Over the past year, South African mining companies have experienced a decline in performance and shareholder returns, according to PwC South Africa's '2023 SA Mine: Adapt to Thrive' report. This decline is attributed to several industry changes, including productivity and infrastructure constraints, price decreases for certain minerals, and rising input costs. These factors have led to reduced profits and operating cash flows for South African mining firms, although strong balance sheets have allowed them to increase investments and pay dividends.

In terms of revenue, there was a 5% decrease in rand terms between June 2022 and June 2023. Platinum group metals (PGMs) remained the largest contributor to industry revenue, followed by coal. However, PGMs revenue dropped by 33%, while iron-ore and coal revenues decreased by 22% and 12%, respectively. Chrome, on the other hand, saw a 38% increase in revenue.

The weak rand bolstered mining companies' revenue, but it also had a negative impact on input costs, including chemicals, materials, and equipment required for operations. Operating expenses, excluding metal purchases, increased by 11%, mainly due to above-inflation increases in energy costs (electricity and fuel), chemicals, and labor costs.

The report highlights the importance of collaboration among mining stakeholders to develop plans for life after mine closure. It also emphasizes the need for miners to use their strong balance sheets to capitalize on growth opportunities during economic uncertainty. Additionally, having a regulatory environment comparable to that of other countries is seen as crucial for attracting investment.

As certain mineral reserves shrink, the report stresses the importance of strategies to safeguard communities dependent on mining operations. This includes reskilling employees and transitioning communities away from mining dependency. However, these efforts require partnerships to unlock their full potential.

Overall, the report suggests that South Africa should focus on securing critical minerals for global decarbonization efforts, as the global pursuit of carbon neutrality depends on specific minerals such as copper, PGMs, lithium, nickel, cobalt, and rare earths. Increasing the production of these critical energy metals in Southern Africa can enhance global supply diversity and boost the local and regional economy.

Despite the challenges, South African miners have shown flexibility and optionality for converting exclusive resources into reserves. They have continued to invest in projects within the country, with a significant increase in capital spending on assets from 18% in 2022 to 37% in 2023. However, there are concerns that the drop in PGM and coal prices from record highs could limit future investments.