South Africa: Mining production declines in May

Mine worker13 July 2014, Tshwane – Mining production decreased by 6.5% year-on-year in May, Statistics South Africa (Stats SA) said on Thursday.

The largest negative growth rates were recorded for Platinum Group Metals (PGMs) at (48.5%), other non-metallic minerals at (13.3%) and building material at (11.7%).

“The main contributor to the 6.5% decrease was PGMs (contributing 10.4%),” said Stats SA.

The crippling strike action, which began on 23 January 2014 in the platinum sector, had a negative impact on total mining production.

Mineral Resources Minister Ngoako Ramatlhodi had previously intervened in the five-month long strike before announcing his withdrawal from the matter.

Mining companies Lonmin, Anglo Platinum (Amplats) and Impala Platinum (Implats) reached a wage agreement with mining union, Association of Mining and Construction Union (Amcu). The strike action ended on 23 June.

According to Stats SA, for the first five months of the year, total mining output contracted by 1.9%, compared with the first five months of 2013.

On a seasonally adjusted basis, mining production dropped 3.1% month-on-month from a downwardly revised 6.3% (7.9 % previously) in April and was down 5.6% quarter-on-quarter.

Nedbank economists said the performance of the mining sector is likely to be volatile in the months ahead, pressured by labour unrest and infrastructure constraints.

“Mining figures are volatile and have little influence on policy decisions in the short term, but the persistent weakness will have a negative impact on second quarter gross domestic product (GDP) growth.

“Despite generally weak economic conditions, the Reserve Bank may still tighten policy later in the year in response to the effects of the weak rand on inflation,” it said.

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