SOUTH Africa’s mining industry is struggling to turn its commodity-price windfall into higher production, with output still below pre-Covid levels despite much stronger profits and cash flows.
Mining production rose just 2% in the year to end-June and stayed at about 5% below 2019 levels, according to PwC’s SA Mine 2026 report.
Revenue among the mining companies analysed by PwC jumped 38% to R786bn, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose 74% to R214bn. Free cash flow increased 147%.
Gold and platinum group metals drove much of the improvement. Average dollar gold and platinum prices during the reporting period were 50% and 80% higher respectively than in the previous 12 months.
Revenue from the PGM companies analysed by PwC increased 59% to R429bn, while revenue from gold companies increased 41% to R185bn.
PwC’s analysis of the country’s mining revenue profile showed PGMs accounted for 28% of revenue in 2026, compared with 21% in 2025. Gold’s share increased to 23% from 19%, while coal’s declined to 20% from 25%.
Production lags
PwC Africa energy, utilities and resources leader Andries Rossouw said the industry now needed to use the commodity-price windfall to unlock longer-term growth.
“We saw disciplined capital allocation for the industry, really focusing on efficiencies, brownfield optimisation ... mine life extensions [and] selective growth,” he said.
“We haven't really seen the large-scale expansion that we would like to see.”
PwC’s findings echo concerns elsewhere in the industry that stronger prices may support existing operations without necessarily bringing substantial new production to market.
Edward Sterck, research director at the World Platinum Investment Council, told MiningMX last month that higher PGM prices were supporting the economics of South African mines and could result in modest supply increases over several years. But he did not expect the increase to be “transformative”.
Chrome and manganese were notable exceptions to the weak production picture. Rossouw said chrome had benefited partly from platinum group metal miners extracting ore from the UG2 reef, which also contains chrome.
Producers have installed recovery plants that allow them to sell chrome that would previously have been discarded on tailings dams, providing an additional source of revenue from existing operations.
Gold production also recovered 2% during the year, helped by higher prices. But PGM production remained below 2019 levels, while gold output was still on a longer-term declining trend.
Logistics remain another constraint on production. Transnet Freight Rail moved 167.9 million tons in the year to March, up 4.9% but still well below the 226 million tons transported in 2017/18. Coal deliveries improved to 58.5 million tons, but remained short of Transnet’s 65 million ton target for the export corridor.
Transnet has approved R6.77bn to rehabilitate the Coal North Corridor, but miners and private rail operators have raised concerns about whether its new open-access rail model is commercially viable.
These include weak service guarantees and the risk that operators could still have to pay access charges when the network is unavailable.
Mines get longer lives
An encouraging development is that South Africa’s existing mines now have longer expected lives.
Gold reserves increased from 68 million ounces in 2023 to 77 million ounces in 2026, lifting estimated average mine life from 27 to 29 years.
PGM reserves rose from 261 million to 298 million 4E ounces, extending average mine life from 38 to 43 years.
Iron ore recorded an even larger improvement, with reserves increasing from 696 million tons to 1.1 billion tons and average mine life rising from 13 to 23 years.
PwC South Africa mining partner Vuyiswa Khutlang said higher prices had strengthened the operating environment, while investment and innovation were helping miners extract more value from existing assets.
“The focus now is on translating these gains into sustained productivity, investment and economic value,” she said.
PwC said the increases were not only due to new discoveries. Higher prices meant resources that were previously too expensive to mine could now be mined profitably. Investment, drilling and better processing technology had also increased reserves.
In iron ore, improved technology meant material previously seen as waste could now be mined economically. In gold, high prices had supported deep, expensive mines that only a few years ago seemed close to the end of their lives.
Capital spending by the companies analysed amounted to R121bn in the past year, while capital commitments to projects under way exceeded R120bn.
Rossouw said local mining companies had invested substantially in South Africa, including in gold mine-life extensions, but they also had the option of deploying capital elsewhere.
He pointed to proposed PGM and copper developments as examples of new investment, but said much of their funding came from offshore. South Africa therefore had to compete internationally for both local and foreign capital.
Regulatory uncertainty remained another obstacle. One particular industry concern is the treatment of historic mine dumps and tailings under the proposed Mineral Resources Development Bill.
Existing owners would have two years to apply for these assets to be incorporated into existing mining rights or for new rights.
The Minerals Council South Africa has also opposed aspects of the bill, saying that in its current form it does not encourage the investment and growth the industry needs.
Its concerns include security of tenure, regulatory ambiguity and administrative discretion, as well as provisions affecting transfers of mining rights, beneficiation, historic tailings and stockpiles, mine closure and new applications.
Rossouw also pointed to what he called “execution uncertainty” over how long approvals and permits actually take.
“If you're an exploration company, you're not going to risk the chance that you don't get your permit in time in South Africa if you are assured that you will get it in time in another jurisdiction,” he said.
Asked specifically about the proposed amendments, Rossouw did not single out a particular provision but said clarity was needed on ownership and mining rights.
“The industry needs clarity on security of ownership and on tenure,” he said. “At the moment there's uncertainty created around those topics with some of these suggestions.”