JOHANNESBURG (miningweekly.com) – Mining production declined by 4.7% year-on-year in March with platinum group metals (PGMs) production, which decreased by 44.3%, contributing significantly to the negative growth, Statistics South Africa (Stats SA) reported on Tuesday.

These latest production figures were published as labour unrest in the platinum sector, which had also impacted on January and February production, which contracted by 3.7% and 4.8% year-on-year respectively, continued for the sixteenth week.

BNP Paribas economist Jeffrey Schultz pointed out that, as was expected, the impact of the strike in the PGM sector was now starting to become more acute.

Banking group Investec economist Kamilla Kaplan added that the effects of disruptions in platinum production would linger for some time after the strike officially ended, as underground safety and retraining procedures would have to be completed before operations could resume.

“This suggests that the effects of the platinum sector strike are likely to weigh on the performance of mining production throughout the first half of the year,” she said.

Meanwhile, Schultz said, outside the PGM space, gold production also continued to suffer after its weak start to the year, contracting by 2.9% year-on-year in March.

However, iron-ore, coal and manganese ore showed positive growth rates of 1.7%, 1.5% and 1.2% year-on-year respectively.

Meanwhile, seasonally adjusted mining production declined by 6.8% during the first quarter of this year, compared with the prior quarter, Stats SA said.

The main contributors to the 6.8%, Stats SA said, were PGMs, which contributed -4.5 percentage points, and diamonds, contributing -1.2 percentage points.

“March figures aside, today’s figures give us a read-through into how the mining sector fared in the first quarter and how this is likely to impact on first quarter growth.

“As we had anticipated, momentum growth in mining production deteriorated significantly in the first quarter, with production growth slipping to 24.8% on a three-month seasonally adjusted and annualised basis after growing over 10% in the fourth quarter of last year,” Schultz said, adding that mining, along with the manufacturing sector, was expected to once again be the largest drag on the first-quarter production side gross domestic product (GDP) figures to be released on May 27.

Further, banking group Nedbank said the performance of the mining sector was likely to be volatile in the months ahead, pressured by labour unrest, infrastructure constraints, a challenging policy environment and slower growth in China.

Kaplan pointed out that China’s GDP growth had slowed to 7.4% in the first quarter of this year, from 7.7% in the fourth quarter of last year, adding that while recent economic data releases indicated that China’s economy might stabilise somewhat during the second quarter this would be insufficient to allay concerns of slower GDP growth this year.

“Mining figures are volatile and have little influence on policy decisions in the short term, but the persistent weakness will have a negative impact on GDP growth. Given the need to balance growth prospects with higher inflation, we anticipate that rates will rise by 25 basis points at two of the next four meetings,” Nedbank said.

Meanwhile, mineral sales increased by 11.1% year-on-year in February with the highest positive growth rates having been recorded for other nonmetallic minerals at 85.9%, manganese ore at 72.5%, other metallic minerals at 62.6%, nickel at 52.9% and iron-ore at 52.4%.

The major contributors to the 11.1% increase were iron-ore, which contributed 7 percentage points, other nonmetallic minerals, contributing 5 percentage points, and PGMs with a contribution of 2.2 percentage points.

Seasonally adjusted mineral sales at current prices increased by 2.4% in February compared with January, following month-on-month changes of 6.3% in January and 0.3% in December.