Mining production on the up

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Statistics South Africa (Stats SA) released positive mining and manufacturing production numbers for June 2023.
Mining production rose by 1.1 percent, year-on-year in June.

The main drivers of this positive print included gold and platinum group metals.

Meanwhile, manufacturing production jumped by 5.5 percent year-on-year in June.

Both data sets were ahead of market expectations. The largest contribution to the increase in manufacturing production came from motor vehicles, transport equipment, basic iron and steel, as well as food and beverages.

Manufacturing production rose by 2.3 percent on a quarter-on-quarter basis.

Economist at Investec Lara Hodes says manufacturing is also expected to contribute positively to the overall second quarter GDP figure.

“If we break down the manufacturing figures, 7 of the 10 categories included in the manufacturing basket increased annually. The main contributors were the motor vehicle parts and accessories, components, the basic iron and steel segment and the food and beverages grouping. Together they added 4.7 percentage points to the headline reading. I should note that notwithstanding June’s lift, conditions in the manufacturing sector remain subdued.”

Stats SA data shows that mining production increase year-on-year in June following a 0.7 percent decline in May.

Positive contributors to mining production in June came from gold and platinum group metals.

Mining production increased by 1.5 percent on a month-on-month basis in June.

Senior Economist at Econometrix, Laura Campbell says the sector remains challenged by structural issues.

“June’s print is only the second time in 16 consecutive prints that recorded production growth and likely benefited from less intense load shedding over them month. Of the four key mineral grounds June productions was particularly strong in gold and PGM production and unfortunately coal production and iron ore production remain weak in a month. Despite some relatively improvement in June the sectors outlook remains challenging amidst persistent structural impediments, a weaker rand helps exporters but the flip side of this to the industry is uncompetitive input cast, poor public infrastructure and uncertain policy environment.”

Analysts continue to worry about the country’s ongoing structural impediments characterized by load shedding and the logistical failure of Transnet ports and freight rail system which hinders the free movement of goods for export.