South Africa’s mining production falls for a fourth month

16th January 2020 By: Tasneem Bulbulia - Creamer Media Reporter

South Africa’s mining production falls for a fourth month

Photo by: Creamer Media

Mining production decreased by 3.1% year-on-year in November, data from Statistics South Africa (Stats SA) shows.

In a statement, financial services provider Nedbank’s Economic Group Unit said this represented the fourth consecutive month of yearly decline, with non-gold activity remaining the main drag.

Stats SA data shows that the largest negative contributors to the decline were platinum group metals (PGMs) (-13.5% and contributing -3.6 percentage points); iron-ore (-7.5% and contributing -0.7 of a percentage point); and coal (-2.8% and contributing -0.7 of a percentage point).

Other nonmetallic minerals, however, made a significant positive contribution (20.5% and contributing 1.2 percentage points).

Further, seasonally adjusted mining production decreased by 3.5% month-on-month in November. This followed month-on-month changes of 1.7% in October and 0.8% in September.

Seasonally adjusted mining production decreased by 0.9% in the three months ended November, compared with the previous three months.

The two largest negative contributors were manganese ore (-10.6% and contributing -0.8 of a percentage point) and coal (-2.9% and contributing -0.7 of a percentage point).

Gold (4.8% and contributing 0.6 of a percentage point) and other nonmetallic minerals (8.3% and contributing 0.6 of a percentage point) were significant positive contributors.

Nedbank posited that growth prospects for the mining sector remained subdued as a result of the resumption in load-shedding, elevated operational costs and an unfavourable policy environment.

Moreover, it said an ambiguous global growth outlook and relatively flat commodity prices further hindered potential growth in the sector.

Also commenting on the statistics, Investec said unpredictable electricity supply continued to undermine operational efficacy, while the constrained global demand for industrial metals was weighing on the country’s export potential. 

Moreover, it noted that heightened rotational load-shedding in December once again forced many large miners to scale back production. The company anticipates this will negatively impact the fourth quarter of 2019’s headline outcome, with the mining sector likely to detract from the period’s gross domestic product.