Steadily improving South African mine output to benefit Q2 GDP figures – economist

JOHANNESBURG (miningweekly.com) – A steady improvement in mining activity in recent months should bode well for South Africa’s second-quarter gross domestic product (GDP) figures, BNP Paribas Securities South Africa economist Jeffrey Schultz commented on Tuesday.

“On a quarter-on-quarter seasonally adjusted and annualised basis, mining production growth managed to bounce strongly to +17.4% in the [second] quarter, marking its highest quarterly growth rate since the first quarter of 2015,” he said in a note on Thursday, adding, however, that production growth continued to come off a “very low base”.

“In level terms, mining production is still more than 17% below its 2005 highs, while year-to-date production is down nearly 8% year-on-year. The low commodity price environment along with domestic regulatory uncertainties in the sector and wage negotiations currently under way in the platinum sector all continue to keep us cautious on the outlook for this side of the economy in [the second half],” he pointed out.

Statistics South Africa on Thursday released the latest mining production statistics for June, with output having decreased by 2.5% year-on-year.

This followed a 3.9% year-on-year contraction in mining production in May.

On a seasonally adjusted basis, production increased 1.9% month-on-month in June, its third consecutive month of improvement.

The production of iron-ore, which was up 23.1% month-on-month, and coal output, which increased by 3.8% month-on-month, made the largest positive contributions in June.

This was offset by a 12.4% month-on-month decrease in platinum group metals (PGMs) production and a 1.8% drop in gold output.

On a year-on-year basis, PGMs and coal made the largest positive contributions, with output up 4.9% and 4.6% respectively.

This was offset by a 50.8% decrease in copper production, a 38.9% decrease in diamond output, a 26.1% decrease in nickel production and an 18.2% drop in manganese ore production.