Minerals Council's economist André Lourens warned that the shift in global dynamics is already feeding into mining input costs and is likely to intensify in the months ahead.
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South Africa’s mining sector is bracing for a renewed surge in costs after a brief period of relief, as the escalating Middle East conflict disrupts global markets, weakens the rand, and pushes up key input prices.
According to the latest data from the Minerals Council South Africa, mining input cost inflation eased to 1.2% year-on-year in February 2026, down from 1.6% in January. The decline reflected a temporary alignment of favourable conditions, including lower fuel prices, a stronger rand, and easing inflationary pressures across the broader economy.
However, that respite proved short-lived. By early March, the escalation of tensions involving Iran and the wider Middle East had triggered a sharp reversal in these trends, setting the stage for a new wave of cost pressures across the sector.
Minerals Council's economist André Lourens warned that the shift in global dynamics is already feeding into mining input costs and is likely to intensify in the months ahead.
“The impact has extended well beyond energy markets. Aluminium production, fertiliser supply, and global supply chains more broadly have come under growing strain, with prices rising as supply disruptions materialised,” said Lourens.
The most immediate driver of rising costs has been a surge in oil prices. Since the conflict intensified at the end of February, crude oil prices jumped by more than 40% during March, significantly increasing fuel and transport costs for mining operations.
At the same time, the rand weakened by around 4.5% against the US dollar, making imported inputs more expensive. This combination of higher fuel costs and currency depreciation has amplified inflationary pressures across the mining value chain.
These developments are particularly concerning for a sector already grappling with structurally high costs. Electricity remains the single largest contributor to mining input inflation, rising by 15.9% year-on-year, followed by mining and quarrying inputs and water costs.
The situation is set to worsen further with the implementation of an 8.76% electricity tariff increase for industrial users from April, adding another layer of financial strain on producers.
In February, some cost categories — including fuel-related inputs and imported intermediates — had provided relief, helping to pull down the overall index. But these same components have now reversed course sharply as global supply chains come under pressure.
The Middle East conflict has not only disrupted energy markets but also created bottlenecks in the supply of key industrial inputs. This has pushed up prices for chemicals, petroleum-based products, and other essential materials used in mining operations.
For commodity producers, the impact varies across subsectors. Input cost inflation for platinum group metals eased to 2.4% in February, broadly in line with gold, while coal and iron ore recorded the lowest cost increases. However, these relatively benign figures are expected to deteriorate as March and April data reflect the full impact of global shocks.
Lourens cautioned that the persistence of the conflict could transform what initially appears to be a temporary supply shock into a more entrenched inflationary cycle.
“Overall, a return of input cost pressures to their long-term average will depend critically on an end to the conflict and a normalisation of global economic conditions and supply chains,” he said.
The broader implication for South Africa’s economy is significant. Rising mining costs could squeeze margins, delay investment, and ultimately affect export competitiveness — particularly at a time when global demand remains uncertain.
With the mining sector playing a central role in South Africa’s export earnings and industrial activity, sustained cost pressures could ripple through the wider economy, affecting everything from employment to fiscal revenues.
For now, the outlook remains highly uncertain. Much will depend on how long the Middle East conflict persists and whether global supply chains can stabilise.
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