South Africa is heading for disaster if urgent action is not taken to rescue its ailing industrial sector, warns mining expert Peter Major.
Major explained that smelters in South Africa heavily depend on electricity, and the price increases have made them uncompetitive.
He added that despite a deal two years ago in which Eskom cut electricity prices for smelters by 40%, the Boershoek and Vonnekop smelters were still on the brink of closure.
“Earlier this week, there were negotiations with Eskom where they’ve given it a stay of execution for three months,” he said, adding that Eskom hopes the pause will allow all parties to reach a workable deal.
Major is cautiously optimistic about the immediate situation but warns of broader risks. “There’s definitely hope, but the worry is, what about the other industries?” he said.
He pointed out that other sectors, including aluminium extrusion, copper refining, and steel production, are watching closely.
“They’re going to say, ‘Wow, you rushed to help the ferrochrome industry, that’s great, but what about us?'”
Major argued that government missteps have particularly devastated the steel industry. “I don’t think anything drove our steel industry down more than government policies,” he said.
Major criticised the government’s short-term, reactive approach. “What we can’t afford to do is knee-jerk policy. You’ve got to have a firm, established policy.”
He emphasised the importance of cheap, reliable, on-demand electricity as the foundation of South Africa’s industrial competitiveness.
“It’s good news that the government’s rushing now to save what smelters can still be saved, but they’re almost stealing from Peter to help Paul,” he said.
They are going to make up the difference in rates, either through consumers or through other industries.
Major pointed to China as a model for industrial policy. “China has brought down the real cost of electricity year after year. Their main aim is to have the lowest cost of electricity to buttress their beneficiation,” he said.
“That’s got to be the stated goal of government in South Africa. We want to see decreases in electricity prices, not increases.”
Beyond electricity, Major highlighted the broader challenges facing South Africa’s industries. “It takes a long time to build up a strong industry. Inputs like electricity, roadways, railways, ports, bureaucracy, licensing — all of these matter,” he explained.
“There’s got to be one ideology: to make South Africa the most competitive country in everything we do, whether it’s agriculture, mining, or tourism.”
Major argued that the collapse in South Africa’s mining powerhouses was also due to poor policy, uncertain implementation, calls for nationalisation, and demands to have specific shareholders through the empowerment policy.
“We were a leviathan in the 1980s. Nobody could beat us. Anglo American was the largest investor in the United States. The Americans were terrified of us,” Major said.
“You are now seeing what happened in Zambia and in Zimbabwe, now in South Africa. It has not turned around. It is still going down.”
Major explained previously that things began to change in South Africa in the 1990s, with the ANC government making significant changes to mining legislation and imposing transformation policies on the sector.
These policies, often well-intentioned, have had disastrous side effects and consequences, with the government failing to course-correct.
