Although the speed and extent of the global economic recovery remain uncertain, commodity prices are likely to put up strong performance in 2010. This will boost the worldwide mining industry, although challenges particular to South Africa may dampen local prospects.

"The global mining industry is likely to be buoyed by growing physical demand for commodities, the strong possibility of speculative buying and rising prices," says Frost & Sullivan metals & mining analyst Wonder Nyanjowa. "This is likely to encourage miners to expand production capacity."

However, Nyanjowa warns that South Africa may not reap the full benefits of this rebound.

"Many of the local challenges that adversely impacted on production in 2009, such as electricity supply shortages, a lack of skills and safety concerns, are likely to continue affecting the performance of the mining industry in 2010," he says. "In addition, the prospect of higher commodity prices, particularly in the gold, platinum and coal sectors, is likely to lead to tough wage demands from unions."

Nyanjowa believes that growing inflation fears in the developed world, particularly the United States, an unstable US Dollar, threats of another recession from expansionary fiscal and monetary policies and negative real interest rates point towards strengthening investment demand for gold.

"A price range of $1300 to $1500 per ounce in 2010 looks likely, supported by gold demand and supply fundamentals," he says. "Investors are likely to continue turning to gold as a hedge against uncertainties in the global economy."

However, South Africa's gold production is likely to slip further this year, to around 200 tonnes. This will see it drop to fourth place amongst the world's gold producers, behind China, the USA and Australia.

While platinum was one of the biggest casualties of the global recession, Nyanjowa expects things to be much rosier in 2010.

"Frost & Sullivan anticipates that the platinum industry will recover this year on the back of stronger prospects of recovery in the global automotive sector, particularly in China and India. The launch of two new platinum-based Exchange Traded Funds in the USA will also lead to strong investment demand."

Local coal miners, who escaped from the global slowdown with relatively minor bruises, should also remain robust.

"The bulk of the country's coal production is consumed in the electricity generation and synthetic fuel manufacturing industries, with only a third being exported to Europe and Asia," explains Nyanjowa. "The domestic demand for coal is set to continue growing in 2010, following expansion programmes at Eskom and Sasol that will require an additional 75 million tonnes of coal."

However, South Africa's production is likely to remain stagnant at around 240 million tonnes this year as the industry waits for new coal fields to be opened in the Waterberg basin.