SA Mining Production Grew By 7% In February

Data released by Statistics South Africa on Thursday showed that mining production and mineral sales surged in February, while manufacturing production declined. Mining production grew by 7 % in February compared to February last year after a 7.5% jump in January.

This took the year to date increase to 7.2% compared with a 0.7% drop in 2019 and a 2.1% decline in 2018.

The largest positive contributors to the 7 % increase in February were coal, which rose by 13.7% compared to a year earlier and contributed more than half or 3.8 percentage points to the 7.0% rise; platinum group metals (PGMs) such as platinum, palladium and rhodium, which increased by 8.7% and contributed 1.8 percentage points and gold production, which grew by 11.5% and contributed 1.5 percentage points.

As the rand has weakened and precious metal prices have strengthened in US dollar terms, so South African producers have gained with the value of mineral sales rising by 18 %in February to R45.1bn after a 24.4% surge in January to a record monthly sales value of R51.1bn.

PGM sales rose 66.4% from a year earlier while gold sales surged by 83.9% and iron ore grew sales by 24.3%.

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The rise in mineral export sales was one of the reasons why South Africa had a record monthly foreign trade surplus of R24.2bn in March.

Manufacturing production on the other hand had its ninth consecutive month of yearly decline with a 2.1% decrease in February compared to the same month last year after a 1.8% drop in January.

One of the reasons for the poor performance in February was due to intermittent load-shedding even though Eskom increased its generation by 1.7% from a year earlier.

 Another reason is the depression in the construction industry which has cut the demand for structural steel and other manufactured goods such as doors, lights, and electrical goods.

Stats SA reported last week that the real value of building plans completed fell by 12.9% in the first two months of 2020 from a year earlier.

Even worse are the prospects for later in the year as the real value of building plans passed plunged by 30.9% in the first two months of 2020.

The national lockdown that started in March was preceded by a National State of Disaster and has continued into May which means that manufacturing plants were closed, so large manufacturing production annual declines are expected in March, April and May.

The basic iron and steel, non-ferrous metal products, metal products and machinery sector had the largest contribution to the 2.1% y/y decline in total manufacturing production with a 4.8% yearly drop and which contributed 0.9 of a percentage point to the decline.

Other negative contributors were wood and wood products, paper, publishing and printing with a 6.3% decrease.

Textiles, clothing, leather and footwear had a 9.1% decline, glass and non-metallic mineral products also had a 9.1% primarily due to the stoppage in alcohol production, which takes up 85% of the glass industry packaging output.

Motor vehicles, parts and accessories and other transport equipment had 3% drop.

Offsetting these negative contributions, the food and beverages division had a 2.2% rise from a year earlier and contributed 0.6 of a percentage point. As food is an essential service, this positive contribution should continue in the months ahead.

Last week, Stats SA reported that the capacity utilisation of large manufacturing enterprises fell to a seven-year low of 79.3% in February 2020 compared with 80.8% in February 2019.

This means that just more than a fifth (20.7%) of capacity was unused, or machines lying idle, even before the Covid19 pandemic.

(Compiled by Inside Politics staff)


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