South Africa's mining sector recorded its sharpest monthly decline of 2026 in July, with output falling 7.5% year-on-year, according to Statistics South Africa. The contraction was far steeper than the 4% decline economists had forecast, and marks a clear acceleration from June's revised 4.3% drop and May's 5.1% fall. On a seasonally adjusted month-on-month basis, output slipped 1.9%, wiping out June's marginal 0.1% gain.

The weakness was broad-based. Ten of the twelve mining subsectors tracked by Stats SA posted declines in July.

Diamonds were the worst performer by a wide margin, with output down 48.2% year-on-year. Nickel followed at minus 18.8%, and platinum group metals fell 13.5%. Only two commodities bucked the trend: chromium ore rose 13.7% and manganese ore gained 4.9%. Coal and iron ore, both already weakening through the second quarter, had posted year-on-year declines of 7.5% and 8.1% respectively in June, with the Minerals Council's own tracking showing coal down 5.8% and iron ore down 7.8% over the January-to-May period.

The sector's slowdown is feeding directly into the broader economy. Mining and quarrying output fell 3% in the second quarter, a significant contributor to South Africa's 0.2% GDP contraction over that period. FNB senior economist Thanda Sithole described the sector as fragile, and said the July numbers raise the risk of another negative contribution to third-quarter growth, pointing to global uncertainty, infrastructure constraints and elevated production costs as the main drags.

Minerals Council economist André Lourens has pointed to fading commodity price support as a key driver of the slowdown. Gold and platinum group metal prices retreated from May and continued softening through June and July, even though prices remain high enough in absolute terms to keep supporting production on a month-on-month basis, output actually rose 1.3% in May measured that way. Lourens singled out diamonds as under particularly severe pressure, warning that further mine closures are a real risk without intervention, with several operations having already announced stoppages.

The relationship between prices and volumes cuts both ways. Even as gold mining volumes struggle, the gold price itself has kept climbing toward record highs in rand terms, lifting both the currency and miners' earnings. Pan African Resources said this week it expects headline earnings per share to nearly triple, a reminder that softer output does not automatically mean softer profits when prices are strong enough.

Cost pressures are compounding the volume problem. The Minerals Council says mining and industrial majors paid Eskom R115 billion for electricity in the 2025/26 financial year, nearly R50 billion more than in 2021, with tariff increases consistently outpacing the Reserve Bank's inflation target for more than two decades. Rising fuel prices, linked to renewed tensions in the Middle East, have added further pressure on machinery running costs and port logistics.

There was a partial offset elsewhere in the economy: manufacturing output rose 1.1% year-on-year in July, helped by stronger textiles and food and beverage production, although Investec economist Lara Hodes cautioned that weak consumer confidence and soft spending on non-essential goods continue to temper the outlook.

The Minerals Council has repeated its call for structural reforms, including more affordable electricity, improved rail and port logistics, greater private sector participation in freight rail, and stronger exploration incentives, arguing these are the conditions needed to turn the sector's current price support into a durable recovery in volumes.