Germany has agreed to extend a €200 million (US$234 million) concessional climate loan to South Africa, as the two countries pledged to deepen cooperation on critical minerals and clean energy projects.
The funding will support investment in South Africa’s electricity grid and expansion of renewable energy capacity, South African Foreign Minister Ronald Lamola said on Monday following talks in Berlin with his German counterpart Johann Wadephul.
The agreement comes as South Africa seeks to accelerate its transition away from coal and address persistent power shortages that have weighed on economic growth.
Lamola said additional German and European Union funding for green hydrogen initiatives and battery value chain development had also been increased by more than €270 million.
“The support will go a long way in advancing our energy transition and strengthening industrial cooperation,” Lamola said.
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The partnership also includes enhanced collaboration on critical minerals — a sector of growing strategic importance as countries race to secure supplies for clean energy technologies such as electric vehicles and energy storage systems.
South Africa, which holds significant reserves of minerals such as platinum group metals, manganese and vanadium, is positioning itself as a key player in global supply chains linked to the energy transition.
Germany, Europe’s largest economy, has been seeking to diversify its access to such resources while supporting partners in scaling up renewable energy and green industrial capacity.
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Lamola expressed appreciation for Berlin’s continued support, particularly amid strained ties between Pretoria and United States during the second term of President Donald Trump.
Relations between South Africa and Washington have come under pressure over Pretoria’s foreign policy positions and domestic legislation, with Washington taking several diplomatic steps this year.
Trump has excluded South Africa from meetings linked to the Group of 20 (G20) and criticised the country’s stance on global issues as well as aspects of its domestic race laws.
He also boycotted a G20 summit held in Johannesburg in November, highlighting tensions between the two nations.
Despite these challenges, Lamola said South Africa continued to enjoy strong backing from other international partners.
“We feel we are part of it (the G20) because of the support that we have received from Germany and from other G20 members,” he said.
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Analysts say Germany’s financial and technical support underscores Europe’s broader strategy of strengthening ties with African economies, particularly in areas linked to climate transition and resource security.
The concessional nature of the loan — typically offered at below-market interest rates — is expected to ease South Africa’s financing burden as it undertakes costly upgrades to its energy infrastructure.
South Africa has been working with international partners under its Just Energy Transition framework, aimed at reducing reliance on coal while safeguarding jobs and economic stability.
The expansion of cooperation on green hydrogen and battery value chains is also seen as a step toward developing local industries and boosting value addition, rather than exporting raw materials.
For South Africa, securing stable funding and partnerships remains critical as it balances energy security concerns with climate commitments.
For Germany and the European Union, the deal reinforces efforts to build resilient supply chains and support emerging markets in the global shift toward cleaner energy systems.
