South Africa's mining production increased by 0.1% year-on-year in December 2020, Statistics South Africa notes.

The largest positive contributors were manganese ore (32.5% and contributing 2.2 percentage points); diamonds (51.4% and contributing 1.4 percentage points) and coal (5.7% and contributing 1.2 percentage points).

The largest negative contributor was platinum-group metals (PGMs) (-19.4% and contributing -5 percentage points).

Further, for the full year, mining production was 10.7% lower than in 2019.

The 10.7% decrease in yearly mining production followed a decrease of 0.5% in 2019 and a decrease of 1.5% in 2018.

Seasonally adjusted mining production increased by 0.5% in December 2020 compared with November 2020.

This followed month-on-month changes of -2.4% in November 2020 and -0.8% in October 2020.

Seasonally adjusted mining production decreased by 0.5% in the fourth quarter of 2020 compared with the third quarter of 2020.

During the fourth quarter of 2020, the largest negative contributor was PGMs (-13.2% and contributing -3.0 percentage points) and the biggest positive contributor was iron-ore (13.3% and contributing 1.2 percentage points).

MINERAL SALES

Mineral sales increased by 23.8% year-on-year in December 2020.

The largest positive contributors were iron-ore (59.0% and contributing 8.2 percentage points); PGMs (24.6% and contributing 7.4 percentage points); gold (23.9% and contributing 3.5 percentage points); manganese ore (26.3% and contributing 1.4 percentage points); chromium ore (37.5% and contributing 1.1 percentage points) and nickel (80.8% and contributing 1.0 percentage point).

Total mineral sales were 10.4% higher in 2020 compared with 2019.

The 10.4% increase in yearly mineral sales followed increases of 10.8% in 2019 and 5.2% in 2018.

Seasonally adjusted mineral sales at current prices decreased by 6.5% in December 2020 compared with November 2020.

This followed month-on-month changes of -4.4% in November 2020 and 2.2% in October 2020.

In the fourth quarter of 2020, the seasonally adjusted value of mineral sales at current prices was 4.1% higher than in the third quarter of 2020.

Commenting in a statement, Nedbank Group Economic Unit said that the outlook for mining remains mixed.

Globally, improving industrial activity and firmer commodity prices creates conditions for higher production. Domestic factors, however, remain major constraints, with the uncertain legislative framework and persistent power shortages being the key obstacles, it noted.

Moreover, it mentioned that the threat of new waves of Covid-19 infections could also still undermine the build-up of momentum in mining activity.

Also commenting was financial services provider FNB economist Thanda Sithole, who said that near-term mining activity should be supported by favourable commodity prices and anticipated global growth recovery, mainly from South Africa’s major trading partners.

Sithole indicated that the International Monetary Fund expects global economic growth of 5.5% in 2021 following a contraction of 3.5% in 2020, with China, the US and euro area expected to post growth rates of 8.1%, 5.1% and 4.2% respectively.

However, Sithole mentioned that risks exist given the uncertainty about the pandemic’s path, delays in vaccine roll-outs and vaccine efficacy challenges given mutations.

Moreover, State-owned power utility Eskom’s load-shedding also poses an idiosyncratic risk to overall economic activity such that even if the global economy recovers, domestic production could still be constrained, Sithole noted.