Mining Industry Trends in South Africa 2023

The mining sector provides materials essential for all sectors of the economy and creates employment, investment, government revenues and infrastructure. Recent growth came on the back of record commodity prices. The pandemic and invasion of Ukraine played an important role in supporting higher commodity prices from 2020 to 2022.

With the exception of gold, commodity prices decreased in 2023. The fiscus is benefitting from tax, royalties, PAYE and transfer duties. Challenges include rising input costs, safety, and rail and port logistics constraints.

Key Opportunities

• Circular economy opportunities (reducing, reusing, recycling).
• Explore and develop new mineral deposits and expand existing mines.
• New technology and innovation.
• Producers investing in R&D and innovation to extend the life of mines. SME mining development.
• Social development of rural areas that enhances industry stability.
• The demand for certain commodities could rise on the back of creating a carbon-neutral environment.

Challenges

• China’s impact on global commodity markets (e.g. economy slowing down).
• Commodity price fluctuations.
• Electricity and water supply.
• Environmental activism (e. g. opposition to coal mining).
• Illegal mining.
• Material input cost increases (mining at depth, wages, electricity, fuel).
• Above-inflation administered price increases are specifically problematic.
• Resource nationalism.
• Substitution of mineral products by other mineral and non-mineral products.

Trends

Certain commodities needed for the green transition will become in higher demand. Commodity prices are softening after a three-year run. Cost pressures in the mining industry are largely driven by above-inflation increases. Labour productivity is on the decline. Mining production has declined since the global financial crisis. Mining shares have been outperforming the rest of the market over the longer-term. South Africa faces a depletion of its mineral reserves in the near future. South Africa’s mineral wealth is predominantly destined for exports markets. The mining industry remains an important contributor to the South African economy.

Market Outlook

The World Bank projects that base metal prices will fall 5% in 2024 due to slowing demand and rebound by about 6% in 2025. In the medium- to longer-term the minerals and metals industries will play a growing role in creating a carbon-neutral environment. Metals that play a role in renewable energy will be in demand, resulting in higher prices. Prolonged disruptions to energy markets can raise production costs of energy-intensive metals such as aluminium and zinc. Heightened geopolitical risk could lead to much higher gold prices. In an environment where government provides policy certainty, administered prices are tolerable and logistics problems are solved, the mining industry can retain its historical importance in the economy. However, over the short-to medium-term these challenges will remain.

Report coverage

This report on trends in the mining industry includes information on the industry’s contribution to the economy, production, sales and exports, commodity prices, industry performance and issues and developments such as mineral resource depletion, critical metals for energy transition, employment and productivity and safety.