Mining production decreased by 1.5% year-on-year in April, Statistics South Africa (Stats SA) data revealed on Thursday.
The largest negative contributors were gold, at -19.5%, and contributing -2.7 percentage points; iron ore, at -11.9%, and contributing -1.7 percentage points; and chromium ore, at -7.2%, and contributing -0.3 of a percentage point.
The largest positive contributor was ‘other’ metallic minerals, with an 82.8% increase in output, and contributing 1.3 percentage points.
Seasonally adjusted mining production also decreased by 2.3% in April compared with March.
This followed month-on-month changes of 4.2% in March 2019 and -2.2% in February.
Seasonally adjusted mining production decreased by 0.9% in the three months ended April compared with the previous three months.
The largest negative contributors were platinum-group metals (PGMs), at -3.8%, and contributing -1 percentage point; iron ore, at -2.2%, and contributing -0.3 of a percentage point; and building materials, at -11.7%, and contributing -0.3 of a percentage point.
Mineral sales, meanwhile, increased by 16.1% year-on-year in April.
The largest positive contributors were iron-ore, at 81.7%, and contributing 8.5 percentage points; PGMs, at 30%, and contributing 5.7 percentage points; coal, at 9.9%, and contributing 2.8 percentage points; and manganese ore, at 11.5%, and contributing 1.1 percentage points.
Seasonally adjusted mineral sales at current prices, however, decreased by 0.2% in April compared with March.
This followed month-on-month changes of 7.2% in March and -7.4% in February.
In the three months ended April, the seasonally adjusted value of mineral sales at current prices was 3.8% lower than in the previous three months.
Nedbank Group Economic Unit commented that mining prospects remain subdued.
“If there is no further load-shedding, some improvement off a low base is possible, but the upside will still be contained by softer global demand and relatively stagnant commodity prices,” it said.
Moreover, it indicated that the industry continued to grapple with rapidly escalating production costs and a relatively unfavourable regulatory and legislative environment.
The company’s analysis was that the latest set of monthly economic statistics mostly reflected some improvement in April, mainly influenced by the absence of any further power outages.
“Mining production remained depressed, suggesting that operating conditions remain difficult. While the economy is expected to return to growth in the second quarter off the low base established in the first quarter, the rate of recovery is expected to be slow and modest.”
The company posited that there would not likely be much demand pressure on prices, which should help contain the impact of the higher global oil prices, a moderately weaker rand and the expected upturn in food prices later this year.
Owing to weak growth prospects and a muted inflation outlook, it now anticipates a 25 basis point cut in interest rates at the next policy meeting in July.
Thereafter, rates are forecast to remain unchanged at the lower level for an extended period of time.