Mining production fell by 4.6% year-on-year in October, owing to a drop in coal, iron-ore, and gold output, Statistics South Africa (Stats SA) revealed on Tuesday.
Coal production was down 15%, iron-ore production fell 18.4%, and gold production declined 7.5%.
Surprisingly, the embattled platinum group metals (PGMs) industry was a significant positive contributor, with production up 26.5% year-on-year.
Mining production increased by 1.8% in October compared with September. This followed month-on-month contractions of 4% in September and a 1.1% drop in August.
In the three months ended October 31, seasonally adjusted mining production decreased by 3.1%, compared with the previous three months.
The main contributors were PGMs, iron-ore, and coal. “The slump in the prices of commodities continues to negatively impact the operating environment for producers.
Commodity prices are likely to remain low next year on excess supply and weak demand, while China has said its economic slowdown is the new normal, as it shifts from a heavy industrial phase into a more services-focused era,” Investec economist Annabel Bishop commented.
China’s Metallurgical Industry Planning & Research Institute’s president Xichuang Li predicted a consistent fall in Chinese steel consumption, which accounted for 60% of global consumption, dropping to 689-million tonnes in 2020, 650-million tonnes in 2025, and 610-million tonnes in 2030.
“High costs are also having a negative impact on producers, including utility tariffs, imported capital equipment, labour, net debt and mothballing. Many firms are looking at selling assets and laying off experienced staff,” Bishop added.
Meanwhile, Stats SA noted that mineral sales also decreased by 5.3% year-on-year in September. Non-metallic minerals made the biggest negative contribution of 27.5%, followed by iron-ore at 22%, and coal at 7.1%. PGM sales increased by 17.6% year-on-year.