JOHANNESBURG (miningweekly.com) – Growth in South Africa’s mining output slowed to 3.8% year-on-year in August, compared with the 4% year-on-year increase recorded in July.

Statistics South Africa on Thursday revealed that the highest positive growth rates were recorded for platinum-group metals (PGMs) and diamonds, which made the biggest positive contributions of 7.6 percentage points and 0.5 of a percentage point respectively.

Iron-ore and coal made the largest negative contributions of -3.4 percentage points and -1.5 percentage points respectively.

BNP Paribas Cadiz Securities economist Jeffrey Schultz noted that, although mining production was up by 6.5% year-on-year for the first eight months of this year, it continued to be masked by favourable base effects in platinum production.

"Excluding PGM production from today’s headline mining production figures reveals that production would, in fact, have contracted 3.8% year-on-year.

"We expect a combination of less favourable base effects, weak commodity prices and faltering demand to all weigh on mining activity and growth over the medium term," he noted.

Nedbank's economic unit agreed that the outlook for the mining sector remained poor.

"The effect of last year's platinum mining strike should work itself through the base in the next month or so, after which mining production numbers should soften. Mining production will also be negatively impacted by poor global growth and, therefore, lower commodity prices, as well as local infrastructure constraints – especially concerning electricity supply," it said.

On a month-on-month basis, mining output fell 1.1% in August.

This followed on the 0.8% month-on-month decrease recorded in July and the 2.4% month-on-month increase in June.

Meanwhile, mineral sales fell by 1.5% year-on-year in July, with the biggest negative contributions of -3.6 percentages points, -3.4 percentage points and -1.6 percentage points made by the gold, iron-ore and nickel sectors respectively.