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After South Africa’s annual mining production contracted for 14 consecutive months, the data for April showed a positive surprise in mining production, although mineral sales were broadly lower at the start of the second quarter of 2023.
According to statistics released by Statistics SA today, the country’s annual mining production increased by 2.3% in April, while seasonally adjusted mining production increased by 1.8% compared to March and was up 0.4% in the three months ended April 2023 compared to the preceding three months.
Economic research group, Oxford Economics Africa, says the better-than-expected production figures point to a favourable start to the second quarter.
“While we expected mining output to fall back in April compared to the previous month, annual output was up by 2.3%, marking the first year-on-year growth rate since January 2022, mostly due to favourable base effects.”
The outcome was better than the group’s expectation of a year-on-year increase of 1.0%, as well as the consensus forecast of 0.9%. The largest contributors to this annual increase were gold (+27.4% and contributing +3.5 percentage points) and coal (+12.5% and contributing +3.1 percentage points).
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However, seasonally adjusted mineral sales at current prices decreased by 5.0% during the same period and nominal mineral sales were also down by a staggering 25.6% year-on-year in April (-10.1% m/m) due to lower sales of platinum group minerals (PGMs), coal and gold.
Is this a sign that the country can still depend on the post-pandemic commodity boom to support economic growth? Unfortunately, it does not seem to be the case.
“Like the manufacturing industry, the latest mining production data for April surprised positively. That said, mineral sales were broadly lower at the start of Q2 2023.”
Oxford Economics Africa says dwindling commodity export prices, together with widespread logistical constraints, mean that mining will support South Africa’s economic growth less than in previous years following the pandemic commodity price boom.
The effect of rolling blackouts also made its presence felt in the mining industry, while infrastructure constraints, such as our railway system, added to reduced mining output.
“A lack of reliable electricity supply and infrastructure inefficiencies also prevented South African mining from really taking off. Industry fulfils a key role in generating revenue income for the economy and it is an important contributor to job creation.”
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