The Ghost of Zimbabwe
In 2002, I sat under a baobab tree with a Zimbabwean farmer named Willem, his weathered face etched with worry. His 4,000-hectare farm in Matabeleland was a powerhouse—soybeans, wheat, and cattle that fed thousands and fueled exports.
Willem employed 150 locals, and his operation was a cog in Zimbabwe’s economic engine. But Mugabe’s land grabs were in full swing.
By mid-year, people he knew, former neighbors, came waving AK-47s and kicked him off his land, giving it to a regime loyalist who took everything of value, then let it turn to waste.
Unfortunately, this was a common story. Within a decade, Zimbabwe’s agricultural output tanked 70%, inflation hit 231 million percent, and supermarkets stood empty. People were starving.
Now, in 2025, South Africa’s is gearing up for a similar tale, though admittedly it is not as bad yet. But South Africa isn’t just an agricultural exporter. It is a major producer of hard assets —gold, platinum group metals (PGMs), zinc, coal, and more.
The parallels to Zimbabwe’s farm debacle are chilling. South Africa, once Africa’s industrial titan, is unraveling. GDP growth crawled to 0.4% in 2024, hammered by Eskom’s blackouts, Transnet’s broken rail lines, and a mining sector in freefall. The ANC’s mismanagement, bloated with corruption, mirrors Mugabe’s playbook. Land reform talks, though less brutal than Zimbabwe’s, spook investors, with white farmers holding 68% of arable land while being 7% of the population. Unemployment festers at 34%, and the rand has slumped 15% against the dollar since 2023. If South Africa’s metal production shrinks significantly, the economic carnage could dwarf Zimbabwe’s collapse.
Mining is South Africa’s lifeblood, contributing R489 billion to GDP in 2024 and employing 475,000 workers. The country dominates global supply: 80% of PGMs (platinum, palladium, rhodium), 40% of gold, and significant zinc, coal, and iron ore. But production is crumbling. Mining output fell 2.1% in 2024, with PGMs down 3.4% and gold off 4.8%. Zinc, critical for galvanizing, faces global deficits, with South Africa’s Gamsberg mine struggling under power cuts. Coal, powering 80% of Eskom’s grid, is bottlenecked by Transnet’s failures. Illegal mining—R70 billion lost in 2024—bleeds the sector, while labor strikes and aging mines add pressure. Imagine a 30% production drop across these metals. The fallout would be apocalyptic to South Africans but a boon to the prices of precious metals.
Start with the economy. Mining accounts for 50% of South Africa’s export revenue. A 30% metal production plunge would gut exports, turning the 3.2% current account deficit into a chasm. The rand would nosedive, spiking inflation as import costs for food, fuel, and medicine soar. Mining towns like Johannesburg and Phalaborwa would implode, with 150,000 jobs vaporized. Suppliers, from equipment makers to corner shops, would fold. Unemployment could hit 45%, igniting crime and protests in a nation where 2021’s riots killed 350. Food insecurity, already up with agriculture down 4.1% in 2024, would echo Zimbabwe’s 2008 starvation crisis, when maize production crashed 65%. Urban centers would face breadlines, and rural migrants would overwhelm cities.
The global ripple would be seismic. PGMs, vital for catalytic converters and hydrogen fuel cells, would skyrocket—palladium could hit $2,700/oz, platinum $2,500. Automakers and green tech firms would scramble, delaying EV and hydrogen projects.
Gold, a safe-haven asset, would surge past $5,000/oz as South Africa’s 40% supply share dwindles, fueling investor panic. Zinc, already in a 164,000-ton deficit globally, would choke construction and battery markets. Coal shortages would hike energy prices, with South Africa’s 15% share of global thermal coal exports gone. Russia and Canada might plug some PGM gaps, and Australia could boost coal, but their ramp-up would lag. Zimbabwe’s fledgling mines, like Tharisa’s, are a decade from relevance.
Socially, it’s a powder keg. Xenophobic attacks, fueled by jobless desperation, would spike—2024 saw anti-migrant protests in Soweto. Political instability, with the ANC’s grip weakening post-2024 elections, could birth a populist wave or worse. Zimbabwe’s 2008 hyperinflation sparked riots; South Africa’s urban poor, 60% living below $6/day, could ignite similar chaos. The government, drowning in 72% debt-to-GDP, lacks the cash for bailouts or welfare.
For investors, this scenario would be a huge opportunity. PGM ETFs like PALL or miners like Anglo American (JSE: AGL) could triple. Gold stocks like Harmony (JSE: HAR) and zinc plays like Vedanta (LSE: VED) would soar.
I’m not saying it will play out this way, but it is a real possibility. I do know that a shut down of South African mining is not priced into the precious metals market in any way.
All the best,
Christian DeHaemer
Outsider Club
