Ramaphosa Emphasizes Fair Returns from Mining Without Immediate Policy Reform

South Africa’s mineral wealth will continue to serve as a cornerstone of national development, President Cyril Ramaphosa told the National Assembly this week, reiterating the government’s commitment to ensuring equitable returns from resource extraction without disrupting the current fiscal regime.

Amid mounting global interest in critical minerals essential for clean energy technologies, President Ramaphosa clarified that there are no immediate plans to reform the country’s mineral royalty framework, which already incorporates principles aligned with resource rent taxation to ensure fair and flexible revenue generation.

Current Royalty Regime Remains Fit for Purpose

Responding to concerns from members of Parliament regarding whether South Africa is maximising fiscal benefits during periods of high commodity prices, President Ramaphosa explained that the existing mineral royalty regime—governed by the Mineral and Petroleum Resources Royalty Act of 2008—remains effective in capturing additional revenues during commodity booms.

“Any company that extracts a mineral resource in our country is required to pay the South African government a mineral royalty,” the President said. “This is because mineral resources are finite and cannot be replaced.”

He added that while periodic reviews of economic policies are necessary, the current regime already includes a profitability-linked royalty formula, which adjusts based on the nature of the resource (refined or unrefined) and the company’s financial performance.

Understanding Resource Rent and Royalty Principles

The idea of a resource rent tax—where companies pay a greater share of their profits when resource prices spike—has drawn attention globally. President Ramaphosa confirmed that South Africa’s royalty system already mirrors this concept, albeit through a sliding scale rather than a separate windfall tax mechanism.

The royalty formula ensures:

• A minimum payment, regardless of profitability

• Higher royalties during commodity booms, due to increased sales value and margins

• A built-in adjustment to market fluctuations

“In this way, government collects more corporate tax revenue and mineral royalty revenue during commodity booms,” he said.

Royalty Revenue Trends Reflect Market Conditions

Citing data from the South African Revenue Service (SARS), the President highlighted how royalty collections have responded to changing market conditions:

• R14.2 billion in 2020/21

• R28.5 billion in 2021/22 during a commodity price surge

• Elevated levels maintained in 2022/23

• A decline to approximately R16 billion in 2023/24, indicating reduced mining profitability

This trend underlines the system’s dynamic structure, ensuring a fair share for the state while maintaining a predictable investment environment for the mining industry.

Mining’s Broader Fiscal Contributions

Beyond royalties, the mining sector remains a major contributor to South Africa’s tax base, paying:

• Corporate income tax

• Capital gains tax

• Value-Added Tax (VAT)

• Employee PAYE (Pay As You Earn) contributions

In the last financial year, the mining industry accounted for 14% of total corporate tax revenue, reinforcing its role as an economic pillar and fiscal engine.

Critical Minerals Strategy: A Vision for the Future

Looking ahead, the government is pivoting toward a long-term vision that balances fiscal stability with value addition and beneficiation. Earlier this month, Cabinet adopted a Critical Minerals Strategy, which aims to:

• Leverage South Africa’s comparative advantage in key minerals

• Promote domestic processing and manufacturing

• Support local job creation and community development

• Enable the country’s just energy transition

“This strategy aims to ensure that South Africa derives greater benefits from its mineral wealth through beneficiation, localisation, and the people who work for those companies,” Ramaphosa said.

Key minerals identified under the strategy include:

• Platinum group metals (PGMs)

• Vanadium

• Manganese

• Rare earth elements

• Lithium

All of these are critical for battery technologies, hydrogen fuel systems, renewable energy infrastructure, and low-emissions transport systems.

Balancing Revenue, Stability, and Sustainability

President Ramaphosa’s comments reflect a pragmatic approach: maintaining policy certainty to support investment while maximising public benefit through existing fiscal tools and sectoral development strategies.

By resisting knee-jerk policy shifts and focusing on long-term transformation, the government is striving to:

• Attract and retain responsible investors

• Secure steady, scalable revenues

• Ensure community participation and equity

• Position South Africa as a global leader in green mineral value chains

While global interest in critical minerals grows, South Africa’s approach remains measured and strategic. With no plans for immediate reform of its royalty system, the government is instead emphasising effective utilisation, beneficiation, and broad-based development to ensure mineral wealth translates into lasting national prosperity.