Mining production decreased by 7.8% year-on-year in May, Statistics South Africa (Stats SA) has revealed.
The largest negative contributors were gold (-28.3% and contributing -4.6 percentage points); coal (-7.3% and contributing -1.9 percentage points); and manganese ore (-14.5% and contributing -1.1 percentage points).
Seasonally adjusted mining production increased by 0.7% in May compared with April.
This followed month-on-month changes of -3.6% in April and 3% in March.
Seasonally adjusted mining production decreased by 1.3% in the three months ended May compared with the previous three months.
The largest negative contributors were gold (-10.5% and contributing -1.6 percentage points) and manganese ore (-13.2% and contributing -1 percentage point).
Mineral sales at current prices, however, increased by 17.6% year-on-year in May.
The largest positive contributors were coal (116.7% and contributing 17.5 percentage points); gold (165.1% and contributing 7.6 percentage points); manganese ore (52.4% and contributing 2.2 percentage points) and chromium ore (81.3% and contributing 2 percentage points).
Platinum group metals (-26.3% and contributing -13.1 percentage points) were a significant negative contributor.
Seasonally adjusted mineral sales at current prices increased by 9.8% in May compared with April.
This followed month-on-month changes of -0.2% in April and 8.9% in March.
For the three months ended May, the seasonally adjusted value of mineral sales at current prices was 19.3% higher compared with the previous three months.
Commenting on the statistics, Nedbank’s Group Economic Unit said the considerable power cuts experienced in the country in May likely constrained the recovery.
It notes that while sales have remained supported largely by a buoyant commodity price environment, this could change in the near term amid growing fears of a global recession.
“The outlook for the mining sector is dimming progressively. With the increasing risk of a global recession in the near term and the re-emergence of new Covid-19 variants, demand is likely to slow and thus weigh on overall sales.
“Performance within the sector remains constrained by regulatory obstacles, poor infrastructure and policy uncertainty. In addition, the ongoing and intensifying electricity supply constraints pose a significant threat to productivity,” the unit says.
It notes that, while miners may continue to benefit from higher commodity prices, a recessionary global slowdown will weigh on demand and may ultimately push prices lower.
However, the unit points out that rising US interest rates and global risk-off sentiment have already seen the domestic currency face immense pressure, which it says will boost miners’ profits.