JOHANNESBURG (miningweekly.com) – The ongoing industrial action in the platinum sector would have the largest impact on mining production figures for the month of March as well as the first quarter of 2014, banking group Investec economist Kamilla Kaplan said on Monday.

In its ‘Week Ahead’ bulletin, in advance of the publication of the March mining, production and sales data by Statistics South Africa on Tuesday, Investec pointed out that platinum-group metals comprised nearly 25% of total mining production and, therefore, the effect of the strike on overall mining production performance was considerable.

“Moreover, disruptions to platinum production will linger for some time after the strike officially ends, owing to required underground safety preparations and retraining processes,” Kaplan said.

She noted that, while the mining sector’s contribution to the country’s gross domestic product was only in the region of 5%, the effects of the strike action were bound to spill over into other sectors.

South Africa’s largest steel producer ArcelorMittal South Africa earlier this month said that it did not expect South Africa’s weak domestic steel market to show any sign of recovery until after June, warning that the protracted platinum industry strike was exacerbating already weak trading conditions across the key steel-consuming sectors of mining, manufacturing and construction.

“[Meanwhile], the allied manufacturing sector will experience reduced orders for the duration of the platinum mine closures. With striking workers not receiving an income, an estimated R7.6-billion in accumulated lost wages has been incurred to date. This will impede retail purchases and the timeous servicing of debt in the case of the credit active individuals.

“In addition, with platinum exports comprising around 17% of total export revenues, the depletion of above ground platinum supplies during the first quarter of the year will start to materially affect South Africa’s international trade performance,” Kaplan said, adding that this came at a time when the magnitude of a trade deficit was a meaningful marker for international investors.

Meanwhile, lower gold production during the first quarter, as opposed to the fourth quarter of last year, would also weigh on the performance of the mining sector, she noted.

In recent trading updates, specifically those of gold miners Harmony Gold and AngloGold Ashanti, seasonal effects relating to the higher number of holidays and the post-festive season start-up process were cited, Kaplan highlighted.