Miningweb Weekly: Peter Major – China’s $15bn iron gamble and SA’s 3% inflation shock

From hopes of turning South Africa into “Africa’s Switzerland” to fears over China’s mega mine in Guinea, mining veteran Peter Major joins Alec Hogg for a fiery Miningweb Weekly. They unpack how the Reserve Bank’s bold 3% inflation target could reshape mining, why Eskom and Transnet remain the industry’s biggest shackles, and how China’s iron ore play may threaten Kumba and South Africa’s competitiveness. Major doesn’t hold back — calling out bad policy, corruption, and missed opportunities holding the sector hostage.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here.Listen here.BizNews Reporter.South Africa’s mining industry is caught between hope and hardship. In the latest episode of Miningweb Weekly, mining veteran Peter Major joined Alec Hogg from Idaho to unpack the week’s biggest developments - from the Reserve Bank’s bold 3% inflation target to China’s $15 billion gamble in Guinea - and what they all mean for the future of South African mining.Major says the Reserve Bank’s decision to aim for 3% inflation could, in theory, make South Africa a “low-inflation geography,” similar to Switzerland. But, he warns, it will take more than words. “If anybody’s got credibility in government, it’s our Reserve Bank governors,” he told Hogg. “But the rest of government has to follow. You can’t just have the central bank behaving sensibly while the rest of the ministries are chaotic.”He recalls how the 1990s reforms under Chris Stals helped break South Africa’s addiction to double-digit inflation. “Once people believe inflation will stay low, it becomes self-fulfilling,” he says. “The benefits are huge.” He adds that if the Treasury and Reserve Bank truly work together, South Africa could enter its own “sweet spot” like the United States did during the Clinton era, when sound monetary policy and economic discipline created growth and stability.But for mining, Major says lower inflation alone won’t fix what’s broken. “People buy mining stocks as a hedge against bad government,” he says. “The biggest damage has come from destructive legislation and state interference. Unless that changes, the sector will stay under pressure.”He points to electricity, water, and labor costs as the main culprits. “You can’t run a mine without power and water, and government has total control over both,” Major explains. “They’ve plundered Eskom for decades. And compensation of employees has gone up way above inflation, even though productivity has collapsed.”Year-on-year, electricity costs have risen 15%, and water 11%. “That’s all above inflation and it’s killing mining,” he says. “It puts more mines out of business and prevents new ones from being built.” He argues that South Africa has done it before - when the 1990s reforms cut costs and boosted productivity - and could do it again if leaders act instead of talk.Even so, Major believes South Africa may have a better shot at low inflation than America under Donald Trump’s new administration. “Trump’s a serial spender,” he says. “He’s running a two-trillion-dollar deficit. If we hold the line, we can actually beat the States on inflation and turn South Africa into Africa’s Switzerland.”But he says it all depends on execution — and political will. “We can’t just talk about being business-friendly while keeping disastrous mining laws,” he says. “Those laws have strangled the industry. We have to get rid of them, and then add incentives for investment.”On the global front, Major warns of the impact of China’s giant Simandou iron ore mine in Guinea, which could soon produce 120 million tons a year. “That’s five to ten percent of the world market,” he explains. “Even small changes in supply move prices. This could push iron ore down $20 to $30 a ton — and that’s bad news for Kumba.”He adds that South Africa’s rail and port failures have made the problem worse. “We’ve gone out of our way to make our logistics the most inefficient in the world,” Major says. “Kumba could have grown instead of shrinking if we had functioning rail and harbor systems.”The mini-budget’s promise of R8.5 billion for Transnet’s Northern Corridor has left him skeptical. “Who’s going to spend that money?” he asks. “The mining companies are happy to invest if they control the spending. But government always wants to take the money and call the shots. That’s why nothing gets done.”As for the broader political landscape, Major doesn’t mince his words. “This government will change, just like Zambia and the DRC,” he predicts. “They’ll eventually throw out the bad legislation and beg foreigners to come back. But we’ll only attract serious capital when we have stability and clear rules.”He says investors already know South Africa still has more gold than any other country — “but it’s deep, it’s expensive, and you need trust in the system before you commit billions.” The same goes for the Northern Cape’s untapped copper reserves. “We’ve got huge potential,” he says, “but we’re sitting on it while the rest of the world moves ahead.”Looking abroad, Major sees the United States as the new mining hotbed. “America is open for business again,” he says. “They’re pushing through long-stalled projects. If you let mines make money, exploration follows. But in South Africa, even if you find a great deposit, there’s no buyer. Why would anyone fund exploration when the government keeps changing the rules?”Ultimately, Major’s message is blunt: good policy and stability create prosperity; bad policy destroys it. “Government needs to stop hiding behind excuses about what the electorate wants,” he says. “Ordinary people didn’t ask for nationalization or 30% handouts. They just want jobs and a fair shot.”If the Reserve Bank and Treasury can lead the way — and if the rest of government follows — he believes mining could once again drive South Africa’s recovery. But until that happens, he says, “We’ll keep watching other countries thrive while we keep talking about what could have been.”

Miningweb Weekly: Peter Major – China’s $15bn iron gamble and SA’s 3% inflation shock

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