Platinum group metals (PGMs) were the standout performer, expanding by more than 50% year-on-year and contributing the bulk of the overall increase.
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South Africa’s mining sector delivered a strong start to 2026, with production rising sharply in February, but underlying weaknesses and external risks continue to cloud the industry’s outlook.
According to Statistics South Africa, mining production increased by 9.7% year-on-year in February, building on a 5% rise recorded in January.
According to the Minerals Council South Africa, the surge was largely driven by platinum group metals (PGMs) and increased demand linked to China’s stockpiling strategy.
PGMs were the standout performer, expanding by more than 50% year-on-year and contributing the bulk of the overall increase. However, this growth was partly attributed to a low base in 2025 rather than a sustained structural shift in demand.
At the same time, the Minerals Council said China’s efforts to secure supplies of critical steelmaking inputs—including chrome and manganese—provided an additional boost. Production of these commodities rose significantly, offsetting declines in iron ore output, which fell by over 12% during the same period.
Despite the strong production figures, industry experts caution that the current momentum may not be sustainable.
Bongani Motsa, acting chief economist at the Minerals Council, on Wednesday said much of the growth reflects temporary factors rather than a broad-based recovery.
“South Africa’s mining sector entered 2026 with robust momentum, posting notable year-on-year production gains in February largely on the back of PGMs and China’s stockpiling of key steelmaking inputs,” Motsa said.
“However, the sustainability of this growth is questionable as much of the expansion reflects base effects rather than a structural demand shift across mineral commodities.”
The mixed performance across commodities highlights ongoing challenges within the sector.
Coal production declined by more than 12%, marking the fourth consecutive month of contraction, while iron ore output also continued to weaken.
On the revenue side, however, the sector experienced a significant uplift. Total mineral sales surged by more than 58% year-on-year in February, driven by strong performances in gold, PGMs, and chrome ore.
Rising global prices for precious metals—particularly rhodium, platinum, and palladium—played a key role in boosting earnings.
Year-to-date figures show a widening gap between 2025 and 2026 mineral sales, underscoring the impact of favourable pricing conditions and increased export demand.
Looking ahead, Minerals Council said the outlook remains cautious. Mining production for the first quarter of 2026 is projected to grow modestly by 1.3% quarter-on-quarter, suggesting that while headline numbers remain positive, underlying growth is uneven.
External risks are also mounting, particularly from geopolitical tensions in the Middle East. The ongoing conflict is expected to push up fuel costs significantly, with the mining sector’s monthly fuel bill projected to rise from an average of R2.9 billion to around R4 billion in April 2026.
Higher fuel costs, combined with rising inflation, could place additional pressure on mining companies’ margins. The potential for increased interest rates and tougher wage negotiations further complicates the outlook, given that labour costs account for a significant share of operating expenses.
Motsa warned that these factors could have both direct and indirect impacts on the sector, affecting profitability and operational stability in the months ahead.
While the strong February performance provides some optimism, it also underscores the sector’s reliance on external demand drivers and commodity price cycles. Without broader structural improvements and more consistent growth across key commodities, sustaining momentum will remain a challenge.
As the year progresses, the focus will be on whether the mining sector can build on its early gains or whether global headwinds and domestic constraints will weigh more heavily on performance.
BUSINESS REPORT