Mining output expected to surge further as world economy picks up
PRECIOUS metals and minerals once gain came through for the beleaguered mining industry as output surged and was expected to lift even further in the medium term.
Data from Statistics South Africa (StatsSA) yesterday showed that production improved with export values growing 5.6 percent month-on-month in February to R53.5 billion.
Analysts said that the output was 33.6 percent higher than the comparable period last year, suggesting that external conditions had become favourable in line with the global economic growth recovery.
StatsSA said production in the sector rose 0.8 percent year-on-year in February, ahead of expectations as iron ore output surged.
The statistics agency said that iron ore, the main ingredient in the production of stainless steel, was the largest contributor to the output with 65.7 percent growth, adding 5.9 percentage points.
Iron ore’s production leapt from -5.6 percent in January, manganese inched up 21.6 percent, contributing 1.7 percentage points, while other non-metallic minerals production, posted growth of 12.6 percent year-onyear in February after contracting by 13.5 percent year-on-year per month over the past 12 months.
FNB economist Thanda Sithole said the upswing was expected to continue.
“We still expect mining activity to be supported by sustained higher commodity prices from last year and the anticipated robust economic growth rebound, mainly from South Africa’s major trading partners,” Sithole added. “The IMF recently lifted its 2021 global growth forecast by 0.5 percentage point to 6 percent relative to January’s World Economic Outlook.
“Global growth is expected to remain reasonably strong at 4.4 percent in 2022.
“We are, however, concerned about the slow roll-out of vaccines (versus the possibility of a third wave of infections) and persistent electricity supply disruptions, which could both limit production even as the global economy recovers,” Sithole said.
StatsSA said total mining production rose in February after contracting sharply by a downwardly revised 8.4 percent year-on-year in January.
Non-gold mining production grew 2.4 percent year-on-year, outperforming the market consensus of a 3 percent contraction in January.
Gold, copper and coal production volumes, however, fell during the month under review.
StatsSA said mineral sales were strong recording 26 percent year-onyear growth in February buoyed by contributions from Platinum Group Metals, iron ore and manganese.
Investec economist Lara Hodes said iron ore demand was spurred by a pick-up in global manufacturing activity and new order growth, following the restrictive lockdown last year.
“Iron ore’s robust rebound in production outweighed coal’s negative performance, which saw output fall by a further 19.3 percent year-on-year and accordingly detract a notable 5.7 percent points from February’s top line reading,” said Hodes, adding that there was optimism South Africa would benefit from the 6 percent global economic growth projected by the IMF.