Declining Production and Rising Challenges in South Africa's Precious Metals and Minerals Mining Industry

Strategic Insights -

The mining of precious metals and minerals in South Africa is facing significant challenges, with declining production and rising input costs affecting the industry's overall performance. According to a report by ResearchAndMarkets.com, the production of diamonds, gold, and platinum group metals (PGMs) has been declining over the past several years, with exports of precious metals and minerals increasing by 10% in 2024 due to the rising gold price. However, companies are struggling with increasing input costs, illegal mining, and low PGM and rough diamond prices, which are impacting their operating margins.

Key Takeaways:

  • The production of diamonds, gold, and PGMs has been declining over the past several years, with gold output on a declining trend due to the increasing depth of operations, ageing infrastructure, and falling labour productivity.
  • The increasing gold price has allowed producers to continue producing from marginal shafts and extend long-life shafts due to improved profitability.
  • Companies are facing significant challenges, including rising input costs, illegal mining, and low PGM and rough diamond prices, which are impacting their operating margins.
  • Several companies are re-opening closed mines and developing shallow, low-cost underground mines as a relatively low-cost, low-risk opportunity in retreatment of tailings storage facilities.
  • Mining companies spend an estimated R2.5bn per year on extra security measures to combat illegal mining, and there is pressure on listed companies to decarbonise their products.
  • The rate of decline in gold production is expected to slow as high gold prices allow shafts to remain profitable for longer, and a few new mines are developed.
  • Uranium demand is expected to exceed supply, but higher prices could lead to increased production.

Statistics:

  • The production of diamonds, gold, and PGMs has been declining over the past several years.
  • Gasoline and diesel fuel vehicles are a major source of PGM demand (PGM demand is expected to decline as internal combustion engines are phased out).
  • Renewable energy sources will account for an increasing share of PGM demand (PGM demand is expected to increase due to their use in renewable energy systems and the electrification of transport systems).
  • Diamond output is decreasing as mines' reserves become depleted and no new mines enter production.
  • The industry spends an estimated R2.5bn per year on extra security measures to combat illegal mining.
  • South Africa's production of diamonds, gold, and PGMs has been declining over at least the past several years.

Sources:

  • ResearchAndMarkets.com - "The Mining of Precious Metals and Minerals in South Africa 2025" report.
  • De Beers Consolidated Mines (Pty) Ltd.
  • Petra Diamonds Ltd.
  • Trans Hex Operations (Pty) Ltd.
  • Dmi Minerals South Africa (Pty) Ltd.
  • Ekapa Mining (Pty) Ltd.
  • Botswana Diamonds Plc.
  • Alexkor Soc Ltd.
  • Sibanye-Stillwater Ltd.
  • Gold Fields Ltd.
  • Harmony Gold Mining Company Ltd.
  • DRDGold Ltd.
  • Pan African Resources Plc.