Modern Mining April 2025

Nigeria’s new policy only grants mining licenses to companies with local processing plans.

incentives, reduced dividend taxes, and foreign exchange benefits to encourage large-scale investments in sectors like mining and energy. The risks of forced beneficiation: lessons from Nigeria and Zimbabwe Nigeria and Zimbabwe provide examples of how forced beneficiation mandates can create mixed results. Nigeria’s new policy only grants mining licenses to companies with local processing plans, while offering incentives like tax waivers and streamlined electricity licenses to attract investment. Zimbabwe, meanwhile, has mandated that lithium miners submit plans for local production of battery-grade lithium, hoping to capitalise on the global demand for clean energy minerals. However, both countries face challenges in implementing these policies effectively. The risk with such mandates is that they can stifle investment if they are not coupled with robust incentives and adequate infrastructure support, as seen in other parts of Africa. Conclusion South Africa’s mineral beneficiation strategy should be rooted in a flexible, incentive-driven approach that recognises the realities of its current economic landscape. By offering targeted incentives— such as certain tax breaks like a “tax holiday” for a certain number of years, reduced tariffs, or subsidised electricity or other innovative mechanisms—while addressing critical infrastructure challenges like energy and logistics, the country can encourage local value addition with a positive impact on host countries without discouraging mining investment. At the same time, South Africa must carefully assess which minerals and industries are best suited for beneficiation, using a case-by-case evaluation rather than a one-size-fits-all mandate. By learning from international models and focusing on long term economic benefits, South Africa can create a win-win scenario for its economy, its investors, and its people. n

importance of addressing these infrastructure challenges before pushing for further export taxes or restrictive measures. Their stance is that the country should adopt a “carrot” rather than a “stick” approach, offering incentives to encourage beneficiation, while simultaneously removing barriers such as energy constraints. By creating an investor-friendly policy environment, South Africa could reindustrialise and attract both domestic and foreign investments. The case for incentives over mandates Minister of Mineral and Petroleum Resources, Gwede Mantashe, recently proposed measures to promote local beneficiation, including taxing primary mineral exports and providing incentives like tax holidays or electricity tariffs linked to commodity prices. Given South Africa’s already financially and administratively burdensome mining regulatory framework, which poses significant challenges for those interested in capitalising on the country’s resources, mandating beneficiation would likely exacerbate these difficulties. Such a requirement would further increase the cost and complexity of doing business, potentially deterring much-needed investment in the mining sector. International models of incentivised beneficiation Looking to international examples, in a comprehensive reform effective 8 July 2024, the Argentine Congress introduced the Promotional Regime for Large Investments (RIGI), designed to provide certainty and legal stability for long-term investments in Argentina. A key element of this reform is the creation of the RIGI, which offers generous tax, trade, and foreign exchange benefits for 30 years to projects exceeding US$200 million in sectors such as forestry, tourism, infrastructure, mining, technology, steel, energy, and oil and gas. The government aims for RIGI to attract foreign direct investment (FDI) to export-oriented sectors, which are crucial as Argentina remains excluded from global capital markets. The RIGI has introduced a suite of tax

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