7 September 2017

South Africa: SA Mining Production Increases, Sales Decrease

Mining production increased by 0.9% year-on-year in July 2017, Statistics SA said on Thursday.

The largest positive contributors were manganese ore (19.3%); chromium ore (18.3%); diamonds (16.5%); gold (3.9%) and "other" non-metallic minerals (17.0%).

Iron ore and platinum group metals (PGMs) each decreased by 5% and were significant negative contributors.

Seasonally adjusted mining production decreased by 0.4% in July 2017 compared with June 2017. This followed month-on-month changes of -1.0% in June 2017 and 0,5% in May 2017.

Seasonally adjusted mining production increased by 0.1% in the three months ended July 2017 compared with the previous three months.

Diamonds was the largest positive contributor and PGMs the largest negative contributor. Mineral sales

Mineral sales decreased by 3.9% year-on-year in June 2017.

The negative contributors were PGMs (-33,.9%); gold (-14.6%) and iron ore (-4.5%).

Manganese ore (95.4%) was a significant positive contributor.

Seasonally adjusted mineral sales at current prices decreased by 1.4% in June 2017 compared with May 2017. This followed month-on-month changes of 1.6% in May 2017 and -2.3% in April 2017.

According to Nedbank's Economic Unit, mining activity has rebounded, although moderately, from the low base in 2016. However, longer-term prospects remain less certain due to the difficult operating environment and policy uncertainty stemming mostly from business unfriendly signals from the Ministry of Mineral Resources.

"Mining production figures on their own have very little impact on the SA Reserve Bank's monetary policy decisions. However they do matter in as far as they add to the country's general growth outlook and the latest figures paint a less positive picture than those released for the second quarter," commented Nedbank.

"While the latest gross domestic product (GDP) figures show that SA has emerged from recession, the outlook for the year as a whole still looks relatively poor. With falling inflation the SARB will probably continue on the interest rate cutting cycle that began in July. We forecast further 25 basis point cuts in September, January and March, followed by a flat profile into 2018."

Source: Fin24

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