Africa (Commonwealth Union) _ Finance Minister Enoch Godongwana‘s Medium-Term Budget Policy Statement (MTBPS), the first fiscal framework since the establishment of the Government of National Unity (GNU) in June 2024, has received positive feedback from the Minerals Council South Africa. The MTBPS projects a cautiously optimistic outlook with an average GDP growth of 1.8% between 2025 and 2027, up slightly from February’s forecast. This hopefulness is attributed to improved power supply, regulatory reforms, and renewed investor confidence following the GNU’s formation. However, the Minerals Council stresses that for the mining sector to flourish, sustained growth exceeding 2% is necessary, achievable only through urgent, accelerated reforms to tackle issues like infrastructure inefficiencies, crime, and regulatory bottlenecks.
Godongwana highlighted underperformance in logistics, especially in Transnet’s operations, as a significant barrier hindering mining productivity, despite improvements in energy. Mining output has struggled to recover to pre-pandemic levels, hampered by insufficient rail and port performance. Addressing the metals and engineering sectors in September, Deputy Finance Minister David Masondo acknowledged that structural reforms across critical sectors like rail, logistics, and energy must anchor economic growth.
To address these challenges, the MTBPS outlines measures to advance infrastructure development, encourage private-sector participation, and limit government borrowing specifically for infrastructure projects. Transnet, while not slated for new financial aid beyond the R47 billion guarantee issued in 2023, is expected to pursue partnerships, new funding avenues, and asset sales. Minerals Council Chief Economist Hugo Pienaar noted the importance of recapitalizing Transnet to tackle its significant maintenance backlog, stressing that a functional logistics network is key to sustaining the bulk mining sector, which generated over R260 billion in export earnings in 2023.
Additionally, Eskom’s proposed 36% electricity price hike for 2025 poses inflation risks. With Treasury projecting a lower inflation rate for electricity, Pienaar warns that a dramatic price increase could destabilize growth across the mining industry, heightening costs for essential operations.
Despite these concerns, the MTBPS emphasizes infrastructure bonds, scaling private-sector involvement, and advancing logistical and energy reforms as foundations for growth. Public debt, expected to peak at 75.5% of GDP by 2025/26, remains a central focus, with reduced debt necessary to unlock resources critical to South Africa’s key industries.
Pienaar underscores the need for cohesive action: “The vision of an ‘infrastructure era’ for South Africa depends on swift, committed collaboration across sectors.” The Minerals Council’s cautious optimism mirrors government ambitions, with the MTBPS seen as a step toward a competitive and resilient future for the mining sector and broader economy.
