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China’s Impact on South Africa’s Mining Sector

China has become a voracious consumer of South African minerals and metals over the last several decades. As such, Chinese demand has had profound effects on South Africa’s extractive sector. To understand the significance of mining in the Sino-South African relationship, one merely has to look at South Africa’s exports to China, where mineral products (Iron Ore, Chromium Ore, Manganese Ore, etc.), metals (Ferroalloys, Nickel, Copper, etc.) and precious Metals (Gold, Platinum) make up approximately 85% of total exports (OEC, 2016). However, while Chinese demand has become a driver for South Africa’s mining sector, fixed capital investment is still relatively rare.


Principally driven by the need to secure natural resources for domestic development in the face of rapid depletion, extractive investments are part of what has been coined ‘inward-oriented outward investment’ (Fessahai and Morris, 2013). Chinese investment in extractives throughout sub-Saharan African has grown rapidly over the last two decades (beginning with the ‘go-out’ initiative of the early 2000’s which incentivized international expansion for large state-owned enterprises) but remains small in comparison to other regions (Kuo, 2017). Major acquisitions on the continent include the Husab uranium project in Namibia, the Kamoa Copper deposit in the DRC, and the Chambishi mine in Zambia. It is important to note that while the Chinese government may have nurtured significant political linkages with the continent, in terms of mining investment, Chinese capital (either state or private) must still compete with large-scale mining companies which hail not only from the Global North, but also increasingly from fellow BRICS (Brazil, Russia, India, China, South Africa). This competition has seen Chinese firms turn to states which have been eschewed by the international community (Sudan, Zimbabwe, and Angola) as well as practice unique accumulation strategies (what CK Lee (2018) terms ‘encompassing accumulation’) where the significance of strategic materials lies in both their exchange value, and their use value (their importance to the Chinese economy).

China & South Africa’s Mining Sector South Africa currently ranks second among African countries in Chinese extractive investmen, with major purchases including Jinchuan’s (a Chinese State-owned enterprise) takeover of Metorex, SAIL mining group’s acquisition of the Black, Rooderand, and Palm chrome mines, China Investment Corporation’s (CIC) $243 million purchase of 25% of Shanduka group, and Jinchuan’s $227 million acquisition of Wesizwe, a junior-listed mining corporation which owns the Bakubung platinum mine. In addition to these is the upcoming metallurgical complex in the Musina-Makhado Special Economic Zone. This ambitious $3.8 billion project will create a ‘world class’ manufacturing and logistics hub and process chrome, nickel, manganese, and iron-ore in order to produce stainless steel. While the project remains years away from completion, it signals a new phase in the Sino-South African relationship, and a new level of cooperation in terms of extractives.

Chinese investors have developed specific interest in South Africa’s chrome and platinum deposits as these are of strategic importance to China’s economic growth (chrome being necessary for stainless steel production and platinum for catalytic converters). South Africa is the world’s largest producer of both resources, with 52% and 68% of global output, respectively. 65% of all Chinese chrome imports come from South Africa, including 90% of SAIL mining group’s chrome output. As one executive noted: “China is dependent on South African chrome exports, they will always be our largest market”

China is similarly dependent on South African platinum group metals (PGM). In 2009, the country became the world’s largest consumer of platinum with 2.21. million troy ounces (Surborg, 2012), and presently accounts for 50% of world platinum jewelry offtake (Chamber of Mines, 2016). As of 2016, nearly 63% of Chinese platinum imports came from South Africa. Wesizwe’s Bakubung mine was China’s first direct investment in the platinum sector and will have an estimated output of 350,000 oz. of platinum group metals (PGM) per year by the time it reaches full capacity in 2023. As with other priority projects, the state-corporate linkages run deep, and China Development Bank provided Wesizwe with a $650 million loan to complete the project. The loan has exceptionally low interest rates (3.8% vs the standard 8%) and is characteristic of the type of financing given by Chinese institutions to projects of high strategic value.

As with other Chinese mining investments throughout the continent, SAIL group and Jinchuan acquired their South African assets at opportune times; SAIL when chrome prices were at their nadir, and Jinchuan when Wesizwe sought an outside investor after the 2008 financial crash. This is typical of Chinese investors in Africa, who tend to look at stressed assets and work with long term (10 years +) timelines in mind. Contrary to the popular discourse, Chinese firms overwhelmingly employ locals, though typically bring in their own management teams and source materials from China.

However, despite these successes, South Africa is currently coping with a period of economic and political upheaval, and the future of the mining sector is in flux. Investors from all countries have struggled to deal with the combination of falling commodity prices and administrative dysfunction that plagued the last years of the Zuma administration. Confidence plummeted with the Marikana massacre (where South African Police Services (SAPS) killed 34 striking miners) and the sector found it hard to recover amid plummeting prices and mismanagement from the top. Additionally, South Africa’s ever-changing Black Economic Empowerment (BEE) laws and use-it-or-lose-it approach to mineral rights as envisioned under the Mineral and Petroleum Resources Development Act (MPRDA) have created wide-ranging regulatory uncertainty. The new Mining Charter, which dictates the terms of operation, was released in June 2017, though it is currently being contested in court. Among other provisions, it requires companies to achieve 30% black ownership within a year, as well as pay 1% of their turnover to BEE partners. The Chamber of Mines, which challenged the ruling, believes the targets are ‘too ambitious’ and that they were ‘not consulted sufficiently’ throughout the review process. The Ramaphosa era will likely bring back some semblance of investor confidence, but it could be many years before the sector returns to a state of normalcy.

Ricardo Reboredo is a PhD student from Miami, Fl currently studying at Trinity College Dublin. He specializes in Sino-African relations and economic geography

Works Cited: Chamber of Mines (2016) “Platinum: Facts and Figures” Retrieved April 2, 2018, from Fessehaie, J. and Morris, M., 2013. Value chain dynamics of Chinese copper mining in Zambia: enclave or linkage development?. The European Journal of Development Research, 25(4), pp.537-556.

Kuo, L. (2017) “Chinese mines in Africa provide better roads but not more jobs for locals” Quartz Africa, November 2. Retrieved April 2, 2018, from

Lee, C.K., 2018. The specter of global China: politics, labor, and foreign investment in Africa. University of Chicago Press.

Surborg, B., 2012. The production of the world city: Extractive industries in a global urban economy (Doctoral dissertation, University of British Columbia). OEC (2016) “What does South Africa export to China?” Retrieved April 2, 2018, from

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