South Africa’s mining output decline deepens to 2% y/y in December

By bne IntelliNews February 12, 2015

South Africa’s mining output fell on a y/y basis for the third straight month in December, with the decline deepening to 2% from a revised 0.1% in November, data from Statistics South Africa showed. Production registered y/y declines in nine months last year, with the sector struggling to recover from the debilitating platinum strike and cope with weak commodity prices. In addition, the ongoing electricity supply shortages weigh on production.

For the full year 2014, mining output shrank 1.5% y/y, reversing a 3.6% growth in 2013.

The December data shows that of the major segments, performance deteriorated in the iron ore (14.5% weight) and platinum (19% weight) sectors, but improved in the gold (21.1% weight) and coal (26.5% weight) industries.

Iron ore was the biggest negative contributor (-3.5pp) to the overall development, as output dropped 15.6% y/y in December after a 20.2% y/y growth in November (contribution of +3.5pp).

Production of PGMs (platinum group metals) shrank 14.9% y/y in December, following a 14,3% y/y drop the month before. PGMs contributed -3.1pp to the overall output development, compared to -2.6pp in November.

Coal output surged 16.1% y/y in December and contributed +3.2pp, reversing a 3.9% y/y decline and a -1.0pp contribution in November.

Gold production rose 2.3% y/y in December after a 10.1% drop in November. It contributed +0.4pp to the overall output development, compared to -1.9pp in November.

On a seasonally adjusted monthly comparison basis, the country’s mining output rose 0.9% in December, following a 1.1% decline in November.

The seasonally adjusted mining output for the fourth quarter rose 3.1% q/q, mainly due to a 24% rise in PGM production.

Mineral sales

South Africa’s mineral sales at current prices dropped 5.8% y/y in November, deepening from a 3.0% decline in October, Statistics South Africa said. The key culprits were iron ore sales, which plunged 15.7% y/y (contribution of -2.6pp), coal sales, which dropped 6.7% y/y (contribution of -1.9pp), PGM sales, which fell 5.7% y/y (contribution of -1.3pp), gold sales, which declined 11.2% y/y (contribution of -1.3pp), and nickel sales, which plummeted 38.6% y/y (contribution of -1.0pp).

Seasonally adjusted mineral sales fell 4% m/m in November, following a 0.1% monthly growth in October. In the three months to end-November, mineral sales rose 6.3% compared to the preceding three months.

South Africa is the world's biggest supplier of platinum and a major gold producer. Mining directly accounts for about 6% of the country's GDP and for some 18% indirectly. It is also responsible for about 60% of the country’s export revenues. The sector has a significant impact over other parts of the economy and its performance is a major indicator of economic growth prospects.

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