2026: reasons for optimism
Peter Middleton
Addressing the Joburg Mining Indaba in October last year, when gold first surged above US$4 000 per ounce, the South African mining veteran Duncan Wanblad la- mented missed investment opportunities in the mining sector. He pointed out that South Africa's mining po- tential has not been fully explored due to unsupportive exploration policies over the past 20 years. Exploration is a critical part of the mining life cycle, he explained, and it typically takes 17 years to get a de- posit permitted, ramped up and into full production. A generation has been sacrificed through these restrictive exploration policies. Today, South Africa's deeper, older shafts cost more to operate than those of competitors in Africa, Australia and Canada, he noted, while policy uncertainty, infra- structure problems and labour unrest continue to pre- vent investment in exploration and mine development. It is hard to believe our economy or the South African mining industry is in a good place, but there are some positive signs. Unit 6 of the Kusile Power Station entered com - mercial operation in September last year, marking the conclusion of Eskom's ‘new-build’ programme, albeit more than a decade later than planned. The Eskom grid has begun 2026 with an additional 4 400 MW of avail- able capacity compared to this time last year. Eskom says the current resilience of the power system reflects significant improvements in its generation fleet and the success of its Generation Recovery Plan, which is driving stronger operations and securing the country’s energy future. The year-to-date availability factor (EAF) has further increased to 64.66%, and the fleet has now achieved or exceeded the 70% EAF mark on 55 occasions, “…rein- forcing energy security and grid stability,” according to Eskom’s Media Statement of Friday, 16 January 2026. On the mining side, gold and platinum continue to set price records, following an easier 2025 year for the mining sector. PWC’s SA mining report for 2025, entitled ‘South African mining sector shows resilience and recali- brates for sustainable future’, revealed that the mining in- dustry recorded a 28% increase in market capitalisation, driven by record gold prices and a rebound in platinum group metals (PGMs). Although revenue remained flat, free cash flow improved on higher operating cash flow and lower capital investment. The 2025 year was characterised as a dynamic mix of challenges and progress for South Africa’s mining sector. Despite infrastructure constraints, policy uncertainty and rising operational costs, the industry maintained its contribution to GDP at approximately 6%, reaffirming
its critical role in the national economy. The World Bank, in its Global Economic Prospects report for Sub-Saharan Africa, said that the region’s growth picked up to an estimated 4.0% during 2025, up from 3.7% in 2024, driven by moderating inflation and higher-than-expected commodity prices, particularly for gold, other precious metals and coffee. Among the region’s three largest economies, Nigeria's growth edged up to 4.2%; Ethiopia’s eased to a still-robust 7.1%; while South Africa’s economy strengthened to just 1.3 %. For 2026, the World Bank projects that Ethiopia and Nigeria are likely to achieve growth rates of 7.2% and 4.4%, respectively. South African growth will increase to 1.4% in 2026 and 1.5% in 2027, driven by continued reform momentum, particularly in the energy and logis- tics sectors, and rising public investment. In response to the World Bank’s outlook, the South African Government said it affirms that “sustained re - forms are beginning to yield positive results,” and that “Government will continue to work with social partners, the private sector and international development insti- tutions to strengthen reforms, unlock investment and build a resilient, inclusive and sustainable economy.” The lead HVAC feature in this issue of MCA highlights the role of advanced ventilation-on-demand in helping realise the Venetia Underground Project expansion, which aims to extend the life of this De Beers Group diamond mining operation by 25 years. Construction began on this project in 2013, with the first production being achieved 10 years later, in October 2023. The full production capacity of up to 4.5 million carats of diamonds per year from this highly mechanised, modern mine is expected to be realised between 2026 and 2028. And this development has been achieved despite a difficult decade in South Africa. Looking forward from an energy perspective, the Integrated Resource Plan 2025 (IRP 2025) signals a shift to cleaner solar, wind and nuclear energy sources, for the first time displacing fossil fuels as our primary energy source. In addition, the highly successful Renewable Energy Independent Procurement Programme remains central to addressing energy security issues. There is no doubt that deep-seated challenges remain unresolved. But the outlook seems better. We are on a gradual recovery path. If we remain resilient, keep up the pressure for meaningful reforms, take the opportunities available to us, and focus on true economic and environmental sustainability, we may yet emerge as an investment-friendly, modern and prosperous African country.
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2 ¦ MechChem Africa • January-February 2025
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