Recently, South Africa celebrated a milestone – the first new underground gold mine in 15 years. The Qala Shallows project, supported by West Wits Mining, is a £90-million (or R1.97-billion) investment. It aims to produce around 70 000 ounces of gold annually. Although modest by global standards, the development is symbolically significant for a sector which has experienced a material and extended decline.  

South Africa is home to some of the world’s deepest mines, and this new project carries a sense of nostalgia. Although South Africa is mining deeper than anyone else, the industry faces a different sort of challenge – policy uncertainty, declining investor confidence and the fact that South Africa competes with other mining economies for investment due to the expansion of global opportunities.  

The Mineral Resources Development Bill (MRD Bill), published in May this year, aimed to modernise mining law. Instead, it has reignited debate about whether the regulatory environment is discouraging rather than encouraging investment.

Slow economic growth, as well as policy and regulatory uncertainty, has greatly affected new investments in the sector. The employment contribution of the mining sector has decreased by 10% from 484 000 in the third quarter of 2024 to only 431 000 in the first quarter of 2025.  While the decline in mining contribution to employment has been material, improvements in policy certainty is anticipated to lead to improvements in the mining sector’s ability to increase job creation.  On the contrary, any increases in policy uncertainty are likely to see mining’s contribution decline even further. 

In the current climate of declining ore grades and increasing mining complexity, regulations and policies that encourage new investment are thus essential for promoting growth in the South African mining industry and ensuring its long-term viability.

Mining is a long-cycle, high-risk industry. It often takes seven to ten years to progress from prospecting rights to production, with the return horizon frequently spanning decades. Investors evaluate not only geological potential but also predictability. A stable legal, fiscal, and policy environment throughout the life of a mine is an important part of the return equation.

The MRD Bill introduces several changes that could increase regulatory uncertainty. Among them are:

Expanded beneficiation obligations that empower the Minister to compel local processing of minerals, without clear criteria or cost thresholds.

Ambiguity regarding the recognition of historic BEE transactions, which could mean that companies acting in good faith under previous charters may have to “repeat” costly empowerment deals.

Retrospective reclassification of historic stockpiles, contradicting settled court precedent and potentially converting privately owned material into state-custodian assets unless re-applied for within two years.

New power to declare any mineral “strategic” restricting its export or mining with minimal procedural safeguards.

Each of these provisions has some legitimate policy objectives which encompass and seek to progress industrialisation, transformation and state stewardship, but collectively they risk increasing uncertainty in a sector already under pressure from infrastructure deficits, logistics bottlenecks and energy insecurity.

The timing for this debate is crucial. Global demand for critical minerals is increasing as the world accelerates its transition to renewable energy. South Africa’s Critical Minerals and Metals strategy approved by Cabinet this year, estimates that global demand for these types of minerals could rise by up to 500% by 2050.

This places South Africa at the centre of a once-in-a-century opportunity. We hold the world’s largest reserves of platinum group metals (88%), manganese (80%), and chromite (72%). Based on these figures, South Africa should be attracting significant investment. About twenty years ago, South Africa attracted around 5% of global exploration expenditure. Today, it accounts for less than 1%, a stark sign of how investor confidence in the country’s mining potential has quietly diminished. 

Contrast this with Australia and Canada, two countries competing for the same green-energy investment. Australia’s Critical Minerals Strategy provides a one-stop licensing system and transparent fiscal incentives for downstream processing. Both these countries rank in the Fraser Institute’s top ten globally for mining investment attractiveness, while South Africa ranks in the bottom quartile.

Mining historian Duncan Money cautions that South Africa’s shrinking share of exploration is not just about domestic policy shifts or uncertainty. The global map of mining investment has expanded significantly over the past two decades with the opening of mining frontiers in Latin America, Australia and West Africa. Even so, one cannot help thinking that South Africa’s slow response to these shifts has amplified the decline of the sector.

The opening of Qala Shallows shows a flicker of optimism. The question is whether this spark can lead to a broader revival of the sector or if it will be buried under layers of uncertainty. South Africa has vast mineral wealth, but geology alone does not attract investment. A predictable policy environment and strong infrastructure are essential. The MRD Bill offers a chance, if refined, to create a more coherent framework. 

Written by Avias Ngwenya – Vice President Economics, Nortons Inc & Marylla Govender – Consultant Economist, Nortons Inc