Mining production improving, but still in the red

Mining production decreased by 6.3% on a year-on-year basis in October.
Mining production decreased by 6.3% on a year-on-year basis in October.

Mining production declined for an eighth consecutive month, with data for October recording a 6.3% decline.

Data released by Stats SA on Thursday indicated that the largest contributors to the annual production decline were iron ore - down 26.5%, chromium ore – down 31.4%, and other non-metallic minerals – down 17.3%. Coal was down 4%.

On a month-on-month basis, production declined 0.3%. Seasonally adjusted mining production, however, has increased 18.5% for the three months ended in October 2020. The increasing trend is attributed to platinum group metals, iron ore, gold, other on-metallic minerals and manganese ore.

FNB economists had expected mining production to continue its recovery path, however the pace of recovery is slowing. "The industry still faces a number of challenges such as unreliable energy supply, scarce capital infrastructure investment, logistic bottlenecks and declining global competitiveness," FNB said in a note ahead of the data release.

Mineral sales increased 30.5% on a year-on-year basis for October.

The largest contributions to sales growth was platinum group metals – up 75.7%, gold – up 66.1% and iron ore – 31.2%.

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