South Africa missing out on the opportunity of a lifetime

South Africa risks missing out on the opportunity of a lifetime by antagonising the United States rather than fostering a good relationship at a time when America has an insatiable demand for minerals the country has in abundance. 

These minerals range from industrial and precious metals, all the way through to rare earth metals, which the United States has expressed a particular desire to get its hands on. 

Crucially, the United States is investing to reduce reliance on China for these minerals, which makes it approach the issue with close to a blank cheque. 

South Africa can benefit immensely from the deal-making spree the United States is on, but the local government has failed to improve relations with Washington. Rather, it has antagonised the world’s largest economy. 

This is feedback from Modern Corporate Solutions mining analyst Peter Major, who outlined the immense opportunity that South Africa has in front of it. 

Major explained to BizNews that the opportunity not only comes from American investment in mining in South Africa, but also from the nature of this investment. 

“You can’t forgive and forget everything that has happened, but this is a unique and powerful opportunity for South Africa to do what it takes to get in good with America and get the investment,” Major said. 

South Africa desperately needs investment in its mining sector, with little to no exploration for new deposits occurring in the country for the past 20 years, despite evidence of rich mineral resources. 

Apart from the minerals South Africa already produces at a large scale, the country also has rich rare-earth metals deposits that the United States is particularly interested in acquiring to reduce reliance on China. 

This is central to the opportunity South Africa has. With America investing and spending on the basis of national security, the opportunity is nearly limitless. 

“With the Pentagon spending money, they are not looking for a return on investment like all your banks, investors, and mining firms around the world. They are looking at securing supply,” Major said. 

“They are willing to overlook a lot of things that maybe politicians are not, and investors are not. That is the situation we are now in.” 

“The Americans are willing to write big checks, and they are not going to look at the return on investment like even the Chinese do. That is a unique opportunity.”

Major said this is a once-off opportunity and South Africa has to grab it with both hands starting today. 

ANC is the stumbling block

There is very little in the way of South Africa securing a trade deal with the United States, if it plays its cards correctly. 

The country has immense strategic benefits for the United States in the form of its mineral deposits and location along one of the world’s major trade routes. 

It is clear that the United States wants to strike a deal with South Africa, but the country first has to show a willingness to address some of the concerns it has. 

Chief among these are South Africa’s close relations with anti-democratic and anti-American regimes in Iran, China, and Russia. Apart from China, these relations have little strategic or economic benefit for South Africa. 

The United States is aware that it has fallen behind China in terms of fixed investment in Africa over the past few years, making it desperate to catch up to maintain its strategic position on the continent. 

This only adds to the American desire to strike a deal with South Africa as the continent’s most developed economy and one of the few with strong democratic traditions. 

“We have bumped heads with the Americans a few times, but there is nothing stopping the ANC from sitting down and securing a deal,” Major said. 

“There is nothing stopping them from saying, ‘Guys, we want to fix some of the things you don’t like, and we want to build a super future, and we want your involvement in this.’ The States can’t refuse.” 

Major assessment of the United States’ willingness to seal a deal with South Africa echoes that of political analyst Dr Frans Cronje. 

“The Americans have immense strategic interests here. I have aired it previously that Simon’s Town is one of three points that anchors control of the Indo-Pacific and provides a backdoor to the Atlantic Ocean,” Cronje said.

This strategic interest is coupled with increasing competition between the United States and China in Africa to secure the support of its 54 states at global forums, such as the United Nations. 

“The Americans have fallen behind China in terms of fixed investment in Africa, and the continent is important. It now has more cities of a million inhabitants or more than Europe and America combined,” Cronje said. 

Africa remains the last untapped global consumer market, with its population steadily growing healthier and wealthier. 

South Africa is particularly important for the United States, given its influence as the largest economy on the continent and its democratic institutions.

Cronje explained that American firms are limited by the Foreign Corrupt Practices Act, which prevents them from investing in undemocratic countries and engaging in corruption. 

“So, South Africa is eminently investable from the American perspective, and the US view on the country is unfavourable based on its slow economic growth and high unemployment,” Cronje said. 

Cronje has previously called on South Africa to use the intense attention the country is receiving from the United States to secure a favourable trade deal and send out a better message about the country’s prospects.