A lack of meaningful structural reform continues to weigh on the local mining industry, enabling persistent cost pressures to erode South Africa’s competitive edge, Minerals Council South Africa says.
According to data published by the council on Wednesday, the cost of power surged almost 16% year on year in November 2025, extending a trend that has led to droves of local smelters being idled in recent years.
Council members, who account for 90% of the country’s mineral production, reported an 11.6% increase in water costs over the same period. Labour was about 6% more expensive than in November 2024.
The steep rise in core expenses for miners operating in the country, part of a decades-long trend, is easy to overlook in a time of substantial market tailwinds, particularly for the gold and platinum group metal (PGM) sectors.
High prices mask cost realities
Precious metal miners, who bear the brunt of input cost inflation in South African mining, have enjoyed a cash windfall in recent months as the price of gold continued its steady ascent while platinum has rocketed to record highs.
Gold is on track to hit $5,000/oz this year, more than double its 2023 peak, and platinum is forecast to reach $3,000/oz — which would amount to a tripling in value in less than two years.
Against this backdrop, the JSE precious metals & mining index is now valued at more than three times what it was just a year ago.
Yet lofty share prices obscure a sobering reality: South Africa’s underlying cost structure remains a competitive disadvantage.
“Despite shifting sentiment regarding South Africa as an investment destination, we have yet to see substantive reforms to the institutional arrangements that matter most for mining: the labour market, the electricity market, Transnet’s logistics system and other structural constraints to growth,” said Minerals Council economist Andre Lourens.
Setting favourable market conditions aside, local mining majors have had some grounds for optimism in recent months. Crude oil prices, a driver of fuel costs, were 13.4% lower in November 2025 than a year earlier, meaning reduced fuel and diesel costs across the industry.
Falling interest rates also offered encouragement, with the Reserve Bank’s cut of 25 basis points in November bringing its repo rate to 6.75%, with financing costs 8.9% below their level in November 2024.
A stronger rand also made some intermediate goods cheaper, including imported machinery, equipment and chemicals. As a result, overall mining input cost inflation eased slightly to 2.7% year on year in November, from 2.8% in October.
These tailwinds, however, do not reflect progress on the structural reforms the government promised to local mining houses.
“This outcome seems less a reflection of genuine improvement in South Africa’s underlying cost structure and more indicative of a cautious, wait-and-see environment across the sector and world economy,” Lourens said.
“While there are encouraging signs that some of these areas are beginning to progress, meaningful, sustained reform has not yet materialised.
“Until it does, the sector is likely to remain constrained, even in the face of temporarily subdued input cost pressures,” he said.
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