Codera: Mining patent data shows innovation is lagging

Innovation is an unappreciated leading indicator for industry health decades down the line. We overestimate how long it will take for a technology to be introduced, but underestimate how big the change will be.

This is self-evident in the tech economy, but the converse is also true; a lack of innovation leads to stagnation as the cost structure prevents operators from keeping up with changing demands.

In 2025 air travel is as uncomfortable and unprofitable as it was a decade ago because the technical advances over the decade have been minimal. Closer to ground, the more than 600,000 observations of SA patent data available since 1918 would suggest that the prospects for the local mining industry are similarly underwhelming.

Technical innovation and economic activity is the age-old chicken-or-egg dilemma for theorists. A prosperous country or industry has the available resources to invest in research & development (R&D), and technological improvements tend to lead to productivity gains. In this regard, patent registrations are a common proxy for the extent of innovation.

Across industries, the number of patents registered per capita has risen dramatically since the 1980s in many developed countries, particularly China. But in SA there has been a dramatic decline, particularly for patents registered by residents, as opposed to foreign people registering in the country.

SA per capita patent registrations are down from three patents per year by South Africans per 100,000 people in 1970, to about 0.5 in 2024. Even including patents by nonresidents that have risen a lot over the past two decades, total patents granted per 100,000 people are down from 35 to fewer than 15 over this period.

Even though we are very much aware of the scale of technological change and how it can change our lives, South Africans are becoming less inclined to do the R&D and register patents.

Similarly, the signs are not encouraging for SA mining. Since 2005, when detailed Companies & Intellectual Property Commission (CIPC) mining patent data became available, just fewer than 2,000 patents have been granted in mining in SA, but more than 80% of these were filed by nonresidents. As shown in the chart, South Africans have registered only 346 mining patents in the past 20 years, compared with 367 from the US and 347 from China.

SA’s contribution to global mining innovation has also declined dramatically. We estimate that the country’s share in global mining patent registrations has fallen from about 10% in the mid-1990s to just more than 4% in 2024. SA’s share of global mining patent applications is down to only 1% most recently.

A growing share of domestic mining patents are defensive — being registered by foreigners to ensure no infringement occurs locally, while many of the remaining local patents are refinements of earlier innovations.

Many of the technologies used in mining in SA are also owned by multinational mining companies that have either shifted their headquarters offshore or have been acquired by foreign firms.

SA’s role in global mining has been under pressure for many decades. The country’s contribution to global gold production has fallen from almost 80% in the early 1970s to less than 5%. The volume of overall mining production in 2024 was lower than in 1980.

This has occurred during a period of phenomenally high commodity prices compared with earlier decades, in which countries such as Australia, China and the US have responded by increasing production. SA has failed to take advantage of this income windfall.

After more than a century, production of metals such as gold and platinum does become trickier and more expensive as shafts must be deepened, which tends to weigh on productivity. Estimates of total factor productivity growth have been negative in mining for more than a decade.

Load-shedding and policy uncertainty (such as overlicensing and mineral rights) have played a key role in the industry’s investment drought and stagnant output.

The irony of SA’s earlier prominence in mining, and the crucial role it plays in the economy, is that it is an outlier among SA industries for how small government support and incentives are relative to turnover. Across industries, SA also lags significantly behind in R&D prioritisation compared with high-productivity economies, and has a relatively low number of researchers per capita compared with major emerging markets.

Yet SA has never lacked mining operator ingenuity — the workshops of many SA mines hide interesting innovations that the creators or companies have not thought to register. That is exactly the policy angle of our patent research: the net effect of government policy is to actively discourage investment in the creation of intellectual property in SA. Evidence of actual innovation and improved competitiveness should guide industrial policy decisions.

It is not as if SA’s industrial policy is a wilting wallflower, ignored by energetic politicians. In fact, you will struggle to find an industry, be it auto, film or even hospitality, that is not somehow included in industrial policy. But the duration and scope of the intervention is a clue to its efficacy — if everything has always been prioritised, nothing has been prioritised.

SA’s most recent National Development Plan, which is almost 500-pages long, does not even mention the words “intellectual property” or “patents”.

Over the long term, productivity is a key determinant of a country’s per capita income. Low investment in intellectual property creation and declining technological intensity of production threatens the economy’s ability to maintain even current living standards.

So what could be done to promote innovation and technological advancement in SA?

• Patent registration could be supported financially. It can cost hundreds of thousands of rand to get a good lawyer to advise on and register a patent, and the more technically complex, the more expensive. That is not a flaw in our system, but a friction nonetheless. The backyard innovator, studious engineer or workshop savant should not be kept from registering and monetising a patent because of administrative cost.
• The government should also reassess its fixation on policy interventionism generally, but particularly in mining. Administrative burdens and regulatory requirements should be reduced. The chance of this happening is low at best, but from experience, a large, organised push from industry for even small reforms often pays off.

• Dr Steenkamp is CEO of Codera Analytics and a research fellow with the economics department at Stellenbosch University. This article was co-written by Codera associates Jan-Hendrik Pretorius, Pietman Roos and Johan Hanekom.