The decline in the headline number is mainly attributable to iron ore production, which plunged 35.3% y/y and detracted 3.9 percentage points (ppt). Other notable detractors were due to declines in the production of platinum group metal (PGMs) (-16.1% y/y and -3.4ppt), manganese ore (-15.9% y/y and -1.5ppt) and coal (-5.9% y/y and -1.5ppt). Of the 12 mineral groups, diamond production was the only division that recorded an expansion; up 56% y/y. However, due to the group’s weight of 3.9% of the total mineral basket, it only contributed 1.6ppt to the headline number.
Concerningly, on a seasonally adjusted basis, mining production declined for the third consecutive month, registering -5.7% m/m in November, following declines of 0.7% and 0.8% in October and September respectively. In the three months ended November mining production slowed to 6.3% q/q, from 17.4% q/q in October.
Lockdowns both domestically and abroad will likely hamper any meaningful recovery in the sector in the short to medium term. Furthermore, if the recent bouts of load shedding are not addressed, then the longer-term prospects for the industry remain dim as business confidence will remain low and investment in new projects muted. The sector also faces other challenges such as logistical bottlenecks, high electricity costs and low global competitiveness.
The recovery in the mining sector is crucial for the overall economy as roughly 400 000 people are employed in the sector. Additionally, the sector makes up approximately a third of export receipts and is an important contributor to the fiscus.
