Firmer commodity prices lift mining output

STATISTICS South Africa (StatsSA) yesterday reported a 10.3 percent year-on-year hike in mining production in July, boosted by sustained higher commodity prices coupled with the global economic recovery.

Mining production year-on-year growth in June and May was 21.9 percent and 19.1 percent, respectively.

StatsSA said iron ore, the steel making ingredient, was the leading positive contributor to output followed by platinum group metals (PGMs), chromium ore, and gold. Meanwhile, copper, coal and building materials were still lower than pre-pandemic levels.

StatsSA said seasonally adjusted mining production increased by 4.1 percent in July compared with June. On a seasonally adjusted basis, mining production decreased by 1.9 percent in the three months ended July compared with the previous three months. StatsSA also said mineral sales growth at current prices eased by 32.6 percent year-on-year in July down from 94 percent year-on-year a month earlier and 88 percent year-on-year in May.

The mineral sales were driven by PGMs, iron ore and coal from 94 percent a month earlier.


Investec economist Lara Hodes said elevated commodity prices and buoyant global demand continued to support mining activity.

“However, the unrest that took place in KwaZulu-Natal and other parts of the country during July, which also affected key transportation routes, led to a number of commodity producers reporting being unable to obtain key inputs required for production such as gasses and explosives,” said Hodes.

Australian miner MC Mining in July announced a temporary suspension of operations at its Uitkomst colliery due to civil unrest spreading throughout KZN amid violence linked to the recent imprisonment of former president Jacob Zuma.

The Nedbank economic unit said activity in the mining sector had rebounded convincingly from the multitude of disruptions in May and June.

“Although sales slumped in July, the return to normal operations at the local ports will support volumes during the rest of the year. The recovery in global industrial activity and high commodity prices remain supportive of the sector’s overall recovery, but the Delta variant’s continued prevalence, associated lockdowns, global supply disruptions and the planned load-shedding pose downside risks to the pace of recovery,” said the unit.

FNB economist Koketso Mano said yesterday’s figures showed that seasonally adjusted mining production was up 0.6 percent quarter-on-quarter reflecting that mining indeed contributed positively to gross domestic product, but there was downside risk to the 1.9 percent quarter-on-quarter currently estimated.

Mano said output was up 18.6 percent in the year to date compared to the same period in 2020.

Meanwhile StatsSA said South African coal production amounted to 306 million metric tons in 2019. A census by StatsSA showed the South African mining industry employed 514 859 individuals in 2019.

“If the mining sector is represented by a group of 100 workers, 39 are employed in the platinum group metals sector, 21 in the coal sector and 20 in the gold sector.

“The iron ore sector is a much smaller recruiter, employing five of every 100 employees. The remaining 15 employees work across smaller operations, which include the production of other minerals, lime works and stone quarrying,” said StatsSA.

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