SOUTH Africa’s mining production grew 21.9 percent year-on-year in May following the record 117.4 percent growth a month earlier, but fell by 3.5 percent month-on-month, Statistics South Africa (StatsSA) said.
The year-on-year growth in mining output was propelled by platinum group metals (PGMs), gold, iron ore and manganese ore, said StatsSA.
Production in May was lower than the 31.5 percent year-on-year consensus forecast by Bloomberg.
In May last year, production fell 21.7 percent because of the lockdown.
Bloomberg said output was up 5.6 percent during the three months to the end of May, driven by a 12.9 percent increase in PGMs, a 9.1 percent increase in gold and a 13.5 percent improvement in manganese.
Mineral sales grew 88.2 percent on a year-on-year compared to the record 151.1 percent year-on-year in April.
StatsSA said PGMs were the biggest contributor, with a 258 percent jump, followed by iron ore (116 percent) and coal sales (12.5 percent), reflecting the strong commodity price environment.
Investec economist Lara Hodes said iron ore and PGMs had benefited from the rebound in global demand.
“Iron ore output increased by 48.4 percent year-on-year, adding a further 4 percentage points, supported by the rebound in global trade and growth following the fall-out from Covid-19, leading to a sharp increase in industrial demand,” said Hodes.
RMB chief economist Etienne le Roux said that besides the huge trade surpluses, booming mining exports had been key in generating super profits for mining companies, which had significantly benefited the fiscus.
“Additionally, increased mining exports have been an important stopgap, with foreign travel receipts, given persistent international travel restrictions remaining in the doldrums,” said Le Roux.
Despite the record prices, the sector was not yet out of the woods, according to the Nedbank Economic Unit.
The unit said the mining sector’s output was likely hindered by power disruptions in May, and June’s production numbers were likely to follow a similar trajectory because of the extent of load shedding during the month.
“Although the recovery in industrial activity and high commodity prices remain supportive of the sector’s recovery, the materialisation of the third wave of infections (worse than anticipated) and associated lockdowns, combined with planned load shedding in the months ahead, pose significant downside risks to the pace of recovery,” said the Nedbank Economic Unit.
First National Bank economist Thanda Sithole said that in the near term, the mining sector remained positive within a highly fluid economic environment.