Min­ing pro­duc­tion in­creases year on year

The Star Early Edition - - BUSINESS NEWS - Ka­belo Khu­malo

STA­TIS­TICS re­leased yes­ter­day by Sta­tis­tics SA in­di­cated that the coun­try’s min­ing pro­duc­tion in­creased by 3.6% year on year in May after ris­ing 1.6% year on year the pre­vi­ous month.

The surge in pro­duc­tion was sup­ported by a strong per­for­mance of the iron ore sec­tor, while plat­inum group met­als (PGMs) were a sig­nif­i­cant neg­a­tive con­trib­u­tor in the pe­riod un­der re­view.

Min­ing ore pro­duc­tion came in at 28.6% in May com­pared with 29.9% recorded in April; the iron ore min­eral group com­prises 14.9% of the min­ing pro­duc­tion in­dex.

On a sea­son­ally ad­justed ba­sis, min­ing out­put edged down 0.2% in May, fol­low­ing a 1.4% de­cline in April.

The in­crease in iron ore pro­duc­tion was at­trib­uted to the sup­port to prices from China’s in­fra­struc­ture and prop­erty con­struc­tion spend, as well as lower iron ore sup­ply growth.

The World Bank pro­jected that in­dus­trial metal prices would in­crease by 16% this year due to strong de­mand and tight­en­ing mar­kets for most met­als.

Kamila Ka­plan, an econ­o­mist at In­vestec, said that the over­all lift in com­mod­ity prices in con­junc­tion with in­creased global growth mo­men­tum should con­tinue to sup­port min­ing pro­duc­tion.

“How­ever, this im­proved back­drop, rel­a­tive to early 2016, has not resulted in a ma­te­rial in­crease in min­ing sec­tor in­vest­ment in pro­duc­tion ca­pac­ity or em­ploy­ment.

“High op­er­at­ing costs as well as con­tin­ued reg­u­la­tory and pol­icy un­cer­tainty re­main a con­straint on the per­for­mance of the sec­tor,” Ka­plan said.

Di­a­monds pro­duc­tion surged 61% in the pe­riod com­pared with 12.1% in April. How­ever, the pro­duc­tion of PGMs shrank 17.5% in the pe­riod.

Macroe­co­nomics sta­tis­tics web­site Trad­ing Eco­nom­ics said min­ing pro­duc­tion in South Africa av­er­aged -0.05% from 1981 un­til this year, reach­ing an all time high of 24.3% in Oc­to­ber of 2013 and a record low of -18.4% in March last year.

Min­eral sales in­creased by 11.2% year on year in April with the largest pos­i­tive con­trib­u­tors com­ing from PGMs, which con­trib­uted 7.9 per­cent­age points, while chromium ore con­trib­uted 3.5 per­cent­age points and coal 3.1 per­cent­age points.

Mean­while, the South African Cham­ber of Com­merce and In­dus­try (Sacci) said yes­ter­day re­strained trade con­di­tions per­sisted in South Africa last month as its Trade Ac­tiv­ity In­dex (TAI) re­mained un­der the neu­tral 50-point mar­ket after it was reg­is­tered at 48-point in the pe­riod.

This means the TAI was at the same level in June this year as it was at in the com­par­a­tive pe­riod last year.

How­ever, the sea­son­ally ad­justed TAI im­proved by a fur­ther two in­dex points be­tween June and May this year to 49. The sea­son­ally ad­justed TAI in­creased by 6 in­dex points since April after the in­dex reached a low of 43 in March.

Richard Down­ing, an econ­o­mist at Sacci, said the re­cently an­nounced re­ces­sion­ary con­di­tions and junk sta­tus by rep­utable rat­ing agen­cies were still af­fect­ing sub­dued trade con­di­tions.

“Apart from the pre­vail­ing de­pressed eco­nomic con­di­tions, re­spon­dents this month cited cur­rency volatil­ity, of­fi­cial red tape, in­stances of cor­rup­tion, po­lit­i­cal un­cer­tainty, lack of fixed in­vest­ment and un­pre­dictable eco­nomic pol­icy as im­ped­i­ments to trade,” Down­ing said.

Sacci’s sea­son­ally ad­justed Trade Ex­pec­ta­tions In­dex (TEI) in June also re­mained in neg­a­tive ter­ri­tory at 48, de­spite be­ing recorded at 60 points dur­ing Jan­uary and Fe­bru­ary.

Last year in the com­par­a­tive pe­riod the trade ex­pec­ta­tions were pos­i­tive at 54. The new or­ders in­dex, how­ever, de­clined to 46 points, while ex­pected sales vol­umes slowed with the in­dex de­clin­ing by two in­dex points to 52 in June.

Ex­pec­ta­tions for new or­ders also de­creased to 47 from 49 in May, while the em­ploy­ment sub-in­dex de­creased to 47 in June – two in­dex points lower than in May, but the em­ploy­ment out­look for the next six months im­proved as the em­ploy­ment ex­pec­ta­tions in­dex in­creased by five in­dex points to 46 in the last month.

The open cast min­ing op­er­a­tions at Nko­mati Nickel Mine owned by African Rain­bow Min­er­als ARM.

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