Mining input cost inflation slows to 1.7% in January, but Iran conflict poses fresh risks
INPUT cost inflation in South Africa’s mining sector eased at the start of 2026, offering some relief for producers after a modest increase toward the end of last year.
The Minerals Council South Africa’s Mining Composite Input (MCI) Cost Index showed input cost inflation slowed to 1.7% year-on-year in January 2026, down from 2.6% in December. The figure is broadly in line with the average recorded during 2025 and marks a reversal of the upward trend seen late last year, when inflation peaked at 2.8% in October.
The moderation was largely driven by declines in several major input categories. Prices for other chemicals and man-made fibres fell by 10.1% year-on-year, while imported intermediate inputsdropped by 8.3%. Finance, insurance, real estate and business services declined by 6.8%, and coke and refined petroleum products fell by 4.1%. These categories together account for roughly one-third of total mining input costs.
However, several key expenses continue to rise. Electricity costs increased by 17.5% year-on-year in January, while water costs climbed by 11.6%. Mining and quarrying intermediate inputs rose by 12.4%, and transport and storage costs increased by 5%. Although these categories represent a smaller share of overall input costs, they remain important cost drivers for mining operations.
Cost inflation also varied across commodities. Input cost inflation for platinum group metals eased to 2.7% year-on-year, down from 3.3% in December, bringing it broadly in line with gold. Coal and iron ore producers recorded the lowest levels of input cost inflation.
Looking ahead, economists expect relatively subdued cost pressures in the near term, supported by a firm rand, stable oil prices and unchanged interest rates.
However, geopolitical tensions could pose risks. The outbreak of war involving Iran at the end of February may push oil prices higher and weaken the rand, potentially increasing the cost of imported inputs and reversing the recent easing in mining input cost inflation.
