Rare Earths and Why SA Suddenly Matters

Key points

• The escalation over rare earths has reignited supply-chain concerns, but also drawn attention to South Africa’s emerging potential as a credible non-Chinese supplier, supported by projects such as Steenkampskraal and Phalaborwa, which are advancing toward commercial viability under the 2025 Critical Minerals & Metals Strategy.
• While the strategy aims to move South Africa up the value chain through beneficiation and local refining, the country remains far from realising this potential. Broader economic constraints, including low investment, weak infrastructure, and fragile industrial output, continue to limit growth momentum and delay benefiting the ZAR.
• Trade diplomacy will be a key swing factor. Trade Minister Parks Tau signalled progress toward a “reciprocally beneficial” deal with Washington to ease 30% tariffs on South African exports. If paired with progress on AGOA renewal and tangible movement in the rare-earth sector, this could reinforce South Africa’s trade credibility and underpin medium-term currency stability.

Baseline view

South Africa’s failure to leverage the broader commodity boom leaves the ZAR exposed. The ZAR’s medium-term outlook depends on whether policymakers can deliver reform, secure tariff relief, and accelerate investment in new-economy sectors such as rare earths. If Pretoria follows through, improved trade dynamics could strengthen the ZAR further out. However, without concrete action, the rally in terms of trade will not translate into durable currency gains.

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