Mineral beneficiation: Key to tackling poverty and unemployment in South Africa

The Extractive Contradiction

The recent call by Dr. Pali Lehohla for increased efforts by the South African government to ramp up mineral beneficiation triggered my deep interest. This is primarily because I originate from a mining province, the Northern Cape.

The Northern Cape holds some of the richest and largest operating mines in South Africa, and mining contributes 19% of the Gross Domestic Product (GDP) of the province. The province is embedded with the best ore deposits in the country, such as iron ore, manganese, copper, lead, zinc and many other base metals. These high-grade reserves anchor our province’s economy and fuel international exports.

Presently, however, the province serves largely as an extraction centre, the raw and dusty periphery, with less than 5% of local mineral beneficiation taking place. This troublesome trend of exporting raw ore and minerals gives birth to poverty, unemployment and underdevelopment. This is a common trend across all post-colonial countries, and is colloquially called the “resource curse”.

In May 1992, the African National Congress (ANC) formally adopted its seminal framework document, “Ready to Govern: ANC Policy Guidelines for a Democratic South Africa”. Regarding the movement's core approach to economic transformation, the policy explicitly asserts that “the balance of the evidence will guide the decision for or against various economic policy measures”.

The Ready to Govern document further states that the central goal of the ANC's economic policy is “to create a strong, dynamic and balanced economy” specifically engineered to eliminate the persistent structural fault-lines in our society, such as high levels of poverty, unemployment, and inequality.

Very interestingly, the Ready to Govern policy document recognised the primary importance of the mining sector in achieving these historic goals. It articulated that progressive policies would be developed to systematically integrate the mining industry with all other sectors of the economy “by encouraging beneficiation and the creation of a world-class mining and mineral processing goods industry”.

The Ready to Govern policy document significantly highlighted mineral beneficiation as one critical pillar for economic transformation. Beneficiation is fundamentally about adding value to what is embedded in the rich soil; which are raw minerals, semi-precious minerals, ore bodies and agricultural products.

Since that historic 1992 Policy Conference, and across all subsequent conferences, calls have been made and resolutions adopted for mineral beneficiation. Despite this continuous, unyielding policy call and conference resolutions over the past three decades, South Africa has not achieved significant progress on this industrial front.

According to empirical data compiled by the Minerals Council South Africa, the local mineral beneficiation rate between 2020 and 2024 for minerals on the high-criticality list remains severely depressed.

For instance, the localised value-addition rate for platinum group metals varies at a mere 3%, iron ore stands at 11%, and manganese hovers at 14%, while the tracking data for chrome remains notoriously shaky.

The single sector where the democratic state performs adequately is coal, sitting at a 69% domestic usage rate, which is directly consumed for localised power generation, industrial chemicals and synthetic fuel production via the SASOL value chains.

However, on all other critical, high-value minerals, South Africa is not doing well. In reality, the situation regarding mineral beneficiation is even worse continent-wide. Hence the recent call, at the SADC 46th Summit in Durban, by President Cyril Ramaphosa for accelerated measures for mineral beneficiation across the SADC bloc and the broader African continent.

This article examines the deep-seated contradictions holding back mineral beneficiation in Africa, analysing how the continent can finally bridge the gap between its ambitions to beneficiate its minerals and the material realities of its mineral wealth.

1. Strategic Opportunities for South Africa and Africa

The contemporary move towards green-transition technologies such as electric vehicles (EVs), renewable energy grids, and advanced microprocessors has created a historic opening for African resource nationalism. Global demand for critical minerals like lithium, cobalt, nickel, manganese, copper and platinum is projected to increase exponentially over the next decade. This creates an unassailable strategic leverage for African states, providing three transformative macro-economic opportunities:

The first opportunity is the reshaping of globalisation. Traditional 20th-century industrial policies, such as inward-looking Import Substitution Industrialisation (ISI), failed because they tried to isolate national economies from global trade behind high tariff walls, resulting in costly inefficiencies and foreign debt traps.

Unlike ISI, modern mineral beneficiation does not retreat from globalisation; it reshapes it. By refusing to export unrefined ore, African states can compel multinational corporations to relocate the high-value, downstream stages of production such as chemical smelting, component manufacturing and final assembly, directly onto African soil. This forces a structural transition from low-margin extraction to high-margin industrial manufacturing.

The second opportunity for mineral beneficiation that could be explored is technology transfer and skills dividend. Beneficiation is fundamentally a knowledge-intensive process. When the state mandates that minerals must be refined locally, it forces a direct technology transfer from foreign monopolies to domestic enterprises.

