South African mining output falls sharply

Pit at the Premier Mine, Cullinan, Gauteng, South Africa. (Photo from Wikimedia Commons).

Statistics South Africa latest report revealed that during July, the country’s mining output contracted by 5.4% year-on-year, dragged down by:

  • PGMs (-9,6% and contributing -2.0 percentage points)
  • Manganese ore (-24.1% and contributing -1.7 percentage points)
  • ‘Other’ non-metallic minerals (-27.5% and contributing -1.1 percentage points)

In detail, seasonally adjusted mining production decreased by 2.4% in July 2016 compared with June 2016. This followed month-on-month changes of 1.0% in June 2016 and 3.1% in May 2016.

One of the reasons driving the downtrend is a labour dispute between the Association of Mineworkers and Construction Union and platinum miners, which is expected to move towards a strike action in the coming weeks. “This could potentially have a material impact on production and, in turn, prices,” say analysts at Capital Economics.

However, seasonally adjusted mining production increased by 4.2% in the three months that ended July 2016 compared with the previous three months. PGMs (3.2%) and iron ore (1.1%) were the largest positive contributors.

Source: Statistics South Africa.

Source: Statistics South Africa.

Sales, on the other hand, showed positive numbers with a 15.6% year-on-year increase in June 2016. PMGs (35.6%), gold (20.3%), ‘other’ non-metallic minerals (49.5%), and manganese ore (90.9%) were responsible for the rise.

Nevertheless, seasonally adjusted mineral sales decreased by 6.8% in June 2016 compared with May 2016. This followed month-on-month changes of 20% in May 2016 and 1.8% in April 2016.