Dark clouds with a silver lining over critical South African industry

The Minerals Council of South Africa expressed concern about the potential damage of sweeping tariffs imposed by the United States government on imports from foreign countries.

The council warned that these tariffs could severely affect global economic growth and, therefore, lead to lower demand for South Africa’s minerals.

This comes after United States President Donald Trump’s so-called ‘Liberation Day’, when he announced wide-ranging tariffs on the world economy, including South Africa.

Trump’s tariffs were more wide-ranging than initially expected and more severe in specific cases, with South Africa being hit with 30% tariffs on local goods exported to the United States.

Late on Wednesday, 2 April 2025, Trump announced a global 10% tariff on all imports and higher rates for the ‘worst offenders’, including South Africa.

To make matters worse, China, South Africa’s largest trading partner, announced retaliatory 34% tariffs on United States imports on Friday, 4 April 2025.

The Minerals Council explained that, luckily, most of South Africa’s minerals and metals sold to United States consumers are excluded from the tariffs. This includes platinum group metals (PGMs), coal, gold, manganese and chrome.

However, some, like iron ore and diamonds, will be subject to the 30% reciprocal tariff on imports from South Africa.

“Despite the exclusions, we remain concerned about the adverse impact on business and consumer sentiment and the resultant feedthrough to business investment, consumer spending and ultimately global real GDP growth caused by this unprecedented upheaval in world trade.” 

“Global growth coming under threat is bad news for the entire South African mining industry,” Minerals Council chief economist Hugo Pienaar said.

This is because even minerals excluded from the new tariffs could still see their demand drop due to indirect effects.

For example, PGMs are excluded from the latest round of tariff increases, but platinum, palladium, and rhodium are used to make autocatalysts for vehicle exhausts that scrub out pollutants. 

Therefore, vehicle prices in the United States will increase because of the 25% tariff the Trump administration has imposed on all vehicle imports.

“Not only will this slow demand for automobiles in the US, but car makers in other countries are likely to moderate production as a result,” Pienaar said.

He explained that if car and truck sales slow, demand for PGMs will reduce and result in volatile near-term prices. 

This is highly concerning for South Africa, as PGMs constitute a large majority of the country’s total mineral exports.

The Minerals Council calculated that, in 2024, total South African exports of mineral products and precious metals to the United States amounted to R65.3 billion, and PGMs accounted for 76.3% of the total. 

Silver lining

Despite South Africa’s dire situation, Pienaar said that, in the longer term, the Minerals Council remains positive about the outlook for PGM demand and prices.

“Concerning PGMs, there is an opportunity for increased market development given the potential that remains with internal-combustion engines, the green hydrogen economy and Jewellery,” Pienaar said.

He also highlighted other yet-to-be-developed technological applications that the council’s members drive through research. 

“South Africa is the world’s leading source of PGMs, manganese, chrome and vanadium, which are all critical as energy metals,” Minerals Council CEO Mzila Mthenjane said.

In addition, he said the mining industry does provide some shield to the South African economy in these challenging times. 

For example, the gold price has remained strong, although slightly muted, during the currency market downturn.

The council expects investor and central bank demand for this safe-haven asset to rise during these uncertain economic times.

“Another silver lining for mining is that the global uncertainties and renewed concerns about the Government of National Unity have weakened the rand against the dollar,” the council said. 

“If sustained, orderly and not accompanied by notable domestic cost increases, the weaker rand should increase the competitiveness of South African mineral and other exports.”

The Minerals Council provided an overview of South Africa’s mineral exports to the United States, which can be seen in the table below.