South African mining production increased by 7.5% year-on-year in January, Statistics South Africa’s data shows.

This was the biggest year-on-year rise in mining output since November 2017 when production increased by 7.8%.

Commenting on the report, international specialist banking and asset management group Investec indicated that the result was notably above Bloomberg’s consensus of a 1% year-on-year increase.

The largest positive contributors to January’s output were iron-ore (27.9% and contributing 2.8 percentage points); platinum group metals, or PGMs (10.2% and contributing 2.5 percentage points) and coal (2.3% and contributing 0.6 of a percentage point).

Investec predicted that iron-ore’s run, which had increased consecutively on a year-on year basis since September 2019, would likely be impeded by the anticipated sharp slowdown in industrial demand as a result of a global trade and growth fallout, particularly from China as Covid-19 continues to spread across the world.

Financial services provider FNB commented that it anticipated that mining production would slow on the back of the recent bouts of load-shedding, as well as the spread of the Covid-19, particularly in China.

It cited statistics from the South African Revenue Service, which indicated that 31% of mineral product and 14% of iron and steel product exports in 2019 were to China.

“However, we remain emboldened by the continued expansion in gold production and have confidence that the high prices of certain PGMs should incentivise increased production,” FNB said.

Investec also mentioned that a disaggregation of the data indicated that gold activity continued to increase, rising by 4.9% year-on-year.

“Gold as a safe haven asset and store of value is likely to continue benefiting from the global risk-off environment, amplified by the outbreak and spread of Covid-19,” it said.

Meanwhile, seasonally adjusted mining production increased by 6% month-on-month in January. This followed month-on-month changes of -5.2% in December 2019 and -1.9% in November 2019.

Seasonally adjusted mining production decreased by 1.1% in the three months ended January, compared with the previous three months.

The two largest negative contributors were coal (-6.4% and contributing -1.6 percentage points) and manganese ore (-13.3% and contributing -1.0 percentage point).

PGMs (5.4% and contributing 1.2 percentage points) and iron-ore (10.4% and contributing 1.1 percentage points) were significant positive contributors.

MINERAL SALES

Mineral sales increased by 24.2% year-on-year in January.

The largest positive contributors were PGMs (85.3% and contributing 18.1 percentage points); iron-ore (43.4% and contributing 4.8 percentage points); gold (9.0% and contributing 1.5 percentage points) and nickel (108.0% and contributing 1.3 percentage points).

Seasonally adjusted mineral sales at current prices increased by 22.9% in January compared with December 2019.

This followed month-on-month changes of -10.1% in December 2019 and 6.1% in November 2019.

For the three months ended January, the seasonally adjusted value of mineral sales at current prices was 7.2% higher compared with the previous three months.