It has been a difficult year for South Africa’s mining sector, to say the least. In addition to months of labor strife, mining production from the country has continued to decline.
In October, the production slide continued falling by 7.7 percent year-on-year with gold and iron-ore production plunging.
The October decrease comes after South Africa’s strike-hit mining sector reported a 7.2 percent year-on-year production decrease in September, Creamer’s miningweekely.com reported.
Gold production dropped 45.7 percent year-on-year and was responsible for 8.6 percentage points of the decline in October mining production, while iron-ore output fell by 22.8 percent, contributing 4 percentage points to the decline.
Other drops in yearly production were recorded for chrome (-19 percent), manganese (-2.9 percent), other metallic minerals (-26.9 percent), copper (-56.4 percent), diamonds (-12.1 percent) and building materials (-4.5 percent).
Nedbank pointed out in a note to clients that the drop in South Africa’s gold production coincided with the strikes in the platinum sector that started in August spreading to the gold sector in October.
Platinum-group metals (PGMs) production increased by 17.6 percent in October, after falling by 17.9 percent in September.
The banking group stated that the difficult operating conditions in the domestic mining sector would continue to undermine the performance of mining production in the months ahead, adding that the Reserve Bank could do little to counter the operating conditions in the mining sector, therefore, limiting its influence on monetary policy.
Seasonally adjusted mining production decreased by 7.9 percent in October compared with September. This followed month-on-month changes of -7 percent in September and -2.4 percent in August.
Further, seasonally adjusted mining production decreased by 10.2 percent in the three months ended October compared with the previous three months. The main contributors to the decrease were gold, contributing -3.2 percentage points, PGMs, contributing -2.7 percentage points, and iron-ore, contributing -1.6 percentage points.
Mineral sales decreased by 12.9 percent year-on-year in September.
The largest negative growth rate was recorded for copper (-42.5 percent), followed by other metallic minerals (-33.7 percent) and chromium ore (-27.5 percent). The major contributors to the 12.9 percent decrease were PGMs, contributing -3.9 percentage points, gold which contributed -3.3 percentage points and iron-ore, contributing -3.0 percentage points.
Seasonally adjusted mineral sales at current prices decreased by 7.3 percent in September compared with August. This followed month-on-month changes of 1.7 percent in August and -1.1 percent in July.
Seasonally adjusted mineral sales at current prices increased by 0.6 percent in the third quarter compared with the previous quarter. This increase was driven mainly by an increase in the sales value of PGMs, which contributed 2.9 percentage points.