South Africa's mining production decreased by 6.3% year-on-year in October, Statistics South Africa (Stats SA) reports.

The most significant contributors to the decrease were iron-ore, which was down 26.5%, contributing -2.6 percentage points to the overall industry performance; while chromium ore was down by 31.4%, contributing -1.4 percentage points to the overall statistics.

The other nonmetallic minerals category declined 17.3%, contributing -1.2 percentage points.

Coal declined by 4%, contributing -1 percentage points to the overall performance figures.

In terms of seasonally adjusted mining production, Stats SA reports that this decreased 0.3% in October when compared with September. This follows month-on-month changes of -1% in September and 6% in August.

However, in terms of the three months ended October 31, seasonally adjusted mining production increased by 18.5%, compared with the previous three months. For the three months, the positive influences were platinum group metals (PGMs) which increased 32%, contributing 6.7 percentage points to the overall statistics.

Iron-ore increased by 30.2%, reflecting an overall contribution of 2.3 percentage points; while gold was buoyed by 19.2%, contributing 2.3 percentage points in total.

The other nonmetallic minerals category increased 22.3%, contributing 1.5 percentage points in total; while manganese ore climbed 16.7%, contributing 1.5 percentage points in total.

An Investec report finds that diamond output grew by 22.5% year-on-year, following September’s 45.5% year-on-year increase. Investec also reveals that rough diamond sales have improved ahead of the holiday season – a key period for diamond jewellery sales.

Nedbank Group Economics comments that the latest mining production figures suggest the industry is on the mend. It adds, however, that lingering lockdown-related disruptions, as well as persistent power outages are likely to keep the recovery limited.

MINERAL SALES

Stats SA reports that mineral sales increased by 30.7% year-on-year in October, with the most significant contributors being PGMs with growth of 75.7%, thereby contributing 20.8 percentage points in total.

Gold sales increased by 66.1% for the period under review, contributing 10 percentage points; while iron-ore was up 31.2%, contributing 2.8 percentage points to the overall tally.

Seasonally adjusted mineral sales at current prices increased by 2.5% in October when compared with September. This followed month-on-month changes of 4.4% in September and 13.1% in August.

For the three months ended October, the seasonally adjusted value of mineral sales at current prices was 35.1% higher compared with the previous three months.

Investec also highlights that commodity demand has picked up markedly since stringent Covid-19-related restrictions (enforced mainly during the second quarter) have gradually been lifted, supported by the subsequent pick-up in global manufacturing activity.

As such, the company points out that JP Morgan’s October global manufacturing Purchasing Managers Index survey showed the fastest lift in almost three years, while new orders rose for the fourth consecutive month as new export business was reported to have improved.

Further, Investec also reveals that commodities prices have climbed substantially, with the World Bank’s Base Metals index up over 37% since April and their precious metals index up nearly 17% over the same period.

However, Investec states that, domestically, the mining sector continues to face a myriad of challenges, which have been exacerbated by Covid-19.

“The government has however prioritised regulatory changes and the creation of a supportive and enabling policy environment to improve the ease of doing business in the country, as highlighted in the reconstruction and recovery plan.”

Investec says this should improve South Africa’s competitive position and aid in the attraction of foreign investment.