Min­ing sec­tor’s sur­prise per­for­mance points to strong in­dus­try

Business Day - - BUSINESS & ECONOMY - Su­nita Menon Eco­nom­ics Writer menons@busi­nesslive.co.za

A sur­pris­ingly strong per­for­mance by the min­ing in­dus­try in Au­gust au­gurs well for the third quar­ter’s GDP per­for­mance.

Min­ing pro­duc­tion rose a sig­nif­i­cant 6.9% year on year in Au­gust, hav­ing ex­panded 0.9% year on year in June.

Cham­ber of Mines econ­o­mist Henk Lan­gen­hoven said: “There’s so much talk about the com­mod­ity price im­prove­ment and whether it would last. It has lasted for a while and the ex­change rate has stayed sta­ble, which has led to the im­prove­ment de­spite economists’ ex­pec­ta­tions for it to drop.”

Cap­i­tal Eco­nom­ics econ­o­mist John Ash­bourne said fig­ures sug­gested that the sec­tor re­mained strong.

“This marked the sec­tor’s strong­est growth since March. The gold, iron, and di­a­mond sec­tors made the largest con­tri­bu­tions to growth. But out­put rose across al­most the en­tire min­ing in­dus­try,” he said.

Ac­cord­ing to FNB se­nior eco­nomic an­a­lyst Ja­son Mus­cat: “While the global en­vi­ron­ment re­mains sup­port­ive of both com­mod­ity prices and out­put, the Au­gust print far ex­ceeded our ex­pec­ta­tions, and puts the sec­tor on course to make a sig­nif­i­cant pos­i­tive con­tri­bu­tion to this quar­ter GDP.”

How­ever, he warned that the do­mes­tic en­vi­ron­ment re­mained un­cer­tain “with re­gard to pol­icy and the re­la­tion­ship be­tween the in­dus­try and the min­ing min­istry”.

Ned­bank econ­o­mist Bu­sisiwe Radebe said: “It’s off a low base from last year, so you ex­pect min­ing to re­bound. There are, how­ever, road­blocks that will take the shine off min­ing pro­duc­tion slightly. There’s un­cer­tainty on pol­icy, which has made the sec­tor busi­ness un­friendly. It’s a dif­fi­cult op­er­at­ing en­vi­ron­ment.”

Last week, Cham­ber of Mines CEO Roger Bax­ter said the cham­ber would pro­ceed with its court chal­lenges against the De­part­ment of Min­eral Re­sources, say­ing that the le­gal route was the only av­enue in which it had con­fi­dence when deal­ing with the reg­u­la­tor and Min­eral Re­sources Min­is­ter Mosebenzi Zwane.

Cham­ber of Mines Pres­i­dent Mx­olisi Mgojo said: “Min­ing is the fly­wheel of the South African econ­omy. When min­ing does well, it lifts many other sec­tors, those who sup­ply in­puts into the in­dus­try, and through the sig­nif­i­cant ex­port rev­enue it brings back into the econ­omy.

“The con­verse is also true – when min­ing strug­gles, most other eco­nomic sec­tors also feel the pain.”

Fig­ures re­leased on Tues­day showed man­u­fac­tur­ing to have also recorded a sur­pris­ingly strong per­for­mance in Au­gust, in­creas­ing sub­stan­tially 1.5% year on year fol­low­ing four months of con­trac­tion.

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