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Johannesburg - Mining companies seem to be cutting back on exploration in an attempt to reduce costs, but this could have long-term consequences for sustainability," according to Saijil Singh, lead analyst of international credit insurer Coface.
The biggest operating costs for the mining and construction sector were labour at 40%, mining supplies and consumables at 21% and water and electricity utilities at 10%.
Mining companies surveyed said the greatest risks their businesses faced were from labour unrest, volatile prices and exchange rates. Infrastructure access and capacity were also problems, including constraints on power as well as the regulatory uncertainty.
READ: Labour strife drives mines mechanisation
At the end of this year, mining companies will have had their compliance with the Mining Charter evaluated.
"Businesses are uncertain what sanctions would be applied where their Mining Charter obligations had not been met. As such, mining companies needed to integrate these risks and performance management," said Singh.
"Increasing costs and regulatory issues arising from the new Mining Charter and mining tax regime, which are currently under review, for instance, means that South African mining companies will need to dig deep to find ways to be profitable."
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