Mining production in South Africa surged to its highest in 7 months in September, rising by 4.7% year-on-year from a 0.3% increase in August, buoyed by platinum group metals (PGMs), iron ore, manganese ore and chromium ore.
Data from Statistics South Africa (Stats SA) yesterday showed that South African miners turned to significant positivity despite suppressed prices and cost rationalisation.
This was the second consecutive month of growth in industrial activity and the strongest since February.
Stats SA’s principal service statistician Jean-Pierre Terblanche said platinum group metals and iron ore were the largest positive contributors, while diamonds, nickel, bromine ore, copper and manganese ore also recorded a positive month.
“Metals and iron ore were the largest mining production increased by 4.7%. On the downside, there was a year-on-year decline in coal and gold,” Terblanche said.
On a month-on-month basis, season-adjusted mining production increased by 3.8% in September compared with August, following an upwardly revised 3.3% rise in the prior month.
Seasonally adjusted mining production increased by 1% in the third quarter of 2024 compared with the second quarter.
Analysts yesterday said this was expected to feed into gross domestic product (GDP) performance for the same quarter.
Thanda Sithole, senior economist at FNB said the stronger September production profile for South Africa, which surpassed expectations, was indicative of “a positive contribution to GDP” growth for the third quarter.
“The production ramp up by PGMs producers bodes well for a rosy outlook that has been predicted for the sector. According to the World Bank, platinum prices are forecast to gain 5% in 2025 and 2026, supported by tighter mine supply among the major producers,” Sithole said.
Lara Hodes, an economist with Investec said “only two of the 12 mineral categories included in the index contracted when compared to the same period last year, namely gold and coal” output.
Coal production slumped by 4% while gold, whose prices have rallied on global markets to all time highs in the past few months was down by 3.7%.
South Africa’s mining sector has continued to face a number of major challenges such as high electricity costs and logistics constraints that are impeding activity and export potential.
The Medium-Term Budget Policy Statement delivered at the end of October stated that mining production was “below pre-pandemic levels due largely to poor rail and port performance, and regulatory bottlenecks”.
Illegal mining, strikes and elevated crime, were also counteracting “gains from improved power supply”.
South Africa’s minerals production for the January to September period also firmed up 0.7%, a notable yet moderate improvement from the flat growth in 2023.
“While mining recovery benefits from easing energy constraints and gradually stabilising logistics, we anticipate a moderate pace of growth in the near term due to a challenging external demand environment,” Sithole said.
“Accelerating reforms in ports and rail infrastructure will be crucial for boosting productivity and profitability in the mining sector over the medium term.”
South Africa also raised minerals sales for the month of September by 8% compared to the previous year’s contrasting period. The largest positive contributors were gold which rose 42.3%, manganese ore which raised sales by 48.8%.
Sales of chromium ore also rose 19.4% for the period under review while coal was higher by 5.8%. Sales for PGMs were however negative, trending down by 15.9%.
BUSINESS REPORT