Little cheer in mining production’s big bounce
MINING production rose sharply in March compared to a year ago, although there was not much else to cheer about.
Output rose by a more-than expected 18.8%, the second-highest year-on-year increase since January 1980, supported by a strong rise in the production of platinum group metals (PGMs), Statistics SA data showed on Thursday.
The extent of the rise was largely buoyed by low-base effects created last year when workers at platinum mines halted production in a strike that dragged on for five months. The strong bounce in mining production growth also reflected “operational and maintenance difficulties” in the gold sector, BNP Paribas Cadiz economist Jeff Schultz said.
Despite coming from a lower base, mining production growth will have supported economic growth in the first quarter.
Barclays economists Miyelani Maluleke and Peter Worthington expected output to have risen a seasonally adjusted and annualised 7.9% in the first quarter.
Statistics SA said the figures were telling the story of a mining industry in distress, particularly in PGMs. Production of PGMs still had “some way to go” before it reached the highs of 2010.
PGMs output peaked in December 2010 with a production index of 130.6 — the highest monthly level on record since January 1980.
Factors such as weak commodity prices, lacklustre demand and power disruptions are among factors that will weigh on mining production in coming months.
The sector is also gearing up for a tough round of wage negotiations, with the Association of Mineworkers and Construction Union already saying it plans to demand increases that will see basic salaries rise to R12,500 per month.