MINING activity for 2021 in South Africa is on course for a rebound to near pre-pandemic levels driven by platinum group metals (PGM), iron ore and gold production.
Data from Statistics South Africa (StatsSA) yesterday showed that the industry outperformed and rose more than expected in November last year. StatsSA said mining production grew by 5.2 percent in November from a year ago, following an upwardly revised 2.2 percent rise in October.
This mining production output was better than market estimates of a 4.25 percent increase, despite another month of severe load shedding in November.
StatsSA said the largest positive contributors were PGMs, which rose 38.1 percent to the headline figure and iron ore at 9.3 percent in November.
Investec economist Lara Hodes said mining production numbers further marked growth from PGMs buoyed the headline result.
“Moreover, going forward PGMs are expected to benefit from pent-up demand in the automotive sector as input shortages that have plagued the sector ease,” Hodes said. At the same time, production rebounded for diamonds and manganese ore. By contrast, coal output continued to disappoint, declining for the fifth straight month, contracting by 7.9 percent in November.
The other heavyweight, gold, has been declining since September, despite rising gold prices over the same period, and it fell by 1 percent. However, on a seasonally adjusted monthly basis, mining production shrank 2.2 percent, following a downwardly revised 3.1 percent rise in the prior month. In the three months ended November, production fell by 1.6 percent compared with the previous three months.
Analysts said the mining sector needed to overcome its electricity supply and logistical challenges to operate optimally.
FNB senior economist Thanda Sithole, however, said the industry would rebound, despite several constraining factors such as shipping delays and related costs, electricity supply disruptions and higher input costs. “Mining activity should still benefit from the ongoing recovery in South Africa’s major trading partner economies and relatively sustained elevated commodity prices,”
Sithole said. “The trajectory of the global economy will be critical to domestic mining output and export volumes.”
With only December 2021 data remaining, analysts forecast that growth in total mining output is likely to have rebounded to 11.7 percent last year from a contraction of
10.7 percent in 2020.
BUSINESS REPORT ONLINE