SA’s annual mining production has pushed back into modest positive growth territory‚ breaking eleven months of consecutive months of contraction.
The mining sector has also made a positive contribution to overall GDP growth for the second quarter in a row – something which it hadn’t been able to achieve in 18 months.
The sector’s underperformance this year has been blamed on rising operating costs‚ weaker commodity demand from China and low commodity prices.
However‚ more recently the improved trade performance of precious metals‚ along with a more favourable commodity price environment‚ has helped to lift the sector’s output.
Mining production increased by 3.4% year-on-year in September from an upwardly revised 0.1% in August (previously -0.2% y/y).
The main positive contributors were platinum group metals which grew by 10‚5% y/y‚ iron ore which grew by 11‚7% y/y and coal by 6‚8% y/y. Gold production growth remained in the red‚ however‚ falling 7% y/y in September from August’s 8.4% contraction.
On a quarterly basis‚ mining production rose by 1.5% seasonally adjusted in the third quarter. Though still positive‚ this was smaller than in the second quarter‚ suggesting that mining’s contribution to third-quarter GDP will not be as significant.
In the second quarter‚ the resurgence in manufacturing and mining output drove a big turnaround in real GDP growth — to 3.3% q/q from the shocking 1.2% contraction in the first quarter
Seasonally adjusted‚ mining production lifted by 0‚9% in September compared to the previous month. This followed month-on-month changes of 2‚3% in August and -2‚4% in July.
BNP Paribas Securities economist Jeffrey Schultz noted that the avoidance of strike activity in the platinum sector this year alongside the amicable three-year wage agreement reached last month should provide some stability to the industry.
“However‚ on-going worries related to mineral policy amid what looks likely to be another bumpy ride for commodity prices (excluding gold) in the wake of the US presidential election outcome‚ means that SA’s mining sector still has many hurdles ahead to clear‚” he said.
Relatively weak global economic growth prospects are likely to continue to dog the sector for the remainder of the year.
Global growth is expected to rise to only around 3.0% this year. This would be the slowest pace of expansion since the 2008/2009 global financial crisis.
“Suppressed global demand weakens the prospects for further significant commodity price recoveries in the near term‚” said Investec economist Kamilla Kaplan.
“These external developments are overlaid by domestic challenges pertaining to elevated operating costs‚ infrastructure constraints and policy and regulatory uncertainty.” — TMG Digital/BusinessLIVE
Mining: Back in the black
SA’s annual mining production has pushed back into modest positive growth territory‚ breaking eleven months of consecutive months of contraction.
The mining sector has also made a positive contribution to overall GDP growth for the second quarter in a row – something which it hadn’t been able to achieve in 18 months.
The sector’s underperformance this year has been blamed on rising operating costs‚ weaker commodity demand from China and low commodity prices.
However‚ more recently the improved trade performance of precious metals‚ along with a more favourable commodity price environment‚ has helped to lift the sector’s output.
Mining production increased by 3.4% year-on-year in September from an upwardly revised 0.1% in August (previously -0.2% y/y).
The main positive contributors were platinum group metals which grew by 10‚5% y/y‚ iron ore which grew by 11‚7% y/y and coal by 6‚8% y/y. Gold production growth remained in the red‚ however‚ falling 7% y/y in September from August’s 8.4% contraction.
On a quarterly basis‚ mining production rose by 1.5% seasonally adjusted in the third quarter. Though still positive‚ this was smaller than in the second quarter‚ suggesting that mining’s contribution to third-quarter GDP will not be as significant.
In the second quarter‚ the resurgence in manufacturing and mining output drove a big turnaround in real GDP growth — to 3.3% q/q from the shocking 1.2% contraction in the first quarter
Seasonally adjusted‚ mining production lifted by 0‚9% in September compared to the previous month. This followed month-on-month changes of 2‚3% in August and -2‚4% in July.
BNP Paribas Securities economist Jeffrey Schultz noted that the avoidance of strike activity in the platinum sector this year alongside the amicable three-year wage agreement reached last month should provide some stability to the industry.
“However‚ on-going worries related to mineral policy amid what looks likely to be another bumpy ride for commodity prices (excluding gold) in the wake of the US presidential election outcome‚ means that SA’s mining sector still has many hurdles ahead to clear‚” he said.
Relatively weak global economic growth prospects are likely to continue to dog the sector for the remainder of the year.
Global growth is expected to rise to only around 3.0% this year. This would be the slowest pace of expansion since the 2008/2009 global financial crisis.
“Suppressed global demand weakens the prospects for further significant commodity price recoveries in the near term‚” said Investec economist Kamilla Kaplan.
“These external developments are overlaid by domestic challenges pertaining to elevated operating costs‚ infrastructure constraints and policy and regulatory uncertainty.” — TMG Digital/BusinessLIVE
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