JOHANNESBURG—Clauses in a draft bill that would have forced foreign minerals exploration companies to be partly owned by black locals have been scrapped by the South African government.
Some analysts see Pretoria’s move, which happened on June 10, as a win for the United States.
South African President Cyril Ramaphosa’s administration denies that its dramatic change of tack is meant to appease the United States, saying its decision “makes practical economic sense.” The administration previously said that the legislation wasn’t negotiable.
Relations between Pretoria and Washington are tense; the two have frequently sparred since Trump began his second presidential term in January.
The U.S. leader has canceled more than $400 million in annual financial aid to South Africa, accusing it of allying with the United States’ enemies, including China, Iran, and Russia, and endangering U.S. national security.
Trump is also highly critical of Pretoria’s filing of genocide charges against Israel, Washington’s strongest partner in the Middle East.
The African National Congress (ANC), the majority party in South Africa’s coalition government, is a strong supporter of Palestinians and filed the case against Tel Aviv’s military actions in response to Gaza-based terror group Hamas’s Oct. 7, 2023, attack on Israel.
Other actions taken by the Trump administration against South Africa include the expulsion of its ambassador to Washington, Ebrahim Rasool, also a senior ANC official, in March after Rasool described the Trump administration and the Make America Great Again movement as “supremacist.”
Representatives from the Trump and Ramaphosa administrations are currently negotiating a new trade deal between the two countries, after the U.S leader imposed a 30 percent tariff on South African imports.
Susan Booysen, political analyst at South Africa’s Nelson Mandela Bay University, told The Epoch Times, “America needs South Africa’s minerals and metals and South Africa needs America’s dollars and mining investments, so maybe the ANC’s backtracking on BEE rules in a key economic sector is an opportunity for them to reconcile, at least in the interests of mutual business.”
South Africa is a major supplier of critical minerals and precious metals to the United States, and mining is the backbone of its economy, according to Mzila Mthenjane, CEO of South Africa’s Minerals Council.
The country’s vast natural resources include large deposits of gold, diamonds, and platinum, and it also extracts significant amounts of critical minerals such as lithium, manganese, nickel, chrome ore, titanium, and vanadium.
According to the Minerals Council, platinum and its derivatives—palladium and rhodium—are used to make catalysts for vehicle exhausts to limit pollutants.
South Africa is the world’s leading source of platinum group metals and manganese, chrome, and vanadium, which are critical ingredients in renewable energy systems, including wind turbines and electric vehicle batteries.
These materials have become essential to economies worldwide, as they’re used in most electronic products, automobile production, and weapons systems.
South Africa supplies most of the United States’ platinum, manganese, and chromium needs.
“Prospecting for new mineral and metal deposits is obviously vital to South Africa’s future,” Mthenjane said. “But freezing out foreign companies by insisting on South African ownership, even in part, would have scared away foreign investment.”
He told The Epoch Times that South Africa also did not have the resources to explore for minerals at the scale needed for “sustained economic growth.”
These regulations have so far prevented Elon Musk’s Starlink satellite internet provider from rolling out services in the country, because the South African-born billionaire has refused to abide by them.
BEE goes a step further than regular affirmative action. It forces quotas and legislation on the business sector to compel it to give ownership of large corporations and others to black businesspeople ahead of their white counterparts.
David Ansara of the Institute for Race Relations in Johannesburg alleged that “these BEE regulations in mineral exploration are ultimately designed to enrich people in the ANC, and people connected to the ANC.”
“So scrapping them is a huge loss to the party, but Cyril Ramaphosa understands business and he understands mining, and he knew those laws wouldn’t fly in an industry that is the lifeblood of the economy, especially in the context of Trump’s vehement criticism of affirmative action,” Ansara told The Epoch Times.
A spokesperson for South Africa’s Department of Mineral and Petroleum Resources, Robert Maake, told the Epoch Times the scrapping of BEE proposals in minerals prospecting has “nothing to do” with the Trump administration’s pressure on the government to end affirmative action.
“It makes practical economic sense to exempt firms involved in prospecting for South Africa’s resources from strict BEE requirements,” he said.
Ramaphosa reentered the ANC fold in 2014 and in 2018 was elected president after President Jacob Zuma resigned.
Before 2014, Ramaphosa, a former leader in the biggest union for mineworkers in South Africa, was executive chairman of the Shanduka Group, a company he founded. It invested heavily in mineral resources, energy, real estate, banking, insurance, and telecoms.
Booysen said the Ramaphosa government’s abandonment of black ownership regulations in minerals prospecting would be seen by many as “surrendering, in a way,” to Trump.
“Whatever the case, it does open the way to America to put more money into exploring in South Africa, and for America to send critical minerals and other resources back to America,” Booysen said.
“This is in line with Trump’s ‘America First’ policy and in that way the Trump government will see this as a win.”
The United States’ current “heavy use” of South African minerals means it already has a strong platform on which to explore within the country, according to Elias Matinde, of the Southern African Institute of Mining and Metallurgy.
He told The Epoch Times that exploring for metals and minerals is extremely complex and expensive, meaning more foreign investment is needed in these areas.
“We can’t afford to exclude powerful countries from our country, no matter how well-meaning certain rules are,” Matinde said.
“We need all the dollars we can get, and American companies are very knowledgeable and skilled when it comes to prospecting for minerals and metals.”
