It’s bleak street in SA mining as rising fuel price starts to take its toll

Oil containers at the Port of Fujairah, as the US-Israel conflict with Iran limits marine traffic in the Strait of Hormuz, in Fujairah, United Arab Emirates. Image credit: Reuters/Amr Alfiky/File Photo

Mining production performed dismally in March 2026 compared to January (4.6%) and February (9.7%), taking a nosedive and reaching only 2.5% year-over-year (y-o-y).

According to the Minerals Council South Africa (MCSA), the West Asian conflict has sharply increased fuel expenditure.

The average monthly spending for the sector nearly doubled compared to last year, increasing from R2.9bn in 2025 to approximately R4bn in April 2026.

On that grim note, let's take a look at the numbers!

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On the up and up

These segments contributed to the March increase, collectively representing 43.2% of the total mining production basket:

• PGMs (+10.5%, contributing 2.6 percentage points): Production was supported by
  operational stability compared to a year earlier and a base effect from recovering demand for internal combustion engine (ICE) vehicles.
  
• Gold (+17.1%, contributing 1.6 percentage points): Heightened geopolitical
  uncertainty reinforced gold’s role as a safe-haven investment.
  
• Manganese (+14.4%, contributing 1.1 percentage points): Driven by strong Chinese demand, in March 2026, manganese production was supported by China’s manganese ore imports, which surged 38% month-on-month (m-o-m) to 3.2 million tonnes, while South Africa’s exports to China rose to 2.2 million tonnes from 1.4million tonnes a year earlier.

Dropping low

Conversely, production contracted y-o-y in the following segments, representing 44.8% of the total mining production:

• Coal (-9.6%, subtracting 2.5 percentage points): Sixth consecutive monthly decline, largely due to reduced domestic demand. Export volumes rose 9.8% y-o-y, with shipments to India up 19.7% after a 71.8% surge in February. Despite the rise in exports, domestic demand still represents more than two-thirds of total consumption.
  
• Iron ore (-2.7%, subtracting 0.5 percentage points): Despite strong export growth (+21.3% y-o-y, with exports to China up 29.4%), the drop in production is attributed to a base effect due to a mine placed in care and maintenance in November 2025 after losing its sole domestic customer. The drop in production was the fourth in five months (to March 2026).
  
• Diamonds (-8.5%, subtracting 0.5 percentage points): Following February’s 13.1% increase in production, the industry remains under pressure. The MCSA says it is engaging stakeholders to explore relief measures.

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Profits

The MCSA says that the sharp increase in mineral sales earnings highlights the sector’s potential to catalyse inclusive growth in South Africa.

The council believes that with supportive policy and regulatory frameworks, the industry could achieve even greater outcomes.

Year-to-date mineral sales reached R242bn, up R67.4bn (39%) from the same period
in 2025.

PGMs (+113.5%) and gold (+51.7%) were the main drivers, with March sales of R25bn and R15.3bn respectively.

Price developments in March 2026 included:

• Rhodium: +105.7% ($11,285)
  
• Platinum: +109.6% ($2,054)
  
• Palladium: +62.4% ($1,556)
  
• Gold: +62.8% ($4,863)
  
• Coal: +24.9% ($111.1)
  
• Iron ore: +3.8% ($107.6)

Based on these numbers, the MCSA expects mining production to increase marginally by 0.3% in Q1 2026 (quarter-on-quarter).