadlock over SA’s industrial strategy poses complex political and economic risks

The current structure of the South Africaneconomyis deeply rooted in the development of the mineral energy complex during the apartheid era. This model is focused on capital-intensive and carbon-intensive industries like mining, steel, petrochemicals, and automotive manufacturing. It flourished due to heavy protectionism and limited trade connections in Africa, Asia, and the Middle East.

The department of trade and industry and competition’s 2026 Industrial Development Strategy (IDS) aims to tackle premature de-industrialisation, slow economic growth, decreasing investment in productive sectors, and infrastructure backlogs, especially in energy, rail, and ports. “Protectionism … through state-mandated beneficiation and export restrictions, threatens to stifle growth and transformation of the [minng] sector.” — Lubabalo Cengani The main disagreement between the government and the mining sector over the IDS centres on the state’s proposed measures to enforce local beneficiation.

The IDS includes proposedtaxesand quotas on chrome ore exports to encourage local processing. Industry bodies believe these restrictions won’t solve industrial decline and instead create unnecessary and harmful policy uncertainty. The mining sector claims that the drop in domestic smelting is mainly due to high electricity costs, not a lack of ore supply.

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They argue that the government should focus on making electricity pricing more competitive instead of imposing export restrictions. Mzila Mthenjane, CEO of the Minerals Council, clearly states that “beneficiation cannot, and must not, be imposed on mining because beneficiation is part of manufacturing and overall industrialisation. Therefore, specific measures must be introduced to incentivise and attract investments to stimulate industrialisation and diversify our economy.” Mikateko Mahlaule, chairperson of the portfolio committee on mineral and petroleum resources, supports the government’s position that “the commitment to exploration funding and beneficiation shows that government is serious about ensuring our mineral wealth leads to inclusive growth and sustainable employment”.

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