[TOP STORY] SA mining in 2026: Capital allocation, discipline, and resource resilience

Simon Brown (0:02)

MoneywebNOW, on the money.

This podcast is brought to you by StandLib Asset Management. Invest in more certainty to navigate volatile market conditions. I'm telling you, Vuyiswa Khutlang, Energy Utilities and Resource Assurance Partner, PwC South Africa. The PwC SA Mine 2026 Report has just come out. Vuyiswa, I appreciate the time. Let's start with the gold and PGM sector. They've obviously had markedly higher commodity metal prices, which has helped the operating environment. But are we seeing the miners spending more on CAPEX, on exploration, on mine expansion in the local environment?

Vuyiswa Khutlang (0:41)

We certainly are seeing them spend more. We've seen them, when you look at their balance sheets and look at the cashflow statements and look at what they've declared for dividends, but also importantly, the capital commitment.

So basically, that's them saying, what am I going to be spending my money on in the next financial year or in the next five to seven years? And that has increased. We've also seen it also from what they've been talking about. So Northam is sinking a shaft. Impala is extending the lives of some of its current operations in Rustenburg. So they're definitely spending more of the money that they have received in the current year.

Simon Brown (1:22)

And my sense around it is that it is disciplined. And I hate to call miners reckless, but it wouldn't surprise me a heck of a lot if there was reckless spend. This does seem to be quite disciplined spend from the miners, notwithstanding those record commodity prices.

Vuyiswa Khutlang (1:37)

It certainly is. I think with mining companies, you have to be disciplined because it's a cyclical industry. So one day, prices are doing very well for a couple of years, and then next year, they're not. So you have to be very strict in your capital allocation and how you're spending your money, because you need to be able to survive the difficult times. So their balance sheets are looking good, and they're being very careful on how they spend their money. And you're right. One of the things we looked at the publication was, well, looking at the cash that's sitting in the bank state in their balance sheet at the moment, how does it compare to what they're going to spend? And you can see there is still some surplus there.

Simon Brown (2:17)

You mentioned some projects. They're sort of expansions of existing mines. What we're not seeing is many sort of new mining projects. What are some big obstacles there? Obviously timelines, but I imagine logistics, policy, permits. There's a lot to getting a brand new green fields going.

Vuyiswa Khutlang (2:34)

100%, Simon. I think I was at the end of it on Wednesday and Thursday. And that's what the mining companies have been saying. Like mining is a long-term game that we know. You spending a lot to start a mining operation, billions and billions of rand. And you're probably going to recover that amount after like a very long time. So you need to have certainty, right? When you're spending that kind of money. And that's the worry when it comes to South Africa, that the certainty, I mean, we're still waiting for the collateral system to come through. The government has promised by next year, permitting transparency regarding that. And also the legal framework in which they operate in, still in a draft form. But what's good is that government is engaging with the industry, but it's still in drafts, so finalization of that will help clear out a lot of the issues.

Simon Brown (3:24)

Let's quickly jump to that, because I wanted to ask about this critical manual strategy that exists still on paper. What does implementation look like and what are timelines? My sense is probably a year or two.

Vuyiswa Khutlang (3:35)

That's the thing. I think everyone is not committing to a fixed timeline to say we'll be done with this. A year or two is the sense that we're getting. Discussions are being held in terms of implementation.

But I guess that's, yeah, we need to execute. The problem with some of the critical minerals strategies is that we need to look at things that we can fix. So, for example, your logistics constraints, your manganese needs to be sorted out because that's one of the critical minerals that we've got, right? And the operators or the mining companies are talking about the limits or limiting what they're producing because of the capacity to get to the port. So some of the things that in paper, yes, we've got a strategy, but there's things that we need to fix. Electricity has become expensive. So those are the kind of things that, yes, we don't have an issue in terms of load shedding, but electricity operators saying that electricity is becoming quite expensive.