In June 2026, the Department of Trade, Industry, and Competition published South Africa’s new Industrial Development Strategy. It names affordable, reliable electricity as the biggest and most urgent enabler for industrial development.

Yet its headline mining proposal is not about electricity. It proposes reviewing mining law so beneficiation conditions can be attached to the allocation of mining rights. The strategy also proposes electricity measures, but they are expressed as intentions without price, timing, or a legal mechanism, while the mining strategy is specific.

The gap between the constraint the strategy identifies and the lever it targets is worth examining.

What the strategy proposes

The strategy is built around three pathways: decarbonisation, diversification, and digitalisation. Decarbonisation means shifting industry to lower-carbon energy and processes, so that exports are not penalised by foreign carbon border measures. Diversification means widening what the economy makes and where it sells. Digitalisation means using digital technology across industry to raise productivity. Together the three pathways aim to stabilise South Africa’s industrial decline and build productive capacity.

Under the decarbonisation pathway, the strategy prioritises mineral beneficiation. For mining, it proposes reviewing the law so that government can attach beneficiation conditions to mining rights.

In simple terms, beneficiation means processing raw minerals into higher-value products in the country that mines them, instead of exporting them unprocessed. Turning chrome ore into ferrochrome is beneficiation. Shipping the ore out unprocessed is not. The mismatch between the constraint the strategy identifies and the instrument it selects is worth examining.

The industry’s response

The Minerals Council South Africa, whose members account for about 90% of mining output by value, warned that the proposal could discourage future investment in exploration and mining. Its objection is structural: mining and beneficiation are separate activities, and processing obligations do not belong in the licensing of mineral rights.

The department has defended the wider strategy. At the 2026 Manufacturing Indaba in July, the Deputy Minister described manufacturing as the sector that turns raw materials into higher-value products and argued that no country has industrialised by leaving that to the market alone.

So the goal of beneficiation has support. The mechanism is contested.

What actually restarts a smelter

The more useful question is not whether South Africa should beneficiate more at home, but what makes local processing commercially viable in the first place. On the industry’s account, the answer is electricity. The Minerals Council points out that electricity tariffs have risen by more than 900% in nominal terms since 2008, and that this, not any shortage of processing capacity, is why the ferroalloys industry became uncompetitive and smelters closed.

The strategy flags a looming gas cliff in Mozambican gas supply and identifies preferential electricity tariffs for energy-intensive users such as smelters as critical to competitiveness.

The strategy is written as though electricity pricing were still wholly administered. It is not.

The Electricity Regulation Amendment Act 38 of 2024 came into force on 1 January 2026 and phased implementation of the market code began in April 2026. The National Transmission Company South Africa was granted a market operator licence in November 2025, performs the functions of the transmission system operator, and now operates under grid capacity allocation rules.

Over the life of this strategy, the route to competitively priced power for an energy-intensive user is therefore more likely to run through bilateral contracting, wheeling, and market participation than through a negotiated concession from Eskom. The strategy does not address this, and its implementation plan identifies Eskom rather than the NTCSA as the counterparty for the first phase of the Independent Transmission Project.

Key takeaways

None of this means beneficiation is the wrong goal, or that mining rights should never carry conditions. It does, however, expose two competing explanations for why South Africa benefits so little. One is regulatory: add conditions, and processing will follow. The other is economic: processing follows only where the operating cost, one being electricity, makes investment pay.

The strategy’s own evidence points to the second. On that reading, its success will depend less on new conditions attached to mining rights, and more on whether government delivers the energy and infrastructure the strategy itself calls the prerequisites for industrialisation.

What to watch

For clients in mining and energy-intensive processing, two things will show whether the strategy delivers:

• The first is electricity pricing. Whether the concessional tariff for energy-intensive users is confirmed, and at what level, will do more for beneficiation than any licensing condition.
• The second is the mining-law review. Watch any move to attach beneficiation conditions to mining rights for its effect on the cost and certainty of new projects. The strategy names no statute, so the vehicle for that review is still unknown.

Contact LnP Beyond Legal’s Ricardo Pillay to help navigate the legal and commercial implications.

Written by Ricardo Pillay and Sipho Sondlo. The article’s general information reflects the law at the time of writing. It is not legal advice. For advice on a specific matter, please speak to us.