Data from Statistics South Africa (Stats SA) showed that mining production shrank by 4.5% in September from a year ago after an upwardly revised 6.4% decline in August. Photo: Simphiwe Mbokazi (ANA)
Mining output in South Africa continued to drag, falling more than expected in September as the energy crisis and industrial action hampered productivity
Data from Statistics South Africa (Stats SA) yesterday showed that mining production shrank by 4.5% in September from a year ago after an upwardly revised 6.4% decline in August.
The last time the industry experienced consecutive contractions of this magnitude was between February 2020 and February 2021, at the height of the Covid-19 pandemic
The September production print was slightly higher than the market forecasts of a 4.05% slump, and marked the eighth consecutive month of falling mining activity hampered by strikes and ongoing power cuts.
Stats SA said that output declined mostly for iron ore and gold which recorded double-digit contractions of 23.1% and 12.4% respectively.
On a seasonally adjusted monthly basis, mining production gained a slight 0.1% in September following a revised 0.6% decrease in August.
In the three months ending in September, mining activity increased by 2.2% compared with the second quarter, mainly driven by gold and diamond production.
Stats SA’s principal survey statistician, Juan-Pierre Terblanche, said mining production increased in the third quarter after recording four consecutive quarters of decline.
“The rise in the third quarter was led by increases in gold and diamond production. Gold was the largest positive contributor, increasing by 9.6%. Miners specialising in diamond production recorded a 20.4% increase in activity,” Terblanche said.
“The country also produced more coal and manganese ore in the third quarter. On the downside, the industry recorded a decline in the production of chromium, copper, nickel, iron ore and platinum group metals.”
Nedbank economist Liandra da Silva, however, said the mining sector performance would remain precarious in the coming months amid a dim economic outlook.
Da Silva said that China, which faces recurring Covid-19 waves and consequent restrictions, exacerbated the weaker demand outlook.
“Demand conditions will deteriorate given the expected slowdown in the global economy, particularly in advanced countries, some of which are key markets for South Africa,” she said.
“However, coal demand and thus prices should remain supportive on the back of ongoing supply concerns sparked by Europe’s ban on Russian coal and increased demand from Asia. On the domestic front, persistent power supply disruptions remain a threat to output.”
Meanwhile, mineral sales accelerated by 20.7% year-on-year in September, the fastest pace since the start of 2022.
Stats SA said overall sales were mainly driven by coal, which accelerated by 63.1% from a year ago, while gold, other metallic minerals, and manganese ore added to the upside.
Although commodity prices have moderated from their early 2022 highs, some commodities have continued to offer support.
Coal prices, in particular, have edged higher this year due to supply concerns related to the Russia-Ukraine war and Europe’s consequent ban on Russian coal.
BUSINESS REPORT
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