JOHANNESBURG (miningweekly.com) – Mining production in South Africa increased in February, growing 7% year-on-year, following the downwardly revised 6.7% growth in January, Statistics South Africa’s (Stats SA’s) preliminary ‘Mining: Production and Sales’ report has shown.

The highest positive growth rate of 66% in February was recorded for platinum-group metals (PGMs), which contributed 9.1 percentage points to the yearly growth in mining production and boosted nongold output by 9.5%. This was followed by a 25% growth in nickel production that added 0.5 percentage points to the mining sector’s production improvement.

However, gold output was down 4.7% year-on-year in February.

Banking firm Nedbank’s economic unit said in a note to clients that the overall improvement reflected further expansion from the low base recorded last year, as mining output suffered from the negative effects of labour action in the mining sector.

Similarly, seasonally adjusted mining production increased by 7.8% in the three months ended February, up from the previous three months. The main contributors to the growth were gold with 2.6 percentage points, PGMs with 1.3 percentage points, diamonds with 1.1 percentage points and coal, which contributed 1 percentage point.

However, Stats SA found that the seasonally adjusted mining production decreased by 2.5% in February, compared with January this year. This followed month-on-month changes of 5.5% in January this year and 0.2% in December last year.

Mineral sales, which have contracted since September 2012, remained weak, falling by another 0.9% year-on-year in January. The largest negative growth rate was -47.8% for ‘other’ nonmetallic minerals, followed by -11% for coal and -2.9% for ‘other’ metallic minerals.

The study also revealed that seasonally adjusted mineral sales at current prices increased by 2.9% in January this year, compared with December last year. This followed month-on-month changes of 8.2% in December and 4.3% in November.

Seasonally adjusted mineral sales at current prices increased by 5.1% in the three months ended January 2013, up from the previous three months. The growth was mainly driven by the sales value of coal, which contributed 1.1 percentage points. Nickel was the only commodity to make a negative contribution of -0.2 of a percentage point.

Nedbank stated that the prospects for the mining sector remained bleak in the short term.

“Global demand remains lacklustre and this has depressed commodity prices. On the local front, the industry faces rapidly rising costs, particularly higher wages and increasing energy costs. Production is, therefore, unlikely to rise strongly this year, with the rise in mining production to be mainly due to an improvement in activity from the strike-related disruptions in 2012,” the banker said.

It added that overall economic activity remained generally sluggish, while the weaker rand had increased the upside risks to inflation.

“We believe that this will persuade the Monetary Policy Committee to keep monetary policy neutral over an extended period, with interest rates remaining unchanged in 2013,” Nedbank indicated.