Motsepe and other mining giants to benefit from the Middle East conflict

The longer the Middle East conflict lasts, the more pressure South African households are likely to feel on their finances. However, there is a silver lining: prolonged tension tends to push up the value of gold and other precious metals.

Gold and platinum group metals (PGMs), such as platinum, palladium, and rhodium, form a meaningful part of the country’s export basket.

If the Middle East conflict pushes gold and PGM prices higher, many South African mining tycoons, such as African Rainbow Minerals founder Patrice Motsepe, could stand to benefit, as higher mineral prices potentially boost the country’s mining sector and support economic growth.

However, the gains may not be straightforward, as rising fuel costs and broader global instability linked to the conflict could eat into some of those benefits.

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Rising fuel costs

On Monday Midday (Central Africa Time), Brent crude oil was trading at $99.96 per barrel, up from $87.19 on Friday. The global oil benchmark was trading at over $100 per barrel, a first in four years.

This follows Middle East leaders’ warning to Washington that a war with Iran could push oil above $100 a barrel. The rand traded at 16.16 against the dollar. These two facts are about to hurt households’ wallets as a significant petrol price increase is expected.

South Africa imports all of its oil. The country pays in dollars, but uses the rand. When Brent crude oil spikes, petrol prices follow within weeks. That means higher transport, food, and retail costs, and interest rate cuts getting pushed further out.

Mining sector to benefit

Johann Els, chief economist at PSG Financial Services, said gold is especially sensitive to safe-haven demand, while PGMs often track risk-off sentiment and industrial cycle expectations. Here’s how the country’s mining sector is set to benefit from the conflict.

“Higher rand-denominated export prices for gold and PGMs directly boost revenue for mining companies and, indirectly, tax receipts for the fiscus,” said Els. “This helps cushion the economy from more expensive oil imports.”

He highlighted that the elevated geopolitical tensions also help cushion the current account. “Improved terms of trade, where export prices rise faster than import costs, can stabilise or even improve the current account balance, reducing vulnerability to external funding shocks,” added Els.

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Pressure on inflation

“In effect, the economy benefits from a partial ‘automatic stabiliser’: higher revenues from key exports help mitigate the impact of more expensive fuel imports,” said Els.

“This terms-of-trade buffer reduces the net macroeconomic impact for South Africa compared with a scenario in which commodity prices were weak or falling.”

However, he warned that the key downside risk is a significant escalation, particularly if major oil supply disruptions occur, for example, through attacks on key export infrastructure or shipping routes.

“In such a scenario, oil prices could rise sharply, placing additional pressure on inflation, real incomes, and corporate margins, with a more pronounced impact on growth.”

Motsepe’s mine expands PGMs operations

The Middle East conflict broke out at a time when Motsepe‘s mining company, African Rainbow Minerals (ARM), was set to expand key PGM operations.

In the company’s interim results for the six months ended 31 December 2025, released on Friday, ARM said the Merensky Reef project at the Two Rivers mine, which was placed on care and maintenance in July 2024 due to weak PGM prices, could be restarted once market conditions improve, with the company currently evaluating the timing of recommissioning the project.

The Two Rivers Mine produces PGMs, mainly platinum, palladium, rhodium, and gold as a by-product.

The results show that ARM benefited greatly from PGM performance during the period. “ARM Platinum headline earnings increased by more than 200% to R704 million, compared to the R689 million loss in first half of 2025, largely due to the significant increase in PGM rand basket prices.”

The country has several major PGM-producing mines, including the Mogalakwena Mine owned by Anglo American Platinum, the Marikana Mine operated by Sibanye-Stillwater, and the Impala Rustenburg Mine owned by Impala Platinum.

South Africa is better positioned

 Els said the country is now in a considerably stronger position to withstand global shocks than a few years ago, thanks to a combination of policy adjustments and market-driven improvements.

“Fiscal consolidation has strengthened credibility, with authorities taking meaningful steps to stabilise debt-to-GDP ratios and reduce the primary deficit,” he said.

“These measures have anchored long-term expectations, boosted investor confidence, and lowered the risk of sudden funding crises. Public debt growth has slowed, and the government’s medium-term fiscal framework is more credible than during the peak of post-2020 fiscal stress, giving policymakers greater flexibility to respond to shocks without jeopardising market confidence.”

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