A new report by the Center for Strategic and International Studies (CSIS), a United States (US) think tank, argues that South Africa’s position in global mineral supply chains is under growing pressure, with energy shortages, weak financing structures, and geopolitical competition threatening to shift processing capacity toward China.

The report identifies energy as the most immediate constraint. Without stable and affordable electricity, it warns that many of South Africa’s mineral processing plants could face closure within months. In such a scenario, producers would be forced to export raw materials for processing abroad, most likely to China, reinforcing Beijing’s dominance in critical mineral supply chains.

South Africa retains a unique combination of mineral reserves, processing infrastructure, and technical expertise. However, current energy costs and supply instability are undermining the viability of keeping processing capacity in-country, particularly in energy-intensive industries such as refining and smelting.

To address this, CSIS proposes a US-South Africa liquefied natural gas (LNG) to power agreement. South Africa is expected to face a significant gas shortfall by mid-2028 as supply from Mozambique declines. The report notes that industries accounting for roughly 8% of GDP and more than 75 000 manufacturing jobs could be affected. A bilateral LNG arrangement could provide a replacement energy source while linking US gas exports to South African mineral production destined for US markets.

The report also calls for the development of a regional energy corridor across southern Africa, leveraging existing infrastructure such as the Southern African Power Pool. This would involve coordinated investment in generation, transmission, and grid upgrades, alongside a diversified energy mix combining gas, renewables, and storage. The aim is to ensure reliable power supply to mining and processing hubs across the region.

Recent developments underscore the urgency. Australia’s South32 has announced it will place its Mozal aluminium smelter in Mozambique under care and maintenance due to high electricity costs, while its Hillside smelter in South Africa faces similar viability risks when current power contracts expire.

Beyond energy, CSIS highlights the importance of rebuilding bilateral frameworks between Washington and Pretoria. It recommends renewing the US-South Africa civil nuclear cooperation agreement, which lapsed in 2022, as a means of strengthening baseload power capacity and expanding collaboration across the nuclear fuel supply chain.

The report also points to the strategic role of neighbouring Namibia, which holds roughly 8% of global uranium resources but is currently dominated by Chinese investment. Expanding US engagement in uranium production and fuel services across the region could both strengthen regional energy security and reduce US dependence on Russian nuclear inputs.

In addition, CSIS proposes targeted industrial policy measures, including price floors for critical defence materials such as vanadium. With current prices below sustainable production levels, there is a risk that supply capacity could shift away from Western markets. The report suggests that relatively modest financial commitments could secure long-term supply.

A central recommendation is that US investment in South Africa’s mining and energy sectors should be tied to long-term offtake agreements. By linking financing to guaranteed supply commitments, the US could provide the revenue certainty needed to unlock private capital and prevent processing capacity from migrating toward China.

The report concludes that South Africa’s mineral base is not a future opportunity but a current strategic asset for the US. However, without coordinated action to secure energy supply, financing, and market access, that advantage risks being eroded, with China positioned to absorb the shift.