South Africa’s mining output slumps 12.7% as rising costs add to industry pressures

South Africa’s mining industry is in trouble, with production having fallen by a notable 12.7% year on year in August, following a revised 7.0% slump in July.

Last month’s decline in production was largely driven by platinum group metals (PGMs), which fell by 6.1%, while coal and iron ore were also among the main contributors, recording respective declines of 3% and 2.4%.

Chromium and manganese bucked the trend, adding a combined 0.9% to the headline outcome and outperforming bulk commodities, which were constrained by logistical challenges and weaker global demand.

According to Investec economist Lara Hodes, the energy-intensive mining sector continues to face elevated input costs as a result of the war in the Middle East, which has sent fuel prices spiralling this year.

To that end, the Mining Composite Input Cost Index (MCI) increased by 3.7% year on year in August, marginally down from July’s 3.8% reading.

Other domestic challenges include logistical bottlenecks, failing infrastructure and the high cost of electricity, with the cost per kilowatt-hour having increased by approximately 1,185% between 2003 and 2025.

“Few businesses, particularly electricity-intensive industries such as smelters, can absorb increases of this magnitude and remain internationally competitive,” the Minerals Council South Africa said.

On the upside, mining has been identified as one of three priority economic sectors in the third phase of the Government-Business Partnership, Hodes added.

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