Mining production decreased by 1.8% year-on-year in September, with the largest negative contributor being gold production with a decline of 19% and contributing -3.1 percentage points.

The largest positive contributor was platinum-group metals (PGMs), which had a 7.2% production increase, contributing 1.7 percentage points.

Seasonally adjusted mining production increased by 1.2% month-on-month in September, which followed month-on-month changes of 1% in August and -8.6% in July.

Seasonally adjusted mining production decreased by 2.2% in the third quarter, compared with the second quarter. Iron-ore was the largest negative contributor, with a decline of 13% in production, contributing -1.8 percentage points.

During the third quarter, PGMs had a decrease of 7.4%, contributing -1.8 percentage points.

Investec commented South Africa’s mining sector continued to face numerous challenges, including access to and escalating costs of fundamental inputs, notably mounting electricity fees.

“Hopefully, the recently gazetted Mining Charter 3 will create a degree of regulatory and policy certainty and will, in turn, attract much needed investment into this significant sector of the economy.”

SALES
Mineral sales decreased by 3.6% year-on-year in September, with the largest negative contributor being gold at -53.9% and contributing -10.5 percentage points.

Positive sales contributors for September were PGMs with 19% and 3.8 percentage points; coal with 10.5% and 2.6 percentage points; and manganese ore with 25.1% and 1.8 percentage points.

Seasonally adjusted mineral sales, at current prices, decreased by 4.8% in September, compared with August, which followed month-on-month changes of 6.5% in August and -6.1% in July.

Third quarter seasonally adjusted value of mineral sales was 1% lower than the second quarter.

FORECAST
Nedbank commented on Thursday that mining production is forecast to recover some lost ground off a low base in the final quarter of the year, before expanding at a moderate pace throughout 2019.

“Global trading conditions will probably remain broadly supportive, with most forecasts pointing to a relatively healthy global demand and steadier commodity prices over the next two years.

“However, the downside risks remain significant, given the escalating trade war between China and the US, rising US interest rates and persistent domestic cost pressures,” the bank said.