Mining activity in South Africa appears to have overcome the logistics challenges and the energy crisis, at least for now, after output surprised on the upside in November 2023, helped by the increased output from platinum group metals (PGMs), coal and iron ore.
Statistics SA (Stats SA) yesterday said that mining production surged by 6.8% year-on-year in November after a downwardly revised 3.6% increase in October.
This print marked the second consecutive month of growth in mining activity, and was the strongest since July 2021, also surpassing market forecasts of a 3% growth.
Stats SA said PGMs surged by 15.2%, coal edged higher by 10.6%, and iron ore rose by 20.1%.
However, gold production fell by 3% in November, the largest drop in 11 months since December 2022, following a 2.2% increase.
On a seasonally adjusted basis, gold output dropped by 2.4%, from a 4.6% rise in the previous month.
Analysts said the sustained monthly momentum indicates a positive contribution to economic growth in the fourth quarter of 2023, and aligned with the view that gross domestic product (GDP) likely rebounded during the final three months of the year following a 0.2% decline in the third quarter.
FNB senior economist Thanda Sithole said mining output faced weaknesses amid subdued external demand, low commodity prices, and domestic infrastructure constraints in 2023.
Sithole said overall output declined marginally by 0.6% in the 11 months leading up to November.
However, this marked an improvement when compared with the substantial 7.5% decline recorded over the corresponding period in 2022.
“While the peak of load shedding intensity has passed, the mining sector will continue to grapple with enduring challenges posed by port and rail infrastructure weaknesses,” Sithole said.
“The dynamics of external demand will play a pivotal role, and we maintain a cautious outlook given escalated geopolitical tensions. Potential disruptions in shipping could further impact domestic exports of break bulk commodities.”
On a seasonally adjusted monthly basis, mining production grew by 2.1% in November, following a downwardly revised 2% rise in the previous month.
Seasonally adjusted mining production increased by 2.1% in the three months ended November 2023 compared with the same period a year ago.
BUSINESS REPORT