Statistics South Africa (Stats SA) reports that South Africa’s mining production decreased by 11.6% year-on-year in November, largely owing to iron-ore output having decreased by 35.3%, contributing 3.9 percentage points.

Platinum group metals (PGMs) also dragged the industry’s performance down, with output down 16.1%, while manganese ore production was down 15.9%.

Coal production was 5.9% lower year-on-year.

Financial services provider Nedbank reports that the rate of contraction had been moderating gradually since the “blood bath” in April when the economy was placed under the highly-restrictive Alert Level 5 lockdown.

In addition, it notes that the deterioration in yearly output was largely anticipated owing to tighter lockdown restrictions in some of South Africa’s major export markets, particularly Europe, which was experiencing the second wave of Covid-19 infections during November.

Further, seasonally adjusted mining production decreased by 5.7% in November, compared with October, according to Stats SA, which says that this followed month-on-month changes of -0.7% in October and -0.8% in September.

However, Stats SA also reports that seasonally adjusted mining production for the three months ended November increased by 6.3%, compared with the previous three months. The largest positive contributors were gold with a 13.2% rise, contributing 1.6 percentage points to the overall performance; while PGMs rose 6.4%, contributing 1.3 percentage points. Manganese ore also increased 10.2%, contributing one percentage point.

Meanwhile, Nedbank reports that all the subcategories, except diamonds, recorded output declines on a yearly basis, with the main drivers being iron-ore, which fell by 35.3%, subtracting 3.9 percentage points from the headline figure.

This was followed by PGMs, manganese ore and coal, which dropped by 16.1%, 15.9% and 5.9% respectively, and leading to the shaving off of 3.4, 1.5 and 1.5 percentage points respectively.

MINERAL SALES

Stats SA finds that mineral sales increased by 15.1% year-on-year in November, with the largest positive contributors being PGMs with 37.6% increased sales, contributing 11 percentage points; iron-ore sales increasing 28.8% and other nonmetallic minerals rising 80.3%.

Stats SA’s figures point to seasonally adjusted mineral sales at current prices decreasing by 4.4% in November compared with October. This followed month-on-month changes of 2.6% in October and 4.8% in September.

Nadbank notes that the decrease was mainly a result of lower sales of gold, which fell by 14.2% following a 65% jump in October, as well as slower sales of PGMs, which eased to 37.8% from 76%. The decline in sales of copper and chrome also contributed, says Nedbank.

The main contributors to the positive annual sales figure were PGMs (up 37.6%), iron-ore (28.8%), ‘other’ nonmetallic minerals and manganese ore (29.5%).

For the three months ended November, the seasonally adjusted value of mineral sales at current prices was 21.7% higher compared with the previous three months, reports Stats SA.

Nedbank states that mining figures are volatile and, although these latest numbers are discouraging, some moderation in the pace of recovery was expected over the final quarter of the year.

“Mining production is not expected to make a positive contribution to gross domestic product in the fourth quarter. Thereafter, the recovery in output is anticipated to continue, but the upside will be limited by the recent return to a stricter Alert Level 3 lockdown to deal with the resurgence in Covid-19 infections and by the persistent power outages.”

Nedbank highlights that a sustainable recovery will depend on how long the country remains at stricter lockdown levels. Local factors such as infrastructure constraints, especially electricity shortages, and the uncertain policy environment are also worrying.