Recovery in South Africa’s mineral productivity could help uplift the country’s GDP growth

Recovery in South Africa’s mineral productivity could help uplift the country’s GDP growth although analysts see further improvements to port and rail logistics as providing impetus to the mining sector, which raised production by 4.4% year-on-year in July.

The largest positive contributors to South Africa’s year on year mining sector production growth for July included iron ore, which rebounded 12.2%, platinum group metals (PGMs), which grew 6.2% ‘other’ metallic minerals whose output was stronger by 45.8%.

On a seasonally adjusted basis, South Africa’s mining production increased by 1.0% in July 2025 compared with June 2025. This followed month-on-month changes of 0.4% in June 2025 and 3.7% in May 2025, according to data from StatsSA.

“Mining production (not seasonally adjusted) expanded by 4.4% y/y in July, accelerating from 2.5% (previously 2.4%) in June. This marks a solid start to 3Q25, following a decent contribution to 2Q25 GDP growth. The outcome was stronger than the Bloomberg consensus expectation of 3.4%,” said Thanda Sithole, FNB senior economist.

Eight of the 12 mining divisions recorded higher production in July, with mixed outcomes across key sectors such as PGMs, iron ore, manganese, gold, and coal.

After iron ore and PGMs output rose in July, coal increased was also firmer by 1.4% year on year following a 4.0% gain in June, though it registered a 1.3% month on month. Inversely, manganese ore production fell by 3.3% year on year “though this marked a slower pace of decline” compared with -13.0% in May and -8.2% in June.

South Africa’s gold production dipped marginally by 0.4% y/y but recorded 0.9% month on month growth, helping the local industry to benefit from currently elevated bullion prices.

StatsSA said mineral sales at current prices increased by 2.2% year-on-year in July 2025, with the largest positive contributors including PGMs at 24.8% and contributing 4.7 percentage points and iron ore which was 20.5% stronger and contributing 1.6 percentage points.

Negative contributors to sales for the period under review were gold, which declined -8.7% and contributing and manganese ore which fell -30.9%.

“Seasonally adjusted mineral sales at current prices increased by 10.0% in July 2025 compared with June 2025. This followed month-on-month changes of -7.1% in June 2025 and 5.8% in May 2025,” said StatsSA.

However, Sithole said the “ongoing recovery in mining activity is encouraging, particularly against the backdrop of subdued domestic growth and elevated global trade” uncertainty.

“If sustained, this momentum would support GDP growth. However, the weakness recorded in the first half of the year suggests mining output could still contract by close to 1% in 2025,” explained Sithole.

With SA mining output down by 1.9% on a year-to-date comparative, the spotlight has been on reduced activity in key sectors such as PGMs, gold, and coal.

“While favourable terms of trade and US tariff exemptions on certain critical minerals may provide some support, soft external demand and persistent uncertainty, should keep global growth sluggish. Domestic structural reforms to improve port and rail logistics will be critical to boosting medium- to long-term mining activity,” added Sithole.

The Minerals Council says that “mining was the biggest positive contributor to economic growth” for South Africa in the second quarter after strengthening by 3.7%. This stronger growth for the second quarter was on account of increased production in PGMs, coal, gold, chrome, diamonds, and nickel.

“While mining registered positive growth, structural constraints affecting the sector remain. South Africa continues to struggle to attract investment into new mines,” said Bongani Motsa, acting chief economist for the Minerals Council.

The 2024 Fraser Annual Survey of Mining Jurisdictions rank South Africa 68 out of 82 jurisdictions in the “investment attractiveness” category.

BUSINESS REPORT