Mining output was unchanged month-on-month in August, but the downward trend since its peak in early 2021 continues.
In a recent research note, Absa said yesterday’s mining output release was stronger than what the flat month-on-month reading suggests.
The release came with an upward revision of the July data. Month-to-month growth is now reported at 3.1% – up from the previous 2.3%.
Moreover, the unchanged August figures mask big divergences in the underlying data.
Across the major categories, gold production rose for the second consecutive month by 4.1% month-on-month.
This increase is likely to reflect normalisation production at Sibanye-Stillwater after the strike ended in July.
Iron ore output increased even more than gold, surging 10.0% month-on-month.
Meanwhile, coal and platinum group metals (PGMs) fell by 7.1% and 2.7% month-on-month, respectively.
Total mining output continues to track way below last year, with the year-on-year rate coming in at -5.9% in August. It is slightly better than the -8.2% in July due to base effects.
The production side of the economy is likely to have taken a knock from record-high levels of power cuts in September, as the PMI prints suggest.
“Therefore, we see significant downside risks to our GDP growth forecast of +0.7% quarter-on-quarter for Q3 2022,” Absa said.
Transnet strike hurting mining industry
The industrial action at Transnet that started on 6 October has severely reduced staff at key ports that export iron ore and coal from South African mines.
The Minerals Council of South Africa said major mineral export harbours were currently operating at between 12% and 30% of their daily averages.
It said the country is currently only exporting 120 000 tonnes of minerals a day, well below the usual 476 000 tonnes.
The council estimates that South African mining companies are losing R815 million in export revenue a day because of the strike.
The government said it was “extremely concerned” about the negative impact the strike was having on the economy and called for a speedy resolution to the impasse.