NJABULO SITHEBE | The minerals that can boost our economic health

Global economy and trade shifts have put South Africa on the brink of an extraordinary industrial transformation. Our mineral wealth, including iron ore, chrome, coal and anthracite, offers a foundation that only forward-thinking, resource-rich nations can match. With the right strategy, we can convert these resources into engines of growth that enable investment, create jobs, build skills and anchor regional value chains.

Every bridge, building, railway line, and mine shaft depends on steel. Rather than viewing the current challenges as a death knell, we should see them as a call to action — a chance to reimagine and rebuild. The recent closures of coal and anthracite mines, for example, free up assets and skilled workforces that can be redirected toward a modern, integrated steel and ferrochrome sector if we could get them to perform at their potential

When steel production dies, so does the foundation of an industrial economy. Unless we reverse the current decline, we risk becoming a nation that exports raw iron ore and chrome ore only to import finished steel and ferrochrome at inflated prices, surrendering both economic sovereignty and the capacity to build our own future.

Recent mine closures, including those of more than 30 coal and anthracite mines representing 1Mt of capacity, are a challenge offering opportunity. These assets, infrastructure and skills can be redirected toward a reindustrialised future. We should use the issue of the closed mines to do more with sectors that have potential, and imagine new jobs, so that we have net new employment.

Steel and ferrochrome are priority levers for reindustrialisation. Construction, automotive, mining equipment, energy infrastructure and manufacturing all depend on an affordable, reliable supply. When domestic strategic production collapses, entire value chains fracture. If we lose steel and ferrochrome, upstream mining and downstream fabrication could follow.

Five factors have driven our steel industry to its knees. These pressures have also undermined ferrochrome’s viability.

1. Cheap steal imports flooded the market, often sold at below production cost. Local producers couldn’t compete, yet government responses — investigating dumping, considering tariffs — came years too late and with no real teeth;
2. Rising electricity costs became a death sentence. Years of load-shedding and Eskom’s relentless tariff hikes rendered energy-intensive steelmaking and ferrochrome smelting economically unviable. While competitors in other countries had stable, affordable power, South African mills operated in survival mode, unable to plan or invest;
3. Transnet’s poor performance compounded the crisis. Rail and port dysfunction forced mills to shift to road transport, adding 20%–30% to logistics costs. When you cannot move iron ore, chrome ore, finished steel or ferrochrome efficiently, competitiveness evaporates;
4. Weak domestic demand due to sluggish construction and infrastructure spending left plants running at below 50% of capacity. Without demand, in which public infrastructure spending plays a key role, economies of scale disappeared; and
5. Chronic underinvestment and policy incoherence. Plants have aged without upgrades, while government industrial policy remained ambitious on paper but inert in execution. The steel & metal fabrication master plan, launched in 2021, promised to reposition steel as a strategic industry. Five years later, implementation has stalled, exposing the chasm between rhetoric and action.

The 2021 steel & metal fabrication master plan promised to reposition steel as a strategic industry. Five years later, implementation has stalled, exposing the chasm between rhetoric and action

Five levers can unlock opportunities in the steel and ferrochrome sectors:

1. On trade, calibrated tariffs and financing mechanisms can activate domestic producers while enabling downstream competitiveness;
2. Tax incentives, blended finance, technology partnerships and development funding can drive plant upgrades and technology adoption;
3. Energy innovation in the form of dedicated power solutions can provide an opportunity for steelmaking to benefit from affordable, reliable energy;
4. Upgrading rail and ports will transform logistics from a bottleneck into a competitive advantage; and
5. Partnerships with universities and technical colleges will rebuild expertise in metallurgy, engineering and industrial operations.

South Africa’s steel and ferrochrome revival must be positioned within a rapidly shifting global economic order, one defined by geopolitical tensions, reconfigured supply chains, currency realignments and a renewed global appetite for infrastructure investment. Included in this would be the positioning of South Africa as providing a reliable investment platform, through its ongoing ability to be ambidextrous in its trade relationships.

As rising protectionism and trade weaponisation threaten global supply chains, the need for diversified export strategies has created opportunities for Africa. The African Continental Free Trade Area (AfCFTA) acts as a strategic lever for South Africa to navigate global economic shifts, secure regional market access and underpin the revival of its steel and ferrochrome sectors within a more integrated and competitive African economy.

Currency dynamics strengthen the case for reindustrialisation. The dollar’s weakness has lifted commodity prices and improved export competitiveness for resource-rich economies such as ours. While a stronger euro raises the cost of imported machinery, it simultaneously incentivises localisation of production. Rand volatility remains a risk, but gold-linked strength provides an inflation hedge and enhances fiscal flexibility.

The surge in gold prices above $5,000/oz has been driven by safe-haven demand and central bank buying, strengthening the fiscal spacing and buoying our currency. This windfall should be strategically deployed. Channelled into low-cost industrial finance, energy infrastructure and logistics upgrades, mining revenues can catalyse the modernisation of steel and ferrochrome capacity, converting short-term commodity gains into long-term industrial assets.

Global growth projections of 2.6%-3.3% in 2026, underpinned by sustained infrastructure spending, reinforce demand fundamentals. Africa’s infrastructure deficit creates a structural, long-duration demand pipeline for steel and ferrochrome. Positioned correctly, South Africa can supply this demand while embedding itself more deeply into regional value chains.

Revitalising South Africa’s steel and ferrochrome sectors requires a fundamental shift in policy — one that treats these industries as strategic national assets rather than market participants subject to external pressures.

These are not isolated interventions. They position steel and ferrochrome as the backbone of construction, automotive, mining equipment, energy infrastructure and manufacturing. Policy coherence, not piecemeal responses, will determine whether we maintain industrial sovereignty or accept permanent deindustrialisation.

The government’s expanded infrastructure budget targeting roads, rail, energy grids and housing creates a demand pipeline for steel and ferrochrome. Plans to build 14,000km of electricity transmission infrastructure will be a major driver of steel demand. Transmission towers, pylons, substations and grid reinforcements are steel-intensive projects. This single programme could anchor domestic demand, crowd in private investment and provide a predictable pipeline for local mills, ensuring that reindustrialisation is underpinned by tangible, long-term projects.

Reindustrialisation cannot succeed on domestic demand alone. The AfCFTA creates the world’s largest free trade zone, offering preferential access to 1.3-billion consumers. Latin America remains an untapped market that needs to be unlocked as part of emerging Global South partnerships founded on real value. Continued focus on the Asia-Pacific region beyond China and Japan creates bigger potential. South Africa’s steel and ferrochrome sector could anchor regional industrialisation by supplying the material for Africa’s infrastructure boom, including railways, energy grids and construction projects. This builds industrial resilience on top of a clear export strategy.

The steel and ferrochrome crisis is a test of national will. If we fail, the consequences are irreversible: tens of thousands more jobs lost, a hollowed-out manufacturing base and a future as an exporter of raw minerals.

We have an opportunity to reclaim industrial sovereignty and build resilience. South Africa has the necessary resources, infrastructure and human capital. What we need now is bold policy leadership and decisive action.

The path forward is clear.

Commodity windfalls must be converted into industrial capital, untapped African markets prioritised over volatile global ones, and energy and logistics treated as strategic industrial inputs. Public infrastructure spending should anchor local demand and crowd in private investment, while policy coherence and execution restore credibility.

The quality and coherence of our policy response, aligned with geopolitical realities and global currency shifts, will determine the future of our steel and ferrochrome industries. Let us choose to build.

• Sithebe is an economist and development adviser

Business Day