South Africa Mining Output is Down 7.5%

South Africa’s mining production fell 7.5% year on year in July, dragged lower by declines in platinum group metals (PGMs), coal and iron ore, official data showed on Wednesday, underscoring continued weakness in a sector central to the country’s industrial economy.

Production of PGMs fell 13.5% from a year earlier, subtracting 3.2 percentage points from the overall mining decline, while coal output dropped 7.5%, reducing the headline figure by 2 percentage points, Statistics South Africa said.

Iron ore production fell 8.1% and contributed a further 1.3 percentage points to the decline.

On a seasonally adjusted basis, mining production fell 1.9% in July from June, after rising 0.1% in June and declining 5.6% in May. Production was 5.5% lower in the three months to July than in the previous three-month period, with PGMs accounting for the largest share of the decline.

The figures highlight the uneven performance of South Africa’s mining industry, which remains an important source of exports and industrial activity even as the economy seeks to diversify beyond its traditional reliance on raw materials. The World Bank describes South Africa as one of Africa’s most diversified production bases, while noting that economic growth remains relatively weak.

The PGM decline comes despite a sharp improvement in prices for the metals earlier in the year. African Rainbow Minerals said this month that PGM prices had risen by more than 50% year on year, helping its PGM operations return to profit, although production and earnings in some of its coal, iron ore and manganese operations remained under pressure.

The weakness also extended to the value of mineral sales.

Sales at current prices fell 5.6% in July from a year earlier, led by a 33.4% decline in gold sales, which alone subtracted 8.5 percentage points from the overall change.

Sales of other non-metallic minerals fell 26%, while nickel sales plunged 51.7%. These declines were partly offset by a 20% increase in chromium ore sales and a 5% rise in coal sales.

Seasonally adjusted mineral sales fell 15.1% in July from June, following a 2% increase in June and a 5.2% decline in May. Over the three months to July, sales were down 10% from the preceding three-month period.

Mining has faced a combination of structural and operational pressures in recent years, including constraints in rail and port infrastructure, electricity costs and fluctuations in global commodity demand. Mining companies have also been investing more heavily in renewable power to reduce their dependence on state utility Eskom and lower energy costs.

Statistics South Africa’s monthly mining production index is based on a survey of formal mining establishments, with data supplied through the Department of Mineral and Petroleum Resources. The figures are preliminary and subject to revision.

The next mining production and sales release, covering August, is scheduled for Oct. 13.

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