Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) – As local headline mining production growth slipped back into negative territory, falling 4.8% year-on-year in September, the sector probably entered a technical recession in the third quarter, which will be confirmed when production-side gross domestic product figures are released on November 24, BNP Paribas Cadiz Securities said on Thursday.
Economist Jeffrey Schultz noted that the decline was unsurprising, considering the rising pressures in an industry which continued to grapple with falling global commodity prices, weak demand and faltering productivity.
On a seasonally adjusted month-on-month basis, production slipped 3.7% in September, its third consecutive month of decline. The decrease was driven mainly by a 7.3% contraction in coal production, a 3.2% drop in platinum group metals (PGMs) output and a 1.9% contraction in gold production.
The largest year-on-year negative growth rates were recorded in the diamonds sector, falling 38.5%, “other” metallic minerals, which fell 30.1% and iron-ore, down 17.9%.
PGMs was a significant positive contributor, with output rising 25% year-on-year.
However, Schultz warned that this favourable base effect from last year’s strikes in the platinum sector was fading fast, with PGM production growth having registered growth of nearly 100% year-on-year in May.
Seasonally adjusted mining production decreased by 2.5% in the third quarter compared with the second quarter.