Mining contracts for seventh-consecutive month
Mining production fell 1.5% year on year in May, a little better than expected, and the sector rebounded when compared to a dismal April
Mining production contracted 1.5% year on year in May, extending the sector’s fall to a seventh consecutive month.
Gold production in May fell 24.4% year on year, data from Statistics SA showed on Thursday, although mining production rose 3% in May compared with April. The Bloomberg consensus had been for a 2.4% contraction year on year, and 0.3% growth month on month.
April had been a surprisingly bad month for the sector, which remains beset by industrial unrest and policy uncertainty.
In May, diamond production fell 30.7% year on year, representing a 1.7 percentage points fall in the headline figure. Gold's fall of 24.4% contributed 3.3 percentage points.
This was offset by an 8% rise in coal production year on year — adding two percentage points to the headline figure — and a 6.8% rise in platinum group metal production, adding 1.6 percentage points.
Ahead of the release, Investec economist Kamilla Kaplan had said any improvement in the sector would have come off a low base, after significant disruptions in electricity supply in February and March. As such, this recovery may not be sustained in subsequent quarters.
“Persistently weak domestic demand and the slowdown in international trade growth amid trade disputes and softening global growth data, have constrained domestic mining and manufacturing production,” Kaplan said. Rising operating costs, periods of insufficient electricity supply and regulatory uncertainty also served as headwinds.