Mining production slumps 5% in July, despite expectations of an increase
After a pick-up in June, production in the mining sector fell in July, with the numbers far below economists’ consensus forecast.
Mining production fell 5.2% in July year on year, with iron ore falling 17.4%, gold 15% and platinum group metals 5.8%.
Seasonally adjusted mining fell 8.6% in July, which followed month-on-month falls of 5.4% in June and 5.3% in May.
Economists had expected mining production to pick up in July, the first month of the third quarter, with the data further underscoring recent figures indicating that SA’s economic growth was failing to pick up as the year drew to a close, despite widespread expectations it would.
SA’s mining sector has been battered by turbulence as a result of a trade war between the US and China, the latter a major importer of commodities. A falling platinum price as a result of reduced demand for diesel vehicles as well as a volatile rand, has also added to pressure on the sector.
Domestic concerns, including policy uncertainty over the Mining Charter, declining productivity and escalating costs, had also suppressed activity in the sector, said Investec economist Lara Hodes.
Resources shares on the JSE fell after the release of the data, but were finding some support from news that the US was seeking renewed trade talks with China.
At 11.57am the JSE’s resources index was 0.53%, having gained 15.4% so far in 2018 — led largely by gains in big diversified miners. At the same time, the JSE’s platinum index is 18.35% lower so far in 2018, while gold miners have lost 23.16% over the same period.