South Africa's mining input cost pressures accelerated sharply in May, with the Minerals Council's Mining Composite Input Cost Index rising to 5.3% year-on-year from a revised 2.8% in April, as the Middle East conflict drove global energy prices higher.

The 2.5 percentage-point surge was driven primarily by higher prices for coke and refined petroleum products, as well as chemicals, the Minerals Council said in its May report released on 3 July.

Coke and refined petroleum products rose 40.3% year-on-year, largely reflecting a 62% increase in Brent crude oil prices, which averaged $103.80/barrel in May compared with $64.10/barrel a year earlier. On a month-on-month basis, coke and refined petroleum products jumped 15.3%, while chemicals and man-made fibres increased 11.5%.

"Other mining and quarrying, including aggregates and sand, recorded the highest input cost inflation at 6.3% year-on-year because of its reliance on diesel-powered operations and road-based transport," the Minerals Council stated.

Coal, chrome and manganese producers also faced disproportionate cost increases owing to significant transport and storage requirements, much of which remains road-based and exposed to higher fuel prices.

The impact of the energy shock was not uniform across commodities. Gold mining input costs remained elevated, with the energy-intensive nature of deep-level mining combined with yearly electricity tariff increases continuing to place upward pressure on operating costs.

The rand's appreciation offered partial relief. In May, the currency strengthened 0.5% against the dollar from April, and also gained against the euro (0.7%), pound sterling (0.2%), Japanese yen (0.3%) and Chinese yuan (0.6%). This helped the only category to record an improvement – imported intermediate goods – which declined 0.4% month-on-month.

Looking ahead, the Minerals Council warned that domestic cost pressures are likely to intensify. Winter electricity tariffs took effect from mid-June, typically raising electricity costs by 20% to 30% through September, while municipal tariff increases, including water tariffs, came into effect from 1 July.

"The May data showed the Middle East-related energy shock had transmitted more strongly through the mining input cost chain, with the largest yearly impacts concentrated in fuel, energy, chemicals and transport-related inputs," the Minerals Council said.

While imported energy-related cost pressures may begin to ease following the June ceasefire – with Brent crude returning to pre-conflict levels and tanker traffic through the Strait of Hormuz resuming – the council cautioned that domestic electricity and water tariff increases would place further upward pressure on operating costs in the months ahead.

The South African Reserve Bank raised interest rates to 7% in May, citing inflationary risks, and has signalled that further monetary tightening later in the year cannot be ruled out.