South African mining output falls sharply

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.

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.