The mining sector continues to take a beating due to the ongoing COVID-19 pandemic and its impact on the economy. The latest figures from Stats SA show that mining production decreased by 29. 8% year-on-year in May 2020.
This is down from a production of 50.3% in April when the sector had to halt production due to stage 4 lockdown.
Mining sales decreased by 13.4 % year-on-year in May 2020. Although this latest number is lower than the decrease in April, it still shows the impact that lockdown regulations had on economic activity.
The largest contributors were Iron Ore, PGMs, Manganese, coal, and other nonmetallic minerals.
Iron ore saw the largest drop at 69.1%. However, on a seasonally adjusted basis production increased by 44% in May 2020 when compared with April 2020.
“All the companies are doing their best to ramp-up their production. The big issue is the teams, all of them are not back and some of them are actually repatriating back to South Africa from the surrounding countries. And we are experiencing bottlenecks at the borders because you can imagine that we need to bring back in the order of 10 000 people and if all of them are on the same border post, there are three in Lesotho,” says Minerals Council of South Africa Chief Economist Henk Langehoven.
South African #mining production increased by 44,0% in May 2020 compared with April 2020. However, the industry produced less in May 2020 compared with May 2019, recording a 29,8% y/y decline in activity #StatsSA
— Stats SA (@StatsSA) July 14, 2020
In the video below, Langehoven’s analysis of the figures:
Langehoven says the current load shedding by Eskom is a concern for the mining sector.
“We are very concerned about Eskom, and the availability of electricity but that is not in our numbers now. So companies are really trying their best to make the best of the circumstances.”
Mineral sales also saw a slower decrease of 13.4% annually in May from a fall of 29.3% in April. But on a seasonally adjusted basis sales increased by 25.7 % on a monthly basis in May.
Nedbank Economists say although production figures are still weak, slight improvement is welcome as it signals that local production is starting to recover post the hard lockdown.