South African mining companies have faced a decline in performance and shareholder returns over the past year after enjoying record levels of success following the post-COVID-19 economic recovery. The "2023 SA Mine: Adapt to thrive" report by PwC South Africa attributes this regression to various industry changes, including productivity and infrastructure limitations, declining mineral prices, and rising input costs.

The depreciation of the South African rand has partly offset the impact of lower dollar-mineral prices but has also led to increased expenses for imports and essential materials, chemicals, and equipment needed for mining operations.

Vuyiswa Khutlang, PwC South Africa Energy, Utilities, and Resources Partner, highlights the importance of developing strategies to support communities dependent on mining operations as mineral reserves diminish.

The mining sector has historically played a significant role in the South African economy. Data from the South African Revenue Service reveals that mineral exports were valued at R575 billion in the first half of 2023, constituting approximately 58% of the country's total exports. The mining industry also provides formal employment to around 478,000 individuals and contributes essential revenue through corporate taxes, mineral royalties, and employee income taxes.

Despite the sector's importance, it faces several challenges, including electricity and logistical constraints, inflationary cost pressures, volatile commodity prices, illegal mining, and a shortage of critical skills. Given these hurdles and the availability of alternative investment options, the report raises questions about the long-term sustainability of mining for key commodities such as gold, coal, iron ore, and platinum group metals.

In light of global decarbonization efforts, there is growing emphasis on securing critical minerals for a cleaner future. Miners continue to invest in future prospects, with a shift toward retaining fewer funds for capital investments. However, declining prices for platinum group metals and coal compared to record highs may limit future investments.

Mining companies' tax contributions play a pivotal role in balancing the national trading account, benefiting a broad spectrum of stakeholders and striving for sustained industry outcomes.