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JOHANNESBURG (miningweekly.com) – South Africa’s mining production decreased 7.7% year-on-year in July, with the platinum-group metals (PGMs), copper, gold and diamond sectors recording the largest negative growth rates.
According to the latest data released by Statistics South Africa, PGMs output fell 45.2% year-on-year, copper 15.9% year-on-year, gold 14.6% year-on-year and diamonds 10% year-on-year in July.
The PGMs and gold sectors had been the main contributors to the overall decline in mining output for the month, making negative contributions of 11.1 percentage points and 2.3 percentage points respectively.
Investec analyst Kamilla Kaplan commented that, aside from the strike-induced disruptions to production, platinum producers were experiencing real inflationary pressures stemming from wages, electricity and imported inputs, the price of which had been inflated by past rand weakness.
Meanwhile, seasonally adjusted mining production increased 0.4% month-on-month in July. This followed month-on-month decreases of 1.1% in June and 3.2% in May.
Seasonally adjusted mining production for the three months ended July decreased 0.6%, compared with the three months ended April, with the main contributor being PGMs with a negative contribution of 3 percentage points.
The iron-ore sector, however, made a significant positive contribution of 2.2 percentage points to overall output for the three months.
Kaplan noted that although the mining sector only comprised about 5% of South Africa's gross domestic product, its underperformance was synonymous with that of the production side of the economy in general. "Production has been fundamentally constrained by high operating costs, amid weak aggregate demand conditions and infrastructure bottlenecks."
Nedbank added that, although mining output was likely to improve over the rest of the year, activity would remain lacklustre, with infrastructure constraints and lower international commodity prices keeping output weak.
Mineral sales, meanwhile, fell 12% year-on-year in June, with seven of the 11 mineral group and minerals having reported negative growth rates.
The PGMs sector recorded the largest negative growth rate of 35%, while the other metallic minerals sector saw a 26.1% drop, nickel a 25.2% drop, gold a 16.6% decrease and copper a 15.7% fall.
Further, seasonally adjusted mineral sales at current prices decreased 6.1% month-on-month in June. This followed month-on-month decreases of 4% in May and 0.7% in April.