South African mining production expands in June, while sales contract

Key Takeaways:

1. The local mining sector in June 2023 witnessed both positive and negative trends.
2. Gold and PGM production saw an impressive surge to support the overall output figure.
3. A steep decline in mineral sales, particularly PGMs and coal, raises concerns about the overall health of the mining sector.
4. When considering the seasonally adjusted figures, there was a modest increase of 1.3% in mining production in June 2023 compared to the previous month.

Despite the overall decrease in mineral sales, gold and chromium ore sales stood out with significant increases.

The local mining sector presented a mixed picture in June 2023. Statistics South Africa’s (STATSSA) mining report for June 2023 highlights that while production increased, sales experienced a decrease.

The significant growth in gold and platinum group metal (PGMs) production is certainly encouraging. However, the steep decline in mineral sales, particularly PGMs and coal, is perhaps cause for concern.

Gold and PGM production rises, while iron ore and diamond production falls

The mining sector showed a promising increase of 1.1% year-on-year in June 2023. This growth was predominantly fueled by gold, which demonstrated an impressive surge of 28.5%, contributing 3.6 percentage points to the overall growth. Platinum Group Metals (PGMs) also played a significant role, showing an increase of 11.1% and contributing 2.5 percentage points.

Unfortunately, not all minerals followed the same upward trend. Iron ore, for instance, decreased by 18.0%, negatively contributing 2.4 percentage points. Diamonds also fell significantly, down by 41.0% and detracting 1.8 percentage points from the overall results.

When considering the seasonally adjusted figures, mining production showed a modest increase of 1.3% in June 2023 compared to May 2023. This is a positive turnaround from the 3.8% decrease observed in May 2023 and the 1.6% increase in April 2023.

The second quarter of 2023 saw a 1.5% increase in seasonally adjusted mining production compared to the first quarter. PGMs, gold, 'other' metallic minerals, and coal were all positive contributors to this growth, with PGMs leading the pack at a 5.8% increase.

Mineral sales contract

However, the mineral sales depicted a different picture for June 2023, with a decrease of 14.3% year-on-year. PGMs were the largest negative contributors with a significant drop of 30.9%, followed by coal at 26.2%. 'Other' non-metallic minerals and iron ore also negatively impacted the overall sales.

Despite the overall decrease in mineral sales, gold and chromium ore showed significant positive contributions. Gold sales dramatically increased by 84.8%, contributing 5.9 percentage points, while chromium ore sales rose by 57.0%, contributing 2.4 percentage points.

The seasonally adjusted mineral sales for June 2023 showed a decrease of 12.8% compared to May 2023. This followed a notable increase of 25.4% in May and a decrease of 12.0% in April. The second quarter of 2023 also showed a decrease in the seasonally adjusted value of mineral sales by 3.8% compared to the first quarter.