A report released by PricewaterhouseCoopers (PwC) has claimed that mining companies in South Africa are witnessing steep decline in financial performance due to a slump in commodity prices and high cost pressures.

In order to meet demanding global and local mining environment, the companies are struggling to boost productivity.

The findings from PwC’s seventh edition of ‘SA Mine’ found that the industry continues to be spoiled by labour unrest.

Four gold mining companies are said to be locked in a three-month wage stalemate with unions and the pressures of a coal strike mounting recently.

PwC African mining industry leader Michal Kotze said: "The message to miners is clear: ‘Continue to focus on costs, refocus on your core business and carefully evaluate growth opportunities’. It certainly will make for some interesting planning and forecasting discussions in the coming year."

"Financial performance for the South African mining industry in 2015 was extremely challenging and downcast."

During this year, market capitalisation for the top 35 companies declined to R414bn ($1bn) as of 30 June 2015.

Market capitalisation as at 30 September 2015 stood at R304bn ($23.1bn), resulting in an aggregate fall of R371bn.

During this period, iron ore and coal prices were severely impacted.

Despite a continued reduction in prices, coal is said to remain the highest earning commodity in the country and posted a solid performance over the last ten years.

In the last two years, the long-term decline in gold production temporarily halted and the fall indicates the ever-increasing depths of existing mines and technical difficulties faced by start-up operations.

Production of platinum group metals (PGMs) has been impacted by industrial action since 2012, as well as mine enclosures in the low-price environment.

PwC assurance partner Andries Rossouw said: "Financial performance for the South African mining industry in 2015 was extremely challenging and downcast."

In 2014, revenue only increased by a mere 4%, operating expenses increased by 14% and the share of labour costs decreased marginally from 47% to 45% in 2015.

In 2015, net profit reduced by 75% and the EBITDA margin is 22%.

Kotze concluded: "Creating an environment with adequate infrastructure, less policy and regulatory uncertainty, and a skilled yet flexible workforce should go a long way towards attracting investment and benefitting all stakeholders."