Policy uncertainty, infrastructure challenges are clouding an upswing in mining output
SOUTH Africa’s mining productivity is still suffering from elevated policy uncertainty and infrastructure challenges such as water, electricity, rail and ports bottlenecks, dimming investment prospects in spite of the 9.9% rise in mineral output in February.
Data from Statistics South Africa (StatsSA) yesterday showed that the country’s year-on-year minerals output surged by a significant 9.9% in February, driven largely by iron ore, chrome and coal.
StatsSA’s principal survey statistician, Juan-Pierre Terblanche, said iron ore was the biggest contributor to the overall mineral output surge for the month, growing by 42.9%, while coal production was 14.6% stronger.
“Chromium ore output was up 20.6% and contributed a percentage point to South Africa’s minerals production rise during the period under review.
“After 16 consecutive months of year-on-year decline, diamond production turned positive in February, growing by 16.8%,” he said.
“Not all miners registered positive
results, however. Gold and manganese ore were weaker.”
On a month-on-month basis, season-adjusted mining production increased by 5% in February compared with January, the largest month-onmonth increase since March 2023.
However, on a seasonally adjusted basis, South Africa’s mining production decreased by 1.4% in the three months ended February compared to
the previous three months.
The big contributors to this decline were manganese ore, which declined by 9.1%, gold, which was 4.2% softer, and platinum group metals (PGMs), which fell 1.3%.
Investec economist Lara Hodes noted that the production of diamonds had moved in expansionary territory in February, growing by 16.8% following an extended period of year-on-year contractions, after being impacted by the subdued macroeconomic environment.
Hodes also said the 42.9% yearon-year uplift in iron ore output was largely responsible for the marked lift in overall production.
“Domestically, although improvements have been made in a number of areas, the mining sector continues to face key challenges, including significant water infrastructure challenges and the poor state of our roads and railways, which continues to impede optimal activity and export potential,” Hodes said.
South Africa, a major producer of metals such as platinum, iron ore, gold, coal and diamonds, among others, has been impacted by electricity load shedding under Eskom as well as Transnet’s logistical inefficiencies.