South Africa’s economy has faced significant challenges in 2024, with real GDP growth proving to be much weaker than initially expected. After a disappointing contraction in the third quarter, the economy managed a modest recovery in the final quarter of the year.
According to Stats SA, real GDP grew by 0.6% quarter-on-quarter (q-o-q) in the final three months of 2024. This followed an upwardly revised contraction of -0.1% in Q3, initially reported as an (unexpected) decline of -0.3%. The (expected) revision to the Q3 GDP figures was due to a large upward adjustment to agricultural GDP. Although still a significant contraction of 19.7% q-o-q, output in the agricultural sector is now estimated to have declined by significantly less in Q3 than previously reported (-28.8%).
Mining sector
The mining sector continued to face difficulties throughout 2024. Mining GDP declined by 0.2% q-o-q in Q4. This followed a robust 0.8% quarterly increase during Q3. With the Q4 numbers available, we can also look at the GDP data for the calendar year 2024. Despite this quarterly decline, mining GDP registered a modest 0.3% growth for the full calendar year.
One of the biggest challenges for the mining industry has been the persistent issue of Eskom’s load shedding, which severely hampered productivity in 2023 and into 2024. At the start of last year, the general expectation was that real GDP growth would improve somewhat towards 1% in 2024. Although the country experienced an improvement in power supply during the last part of the year, with no significant load shedding from late March to December, the damage to mining operations had already been done. As a result, South Africa’s GDP growth remained subdued at just 0.6% in 2024, slightly below the previous year’s growth of 0.7%.
Mining investment
The Minerals Council of South Africa highlighted that one of the most concerning trends for the mining sector in 2024 was the significant decline in fixed investment. In real, inflation-adjusted terms, mining capex declined by 9.6% y-o-y. This follows basically zero (+0.1%) mining investment growth in 2023. “Based on recent company financial results, we know that capex in sectors such as platinum group metals (PGMs) and diamonds was down relative to 2023. This reflects depressed demand and commodity prices in these subsectors. Notwithstanding the decline, mining capex contributed almost 14% to total nominal fixed investment spending in South Africa during 2024,” stated the Council.
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“The mining sector’s profitability has been constrained, as indicated by Stats SA’s gross operating surplus data. Mining profits have declined for the second consecutive year, dropping by 18.5% in 2023 and 1% in 2024. Treasury budget documentation suggests a potential 28% decrease in corporate tax receipts from the mining sector in the 2024/25 financial year.”
Exploration investment
Another area of concern for the mining industry is the continued decline in mineral exploration; outlays on mineral exploration were also poor in 2024, declining by 6.2% y-o-y. “This was the fifth consecutive year that the value of mineral exploration was stuck between a paltry R1.1 billion to R1.2 billion in real terms. If South Africa is to ensure a future pipeline of primary mining extraction, the (sustained) low levels of exploration need to be turned around with urgency.”
Outlook: Impact of domestic progress clouded by global strains
Minerals Council chief economist Hugo Pienaar said, although not without setbacks, continued progress to ensure sustained power availability, some further traction on improving rail and port efficiencies, as well as subdued inflation and lower interest rates, bodes well for improved real GDP growth in 2025.
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“This should be further supported if the government of national unity remains intact. In a nutshell, the domestic environment is expected to support faster rates of growth this year. In contrast, the external (global) environment has been challenging so far in 2025, with no let-up in sight. US President Donald Trump’s mad trade policies are set to weigh on global trade and GDP growth, with the risk that it postpones the progress in bringing inflation down to central bank targets. A globally facing sector such as mining will be particularly vulnerable under these conditions,” said Pienaar.
“This further emphasises the need for business-friendly mining sector regulations and policies in South Africa, as well as improved network infrastructure. For mining to reach its full potential, we need to see more progress on these fronts in 2025 and beyond.”
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