National Treasury now projects real economic growth of 1.2% for 2025, slightly below May’s 1.4% forecast but still ahead of the IMF’s 1.1% estimate. However, with population growth expected to average 1.6% annually over the next 35 years, per capita earnings are set to decline over the next two years before recovering in 2027.
In a major monetary policy shift, Treasury endorsed a 3% inflation target with a 1% tolerance band, formally aligning with the South African Reserve Bank (SARB). The move is expected to reduce borrowing costs and encourage investment. For mining, this could mean lower wage escalations, stable administrative prices, and reduced financing costs in the long run.
“From a mining perspective, the improvement noted by National Treasury on Eskom’s electricity supply and Transnet’s operational performance bode well for the sector,” said Bongani Motsa, acting chief economist at the Minerals Council. “Yet the industry still faces the threat of high electricity tariffs and slow reforms on the rail side.”
Motsa noted that mining’s gross value added contracted by 3% in the first half of 2025 compared to the previous year, while Transnet failed to meet 60% of its performance targets. Electricity tariffs have risen more than 900% since 2008, further squeezing margins in a sector employing about 468,000 people.
Despite fiscal tightening, government has introduced measures to reduce inefficiencies and save costs, including removing 8,854 “ghost workers” from the payroll and identifying R6.7 billion worth of underperforming programmes. It also plans to cut public service costs through early retirement packages, projected to save R3.5 billion annually.
However, the Minerals Council warned that the continued rise in electricity prices—driven by infrastructure investment needs, municipal debt, and the high cost of renewables under the latest Integrated Resource Plan (IRP), could prolong economic strain.
On the chrome front, the Council welcomed Treasury’s silence on a potential chrome ore export tax, saying such a measure would harm local miners. “The main challenge for ferrochrome producers is not the cost of chrome ore but the uncompetitive price of electricity,” Motsa explained. “An export tax would only hurt chrome miners and risk job losses across an industry employing over 28,000 people.”
Looking into the future, the Council believes that attracting private investment into electricity and logistics infrastructure will be critical for growth. “It is not obvious where that money will come from apart from outside of government. Until we see investment levels pick up, we remain cautiously optimistic,” Motsa said.
The Minerals Council reiterated that creating an investor-friendly environment and improving the regulatory framework would unlock mining’s full potential, boosting revenue, sustaining jobs, and ultimately helping South Africa avoid future tax hikes.
“As illustrated in our #MiningMatters campaign, mining remains a vital pillar of the economy. A thriving sector can ease fiscal pressures, create employment, and deliver inclusive growth,” the Council concluded.
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