South Africa has a hidden superpower
As the global economy becomes more uncertain, South Africa could stand to benefit, as the country has historically profited from certain global crises.
Bureau for Economic Research senior economist Shannon Bold explained that this is particularly true for global crises that increase commodity prices.
This is because, during periods of global uncertainty, investors flock to gold as a safe-haven asset, boosting South Africa’s mining sector.
“This creates a positive feedback loop, increasing export revenues and generating higher tax receipts,” she explained.
“While its share of mining production has declined over the past few decades to just below 14%, gold plays a role in South Africa’s economic resilience.”
She explained that the same would hold for sustained, high prices for any of South Africa’s export commodities.
Bold outlined two reasons why South Africa’s export commodities could potentially position the country to benefit from a global crisis.
- Economic buffer: High gold prices can help offset domestic challenges, such as political instability, budget shortfalls, or rising inflation. When prices are elevated, the revenue from gold exports acts as a cushion against these pressures.
- Investment and sentiment: A strong gold sector improves foreign investor confidence in South Africa’s economy, attracting capital and supporting overall economic growth.
However, Bold cautioned that while gold and commodities can bring short-term gains, long-term global instability, whether political or economic, is never ideal.
“Prolonged instability can erode trade, foreign investment, and capital flows, which are critical for sustained growth,” she said.
This leaves South Africa’s economy in a delicate balance. Global shifts – like the rand’s performance, gold prices, and geopolitical dynamics – can bring short-term gains.
However, they can also underscore the importance of sound policy and long-term growth strategies.
“Structural reforms, diversification of trade partners, and strategic investments in sectors beyond gold will be essential for ensuring that South Africa can weather future storms and build resilience in a rapidly changing global landscape,” Bold said.
South African mining in trouble

While South African miners are set to benefit from a high gold price, the country’s mining sector faces significant challenges that could offset this positive impact.
This delicate balance was clearly illustrated in mining giant Sibanye Stillwater’s latest results.
Sibanye is not only one of the world’s largest primary producers of platinum, palladium, and rhodium but also a top-tier gold producer.
Sibanye was founded on high-cost gold mines spun off by Gold Fields in 2013, but the company’s production of the precious metal has reduced by more than half over the years.
Under outgoing CEO Neal Froneman, the company diversified away from gold into platinum group metals (PGMs) and metals for green energy, including lithium and nickel for electric vehicle batteries.
This strategy served the company well in the early part of this decade, with attractive PGM prices leading to record-high profits.
However, PGM prices have struggled significantly in the past few years and, in Sibanye’s results for the 2024 financial year, proved to be a thorn in the miner’s side.
Sibanye made a loss of around R7.3 billion in 2024 after taking an additional impairment of R8.8 billion on PGM mines in the United States.
In addition, while Sibanye Stillwater’s full-year loss narrowed compared to 2023, this was largely attributable to higher gold prices, which offset low palladium rates.
“These mature mines, buoyed by the tailwind of a strong gold price, delivered materially better financial results for 2024, during a challenging period for most of our other metals, which are more aligned with industrial economic cycles,” Sibanye said.
Stanlib chief economist Kevin Lings recently outlined some of the most significant challenges South Africa faces.
He explained that the decline of South African mining and manufacturing has become particularly prevalent in the past few years, with elevated levels of load-shedding crippling the sectors.
Output and employment in these sectors have declined, which is a concerning trend considering that these industries are crucial for absorbing South Africa’s unemployed population.
This is because they can quickly absorb relatively unskilled labour.
However, these sectors have stagnated since 2004, with manufacturing output increasing marginally and mining declining.
Lings said this two-decade decline cannot be attributed to load-shedding alone and points to a more fundamental cause – a lack of confidence in the South African economy.
Declining business confidence in the country since 2006 has resulted in many companies preferring to keep their cash in the bank rather than invest in manufacturing capacity.
Only 32% of respondents to the RMB/BER Business Confidence Index survey reported being satisfied with prevailing business conditions in 2024, compared to around 80% in 2006.
Lings said this is one of the key reasons South African corporations hold R1.4 trillion in excess cash rather than investing it in the local economy.
Comments