{"id":91626,"date":"2025-10-16T12:18:55","date_gmt":"2025-10-16T12:18:55","guid":{"rendered":"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself"},"modified":"2025-10-16T12:52:47","modified_gmt":"2025-10-16T12:52:47","slug":"south-africas-chance-to-save-itself","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself","title":{"rendered":"South Africa\u2019s chance to save itself"},"content":{"rendered":"

Africa-Press – South-Africa. <\/strong><\/span>South Africa\u2019s economic and financial fortunes are set to receive a significant boost from the rise in the gold price and other commodities, particularly platinum group metals (PGMs).<\/p>\n

Due to these rising prices, the country is set to receive billions in additional foreign exchange earnings and tax revenue, aiding its efforts to improve the financial health of the state and boost economic activity.<\/p>\n

However, a lot still depends on how the government decides to use its tax windfall, with previous commodity booms seeing increased spending on short-term consumption, in the form of wages, rather than investment in infrastructure and other productive areas.<\/p>\n

This limits the long-term potential of the South African economy, and when the prices of these commodities eventually moderate, saddles it with significant obligations that it cannot fund without raising debt.<\/p>\n

Commodity booms and the significant profits they bring for South Africa\u2019s mining industry have long been seen as the key to the country\u2019s economic success.<\/p>\n

Using the surplus created by the mining industry during commodity booms to invest heavily in infrastructure and boost activity in other areas of the economy has always proven tricky.<\/p>\n

South Africa is not set to benefit from the current commodity boom as much as in previous instances, with its gold mining industry significantly smaller now than in the past.<\/p>\n

As a result, much of the country\u2019s exposure to the benefits of a rising gold price is indirect, with it only exporting around 100 tonnes a year, which is currently worth around $14 billion (R242 billion), chief investment strategist at Old Mutual\u2019s Symmetry Izak Odendaal said.<\/p>\n

This is 90% lower than its peak production, since most of the gold has been mined out after 150 years, and what remains is kilometres deep and costly to extract.<\/p>\n

Sadly, the mining climate in general has become very difficult due to regulatory red tape, sky-high electricity prices, poor transport infrastructure and increasingly, illegal mining, Odendaal said.<\/p>\n

Even when excluding gold, mining output has flatlined over the past 20 years. And since exploration activity has declined, output will not increase anytime soon.<\/p>\n

Nonetheless, while the South African economy, financial market and exchange rate are less influenced by the gold price and mining in general than in the 1980s, the impact is still important.<\/p>\n

The JSE has boomed this year, with the All Share Index topping 100,000 points for the first time on the way to a 34% year-to-date return.<\/p>\n

This is helped along by an echo-boom in PGM prices. Platinum is not a replacement for gold but can be a substitute in some contexts, and the price is up 74% this year.<\/p>\n

The sharp rise in gold and platinum prices can be seen in the graphs below, courtesy of Stanlib chief economist Kevin Lings.<\/p>\n

The silver bullet<\/b><\/p>\n

The rise in the price of gold and PGMs has suddenly made local miners extremely profitable, boosted South Africa\u2019s export value, and is set to swell the government\u2019s coffers.<\/p>\n

This presents a significant opportunity for the state to address its deteriorating financial health, invest in infrastructure, and boost economic activity over the long run.<\/p>\n

Odendaal explained that gold and platinum miners don\u2019t necessarily need metal prices to keep rising to remain profitable. If prices remain relatively stable at elevated levels, shareholders will be smiling.<\/p>\n

The taxman will also smile as this will lead to a substantial increase in corporate tax collections, potentially dividend tax revenue, and a general increase in economic activity.<\/p>\n

And so indirectly, the gold boom is good for bonds by reducing the South African government\u2019s borrowing requirement somewhat.<\/p>\n

In the first eight months of the year, the South African government has issued 11% less debt than during the same period last year.<\/p>\n

This increased revenue will also be coupled with a generally healthier financial picture, with revenue up 10% year-on-year and expenditure only up 4% due to the National Treasury\u2019s fiscal consolidation.<\/p>\n

The commodity boom will have other benefits as well, with bonds and other interest-rate sensitive assets benefiting from a stronger rand as a result of increased foreign exchange earnings, Odendaal said.<\/p>\n

The rand has appreciated along with the country\u2019s terms-of-trade \u2013 export prices relative to import prices \u2013 due to higher precious metals prices and lower oil prices.<\/p>\n

As a result, the gold price is a windfall for investors with broad South African market exposure, even if they don\u2019t specifically own Krugerrands or a gold ETF.<\/p>\n

It is worth reiterating that the geopolitical conditions that gave rise to the rally in gold are seemingly set to remain in place, but that doesn\u2019t mean the blistering pace of price gains will be sustained or can\u2019t be reversed, Odendaal cautioned.<\/p>\n

It also remains to be seen how the government plans to use the tax windfall that the commodity boom promises to bring, with analysts urging it to be used to stabilise the state\u2019s debt burden and invest in infrastructure.<\/p>\n

The graph below shows the relationship between South Africa\u2019s terms of trade and the strength of the rand. The rand\u2019s value on the right-hand side is inverted.<\/p>\n

For More News And Analysis About South-Africa<\/span> Follow Africa-Press<\/span><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – South-Africa. South Africa\u2019s economic and financial fortunes are set to receive a significant boost from the rise in the gold price and other commodities, particularly platinum group metals (PGMs). Due to these rising prices, the country is set to receive billions in additional foreign exchange earnings and tax revenue, aiding its efforts to […]<\/p>\n","protected":false},"author":84,"featured_media":91624,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[275],"class_list":["post-91626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-south-africa-2"],"yoast_head":"\nSouth Africa\u2019s chance to save itself - South Africa<\/title>\n<meta name=\"description\" content=\"South Africa\u2019s economic and financial fortunes are set to receive a significant boost from the rise in the gold price an ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"South Africa\u2019s chance to save itself\" \/>\n<meta property=\"og:description\" content=\"South Africa\u2019s economic and financial fortunes are set to receive a significant boost from the rise in the gold price an ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\" \/>\n<meta property=\"og:site_name\" content=\"South Africa\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2025-10-16T12:18:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-10-16T12:52:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2025\/10\/sm_1760606492.446.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"669\" \/>\n\t<meta property=\"og:image:height\" content=\"375\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"South Africa\u2019s chance to save itself\",\"datePublished\":\"2025-10-16T12:18:55+00:00\",\"dateModified\":\"2025-10-16T12:52:47+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\"},\"wordCount\":862,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/south-africa\/sites\/31\/2025\/10\/sm_1760606492.446.jpg\",\"keywords\":[\"South-Africa\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\",\"url\":\"https:\/\/www.africa-press.net\/south-africa\/all-news\/south-africas-chance-to-save-itself\",\"name\":\"South Africa\u2019s chance to save itself - 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