Record Gold Prices Push South African Miners to Focus on Shallow Projects as Production Stagnates
Record-high gold prices are prompting South Africa’s struggling mining sector to explore new methods of recovering the metal that avoid the high costs and operational risks associated with traditional deep-level mining, industry executives say.
However, with limited investment in new mine development, the sector is unlikely to significantly increase output in the near term.
This continues a long-term decline for a country that dominated global gold production for more than a century.
According to data from Statistics South Africa, gold exploration activity in the country has fallen sharply, dropping nearly 90% from levels recorded in the 1990s.
Spending on mineral exploration declined to just $43 million in 2025, compared with $900 million in 2006.
South Africa’s annual gold production has also decreased dramatically, falling to about 90 metric tonnes from a peak of 1,000 tonnes in 1970.
The decline has been driven by shrinking economically viable reserves, recurring labour unrest, and the technical challenges associated with operating some of the world’s deepest mines.
Meanwhile, global gold prices have surged, rising roughly 60% in 2025 to reach a series of record highs.
The rally has been supported by geopolitical trade tensions, strong central bank purchases, and expectations of interest rate cuts by the Federal Reserve. Despite these favourable price conditions, mining companies have remained cautious about committing large capital investments to expand production.
Miners Prioritize Shallow and Surface Projects
As prices climb, mining companies are increasingly focusing on lower-risk, higher-margin projects located closer to the surface.
Diversified mining group Sibanye-Stillwater is prioritizing shallow gold developments to support output growth.
The company’s strategy centers on the Burnstone project, which it expects to become a low-cost, long-life operation.
The company is also pursuing expansion opportunities through its 50% stake in DRDGOLD, which specializes in recovering gold from historic mine waste deposits, according to CEO Richard Stewart.
Similarly, Harmony Gold, the country’s largest gold producer, is evaluating the potential to recover approximately 5.7 million ounces of gold through tailings retreatment projects, CEO Beyers Nel told analysts earlier this year.
Large-scale underground expansion projects remain unlikely in the near term due to long development timelines and uncertainty around future commodity prices.
“Given the lead time required to develop new underground areas, production might only begin two to three years later,” said Harmony’s finance director, Boipelo Lekubo. “There is no certainty about what gold prices will be at that point.”
New Underground Mine Opens in Historic Gold Region
Despite the broader slowdown in investment, West Wits Mining launched South Africa’s first new underground gold mine in 15 years in October.
The company’s Qala Shallows mine is located in the Witwatersrand Basin, a geological formation widely believed to have produced roughly half of all the gold ever mined globally.
The project benefits from relatively shallow ore bodies and access to existing infrastructure, significantly reducing capital requirements.
The operation is also mechanized, lowering labour costs, and uses hydropower-based extraction systems instead of traditional compressed-air technology, improving operational efficiency.
According to CEO Rudi Deysel, the project is economically viable under current gold price conditions.
“We have developed a very competitive project, particularly in the context of today’s gold prices,” Deysel said.
The mine is expected to produce approximately 70,000 ounces of gold annually during its initial phase, with long-term plans to scale production to 200,000 ounces per year.
Production Outlook Remains Stable
Despite new technologies and rising prices, South Africa’s gold output is expected to remain largely unchanged in the near term.
Industry forecasts from the Minerals Council South Africa indicate that national gold production will likely remain around 90 metric tonnes next year roughly in line with levels recorded over the past five years.
