SA mining under the gun as US-Israeli attack on Iran piles on the pressure

For the second consecutive month, mining production (unadjusted) remained under pressure in June 2026, extending the contraction recorded in May.

Following a 5.1% year-on-year (y-o-y) decline in May, output decreased by a further 4% y-o-y in June.

While it is still early to draw definitive conclusions, the US-Israeli attack on Iran appears to be a major contributing factor, initially through high fuel costs. Other factors may also have played a role.

The war started on 28 February 2026, and fuel price hikes in South Africa took effect in April, resulting in an over 20% adjustment to diesel prices, the fuel predominantly used in the mining sector.

Weaker global demand

Production was 2.2% higher in the first half of 2026, with growth highly concentrated in chromium, manganese, PGMs and gold. These minerals represent 48.7% of total mining production, while coal, iron ore and diamonds remain under pressure.

The underlying trend points to a more divergent mining sector, with minerals linked to industrial and energy transition value chains such as chromium, manganese and nickel outperforming bulk commodities constrained by logistics and weaker global demand conditions.

The positive year-to-date (YTD) mining production performance indicates that, despite weaker monthly performance in May and June, cumulative production in the first half of 2026 remained above the level recorded during the corresponding period last year.

This does not downplay May and June’s poor production performance.

Sales on the up

Despite weaker production volumes, mineral sales improved substantially.

When comparing mineral sales recorded between January and June 2025 with the corresponding period in 2026, sales increased by R124bn.

This suggests that stronger commodity prices helped support revenue performance, even as production output weakened.

The divergence between declining production and rising sales points to the important role of price movements in sustaining the sector’s nominal income performance.

Commodity price developments in June 2026 were generally supportive, with notable y-o-y increases recorded across several key minerals:

• Coal increased by 29.3% to $117.5
• Gold increased by 26.4% to $4,237
• Iron ore increased by 7.9% to $103.8
• Palladium increased by 21.3% to $1,277
• Platinum increased by 40.2% to $1,738
• Rhodium increased by 46.3% to $8,042

Under pressure

Minerals Council South Africa (MCSA) chief economist Bongani Motsa says the June 2026 data reinforce three important structural themes.

While year-to-date (YTD) production performance remains positive, an undercurrent of headwinds appears.

This is largely attributable to the conflict in the West Asia, which has increased diesel prices — a major fuel source for mining operations — by more than 20%.

The conflict has also heightened volatility in the global economy.

Back home, lower electricity tariffs — both in annual percentage increases and in absolute terms — for the mining sector would go a long way toward reducing input costs, supporting sector growth and clarifying the policy takeaway.

Several African diamond-producing countries have endorsed the Beijing Declaration on Natural Diamonds and have indicated their intention to formally sign the declaration in support of the initiative with the Chinese government.

Signing of the declaration, which aims to sustain and strengthen demand for natural diamonds in China, is scheduled for 15 September 2026.

The MCSA says that a signature by the South African government would not only send a positive signal to the market but also indicate commitment to an industry that has been at the centre of mining in this country.

Motsa says, “Our view at the Minerals Council is that, with an enabling policy and regulatory environment, including competitive administered prices, the mining sector can catalyse inclusive economic growth in South Africa.”

The MCSA is developing an investment and growth strategy aimed at expanding the sector.