Minerals that registered production increases include platinum group metals (PGM), which firmed up by 4% and chromium ore whose output for the period quickened by 15.6%. Picture: Supplied
South Africa’s mining sector’s output firmed up by 1% over the nine-month period to November 2024 compared to the same period a year earlier, although economists said subdued prices for SA’s major mineral exports and slowing Chinese demand could dampen prospects for the sector.
Data from Statistics South Africa (Stats SA) on Tuesday showed mining productivity in SA decreasing by 0.9% year-on-year in November 2024 following a downwardly revised 1.1% rise in October.
Stats SA said the largest negative contributors to this slump were gold, which was down by 11.5%, iron ore which declined by 3.8% and coal which fell by 1.6%.
Minerals that registered production increases include platinum group metals (PGM), which firmed up by 4% and chromium ore whose output for the period quickened by 15.6%.
On a seasonally adjusted basis, SA’s mineral productivity decreased by 0.2% in November 2024 compared to a month earlier, following month-on-month dips of 2.8% and 4.2% in October and September 2024, respectively.
“Mining output increased by close to 1% between January and November last year, reflecting a better performance compared to 0% growth in 2023,” said Thanda Sithole, an economist with FNB.
“However, last year’s performance has been mixed, with mining divisions such as platinum group metals, chromium ore, coal, and manganese ore supporting growth.”
Sithole is expecting that continued suspension of load shedding and gradually stabilising logistic systems will support production over the near-to-medium term. However, some headwinds are dimming prospects for the industry.
“Slowing growth in China, a generally subdued external demand environment, and weak prices for South Africa’s major commodity exports could limit the upside,” Sithole said.
Although PGM productivity by producers has been dented by persistently lower prices, South Africa’s PGM industry has managed to maintain monthly output momentum.
The local PGM sector has increased productivity by 3.2% on average over the past four successive months. Over the January to November 2024 period, PGM output was up by 2.3%, reflecting an acceleration from 1.1% growth in 2023.
South Africa’s gold production, on the other hand, contracted sharply by 11.5% on a year-on-year basis and by 9.2% month-on-month, shaving off 1.5 percentage points and marking the 13th successive month of annual decline.
“The continued decline in gold production is partly attributed to higher operating costs due to aging and ultra-deep mines as well declining ore grades,” said Sithole.
Investec economist, Lara Hodes, said South Africa’s mining sector “continues to grapple with a number of challenges” such as high electricity costs despite improvements in electricity availability.
“Logistics constraints remain a key impediment to activity and export potential. Subdued manufacturing conditions in a number of key countries continue to weigh on demand for industrial commodities,” said Hodes.
However, in terms of sales, mineral volumes at current prices increased by 8.1% year-on-year in November 2024, with gold the largest contributor at 93.4% in spite of the lower productivity. Coal sales for the period were also higher by 8.5% while PGM sales volumes also strengthened by 4.3%.
Iron ore dragged mineral sales, slumping by as much as 28.2%. on a seasonally adjusted basis, mineral sales increased by 6.7% in November 2024 compared to the previous month.
BUSINESS REPORT