KEY POINTS
- Mining output fell 4% in June after a 5.1% drop in May.
- Diesel prices remain more than 20% above pre-conflict levels.
- Mineral sales rose R124 billion despite weaker production.
South Africa’s mining sector recorded another decline in production in June, with higher fuel costs and global economic pressures weighing on producers despite stronger commodity prices.
Mining production fell by 4% year-on-year in June 2026, following a 5.1% decline in May, according to Bongani Motsa, Chief Economist at the Minerals Council South Africa.
The June decline marked the second consecutive monthly contraction, highlighting growing pressure on mining companies.
Motsa said the conflict involving the US, Israel and Iran has contributed to the sector’s challenges, particularly through its impact on fuel prices.
Diesel prices, which are critical to mining operations, increased by more than 20% after fuel prices rose in South Africa from April.
By August, diesel prices remained more than 20% above levels recorded before the conflict, increasing operating costs for mining companies and putting pressure on production.
Electricity costs and broader economic uncertainty are also adding to the challenges facing producers.
First-half production remains positive
Despite the recent monthly declines, South Africa’s mining production for the first six months of 2026 was 2.2% higher than during the same period in 2025.
Growth was driven mainly by chromium, manganese, platinum-group metals and gold, which collectively account for nearly half of the country’s mining production.
However, coal, iron ore and diamonds continued to face pressure from logistics challenges and weaker global demand.
While production volumes weakened, the value of mineral sales increased significantly.
Mineral sales between January and June 2026 were R124 billion higher than in the corresponding period of 2025.
The increase was largely supported by stronger commodity prices, allowing mining companies to generate higher revenues despite producing less.
Several major minerals recorded significant year-on-year price increases in June.
Gold rose 26.4% to $4,237, platinum increased 40.2% to $1,738, while rhodium climbed 46.3% to $8,042. Coal, iron ore and palladium also recorded notable gains.
These higher prices have helped cushion the impact of weaker production and rising operating expenses.
The Minerals Council South Africa said an improved policy and regulatory environment could help the mining industry expand and contribute more to economic growth.
It is developing an Investment and Growth Strategy aimed at increasing investment and expanding the sector.
Motsa also called for lower electricity tariffs, saying reduced energy costs would help mining companies manage expenses and support long-term growth.
