First mining production increase in four months - Stats SA

Mining production increased by 2.8% year-on-year in June, Statistics SA announced on Tuesday. This is the first time in four months that annual production has shown an increase.

The most important contributor to the increase was in platinum group metals, whose production increased by 28.2% when compared to June 2017. 

Gold production, however, fell by 19.2%, which helped drag the overall production increase down. 

Seasonally adjusted mining production increased by 5.0% in June 2018 when compared with May. This followed month-on-month changes of 5.9% in May, and a 3% fall in April 2018.

Mineral sales at current prices, meanwhile, showed a 9% year-on-year increase for June, with platinum group meals leading the way with sales increases of 32.2%. Coal sales were up 20.7%.

Annabel Bishop of Investec said in a note on Tuesday afternoon that while the rise in production of platinum group metals had helped boost overall production, gold's performance was "dismal", and activity in the local mining sector remained suppressed.

"Commodity prices have suffered of late amid geopolitical concerns and rising trade tensions, which have reinforced investor concerns over global growth, threatening demand.

"This, coupled with a combination of other factors, including declining productivity and escalating costs, suppressed activity in the mining sector."

Bishop also noted regulatory uncertainty was a factor.

"Additionally, persistent regulatory uncertainty continues to inhibit essential investment into the sector, with the new, proposed mining charter yet to be signed off and issues around the possible expropriation of land without compensation still not resolved," she said.

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