Gold’s blistering run has buoyed hopes that the mining sector will emerge as a timely buffer for South Africa’s strained fiscus, as precious metals promise to bolster state coffers this year.
On Monday, the price of safe-haven gold soared past $5,000/oz, well ahead of schedule and just less than a month before finance minister Enoch Godongwana delivers his budget speech.
The rally comes after a challenging year for the Treasury’s revenues, in which profitability pressures in the local mining sector weighed on the nation’s strained public finances.
More than two years of suppressed platinum group metal (PGM) prices, coupled with double-digit electricity tariff hikes and the rising cost of labour and water, saw local mining companies pay only R43.6bn in taxes in 2024, which is 49% lower than in 2023.
Treasury royalties fell by a similar margin, down 37% to R16bn, while VAT payments declined 24% to just R21.5bn.
In the PGM sector, where stubbornly low prices forced miners to cut back on production, Treasury royalties dropped a staggering 59.8% to just R3.6bn.
In recent months, however, the outlook has changed dramatically, fuelling hopes of a rare fiscal bright spot. As investors dump bonds and currencies in the face of US President Donald Trump’s erratic stance on international trade, demand for South Africa’s metals has ballooned.
Analysts have sharply raised their PGM forecasts as tariff uncertainty and sustained market deficits fuelled a flock to platinum and palladium in the second half of 2025.
After recording its strongest annual performance on record in 2025, the price of platinum is now expected to breach $3,000/oz, more than triple the closing price at the end of 2024.
Palladium has climbed just shy of 30% this year after more than doubling in 2025.
Earnings leverage
The upswing gives local PGM heavyweights, by far the biggest employers in South Africa’s mining sector, significant earnings leverage, freeing up capital to boost production or at least keep previously unprofitable operations alive.
Sibanye-Stillwater, in particular, has seen its share price skyrocket 375% in the past year as investors expect a cash windfall from its gold and PGM operations.
Copper, a central component of the portfolios of SA’s largest listed miners, has followed a similar trend.
Amid mounting fears of a supply crunch, the price of a tonne of the metal breezed past $13,000 for the first time earlier this month as US importers rushed to secure supplies before potential tariffs.
Last year, copper’s price soared 40% as Trump unveiled a 50% duty on the metal in hopes of stimulating domestic production. The US imports nearly half of its copper, a key input in electronics, electric cars, data centres and renewables.
Bumper profits
Investors’ confidence that record prices will fuel bumper profits in the sector has been reflected in the share prices of the JSE’s biggest mining companies.
Anglo American has added R223bn to its market cap in the past year while BHP and Glencore have added R398bn and R320bn, respectively.
Mining continues to be SA’s best performing sector this year, with the JSE precious metals and mining index up more than 215% in the past year. It peaked at a record 178,287 points on Monday.
As soaring prices open the door to more consolidation in the sector, the prospect of further dealmaking also offers encouragement for tax revenues.
The decision by Anglo to spin off PGM division Valterra gave the South African Revenue Service (Sars) a $388m boost last year, with Anglo attracting $63m in capital gains taxes through the process.
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