JOHANNESBURG (miningweekly.com) – South Africa’s mining production increased 0.6% year-on-year in September, Statistics South Africa (Stats SA) reported on Thursday.
The main contributors to the 0.6% increase were manganese ore, which contributed 1.7 percentage points, platinum-group metals (PGMs), which contributed 1.2 percentage points, and chromium ore, which contributed one percentage point.
Iron-ore was a significant negative contributor, subtracting 3.8 percentage points.
The highest positive growth rates were recorded for copper at 187.4%, chromium ore at 46.3% and manganese ore at 42.1%.
“The 0.6% increase is a particularly weak outcome considering that a low statistical base was established in September 2012 when growth in production contracted 6.4% month-on-month and 7.1% year-on-year,” Investec commented.
Seasonally adjusted mining production for the three months ended September increased 1.4% compared with the previous quarter, with PGMs having been the main contributor to the increase, contributing three percentage points.
Investec stated that the moderate improvement suggested that the mining sector’s contribution to the third-quarter gross domestic product (GDP) could be positive, as opposed to the 0.3% decline recorded in the second quarter.
“However, the overall impact will be muted given the mining sector’s relatively small share of GDP of 5%,” the bank said.
Further, mineral sales increased 7.6% year-on-year in August, with the highest positive growth rates having been recorded for iron-ore at 68.9%, chromium ore at 47.7% and copper at 47%.
Stats SA stated that the major contributors to the 7.6% increase were iron-ore, which contributed 7.2 percentage points and PGMs, which contributed 7.1 percentage points.
Meanwhile, seasonally adjusted mineral sales at current prices increased by 7% in August compared with July, following month-on-month changes of 2.7% in July and 4.9% in June.
Seasonally adjusted mineral sales at current prices increased 1.7% for the three months ended August, compared with the previous three months, with the increase having been largely driven by the sales value of iron-ore, contributing 2.3 percentage points and PGMs contributing 2.1 percentage points.
“On the whole, taking account of the September data, in the year-to-date, mining sector growth is barely positive at 0.7% and, looking ahead, the sector still faces the risk of industrial action, elevated operating costs and a relatively modest outlook for commodity prices. This further implies that the outlook for meaningful employment in the sector is unfavourable,” Investec said.
The banking group further stated that weak mining production growth, in conjunction with the losses in manufacturing output would weigh on the country’s GDP for the third quarter.
“GDP for the year as a whole is likely to be in the region of 2% and downside risks to the economy remain high, supporting the argument for maintaining low interest rates,” Investec stated.