Minerals Council says investor‑friendly rules, reliable power and rail needed to drive mining‑led growth

The Minerals Council South Africa says investor‑friendly regulations and a more reliable operating environment — particularly in electricity and rail — are essential to revive the mining sector and help lift the broader economy after the Medium‑Term Budget Policy Statement (MTBPS) delivered by Finance Minister Enoch Godongwana.

National Treasury now projects real GDP growth of 1.2% for the year, down from 1.4% in May, and expects population growth of about 1.6% annually over the next 35 years. With growth of 1.2% in 2025 and 1.5% in 2026, Treasury warns that per‑capita incomes will decline through 2026 before improving in 2027.

In a significant policy shift, Treasury has formally adopted a 3% inflation target with a ±1% tolerance band, aligning with the South African Reserve Bank. The lower target should allow for more interest‑rate reductions over time, reduce long‑term borrowing costs and strengthen competitiveness — all potentially positive for mining by slowing wage and administrative cost escalation and lowering borrowing expenses. The Reserve Bank is expected to guide inflation expectations toward the new benchmark during the next two years, with the repo rate likely to settle near 6% by 2027.

Treasury implemented tax measures in July that raised R18 billion and signalled the possibility of further increases — R20 billion in 2026 and R21.3 billion in 2027 — if the South African Revenue Service does not materially improve collection efficiency. Gross revenue collections for the first half of 2025/26 are about R17.5 billion, roughly 9.3% above earlier estimates. To cut wasteful spending, Treasury’s Targeted and Responsible Savings (TARS) initiative has identified R6.7 billion in low‑priority programmes for removal; 8 854 suspected “ghost workers” at national level are under investigation for removal from the payroll; and an early retirement drive targeting 15 000 employees aims to save about R3.5 billion per year.

Despite fiscal consolidation, the lower inflation target reduces nominal growth forecasts, leaving the debt‑to‑GDP ratio broadly stable around 77.9% and creating an estimated R15.7 billion revenue shortfall over the next two years unless tax compliance improves or growth accelerates — with mining playing a crucial role in that recovery.

Bongani Motsa, acting chief economist at the Minerals Council, welcomed improvements in Eskom’s supply and Transnet’s operational performance but warned that the sector still faces serious headwinds: high electricity tariffs, underinvestment in transmission, and slow rail reform. Mining’s gross value added contracted about 3% in the first half of the year compared with 2024; Transnet has missed many of its operational targets; and electricity tariffs have risen sharply since 2008. The sector employs around 468 000 people and remains under pressure.

The Council noted that the MTBPS contains no chrome ore export tax. It reiterated that the main constraint for South African ferrochrome smelters is the uncompetitively high cost of electricity rather than chrome ore supply. An export tax, the Council warned, could harm chrome miners — more than 28 000 people are employed in the chrome sector — and risk pushing buyers such as China toward alternative suppliers. South Africa remains the world’s largest chrome‑ore producer.

The Minerals Council concluded that substantial investment in electricity transmission and logistics is required to translate the MTBPS’s fiscal improvements into a sustainable recovery. With public funds limited, the Council said private and foreign investment will be essential to upgrade rail and power infrastructure and restore mining competitiveness.