The mining industry in South Africa has been severely affected by persistent electricity outages, leading to a decline in mining output.
- In addition to electricity outages, rail disruptions caused by cable theft and infrastructure vandalism have further hampered the transportation of minerals to ports, impacting mining operations.
- The mining industry in South Africa has been shrinking for years due to declining ore grades, and the COVID-19 lockdowns in 2020 further disrupted production.
- Mining output and sales for the 12 months leading up to May 2023 have declined by 4.6% and 4.2% respectively compared to the same period a year earlier, according to data from the Minerals Council SA.
- Despite some recovery at the beginning of 2021, the mining industry has struggled to reach production levels seen in 2019, with output in May 2023 down by 7.8% from pre-pandemic levels.
- South Africa is a major producer of PGMs, and the output decline has led to a surge in prices of these metals. Sibanye-Stillwater has warned of a potential 20% decline in PGM output in 2023 due to power supply issues.
- Rail capacity issues have forced coal and iron ore miners to reduce output, leading to stockpiles at mines and affecting exports. Thungela Resources, the largest thermal coal exporter, was unable to export 300,000 metric tonnes of coal in the first half of 2023 due to rail problems.
- The infrastructure problems, combined with lower commodity prices, have resulted in reduced mining tax revenue, which poses a risk to South Africa’s budget deficit target.