South Africa’s mining industry remains resilient despite facing numerous challenges, as statistics from Statistics South Africa (Stats SA) yesterday indicated that overall production in October firmed up by 1.4% year-on-year.
However, this progress is marred by a 3% decline from the previous month of September. The fluctuations present a mixed bag of outcomes for various commodities, reflecting both the sector’s potential and the hurdles it continued to encounter.
Stats SA’s principal service statistician Jean-Pierre Terblanche said platinum group metals (PGM) output grew by 3.3% chromium ore by 14% and diamonds rebounded a massive 27.9% on a year-onyear basis in October.
However, iron ore production fell by 6.4% while gold tanked 3.4% despite elevated bullion prices.
“Chromium ore increased by 14%. Diamonds, copper and coal also recorded positive amounts,” he said.
“Nickel, iron ore, manganese ore and gold registered decreases. Nickel witnessed the largest decline, falling by 8.5% year-on-year.”
On a month-on-month basis, season-adjusted mining production fell by 3% in October compared to September, following month-on-month increases of 4.5% in September and 3.3% in August.
Thanda Sithole, FNB senior economist, said that “while the mining sector benefits from easing energy constraints and improving logistics, growth in the near term is expected to remain moderate due to a subdued external demand” environment.
“Over the medium term, accelerating reforms in ports and rail infrastructure will be critical to enhancing productivity and profitability in the sector,” said Sithole.
Moreover, despite the improvements in electricity supply under Eskom in the past few months, South African miners still face a host of other constraints.
“The mining sector continues to face a number of other key challenges, notably on the logistics front,” said Lara Hodes, economist at Investec.
Over the year to October 2024 period, South Africa’s mining production growth has been minimal at 1%. Analysts said this reflected a “modest improvement compared to flat growth” in 2023.
“This growth has been supported by strong performances in chromium ore, PGM, coal, and manganese ore,” explained Sithole.
South Africa’s mineral sales at current prices increased by 1.6% year-on-year in October. The largest positive contributors include coal which grew 10.3%, gold at 4.1% and other metallic minerals whose sales rose by 28.9%.
“The largest negative contributor was iron ore (-30%),” Stats SA said.
On a seasonally adjusted basis, mineral sales in SA at current prices increased by 3.7% in October 2024 compared to the previous month of September.
“This followed month-on-month changes of 16.7% in September and -21.7% in August. Seasonally adjusted mineral sales at current prices decreased by 7.2% in the three months ended October,” said the statistics agency.
Analysts at Moody’s expect South African gold miners to continue benefiting from higher gold prices in the year ahead, particularly Sibanye-Stillwater and DRDGold.
Despite battling prolonged low prices of the commodity, South African PGM could also start to see the benefits of cost restructuring in 2025.
“Gold miners will benefit from high gold prices, and the platinum group metals segment may see a gradual improvement in pricing as miners close unprofitable operations and postpone investments, and metal stocks deplete,” said Moody’s
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