Mining production in South Africa decreased by 5.2% year-on-year in July, following a 3.7% year-on-year rise in June, mainly as a result of declines in the production of gold, iron-ore, coal and platinum-group metals (PGMs).

According to Statistics South Africa (Stats SA), gold decreased by 15%, contributing –2.4 percentage points; iron-ore decreased by 17.4%, contributing –2.3 percentage points; and coal and PGMs decreased by 5.8% and 6.2% respectively, contributing –1.5 percentage points and –1.3 percentage points respectively.

On a more positive note, however, diamond production was a significant positive contributor, achieving a growth rate of 40.7% and contributing 2.3 percentage points.

On a seasonally adjusted basis, mining production declined by 8.6% month-on-month in July and increased by 3.3% quarter-on-quarter for the three months to July 31.

The main drivers of the quarterly increase, Stats SA noted, were PGMs and diamonds, which added 2.6 and 2.7 percentage points respectively to the quarterly number.

This followed month-on-month changes of 5.4% in June and 5.3% in May.

Mining sales, meanwhile, decreased by 1.7% year-on-year in July as a result of declines in coal, gold and iron-ore.

Coal decreased by 6.3%, contributing –1.9 percentage points, while gold decreased by 7.4%, contributing –1.5 percentage points.

Iron-ore sales saw the biggest drop at 14.2%, which contributed –1.4 percentage points.

Manganese ore, however, was a significant positive contributor to mining sales, seeing an increase of 26.6% and contributing two percentage points.

On a seasonally adjusted basis, mineral sales at current prices decreased by 7.2% in July, compared with June.

This followed month-on-month changes of 1.6% in June and 4.8% in May.

In the three months ended July 31, the seasonally adjusted value of mineral sales at current prices was 5.2% higher, compared with the previous three months.

Despite the mining figures being volatile, financial services provider Nedbank’s group economic unit believes that stronger global demand should offer some support for production and export volumes during the rest of the year, t

he upside of which, the institution said in a statement, would probably be tempered by softer commodity prices, as well as a generally difficult operating and policy environment.

According to Nedbank’s statement, weak economic growth supports a neutral to easier monetary policy stance. However, it warned last week that upside risks to the inflation outlook had increased since the July Monetary Policy Committee (MPC) meeting, as the rand had depreciated further, and international oil prices risen.

The risks of near-term tightening had therefore increased, Nedbank warned.

The MPC, the institution noted, has stressed that its focus would be on countering any second-round inflationary effects from the currency or other cost-push factors.

“We, therefore, still believe the MPC will try to keep rates steady for as long as possible, given the weak economy and the absence of any strong rise in inflation expectations. Interest rates are likely to remain unchanged until the second half of 2019, but this outlook could change if negative factors persist.”