SA mining production rose in April despite intense power outages, reflecting the first month of activity growth after 14 months running of year-on-year declines, Stats SA data shows.
Mining production rose 2.3% year on year in 2023, a better out turn than the above-market forecasts of a 0.9% increase.
On a monthly basis, mining production rose 1.8% in April, after an upwardly revised 6.9% jump in the prior month.
While the energy-intensive sector continues to deal with electricity supply challenges hindering operational performance amid big logistical constraints, there has been some progress.
The Minerals Council SA said that establishment of the national electricity crisis committee and implementation by the government of big reforms to enable greater private sector investment in electricity generation have boosted the sector, albeit slowly, can also be seen in the April numbers.
Stats SA data shows that five of the 12 mining divisions underpinned the annual growth increase.
Gold output grew strongly, 27.4% year on year, reflecting an acceleration from 21.6% on an annual basis in March, and contributed 3.5 percentage points to total annual growth.
This was followed by coal output, which expanded 12.5% year on year from a drop the previous month adding 3.1 percentage points to total annual growth.
Negative contributors to production include the platinum group metals, which fell 4.6% year on year, as well as iron ore output, which shrank 3.6% year on year.
April’s mining output data is another key early signal for second quarter growth.
Data shows that while the mining sector was positive overall in the first quarter, monthly output data was highly volatile with production plunging 7.6% on an annual basis in February and contracting 2.6% year on year in March, mirroring the material effect of idiosyncratic structural bottlenecks.
Africa economist at Oxford Economics Jee-A van der Linde said that while latest mining production data surprised positively, mineral sales were broadly lower at the start of the second quarter.
“Dwindling commodity export prices, with widespread logistical constraints, mean that mining will be less supportive of SA’s fiscal position compared with previous years after the pandemic commodity price boom,” said Van der Linde.
He said the lack of reliable electricity supply and infrastructure inefficiencies have also prevented the country’s mining from really taking off.
The mining industry fulfils a key role in generating revenue income for the economy and it is an important contributor to job creation, he said.
FNB senior economist Thanda Sithole said the monthly increase in output reflects resilience in the sector and, if sustained, could imply increasingly less reliance on the Eskom electricity grid.
Yet “logistics challenges and slowing external demand remain a near-term constraint on mining output”, he warned.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.