Mining was once the mainstay of the South African economy, but has declined steadily under the burden of excessive regulation introduced by succeeding ANC administrations, and especially race-based ownership rules perpetuated by the government’s Black Economic Empowerment (BEE) regime.
This is the core message of a letter sent to President Cyril Ramaphosa by Head of Policy Research at the Institute of Race Relations (IRR), Dr Anthea Jeffery.
She points out that mining’s share of GDP has fallen from 21% in 1980 to only 7% today, with some 47,000 jobs being lost in the sector between 2001 and 2024, and that investors have channelled their exploration expenditure to countries that are not hostile to them.
The key culprits, Jeffery argues, are the onerous regulations of the Black Economic Empowerment Act and the Mineral and Petroleum Resources Development Act (MPRDA).
Jeffery’s letter is a response to Ramaphosa’s reply to a recent question in Parliament in which he restated his support for the application of BEE in mining, dismissing analysis showing BEE’s contribution to the decline and decimation of the industry as a “fallacy”.
President Ramaphosa lauded the application of race-based ownership regulations to mines, but – as IRR Strategic Engagements Manager Makone Maja points out in a statement – “without offering any evidence that without them, current black ownership levels of mines would not have been achieved”.
Maja notes: “Regulations such as the MPRDA and BEE have been fingered as key culprits in the hollowing out of the industry through the former’s vesting of mineral rights in the custodianship of the state and the latter’s racial ownership and management targets. These laws, which introduce hurdles investors do not have to encounter elsewhere in the world, erode property rights and increase government control over the industry. It is no wonder that investors have voted with their feet to pursue business and deliver jobs elsewhere.
“This is corroborated by the responses of investors in reputable surveys of mining attractiveness, such as the global Annual Survey of Mining Companies by the Fraser Institute. According to one mining executive cited in the 2025 Fraser report: ‘Affirmative action and enforcement of Black Economic Empowerment (BEE) shareholding, the conduct of members of parliament, and the conduct of officials at the Department of Mineral Resources (DMR) – with many horror stories covered in local and international press – act as deterrents to investment.’”
The IRR’s letter challenges Ramaphosa’s claim that BEE mining deals have benefited South Africans beyond the politically connected elite whose interests it has mainly advanced, often at the expense of impoverished people whose jobs are on the line.
Maja says: “Dr Jeffery points to a 2015 report showing that only 46 BEE entrepreneurs benefited from the deals that increased BEE ownership to 38% by 2014. These so-called entrepreneurs gained 310,000 times more than some 6.9 million community members, while costing the industry the investment that delivers jobs, development and growth.”
Jeffery points out in the letter that the industry’s 20-year decline can be reversed should the government adopt the IRR’s draft Growth and Employment in Mining Bill.
Among other things, this draft law “renders irrelevant the racial identity of any mining-licence applicant, and instead prioritises their technical capacity and financial resources to develop and operate a mine, comply with safety, health, and environmental obligations, and rehabilitate all affected areas prior to closure”.
Maja concludes: “The more investors are allowed to operate, the greater the number of jobs that will be created and the higher the levels of economic growth. With this in mind, the Bill also enforces a 90-day rule as the period within which any legitimate application for mining rights must be granted by the minister, failing which a licence is automatically granted. By this measure, more mines would be able to operate with limited bureaucratic discretion, and the scope for corruption would be curtailed.”
[Image: By Ryanj93 – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=50106591]