Long decline in mining output persists
The unrelenting decline in mining production extended for another month in December, the latest data show.
Mining output decreased by 1.9% in December from a year earlier, Statistics SA said on Thursday.
The sector has posted a year-on-year decline in output every month since October 2015.
Seasonally adjusted mining production decreased by 2.7% in the three months ended December 2016 compared with the previous quarter.
The persistent problems in SA’s mining industry have come up for discussion at a global industry conference, the Mining Indaba in Cape Town this week.
Miners have been contending with low commodity prices and more difficult mining conditions, which in SA has been compounded by regulatory uncertainty and labour instability.
Industry representatives at the Mining Indaba this week have expressed concern that the Mining Charter has been revised without their input.
Gold Fields CEO Nick Holland told BDTV at the Mining Indaba that the current draft of the charter would not “advance the mining industry”. He said the industry in SA was in recession and government was imposing more costs on it.
Decembers number’s were better than expected: Trading Economics had forecast an annual drop of 2.9% while the Bloomberg consensus was for a 3.8% decline.
The total value of mining products sold in November increased by 6% to R39bn, up from October’s R37bn.
The release of the value of minerals sold lags by one month in Stats SA’s release.
The main contributors to the drop in production was a 15.1% drop in the output of platinum group metals. The production of manganese ore and iron ore both increased during the month.
Analysts from Nedbank’s economic unit said that despite the still weak December mining production figures, the performance of mining production should be supported by the lift in commodity prices forecast for 2017.
Nedbank said that global demand for 2017 was expected to be slightly better, but it still remained subdued and conditions in the domestic mining sector remained challenging, limiting the performance of mining production.