Production of coal and chromium ore surges, but is offset by 4.1% drop in platinum group metals
12 July 2024 - 05:00
byNompilo Goba
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Mineworkers are seen at Impala Platinum’s Bafokeng Rasimone Platinum Mine in this file photograph. Picture: THAPELO MOREBUDI
The latest production and sales data from Stats SA show that platinum group metals (PGMs) were a drag on mining production activity in May.
According to the data released on Thursday, there was a 4.1% drop in PGM production, resulting in a 1.1 percentage point decline in the mining sector’s output. This takes place in the midst of interventions by PGM miners to preserve margins after a rapid decrease in metal prices, which has led to job cuts and investment uncertainty.
“Mining production was flat in May 2024 compared with May 2023. The main positive contributors were coal and chromium ore, while gold and PGMs were the main negative contributors,” said Stats SA.
Coal production increased by 7%, contributing 1.6 percentage points, while chromium ore production surged 17.1%, adding 0.7 percentage points.
Gold production, however, fell 9%, contributing a negative 1.3 percentage points.
The mining sector experienced a seasonally adjusted decrease of 0.6% in May compared with April — the seventh consecutive monthly decline. In the three months ending in May, production fell by 0.8% from the preceding three months, with coal and iron ore the largest negative contributors.
Sales at current prices dropped by 19.1% year on year in May, with negative contributions from PGMs (down 22.9%), gold (down 69.2%) and manganese ore (down 14.2%).
The global platinum market has experienced changes in the balance between supply and demand. In 2023, the World Platinum Investment Council reported a 25% increase in total demand, while supply dropped to the second-lowest level since 2013. This shift pushed the market into deficit.
However, major mining companies such as Anglo Platinum (Amplats), Impala Platinum (Implats) and Sibanye-Stillwater have been forced to introduce strict cost-cutting measures, including substantial job cuts. Amplats previously announced plans to reduce its workforce by about 17% after a 71% profit decline in 2023.
Energy challenges continue to hamper SA’s capabilities. The country is expected to continue the downward trend in 2024, contrasting with its 2023 gains, according to GlobalData statistics.
Safety concerns like the Implats’ Rustenburg operation incident, where 11 workers lost their lives in November 2023, have marred the industry’s reputation and operational continuity. This incident prompted temporary halts in operations.
The economic impact of cutbacks extends beyond operational setbacks, affecting local economies and communities reliant on mining activities.
Sibanye-Stillwater alone has cut more than 11,000 jobs in the past 18 months. CEO Neal Froneman said the miner has restructured the SA region to align with a reduced operating footprint.
Looking ahead, global platinum prices are expected to continue their decline in 2024.
But the World Platinum Investment Council has suggested that policy changes, including tariffs on Chinese vehicle imports and economic reforms, could bolster investment in platinum and mitigate some of the sector’s challenges.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Mining output numbers reflect PGM woes
Production of coal and chromium ore surges, but is offset by 4.1% drop in platinum group metals
The latest production and sales data from Stats SA show that platinum group metals (PGMs) were a drag on mining production activity in May.
According to the data released on Thursday, there was a 4.1% drop in PGM production, resulting in a 1.1 percentage point decline in the mining sector’s output. This takes place in the midst of interventions by PGM miners to preserve margins after a rapid decrease in metal prices, which has led to job cuts and investment uncertainty.
“Mining production was flat in May 2024 compared with May 2023. The main positive contributors were coal and chromium ore, while gold and PGMs were the main negative contributors,” said Stats SA.
Coal production increased by 7%, contributing 1.6 percentage points, while chromium ore production surged 17.1%, adding 0.7 percentage points.
Gold production, however, fell 9%, contributing a negative 1.3 percentage points.
The mining sector experienced a seasonally adjusted decrease of 0.6% in May compared with April — the seventh consecutive monthly decline. In the three months ending in May, production fell by 0.8% from the preceding three months, with coal and iron ore the largest negative contributors.
World platinum body hopes GNU will improve investment case for sector
Sales at current prices dropped by 19.1% year on year in May, with negative contributions from PGMs (down 22.9%), gold (down 69.2%) and manganese ore (down 14.2%).
The global platinum market has experienced changes in the balance between supply and demand. In 2023, the World Platinum Investment Council reported a 25% increase in total demand, while supply dropped to the second-lowest level since 2013. This shift pushed the market into deficit.
However, major mining companies such as Anglo Platinum (Amplats), Impala Platinum (Implats) and Sibanye-Stillwater have been forced to introduce strict cost-cutting measures, including substantial job cuts. Amplats previously announced plans to reduce its workforce by about 17% after a 71% profit decline in 2023.
Energy challenges continue to hamper SA’s capabilities. The country is expected to continue the downward trend in 2024, contrasting with its 2023 gains, according to GlobalData statistics.
Safety concerns like the Implats’ Rustenburg operation incident, where 11 workers lost their lives in November 2023, have marred the industry’s reputation and operational continuity. This incident prompted temporary halts in operations.
The economic impact of cutbacks extends beyond operational setbacks, affecting local economies and communities reliant on mining activities.
Sibanye-Stillwater alone has cut more than 11,000 jobs in the past 18 months. CEO Neal Froneman said the miner has restructured the SA region to align with a reduced operating footprint.
Looking ahead, global platinum prices are expected to continue their decline in 2024.
But the World Platinum Investment Council has suggested that policy changes, including tariffs on Chinese vehicle imports and economic reforms, could bolster investment in platinum and mitigate some of the sector’s challenges.
goban@businesslive.co.za
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