JOHANNESBURG (miningweekly.com) – South Africa’s mining production increased by 7.7% year-on-year in April, with the highest positive growth rate of 81.6% recorded in the platinum group metals (PGMs) sector, given that PGM production has increased significantly compared with April 2014, when the sector was adversely affected by several months of industrial action.

Financial services company BNP Paribas Cadiz Securities economist Jeffrey Schultz said that, despite the increase in overall mining output, it would remain cautious over the outlook for the mining industry, given the ongoing uncertainty around commodity prices; electricity supply cuts, which were set to continue for the foreseeable future; the ten-day closure of Transnet’s iron-ore export line for maintenance, in May; and recent negative comments surrounding mine ownership criteria as stipulated in the Mining Charter.

Further, it pointed out that, with the gold wage negotiations set to kick off in the next two weeks, the industry would likely be challenged, given the rapidly changing face of the country’s labour union movement.

Meanwhile, Statistics South Africa reported that seasonally adjusted mining production had decreased by 4.1% month-on-month in April.

This followed month-on-month downward changes of 6.4% in March and 4.9% in February.

Seasonally adjusted mining production increased by 5.9% for the three months ended April, compared with the previous three months. The main contributor to the 5.9% increase was PGMs, contributing 4.6 percentage points.

Schultz commented that headline growth in mining production continued to be helped by favourable base effects. “Encouragingly, however, on a seasonally adjusted and yearly basis, mining production growth continues to look healthy growing at 25.9% as at April,” it said.

Further, he said that, despite the various structural constraints to activity and weak global commodity prices, activity in the mining sector seemed to have found some stability.

“Indeed this is supported through the pick-up in dry bulk export volume growth as reported by State-owned utility Transnet’s National Ports Authority in recent months,” he added.

Meanwhile, mineral sales decreased by 1.1% year-on-year in March, owing to a 38.7% decrease in iron-ore sales, a 5.5% decrease in coal sales and a 13.3% decrease in nonmetallic mineral sales.

Manganese ore also contributed to this decrease, with sales down 16.6%, or 0.8 of a percentage point.

PGM sales increased by 49.1% year-on-year, contributing 8.1 percentage points. Seasonally adjusted mineral sales at current prices increased by 3.1% in March, compared with February,. This followed month-on-month changes of 3.8% in February and -4.9% in January.