After three consecutive months of declines, South African mining production was higher in June by 2.8 percent year-on-year and five percent month-on-month buoyed by a sharp increase in platinum group metals (PGMs) production, following a 1.8 percent year-on-year decline in May.
Statistics South Africa reported that PGM output surged 28.2 percent year-on-year, although off a very low base, contributing 5.9 percentage points to the country’s mining production.
Diamond and iron ore output expanded by 18.7 percent and 4.2 percent respectively over the same period, collectively adding another 1.5 percentage points, while coal production was unchanged from the same time last year.
The PGM sub-sector occupies the second largest weighting in the commodities basket and therefore its robust performance translated into a positive contribution of 5.9 percent to headline mining production.
This counteracted gold’s dismal performance, with this subsector plunging by 19.2 percent year-on-year and detracting three percent from topline growth.
Notwithstanding June’s increase, Investec Bank economist Lara Hodes said that year to date mining production was still down 1.5 percent as the industry still faces difficulties ahead evidenced by the recent news of job cuts and the potential for an escalation in US / China trade tensions.
“Commodity prices have suffered of late amid geopolitical concerns and rising trade tensions which have reinforced investor concerns over global growth, threatening demand. This coupled with a combination of other factors, including declining productivity and escalating costs have suppressed activity in the mining sector,” Hodes said.
“Additionally, persistent regulatory uncertainty continues to inhibit essential investment into the sector, with the new, proposed mining charter yet to be signed off and issues around the possible expropriation of land without compensation still not resolved.”
– African News Agency (ANA)