The mining sector continued to show signs to strain in June. Stats SA data shows mining production contracted 28.2% in the month, after it contracted by 27.6% in May.
The main negative contributors were the platinum group metals, iron ore, coal and other non-metallic minerals.
On a month on month basis, production decreased by 1.4% in June.
PGMs and gold were the biggest drags on mining activity in Q2:2020 (Apr-Jun) as overall production fell by 30,2% compared with Q1:2020 (Jan-Mar). Mining output was down 28,2% y/y in June 2020.
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This is on the back of improvement in demand from some of South Africa’s key export markets
The sector continues to battle the effects of COVID-19 that saw some mines pause production due to the spread of the virus.
The sector has also endured various challenges from electricity supply constraints to policy uncertainty, logistics challenges.
Chief Economist at the Minerals Council of South Africa, Henk Langenhoven, says they were hoping for a continuation of the recovery in the mining sector.
“The problem is that in June, last year (2019), we had a good month. So, it is a bit of what we call a base effect. We are a little disappointed. We had a good bounce back in May from April, which was the worst. We dropped basically 50% and recovered back quite strongly. We were hoping that that recovery would continue, but it didn’t. We are now about 20% below the average levels per month in the pre-lockdown period. So, if you look at 12 months up to March, we are only 20% below. So, there was a good recovery but we were hoping for better.”
Henk Langenhoven reacts to the latest Stats SA mining data: