Can Critical Minerals Reset the U.S.–South Africa Relationship? | Mapping Minerals Diplomacy

The United States and South Africa are navigating one of the most difficult periods in their relationship in decades. Yet, one fact has not changed. South Africa remains one of America's most important strategic minerals partners. Today, it remains one of our most important suppliers of platinum, roodium, chromium, militarygrade venadium, manganese, and palladium. Few countries can match its combination of world-class mineral resources, sophisticated processing capacity, and deep technical expertise. Welcome to Mapping Minerals Diplomacy, an explainer series that brings clarity to the deals, players, and policies shaping the global race for critical minerals. I'm your host, Graceland Basin, director of the critical minerals security program at CSIS. [music] >> [music] >> Political headlines have dominated the relationship over the past two years. Disagreements over South Africa's domestic and foreign policy have created significant diplomatic friction. But beneath those headlines lies a commercial partnership that has quietly served American strategic interests for more than a hundred years. When the 1917 Bolevik Revolution disrupted Russian platinum supplies, the US turned to its newly discovered deposits in South Africa to meet its wartime needs. After the 1948 Berlin blockade cut off Soviet manganesees and chromium, Washington again looked to South Africa financially backing rail, port, and power infrastructure to secure those supplies. Again, during the Cold War, when the US sought to reduce dependence on the Soviet Union, South Africa became one of its most reliable minerals partners. Today, that economic partnership remains important. And there's several reasons why. First, when it comes to geological resources, South Africa is a mineral superpower with more than $2.5 trillion in mineral wealth and 16 commodities ranked amongst the world's top 10 by reserves. Perhaps even more important than what South Africa has is what America buys. Today, South Africa is America's largest supplier of platinum, roodium, chrome, and military grade venadium. And it's America's second largest supplier of manganese and palladium. For many of these minerals critical to defense, aerospace, semiconductors, and advanced manufacturing, there is no meaningful allied alternative to South Africa. Diversifying away from South Africa would not mean shifting supply from Canada, Australia or another trusted partner. It would mean shifting it to Russian palladium or Chinese military grade venadium. Second, South Africa is a processing powerhouse. Its competitive advantage extends far beyond mining. Over more than a century, the country has built one of the world's most sophisticated mineral processing industries with energyintensive smelters, refineries, and metallurgical facilities supported by worldclass engineers, mining service companies, and research institutions. Unlike many resourcerich countries that export raw ore, South Africa developed an integrated industrial base designed to capture more value at home. Much of this capacity was built during the 20th century when the apartheid government anticipating international sanctions pursued self-sufficiency in strategic industries. That same motivation drove projects such as Sassel's coal to liquids technology and South Africa's nuclear program. Yet South Africa retains something far harder to rebuild than smelters alone. Decades of technical expertise in strong human capital. It has produced generations of mining leaders who now run some of the world's largest resource companies including the present CEOs of BHP, Glenor, Anglo-American, Numa, Sabana, Stillwater, Techmet, and Vidanta. That leadership pipeline is sustained by worldclass mining and engineering institutions. Those enduring strengths make South Africa uniquely positioned not simply to preserve its processing base, but to lead an era of minerals industrialization across Africa. But South Africa's mining sector faces serious headwinds. The erosion of its industrial competitiveness has been driven largely by the failure of two stateowned enterprises, Escom and Transnet. Together, they control the electricity, rail, and ports that underpin mineral processing and exports. The biggest threat to South Africa's processing advantage is electricity. Years of load shedding and soaring power prices have forced smelters to close. ESCOM's operational performance has deteriorated steadily between 2017 and 2025 with the energy availability factor falling from 78% to just 55% as aging infrastructure and and poor maintenance along with governance failures drove severe load shutting. High electricity tariffs have undermined South Africa's processing competitiveness. Ferocchrome smelters were paying around a 135 cents a kilowatt hour at the beginning of 2026 before negotiated reductions brought tariffs down to 62 cents a kilowatt hour, a globally competitive rate. Even Hillside Aluminum Smelter, the country's largest industrial power user, faces uncertainty as it prepares to renegotiate its electricity contract. Electricity cost and reliability has shifted ferocone production to China. While South Africa, despite having some of the world's largest manganesees reserves, has been left with just one operating manganese smelter. Every refinery or smelter that shuts in South Africa strengthens China's grip on global mineral processing. But there are signs of improvement. Escom has sharply reduced load shedding, improved plant performance, and return to profitability after years of losses. Sustained progress will depend on delivering reliable, internationally competitive electricity prices. Without affordable power, South Africa risks exporting ore instead of value added products and losing one of its greatest strategic advantages. The second major constraint is logistics. Years of underinvestment, theft, and equipment failures have crippled Transnet's rail and port network, leaving mines unable to move minerals to export markets. But reforms are gaining momentum. South Africa is opening its freight rail network to private operators for the first time and investing billions to modernize rail corridors and ports. Steps aimed at restoring export capacity and improving competitiveness. A third major constraint to developing South Africa's mining sector is exploration. South Africa's share of global exploration spending has fallen from 5.7% in 2003 steeply down to just 1% in 2025. That matters because exploration is the oxygen of mining. If you don't look, you don't find. And if you don't find, you cannot produce. To reverse this decline, South Africa has launched the Junior Mining Exploration Fund, a public private partnership that provides grants for early stage exploration managed by the Industrial Development Corporation and backed by government and private capital including Anglo-American. The fund is designed to rebuild the country's project pipeline. Now, the United States actually has a long track record of supporting South Africa's mining ecosystem. And between 2011 and 2013, XM provided $230 million of financing to support the procurement of a 100 Americanmade locomotives for Transnet. There are several recommendations to strengthen the economic relationship between the US and South Africa. First, the United States should leverage the US International Development Finance Corporation, DFC, and the and the Export Import Bank to back investments that crowd in private capital. There's already strong commercial interest from American companies in this space. In June 2026, Houstonbased Exxon Mobile signed a preliminary agreement to supply liqufied natural gas to the Zulu land energy terminal set to become South Africa's first LG import facility. A month later in July, Alcoa announced a $5.6 6 billion acquisition of South 32's aluminum business, including South Africa's Hillside aluminum smelter, the largest in the southern hemisphere. The deal is the largest new US mining investment in South Africa in years, and gives the United States its first major foothold in the country's mineral processing sector. Further financial support from DFC and XM can unlock strategic investments in South Africa's mining ecosystem, mining, energy, water, and transportation. Second, South Africa should create a globally competitive investment framework. South Africa's broad-based black economic empowerment framework and mining charter seek to expand economic participation for historically disadvantaged South Africans. But uncertainty around ownership and compliance requirements has become a deterrent to long-term mining investment. As competition for mining capital intensifies, South Africa should consider targeted exemptions for large strategic mineral projects. Major mining jurisdictions such as Australia, Canada, Chile, and Peru imposed no local equity requirements, while Saudi Arabia has paired 100% foreign ownership with generous investment incentives to attract capital. If South Africa wants to remain a global mining and processing leader, it must ensure its investment framework is competitive, predictable, and capable of attracting the next generation of strategic projects. And third, the US should renew the US South Africa civil nuclear agreement. Reliable base load power is essential for rebuilding South Africa's mineral processing sector and allowing it to be a hub in the region. Nuclear energy should be a core pillar of that strategy. South Africa has the continent's most advanced nuclear industry and is uniquely positioned to be the as the only country in the world to have had a US section 123 civil nuclear cooperation agreement while retaining uranium enrichment rights. Although the agreement lapsed in 2022, finalizing a new section 123 agreement would deepen bilateral energy cooperation, provide certainty for US companies looking to make investments in the extractive sector, and pave the way for expanded collaboration on advanced reactors, nuclear fuel, and the infrastructure needed to power South Africa's industrial future. South Africa has supplied America's mineral security for more than a century. The question now is whether the next century of that partnership will be defined by strategic investment or strategic neglect. To explore where this relationship goes next, I'm joined by someone who has helped shape South Africa's investment and trade strategy from the highest levels of government. I'm honored to welcome our guest, Dr. Alistister Raiders, special adviser on investment to South African President Siril Ramaposa. Alisters also served as a lead South African negotiator in US South Africa talks and previously held the position of director general of the department of trade industry and competition. Alistister, thank you for joining us today. >> Thank you Grayson for that uh introduction and once again thank you for the invitation to participate in this series. >> Alistister, after two years of political turbulence, how do you see critical minerals helping reset the US South Africa relationship? I think critical mles can play an important role in re in the reset that you're talking about. Um critical minles um opens up a new space for discussion. Um to date the discussion has been characterized by political rhetoric by um the introduction of tariffs and discussions around whether those tariffs are appropriate or not. But I think in the context of critical minerals, we have two things that are in our favor. The first is obviously we have a long-standing relationship with the US where we've traded in minles and commodities over the last decades um including chromium, venadium, manganesees and platinum and uh in recent months we've seen some of those uh exports to the US increase. So clearly there is a strategic relationship that exists going forward. I think what's important is trying to identify where we believe we share common interest but most importantly we need to move from the idea that we need to talk about um the concept of improving the philosophy of improving trade and increasing uh or deepening our relationship to one where we need to identify specific projects. In recent months, I think we've seen increased contact between the US and South Africa on uh critical minerals. We've had high level discussions both in Washington and in Johannesburg and hopefully those will continue as we identify new projects as we identify opportunities for success. >> Alistister, have you seen progress on the bilateral relationship with regards to critical minerals? I think uh [sighs] have I seen progress? Yes, I think um as I said earlier on there've been high level engagements. Um I certainly have spent more time in the presidency talking to investors talking to um to parties who interested in um critical minles as an investment um opportunity. I think the president himself has made signific has made several statements sorry several statements about critical minerals in his state of the nation address and at uh [clears throat] at several conferences he's raised the issue of South Africa's critical mineral endowment and how we can find strategic partners to leverage that endowment but more importantly how we can use that to the benefit of South Africa in terms of growth and in terms of jobs. So a time frame is diff is very difficult to put out there. But I think hard work and continued engagement is what I think is going to ensure that both parties uh benefit from this uh the benefit from this process. >> That's significant progress from where we were two years ago. Now I want to turn to a different angle. South Africa is a legacy mining country and when you look back South Africa's economy was literally built on gold mining. However, over time, the mining industry has experienced some decline and that starts right on the exploration side. As we discussed earlier, uh South Africa's share of global mineral exploration has fallen from about 5.7% to less than 1% over the last 20 years. What reforms is this government taking to reverse that decline? >> You're correct. um exploration spending is down significantly [clears throat] and it is a serious concern. Um at the same time we have to recognize that a significant number of prospecting rights continues to be issued in South Africa. Um and at the same time we also have to recognize that capital spend in existing projects continues um to remain steady. There has been no decline over the uh the past few years which really means that existing miners are continuing to expend to spend money on expanding their projects um and growing existing mines. So the question is how do we accelerate how do we find a way to uh ensure that people who apply for pro prospecting rights in South Africa use those pro prospecting rights. The government obviously is focusing on two specific areas. The first is trying to provide additional capital more capital in the market and so you have the junior miners exploration fund that's been established and pleased to say that that fund was fully utilized in the last year. Secondly, um we need to also improve administrative processes. That's been one of the major hiccups in the South African mining industry. Um, despite the introduction of new legislation, we've not seen the kind of growth that we would have anticipated in the early 2000s when the new legislation was put in place. >> South Africa's biggest mineral constraint is not geology, it is electricity. What is the presidency doing to keep processing and beneficiation competitive? We know that when it comes to beneficiaration, the most important element is electricity. Um, one could argue that technology is becoming a far as also an important part of uh the beneficiation value chain. So in recent months um there's been discussions u particularly with the ferocrome industry around how we could uh create a competitive price and we've achieved that with a 62 cents um per kilowatt price for feroc uh for the federrome industry that uh has obviously meant that other uh sectors have now also made a similar request and government's considering in its options with regard to that. Um why beneficiation becomes important is because many of those smelters uh are located in distressed areas and the consequent job impact um in those areas is very significant. So it's um in everyone's interest to ensure that the smelters remain open and that the beneficiation process continues. However, it's also important that we realize that part of reducing um or creating a competitive energy market is not just about the price, it's also about the technology that's employed. A lot of the smelters in South Africa use old technology. And moving forward, I think where critical minerals becomes important is that it allows us to rethink what the technologies are that we can employ and in particular finding new partners. And here the opportunity arises for American companies who do have um access to technologies that can improve the uh the the competitiveness, the functioning of those smelters. I think it's a great opportunity for us to work together. >> Alistar, I want to turn to the bilateral relationship. South Africa is already a leading US supplier of platinum, chrome, military grade venadium. What US tools can help sustain and expand this strategic trade relationship? >> So the question is what can the US government do? Um it's difficult at this point to be prescriptive and to give advice to the US government. I think there's a lot more experience there in dealing with critical minles. Um some have opted to sign critical minerals agreements with the US government. Um we've taken a view that um given our long history of trade in critical minles and others. Um that perhaps the best thing to do is to look more specifically at projects. And here we're talking about how the US government can support financing of those specific projects. But then there are also infrastructure uh issues related to some of those projects. Many of them might be loc might be located in uh remote areas and people are talking about corridors uh at the moment to try and ensure that we maximize and at the same time not just maximize but also create efficiencies around product movement from the mine to the processing plant and to the export market. So whether we're talking about corridor development um and the financing thereof or whether we're talking about actual financing of projects all of those I think um we'd like to engage as the South African government I think it's important to start engaging through some of our development finance institutions but how we can work together to ensure that we have more capital available for these projects I think technology as I've said earlier on is also significant and important um we've mentioned mentioned earlier on the age of the the smelters and the processing uh facilities the fact that we need um new technologies as we make this transition um to new products new energy efficient products to the defense sectors and so forth. So I think there's a conversation to be had at this particular point in time between the US and South Africa and I think that in itself to go back to your first point that you raised uh in this conversation about the reset I think this is actually perhaps one of the best levers we have in the reset of that relationship to open up a conversation to open up discussion around how we can work together to ensure that some of these projects come to fruition but more importantly that they support the with national security interest. >> Alistister, let's drill into one of these transactions. Alcoa's $5.6 billion acquisition of South 32's aluminum assets marks a major US industrial investment in South Africa. How do we ensure that this is a successful re-entry of American mining investment into South Africa? >> Yes, we're very excited about Alcoa. um it points to the confidence Alcoa has in the South African economy. Secondly, it for us represents an opportunity to deepen uh technology using Alcoa's breadth uh of experience across the world. It offers an opportunity to change supply chains and perhaps find ways uh in using the footprint that Alcoa has globally to lower the cost of aluminium production in South Africa. So there's great great opportunity here. Lastly, I think it also signals the fact that despite ongoing rhetoric about um issues, political issues in South Africa, US companies continue to invest in South Africa. US tourism numbers are up in South Africa and it all points to a deepening relationship. So we believe that um if anything is going to succeed, it's an ongoing effort to deepen economic diplomacy and to continue to work at ensuring that uh the trade barriers between South Africa and the US come down and that we use the potential that exists between our two economies. >> Alistar, that brings me to a final question. When you look 12 to 18 months down the road, what does success look like in the bilateral minerals relationship? >> It's difficult to talk about time frames and whether or not all of this can be achieved um quickly. There are no quick wins. What we're discovering more and more is that what um investors are demanding what um companies that are interested in particular American companies that are interested in uh looking at South Africa as an investment destination but specifically looking at critical mles is that we have to get more specific about projects. Um we have a framework in South Africa a critical minerals policy framework but the question is can we identify those projects be it in the northern cape be it in [clears throat] in Limpopo or Pumalanga where are the projects that would invite investors to come and want to be part of growing that critical minerals value chain. Um, America comes to the table asking critical questions uh in a geopolitical context about whether we can shift uh trade patterns away from the east to the west. South Africa comes at the table asking critical questions about whether or not it's possible um to increase the value chain in South Africa to create highquality jobs um to ensure that South Africa sees a significant benefit from this endowment that it has in critical minerals. I also don't want to overstate the issue of critical minerals because you know if you look at the long list of what is a critical mineral South Africa probably has three to five of them that we could probably participate in uh in a competitive fashion. So it's important that we not overstate this and focus on where we believe we can add value to our partners but also where we can ensure that we create significant jobs and value to our economy. and certainly many emerging opportunities. One of the key areas of work that we've done here at CSIS is on rare earths and last year South Africa was one of the top 10 jurisdictions in the world for rare earth projects. So the emergence of new commodities will certainly be uh uh an important part of the bilateral relationship going forward. And with that, this concludes today's episode of mapping minerals diplomacy. In future episodes, we'll explore how other countries are shaping their minerals diplomacy strategies and how the US can better deploy its tools to compete. Thanks for watching. I'm Graceland Baskinrren. See you next time on Mapping Minerals Diplomacy. [music] >> [music]