The 2024 African Mining Indaba kicks off on Monday and will continue until February 8 in Cape Town under the theme “Embracing the power of positive disruption: a bold new future for African mining”. This reflects the objective of finding solutions and paths towards positive change in the mining industry.
The indaba is the world’s largest gathering of influential stakeholders in the mining industry. This year it celebrates its 30th anniversary of providing SA with a premier platform to showcase its capabilities in the mining supply chain to the global community.
Frans Baleni, new chair of investing at the African Mining Indaba, said the indaba contributed R248m in 2023, up from R156m in 2022. “This represents a spectacular growth rate of 52% when adjusted for inflation,” Baleni said. “This undeniably mirrors the importance of investing in the indaba to fuel and strengthen SA businesses.”
Speakers this year include President Cyril Ramaphosa and mineral resources & energy minister Gwede Mantashe.
Mining’s contribution to the economy remains a key source of revenue for the government at a time when state-supplied electricity and transport logistics are negatively affecting the industry’s performance.
According to the Minerals Council SA, the mining industry grew employment 2% during 2022 to reach 469,353 employees.
Also on Monday S&P will release the S&P Global purchasing managers’ index (PMI) for January, which will give some indication of whether the SA weakness reflected in the Absa manufacturing PMI and Naamsa vehicle sales is also visible in other sectors of the SA economy.
The S&P Global SA PMI fell to 49 in December from 50 the previous month, indicating a renewed deterioration in the private sector, with output declining for the fourth consecutive month and at the steepest pace since May.
Senior economist at S&P Global Market Intelligence David Owen said port gridlock is likely to further dent the economy at the start of 2024 as businesses face greater shortfalls in input supply.
“Load-shedding by Eskom is also expected to remain an issue after electricity outages reportedly hit output and sales in December,” he said.
The Reserve Bank will publish data on SA’s gross gold and foreign exchange reserves on Wednesday.
Gross reserves reached a record high in December, increasing to $62.5bn, up from $61.72bn the previous month — a welcome outcome that will help to buffer the balance of payments and maintain the confidence of financial markets.
Nedbank senior economist Isaac Matshego said the bank expects gross reserves to have remained steady at around $61.5bn in January as the marginal increase in foreign exchange reserves was offset by a decline in gold. He said the decrease in gold reserves reflects valuation adjustments after a 1.4% decline in the market gold price.
“The international liquidity position likely dropped slightly to $56.8bn from $56.9bn. However, the rand value of reserves rose as the rand depreciated against the US dollar during the month,” he said.
Gross foreign reserves play a crucial role in maintaining import cover, which represents the value of gross foreign reserves relative to the value of merchandise imports, services and income payments. This is likely to remain at around seven months as the value of imports has risen over the past 12 months, Matshego added.
FNB chief economist Mamello Matikinca-Ngwenya said that at the end of the third quarter of 2023 the level of import cover increased to 5.5 months from 5.2 months at the end of the previous quarter.
“However, SA’s import cover, even at these improved levels, remains below the estimated global average of nine months at the end of 2022 and the average of 10.6 months for Brazil, Russia, India, and China,” she said.
Stats SA will release the December manufacturing data on Thursday. Manufacturing production grew 1.9% year on year in November, after an upwardly revised 2.3% rise in the prior month, matching market forecasts.
The outcome marked the second consecutive month of growth in industrial activity, mainly boosted by the production of wood and wood products; paper, publishing and printing; and the motor vehicles, parts and accessories and other transport equipment categories.
According to the Bureau for Economic Research (BER) December’s manufacturing production data will help firm up the view of whether the SA economy is set to escape a technical recession.
“Only a very steep monthly decline could tip the manufacturing sector into a quarterly contraction, but the improvement in the output index of the December Absa PMI suggests that this is unlikely,” BER economists said.
“Furthermore, electricity production data released earlier this week showed a decent 2.7% quarter-on-quarter expansion. This bodes well for a GDP growth recovery in the fourth quarter.”
Matshego said Nedbank forecasts annual growth in manufacturing production around 2.3% year on year, a slight gain from 1.9% in November.
“The improvement comes off the back of weak base effects, an improvement in load-shedding over the month and an increase in the December PMI to above 50. However, the latest PMI release points to the sector dipping into contraction at the start of the year,” he said.
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