This creates a powerful catalyst for human capital development. It demands the training of a sophisticated generation of African chemical engineers, metallurgists, data scientists and industrial technicians. This will effectively upgrade the intellectual capital of the local working class and creating sustainable, high-paying jobs that lift families out of generational poverty.

The third opportunity is operationalising the African Continental Free Trade Area (AfCFTA) through intra-continental production.The historical integration of Africa has been paralysed because intra-continental trade remains stubbornly low, hovering beneath 15% of total commerce. This is because African nations produce similar raw materials and sell them to the same Western and Eastern markets. Mineral beneficiation offers the primary economic engine to operationalise the AfCFTA.

By establishing a regional division of labour, individual states can build interdependent supply lines. For example, Zimbabwe’s lithium, the Democratic Republic of Congo’s cobalt and South Africa’s manganese can be pooled into a single, unified regional value chain to manufacture electric vehicle batteries within the sub-continent, creating a massive and captive internal market of over 1.4 billion people in Africa.

2. Challenges for Beneficiation

To turn the dream of beneficiation into successful praxis, we must avoid romantic populism, as the honourable Dr. Lehohla does. Rather, we must candidly confront the deep, unyielding structural challenges that continue to block the execution of mineral beneficiation. These bottlenecks are not accidental; they are systemic features of inherited colonial underdevelopment:

First challenge is the acute infrastructure and energy deficit. The primary material constraint facing mineral beneficiation is that refining and smelting are exceptionally energy-intensive operations. The extraction of raw lithium or manganese requires minimal local power, but turning those ores into industrial-grade concentrates or components demands a stable, uninterrupted, and massive supply of electricity.

Across many parts of the continent, national energy grids are under severe strain or near total collapse due to decades of underinvestment and institutional mismanagement. The call of value addition remains a still-born if local processing plants are plagued by rolling blackouts, load-sheddings or lack competitive rail lines to transport heavy processed components across landlocked borders.

The second challenge is the imperialist counter-measures and tariff escalation. Global monopoly capital will not easily surrender its extractive privileges. Developed economies have designed international trade architectures specifically to penalise African beneficiation through a mechanism known as tariff escalation.

Under Western and Eastern tariff structures, unrefined, raw African minerals are allowed to enter foreign markets with zero customs duties to feed their own factories. However, the moment an African state attempts to export a refined metal sheet, a copper wire, or a processed component, the destination markets slap massive, punitive import taxes on them. These artificial inflation prices made it extremely difficult for beneficiated African products to compete on global market.

The third challenge is conservative nationalism and scale limitations. Authentic beneficiation requires massive economies of scale that no single African nation can achieve in isolation. Unfortunately, the contemporary African landscape remains fractured by a conservative nationalism and deep-seated political distrust.

Individual states frequently engage in unprincipled, competitive races to the bottom, offering tax holidays, cheap resources and lax labour regulations to multinational syndicates in a desperate bid to win isolated, bilateral investment deals. This fragmentation prevents the formation of a unified continental vanguard capable of collective bargaining against global superpowers.

Conclusion: turning ambition into reality

The historical account running from the plundering of Africa's wealth during the colonial era to the contemporary scramble for our green-transition minerals proves that under-development in the continent is engineered.

The theory of Africa's under-development has been well-formulated in hundreds of high-level blueprints and academic papers; what is urgently demanded now is the courage of execution to put the continent on a new unparalleled development trajectory and mineral beneficiation is central to that.

In the 1960’s and 70’s genuine attempts were made by African leaders, in countries such as Ghana, Uganda, Egypt, Tanzania, Kenya etc, to develop the continent through Import Substitution Industrialisation (ISI). In essence, ISI attempted to encourage countries to develop domestic manufacturing capacity to produce final consumer goods by hiding behind protective state barriers.

This model historically failed in post-colonial Africa because Africa did not possess the internal capacity to produce the heavy machinery needed to run its factories, creating a dependency on Western capital goods.

Conversely, mineral beneficiation begins at the absolute material foundation, the soil itself. Instead of pulling away from globalisation, it uses a nation's raw mineral monopoly to compel multinational corporations into joint ventures. It forces technology transfers, local chemical processing and component manufacturing right where the resources are extracted. It shifts the focus from defensive insulation to active, aggressive escalation within international production networks and value chains.

Mineral beneficiation is not merely an alternative industrial policy; it is an existential imperative for our sovereignty. By dismantling conservative nationalism, investing heavily in state capacity, and aggressively defending our right to industrialise, South Africa and the continent as a whole can successfully use her ambitions of mineral benefication to anchor a new development trajectory. We can reclaim the sovereignty of our soil and turn our inherited natural wealth into a living, transformative reality that guarantees self-determined prosperity for the masses of our people.

By Dr. Zamani Saul (Northern Cape ANC Provincial Chairperson)