Mining output decreased by 1.9% year-on-year in January, Statistics South Africa said on Tuesday, marking the 12th consecutive month of year-on-year decline and after a 3.5% contraction in December 2022.
The largest negative contributors were platinum group metals (PGMs), whose production fell 15.2% decrease, while diamonds were down 15.5%.
The last time the sector recorded annual growth was in January 2022.
Economists at Nedbank correctly predicted another decline in mining production in January, noting: “Economic conditions deteriorated further in early 2023 as load-shedding intensified, global demand weakened, and commodity prices declined. This is expected to have harmed production in most industries.”
Although the global environment is looking more favourable, as evidenced by global PMI indicators, South Africa continues to face a number of domestic problems hindering production and export potential, notably electricity supply and logistical constraints, Investec’s Lara Hodes said.
Economists at the Bureau for Economic Research said the mining data should provide the first real clues on the possibility of a technical recession in South Africa. The bureau said the mining sector, which is most exposed to the increased intensity of load-shedding, may contract in the first quarter of 2023.
On the positive side, mineral sales at current prices increased by 6.8% year-on-year in January. The largest positive contributors were coal (up 18.1%), gold (28.2%), chromium ore (68%) and “other” metallic minerals whose sales rose by 57.3%.
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