JOHANNESBURG — Mining firms in South Africa posted bumper profits amid soaring commodity prices, setting the stage for a substantial tax boost to government coffers through 2028. Gold producers like Pan African Resources declared their first interim dividend this week for the half-year ended December 2025, while DRDGold, Gold Fields and Sibanye-Stillwater reported strong earnings. Harmony Gold Company plans results next month, alongside platinum group metals producers.

Finance Minister Enoch Godongwana tables his budget this week. Economists expect him to highlight the sector’s contributions. Gold prices surged to record highs last year, driven by global trade wars. Platinum, rhodium, palladium and ruthenium prices also climbed sharply.

DRDGold CEO Niël Pretorius, speaking after his company’s results, said the gold and platinum sectors would deliver ample revenue this year. “There is going to be a lot of revenue flowing into the government, which will enable them to start fixing water in Joburg, start fixing schools, fix Transnet, and stay away from things they know nothing about, like healthcare, which they should leave to the private sector,” Pretorius said.

The mining boom recalls South Africa’s commodity supercycle of the early 2000s. Since then, the industry has grappled with high electricity costs, frequent power cuts until last year and regulatory hurdles. Johann Els, chief economist at PSG Financial Services, pegs extra corporate taxes from mining at R30 billion to R40 billion for 2026/27, with a similar amount in 2027/28. He forecasts R10 billion to R15 billion annually in additional royalties over the same period.

“The prudent thing to do is to use it to lower the budget deficit and reduce the debt-to-GDP ratio,” Els said. “Through that, we can get ratings agencies to view the budget favourably and keep the pressure on them to upgrade South Africa’s credit ratings.” South Africa’s debt servicing costs will exceed R1.3 trillion over the next three years, or about R1.2 billion daily in 2025/26.

A year ago, Godongwana scrapped a proposed 0.5 percentage point VAT increase after opposition from civil society and parties. That decision cut revenue projections by R61.9 billion over three years. Now, with the rand breaking R16 to the dollar, an S&P Global credit rating upgrade — the first in 16 years — and removal from the FATF greylist, the mood has lifted.

Pan African Resources spokesperson Hethen Hira said mining contributions have bolstered fiscal reserves and strengthened the rand. “So it will definitely help the budget,” Hira noted. “Just imagine the contribution from mining companies if our mineral rights application processes were more investor-friendly to international companies.”

Prof Raymond Parsons of North-West University Business School urged caution. “The fiscus should treat current mining profits as temporary revenue buoyancy, not a permanent structural improvement,” he said. President Cyril Ramaphosa highlighted $2.5 trillion in untapped ore reserves during his state of the nation address. Parsons stressed policy reforms to unlock mining, processing and exports.

“The potential for the fiscus therefore hinges not only on South Africa’s ability to sensibly exploit the immediate commodity boom but also on boosting the policy certainty and long-term investor confidence required to open new mines,” Parsons added.

Maarten Ackerman, Citadel’s chief economist, sees the windfall enabling targeted incentives for private investment in energy, logistics and infrastructure, akin to past solar tax breaks. Gold and platinum strength has eased import inflation via a firmer rand. Bond yields dropped from 11% to under 9% in the past year, cutting borrowing costs. Confidence rose after rating gains and greylist exit.

“We are also seeing early signs of more diversified domestic growth, with notable improvements in energy, logistics and tourism,” Ackerman said. “This should support the budget’s growth assumptions.” He warned commodity tailwinds could fade without structural reforms.

Nolan Wapenaar, Anchor’s head of fixed income and co-chief investment officer, described 2026’s backdrop as the most constructive in over a decade. Global capital shifts, a softer dollar, firm commodities and policy gains have built resilience, he said. Prudent management remains key to sustain investor trust.