Mining surprise for South Africa

Mining production has surprised on the upside in South Africa, beating expectations.

According to Stats SA’s latest data, mining production increased by 4.7% year-on-year in September 2024. This was a marked improvement from the 0.3% y/y increase in August.

It was also far above the Reuters consensus, which anticipated modest growth of 2.2% y/y in September.

The largest positive contributors were:

• PGMs (6.7% and contributing 2.1 percentage points);

• iron ore (10.0% and contributing 1.3 percentage points);

• manganese ore (13.5% and contributing 0.9 of a percentage point);

• chromium ore (17.3% and contributing 0.8 of a percentage point); and

• diamonds (35.4% and contributing 0.5 of a percentage point).

On the other end of the scale, coal (-4.4% and contributing -1.0 percentage point) and gold (-3.7% and contributing -0.5 of a percentage point) were negative contributors.

Seasonally adjusted mining production also increased by 3.8% in September 2024 compared to August’s data. This came off the back of month-on-month changes of 3.3% in August 2024 and -1.1% in July 2024.

On a quarterly basis, mining production increased by 1,0% in the third quarter of 2024 compared with the second quarter of 2024, which is positive news for South Africa’s GDP figures for the quarter.

The largest contributors over the quarter were:

• Manganese ore (10.1% and contributing 0.7 of a percentage point); and

• Chromium ore (7.3% and contributing 0.4 of a percentage point).

Outlook

“Year-to-date (January to September), mining output has increased by 0.7%, a notable yet moderate improvement from the 0% growth in 2023, which was revised upwards from a previous estimate of a 0.2% contraction,” said FNB Senior Economist Thanda Sithole.

“While mining recovery benefits from easing energy constraints and gradually stabilising logistics, we anticipate a moderate pace of growth in the near term due to a challenging external demand environment.”

“Accelerating reforms in ports and rail infrastructure will be crucial for boosting productivity and profitability in the mining sector over the medium term.”

Read: Major company in business rescue in South Africa a step closer to being saved