SA’s mining industry snapped a 12-month losing streak in March, with output up more than a fifth, partly driven by base effects after Covid-19 hit activity in 2020.
Mining output rose 21.3% year on year in March, from a revised 2.3% fall the month before, and better than the 17.3% expected in the Bloomberg forecast, data from Stats SA showed on Thursday.
Platinum group metals (PGMs) led the charge, up 68.6% year on year, and contributing 11.6 percentage points to the headline figure.
High metal prices, including for PGMs and iron ore, has prompted many local miners to pay record dividends recently, while the industry is looking set to be a key prop in SA’s economic recovery from Covid-19.
Commodity prices, notably metals’ prices have climbed considerably, fuelled by rising demand as expectations of a lift in global growth persists, supported by the ongoing vaccine rollout and fiscal stimulus measures, said Investec economist Lara Hodes in a note.
Domestically however, electricity supply disruptions continue to weigh on the optimal functioning of the energy intensive mining sector, she said.
“Additionally, infrastructure challenges, regulatory uncertainty and fiscal concerns remain impediments to foreign investment,” said Hodes.
The road ahead for the industry could be bumpy, said Capital Economics Africa economist Virág Fórizs in a note, with SA unlikely to escape the effects of a global chip shortage — which has hit the automotive industry — and supply chain disruptions.
“Meanwhile, concerns about a third wave of Covid-19 are building and a slow vaccination campaign means that the authorities will probably have to tighten containment measures to curb a new surge in cases,” said Fórizs.
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