African Times - - Business - MTHULISI SIBANDA

THE growth of the min­ing sec­tor in South Africa over the past year has ex­ceeded ex­pec­ta­tions but econ­o­mists have warned the in­dus­try is by no means out of the woods.

Growth in min­ing pro­duc­tion ac­cel­er­ated to 3,1 per­cent yearon-year (y‐o‐y) in Fe­bru­ary from 2,9 per­cent in Jan­uary (2018).

This was bol­stered mainly by pro­duc­tion of di­a­monds, which in­creased by 42,9 per­cent and added 2 per­cent­age points.

On a sea­son­ally ad­justed ba­sis min­ing pro­duc­tion in­creased by 0,9 per­cent month-on-month (m‐o‐m) in Fe­bru­ary and de­clined by 2,4 per­cent quar­ter-on-quar­ter (q‐o‐q) for the three months to Fe­bru­ary.

The big­gest con­trib­u­tors to the sea­son­ally ad­justed in­crease were coal and man­ganese ore, which added 5 per­cent­age and 1,4 per­cent­age points re­spec­tively.

“Min­ing fig­ures are volatile,” Ned­bank econ­o­mists, Den­nis Dykes and Nicky Weimar, com­mented. How­ever, stronger global de­mand and firmer in­ter­na­tional com­mod­ity prices are ex­pected to sup­port pro­duc­tion and ex­ports in 2018, the econ­o­mists stated.

Dykes and Weimar fur­ther fore­cast, “The up­side will still be tem­pered by a gen­er­ally dif­fi­cult op­er­at­ing en­vi­ron­ment.”

Absa Cap­i­tal also high­lighted min­ing out­put rose more than ex­pected in Fe­bru­ary.

Econ­o­mists Miye­lani Maluleke and Peter Wor­thing­ton said how­ever, both the Jan­uary and Fe­bru­ary min­ing prints were launched off a low De­cem­ber base. Thus, they ar­gued de­spite in­creased out­put in the first two months of this

year, South Africa’s av­er­age sea­son­ally ad­justed min­eral out­put so far in 2018 sits 1,1 per­cent be­low the av­er­age of the fourth quar­ter of 2017.

This sug­gests the sec­tor could sub­tract from gross do­mes­tic prod­uct in the first quar­ter. “…un­less March de­liv­ers an ex­cep­tional in­crease,” Maluleke and Wor­thing­ton stated.

Rand Mer­chant Bank (RMB) also pointed out while min­ing pro­duc­tion rose above “our and con­sen­sus ex­pec­ta­tions” for 2,2 per­cent growth.

Isa­iah Mh­langa of RMB said how­ever, de­spite the above­ex­pec­ta­tion per­for­mance, the trend re­mained weak, as gold and plat­inum pro­duc­tion con­tin­ued to de­tract from over­all out­put.

“The sec­tor is likely to sub­tract from over­all GDP in the first quar­ter of 2018 if the year-to-date trend is main­tained in March,” Mh­langa, the RMB econ­o­mist stated.

The min­ing in­dus­try con­trib­uted pos­i­tively to South Africa’s GDP growth in 2017.

Min­ing’s growth was spurred on, in part, by in­creased pro­duc­tion of man­ganese ore, chrome, and iron ore, ac­cord­ing to Stats South Africa.

Ris­ing de­mand for min­er­als used in the pro­duc­tion of steel con­trib­uted to the in­creases.

Min­ing re­mains an im­por­tant player in the South African econ­omy, con­tribut­ing 8 per­cent of the na­tional econ­omy and em­ploy­ing 2,5 per­cent of the en­tire work­force.

The in­dus­try is the largest in four of South Africa’s nine prov­inces. – CAJ News

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