Business
South Africa’s Mining & Manufacturing Crisis: Investment Freeze Threatens Jobs & Growth
South Africa’s mining and manufacturing industries—once the backbone of the economy—are facing an unprecedented decline. Load-shedding, policy instability, and declining business confidence have crippled these key sectors, reducing job opportunities and slowing economic growth.
According to Daily Investor, corporations are holding onto R1.4 trillion in cash rather than investing in local manufacturing due to deep-seated uncertainty about the country’s economic future.
Business Confidence at Historic Lows
Business confidence in South Africa has been on a steady decline since 2006, with many companies reluctant to invest in expansion. Only 77% of the country’s manufacturing capacity is currently in use, signaling weak consumer demand and worsening investor sentiment.
The reluctance to invest is not unfounded. Key challenges include:
- Unstable electricity supply (load-shedding)
- Ongoing policy shifts that deter long-term planning
- High regulatory costs for businesses
- Concerns over property rights and state ownership
Mining Industry Under Siege
South Africa was once a global leader in mining, but today, regulatory uncertainty, infrastructure failures, and threats of nationalisation have made it one of the least attractive mining destinations in the world.
According to mining analyst Peter Major, government intervention and shifting Black Economic Empowerment (BEE) policies have driven away investment.
“Initially, a BEE partner had to own 25% of a mine, but that quickly increased to 30%. Then, 70% of a company’s expenditure had to go to BEE suppliers. These constant changes, combined with nationalisation threats, drove capital away,” said Major.
The result? More than 6,000 abandoned mines, and mining production continues to decline.
Mining Output in Freefall
Recent data from Cratos Asset Management paints a bleak picture:
- Iron ore production fell 15.1%
- Platinum Group Metals (PGMs) declined 3.8%
- Coal production dropped 4.4%
Adding to the crisis, capital expenditure in mining fell by 9.6% in real terms last year, according to StatsSA.
Manufacturing: A Sector in Retreat
South Africa’s manufacturing sector has also struggled with rising costs, unreliable electricity, and weak consumer demand.
Instead of investing in new factories and equipment, many businesses are hoarding cash due to concerns over long-term profitability.
“The fixed investment number is down by 9.6% in real terms, and mineral exploration is stagnant. It’s a horror show for the mining sector,” said Hugo Pienaar, chief economist at the Minerals Council South Africa.
What’s the Way Forward?
Without urgent reforms, both the mining and manufacturing sectors will continue to shrink, costing South Africa thousands of jobs.
To restore confidence, the government must:
- Stabilise the policy environment—Reduce sudden regulatory shifts that deter investors.
- Improve electricity supply—Minimise load-shedding disruptions.
- Create investor-friendly incentives—Encourage businesses to reinvest their capital.
- Clarify mining ownership rules—Reduce fears of nationalisation.
South Africa’s mining and manufacturing industries are at a crossroads. Without urgent policy changes, investment will continue to decline, threatening jobs and economic stability.
The government faces a crucial choice—either implement reforms to attract capital or watch these once-thriving sectors fade into further decline.
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