The Minerals Council says South Africa’s minerals production and sales over the coming months will be influenced by a global economic outlook premised on Donald Trump’s return to the White House as US President.
Last week, StatsSA data showed South Africa’s seasonally adjusted real mining production increasing 3.8% month-on-month in September. This followed an increase of 3.3% in August, with the biggest production increases for September in iron ore, diamonds, and non-metallic minerals that include limestone, sand, and cements.
Now, Bongani Motsa, senior economist at the Minerals Council, has said that Trump’s re-election after the November 5 poll is expected to “ensure the world’s largest economy is more inward-looking” than the approach propagated under the Joe Biden administration.
“While early days, this could have adverse implications for global trade and GDP growth,” said Motsa.
This was despite the ramp-up in South Africa’s minerals production for September as well as for the third quarter period.
After contracting in the first quarter and second quarter of 2024, consequently subtracting from overall GDP, South Africa’s real mining production increased 1% in the third quarter and is expected to provide support for GDP for the third quarter period.
“Mining will support GDP in Q3,” explained Motsa.
Iron ore is one South African produced mineral that is set to be impacted by the re-election of Trump. The US administration under Trump was likely to “negatively affect China’s exports of manufactured goods.”
“Iron ore is an input into steel manufacturing and most of China’s goods exports use steel as an input. This might affect South Africa’s iron ore exports to China, as well as other minerals such as chrome and manganese that feed into the Chinese stainless-steel sector,” said Motsa.
Despite elevated gold prices, South Africa’s domestic gold production has been “on a structural decline” over the past few months.
This comes as input costs have become a major concern for local producers, including electricity costs that continue to increase by more than domestic and global consumer inflation.
Labour cost increases also continue to be a challenge as wage settlements are typically above CPI inflation, said the Minerals Council.
Nonetheless, Motsa expects the currently higher gold price to provide some respite. The gold price is in the short to medium term expected to remain buoyant.
South African PGM producers have been ramping up output, and the Minerals Council expects this trend to stabilise “as the move to battery electric vehicles is likely to slow down on account of Trump winning the presidency” in the US.
The South African coal sector was, however, faced with diverging trends, with the improved Eskom plant performance boosting the demand for coal. However, rail and port problems continue to hamper exports, especially at current prices that make trucking coal less viable for miners of the commodity.
BUSINESS REPORT