A green shoot has appeared in South Africa’s mining sector. Mining production rose 0.8% year on year in February, the first month since February 2020 in which it has not declined. The catch is that the number could still be revised up or down in the coming months.
The data was unveiled on Tuesday by Statistics South Africa (StatsSA), and it has to be said that it is not set in stone. The monthly mining data is often revised after its original publication.
The December read initially showed year-on-year growth of 0.1%, and it was then revised to a contraction of 1.8% and then a deeper one of 2.6%. January’s initial print was a 6.2% decline and it has now been revised sharply lower to 8.4%.
So the February data may yet tip into the red. Or it could be revised higher.
Mining production stats have made for grim reading the past year. In April 2020, output in the sector shrank almost 50%, and while the contractions since have been smaller, they have still been contractions. Getting back to pre-Covid levels of production will take some time.
The one bright spot has been sales data from the sector, which has been consistently lifted of late by surging prices. Minerals sales in February rose a robust 26%, a trend that has been in place for months.
“Despite a drop of 15.5% in platinum group metals (PGM) production in 2020, PGM sales increased by 40% as a result of higher prices,” StatsSA said in a statement accompanying Tuesday’s release.
This has been driven largely by soaring prices for palladium and rhodium, used as catalysts in petrol engines.
“In 2020, prices for palladium (in US$ terms) increased by 43.2% and rhodium by 187.2%. In rand terms, rhodium prices climbed by 222.6%,” StatsSA said.
And this bull run has been extended into 2021.
“We still expect mining activity to be supported by sustained higher commodity prices from last year and the anticipated robust economic growth rebound, mainly from South Africa’s major trading partners,” Thanda Sithole, an FNB economist, said in a commentary on the mining production and sales data. DM/BM