Mining production takes another beating, but comes out better than expected
Gold was by far the biggest drag on the sector’s output, declining more than 16%
The mining sector took another beating in May, though the decline slowed a little more than expected.
Mining production fell 2.6% from a year earlier, after a fall of 4.3% in April 2018.
The biggest drags were gold (down 16.2% and contributing 2.5 percentage points of the decline); coal (down 4.2% and contributing 1.1 percentage points of the decline); manganese ore (down 23% and contributing 1.1 percentage points of the decline); and platinum group metals (down 9.6% and contributing 1.9 percentage points of the decline).
The month-on-month comparison showed a marked improvement, with growth of 5% in May — following a 2.5% decline in April and a 3% fall in March.
Seasonally adjusted mining production decreased by 2.6% in the three months ended May 2018 compared with the previous three months, with eight of the 12 mineral groups and minerals reporting declines over this period.
Investec economist Laura Hodes expected mining to remain on a downward trajectory.
She anticipated that the sector’s output would contract for a third month in a row, and by about 3.5% year on year, while macroeconomics website Trading Economics expected a contraction of 3%.
"Uncertainty still plagues the sector, inhibiting investment, with consultations on the draft mining charter having been extended to the end of August," said Hodes.
FNB chief economist Mamello Matikinca also anticipated a contraction, due to rising import costs, softening demand and lower commodity prices.