Precious Metals Rally Lifts South African Mining Out of Contraction

A robust recovery in precious metal production has pulled South Africa’s mining sector back into positive growth territory for the first quarter of 2026, shielding the broader economy from the impact of contracting bulk commodity output. The sector, which accounts for roughly 6% of the country’s nominal gross domestic product, expanded by 0.6% between January and March, reversing a 0.5% month-on-month contraction recorded in the final quarter of 2025.

The latest data published by Statistics South Africa highlights a stark divergence within the industry. The modest first-quarter growth was almost entirely underwritten by platinum group metals and gold, which offset significant production slumps in iron ore and coal. While the 0.6% expansion provides a necessary buffer for national economic growth expectations, it remains notably subdued compared to the 2.7% and nearly 4% gains recorded in the third and second quarters of 2025, respectively.

Platinum group metals emerged as the primary growth engine, registering an 8.5% jump in production and contributing 2.3 percentage points to the overall sector reading. Gold output followed closely with an 8.2% increase, adding a further 0.7 percentage points. These production increases were heavily incentivised by extraordinary price rallies across the precious metals complex.

Gold has continued to benefit from sustained safe-haven demand driven by heightened geopolitical uncertainty and shifts in US tariff policies early in the year. Bullion prices surged by approximately 65% throughout 2025 and added a further 8% in the first quarter of 2026. Platinum group metals experienced an even more dramatic price trajectory, soaring more than 130% in 2025 as tariff uncertainties and declining domestic supply created substantial market deficits after years of subdued demand.

Conversely, bulk commodities acted as a severe drag on overall performance. Iron ore production contracted by 6.6%, while coal output fell by 3.4%. The decline in iron ore occurred despite major producers like Kumba Iron Ore maintaining their full-year guidance, as the sector grappled with stockpile management, adverse weather conditions affecting rail logistics, and a structural contraction in Chinese steel production. Coal output remained under pressure from weak global thermal demand amid the ongoing energy transition and persistent logistical constraints on the Transnet freight rail network.

Despite these operational headwinds in bulk commodities, the financial windfall from the precious metals rally has significantly bolstered sector revenues. Total mining sales at current prices increased by 6.6% in the first quarter compared to the preceding three months. The impact was particularly pronounced in March, when total sales surged by 30% year-on-year. During that month, platinum group metals contributed 21 percentage points to the sales growth, followed by gold at 8.2 percentage points and chromium ore at 2.9 percentage points.

This revenue surge extends beyond corporate balance sheets, providing critical support to the national fiscus. Tax collections from the mining sector climbed by 29% in 2025, contributing heavily to the South African Revenue Service crossing the historic R2 trillion net revenue milestone for the recent fiscal year.