South Africa’s mining production unexpectedly returned to a 5.3% y/y growth in September, pushed up mainly by higher iron ore and coal production and underpinned by a significant softening in the contraction of platinum output, data from Statistics South Africa showed. The rebound came after four consecutive months of y/y declines: -9.2% in August, -6.7% fall in July, -4.9% in June and -5.9% in May. Market expectations were for a softening decline in September with a Reuters poll predicting a 3.45% fall, on average.

Iron ore production surged 38.3% y/y in September (+21% y/y in August) and contributed +5.7pps to the overall output development (3.2pps in August). Coal output grew 7.7% y/y (+1.1% y/y in August) and contributed 1.8pps (+0.3pps in August).

Production of PGMs (platinum group metals) shrank 17.6% y/y in September, following a 45% y/y drop the month before, as the country’s major platinum mines, which were closed by the five-month wage strike till late June, gradually ramped up to normal production rates. PGMs contributed -4.1pps to the overall output development, compared to -11.6pps in August. Two of the strike-hit miners – Lonmin and Anglo American Platinum (Amplats), have said that full production has been resumed by September, while the ramp-up at Implats’ Impala Rustenburg has been delayed due to four separate fatal incidents at the mine.

At the same time, gold output shrank 0.6% y/y (-8.1%y/y in August) and contributed -0.1pps to the overall development (-1.2pps in August).

On a seasonally adjusted monthly comparison basis, the country’s mining output expanded by 7% in September, following a 2.3% decline in August.

The seasonally adjusted mining output edged up 0.7% q/q in the third quarter, mainly due to a 4.5% rise in iron ore production.

Mineral sales

South Africa’s mineral sales at current prices dropped 10.7% y/y in August, deepening from a 5.5% fall in July, Statistics South Africa said. The major culprits for the drop were PGM sales, which fell 31.2% y/y (contribution of -8.2pps), and iron ore sales, which plunged 40.7% y/y (contribution of -6.6pps).

Seasonally adjusted mineral sales edged down 0.5% m/m in August, following a 7.0% monthly growth in July. In the three months to end-August, mineral sales fell 5.4% compared to the previous three-month period.

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.