Competitive, Responsible Mining - Key Trends and Pressures Shaping South Africa’s Mining Sector

Insights of Sitsaba Bekwa and Lindokuhle Ntumba from Aon South Africa’s Mining Team.

Mining has powered South Africa’s economy since diamonds were discovered near Kimberley in 1867, sparking a wave of foreign investment and infrastructure growth. Today, the sector contributes 6% to GDP, generates nearly half of the country’s export value and supports over 460,000 direct jobs and countless indirect jobs.^[1] But the industry is in transition - balancing Environmental Social and Governance (ESG) pressures with the booming demand for critical minerals like copper, lithium and Platinum Group Metals (PGMs), essential for renewable energy and electric vehicles. With automation, digitalisation and cleaner energy solutions gaining pace, South Africa must position itself as a competitive, responsible mining leader on the global stage.

Key Trends and Pressures Shaping South Africa’s Mining Sector

While South Africa’s mining industry remains a vital economic driver, it is contending with a range of structural and operational headwinds that are influencing its future trajectory.

• Energy supply instability - Against the backdrop of ageing coal-fired power plants, and delays in bringing new capacity online, the mining industry is having to navigate persistent power shortages alongside rapidly rising electricity tariffs adding strain to tight operating margins. In answer, the mining sector is investing in implementation of green energy by means of solar power plants, which also adds an additional cost to the fray.
• Infrastructure constraints - Efficient mining operations depend on reliable transport, energy and water networks, yet South Africa’s infrastructure is under major strain. Port congestion has led to severe delays, with vessels waiting six to ten days at anchorage before berthing^[2] - disrupting export schedules and increasing costs. To aid, the mining industry is working alongside government to repair and fortify key infrastructure concerns such as the railway infrastructure that transports coal to the Richards Bay Coal Terminal (RBCT).^[3]
• Labour relations - The sector’s history of strikes and disputes has long shaped its operational environment. The Labour Relations Act^[4] provides a framework for collective bargaining in which mining unions are working closely with mining companies to foster long-term stability between unions and employers.
• Market Conditions are tight with rising costs and falling prices squeezing margins. While mining input cost inflation eased to 5.1% in 2024 - down from 9.0% in 2023 and 13.3% in 2022^[5] - prices for key commodities have fallen sharply. The Rand price for PGMs was nearly 18% lower in 2024 after a steep 28% drop in 2023,^[6] eroding profitability despite cost pressures easing. While these costs are cyclical in nature, mining operators are adapting in order to reduce costs, from a technological perspective. More mines are diversifying their portfolio of minerals to ensure sustainability.
• Regulatory uncertainty is adding an extra layer of complexity. The proposed Draft Mineral Resources Development Amendment Bill, introduced in 2025,^[7] aims to expand state control over mineral resources and tighten rules on beneficiation and exports of critical minerals. While intended to boost local processing and economic development, the bill has introduced uncertainty for investors assessing long-term project viability. Stakeholders such as the minerals council, are engaging with government and industry bodies to guide decision-makers so that regulations are more informed.
• Illegal mining is a growing concern, costing South Africa an estimated R60 billion in 2024.^[8] Around 100,000 artisanal miners, or “zama zamas,” operate in abandoned and active mines, driven by unemployment, criminal syndicates and limited formal opportunities. At present, the government and industry are working together to find a solution.

Addressing Challenges with Strategic Solutions

South Africa’s mining sector faces persistent hurdles, but they can be met with targeted, forward-looking strategies that strengthen resilience and position the industry for sustainable growth.

1. Tackling operational inefficiencies and cost pressures with technology. IoT-enabled solutions can help counter rising input costs, infrastructure delays and production slowdowns by improving real-time asset tracking, enabling predictive maintenance and streamlining water and energy use. For mines facing power supply instability, IoT systems can optimise resource allocation, while specialist insurance and risk management programmes provide protection for both physical assets and workers.

2. Managing market and payment risks through trade credit insurance. With many mining operations pursuing alternative market opportunities such as China, trade credit insurance safeguards cash flow and enables miners to expand into new territories without jeopardising financial stability.

3. Mitigating the impact of social unrest and political volatility. South Africa is one of the few countries that provide cover for social unrest and political volatility through SASRIA cover. In addition, political violence insurance provides more focused cover against disruptions from strikes, riots and broader civil unrest to fill the gaps that may not be covered by SASRIA. It ensures operations can recover quickly from events that would otherwise cause costly shutdowns.

4. Protecting leadership during times of regulatory change. With the introduction of the Draft Mineral Resources Development Amendment Bill creating uncertainty, Directors’ and Officers’ (D&O) insurance shields company leaders from personal liability linked to unintentional errors or omissions in decision-making, allowing them to focus on steering the business through complex policy shifts.

5. Unlocking business funding without overexposing the business. Non-recourse financing allows miners to secure capital for growth initiatives such as modernisation, beneficiation plants or renewable energy integration - while limiting repayment obligations to project-generated profits and reducing the impact of fluctuating commodity market; using insurance products as collateral.

6. Addressing hard-to-insure risks through captive structures. For exposures like illegal mining-related losses, infrastructure failures or environmental liabilities, captives give mining companies greater control over risk transfer, enabling them to customise cover where traditional insurance is limited or prohibitively expensive. Alternative risk transfer creates self-insurance funds, which is particularly effective for self-insurance retentions when utilised appropriately.

Thriving in this environment demands more than incremental adjustments. By pairing innovative financing and insurance tools with technology-led efficiency gains, South Africa’s mining leaders can actively reduce vulnerability to known challenges - while aligning long-term growth with environmental and social responsibility.

Building a Competitive, Sustainable Mining Sector

South Africa’s mining industry is at a pivotal moment, with more prospecting and focus on green metals we are at the cusp of unlocking value and creating potential for growth. Success will hinge on the sector’s ability to adapt by embracing technology, improving efficiency and integrating ESG principles into every stage of operations.

With strategic investment in beneficiation, renewable energy and workforce skills, paired with robust risk management and collaboration between industry, government and communities, South Africa is working on positioning itself as a global leader in supplying the minerals essential to the world’s energy transition - securing not only competitiveness but also long-term sustainability.

About Aon

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Disclaimer:

This document has been compiled using information which was current and accurate as at the date of publication.  The information contained in this document should not be considered or construed as insurance broking advice and is for general guidance only. Accordingly, the information contained herein is provided with the understanding that Aon, its employees and related entities are not rendering insurance broking advice. As such, this should not be used as a substitute for consultation with an Aon Broker or Consultant.

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^[1] https://www.miningweekly.com/article/mining-still-major-contributor-to-south-african-economy-2025-02-03

^[2] https://www.portcast.io/blog/cape-town-port-congestion-worsens-what-it-means-for-global-logistics

^[3] https://www.miningweekly.com/article/richards-bay-coal-terminal-2024-exports-extend-beyond-52-million-tons-2025-01-24

^[4] https://www.gov.za/documents/labour-relations-act

^[5] https://www.mineralscouncil.org.za/all-categories?task=download.send&id=2399:mining-input-cost-inflation-december-2024&catid=110

^[6] https://www.miningweekly.com/article/pgm-miners-esg-spend-set-aback-by-low-prices-but-efforts-remain-solid-2024-11-28

^[7] https://bowmanslaw.com/insights/south-africa-draft-mineral-resources-development-bill-2025-will-need-further-amendments-to-encourage-investment/

^[8] https://www.sanews.gov.za/south-africa/r60-billion-lost-illegal-mining-2024-says-minister