JOHANNESBURG (miningweekly.com) – The recovery in mining production gathered some pace in February, with production up 2.9% month-on-month and 4.6% year-on-year, after growing by 1.4% year-on-year in January.
The consensus market forecast was for a year-on-year increase of 2%, Nedbank said in a note on Thursday.
“The main boost came from platinum-group metals (PGM) and iron-ore, where output rose sharply off a low base, offsetting sharp declines in coal and gold production,” the bank pointed out.
The mining sector is expected to fare moderately better this year off last year’s low base.
Stronger global growth and firmer international commodity prices should support higher production and export sales; however, the general operating environment is likely to remain challenging, said Nedbank.
Economic activity in most sectors proved much weaker early this year than most had anticipated, while inflation appears to have turned the corner, supported by receding food inflation brought about by a rebound in agricultural production following good summer rains in many parts of the country.
However, the Monetary Policy Committee (MPC) is likely to focus on the downside risk posed to the rand by political events and the subsequent downgrade of the country’s sovereign risk rating to junk status by two major international rating agencies.
“We believe the MPC will probably feel compelled to send a message that monetary policy remains in steady hands to help stabilise capital flows and financial conditions. Consequently, we have changed our interest rate forecast to reflect one more 25-basis point hike in May,” Nedbank noted.