South Africa’s mining industry continued its losing streak in September with production plunging 4.5% year on year as the sector suffered from ongoing power cuts.
September’s mining production data, released by Statistics South Africa on Thursday, marked the eighth consecutive month of falling mining activity in the country.
The stats agency’s data show that production declined mostly for iron ore, which shrank by 23.1% and gold dropped by 12.4%.
Thanda Sithole, FNB senior economist, said despite the long-term structural decline in gold mining output, overall mining activity is constrained by structural weaknesses in critical network industries such as electricity, ports and rail.
“We are concerned about the ongoing loadshedding and the lingering impact of transportation disruptions from the [recent] labour strike at Transnet … the prices of South Africa’s major mining export commodities have already peaked and could moderate further as global demand slows,” Sithole said.
Sithole added that the issues he raised above will impede mining sector export earnings, which over the past months firmly underpinned government revenue overruns.
“Ultimately, to unlock growth in the mining sector and the broader economy, we reiterate the need to move quickly in implementing reforms to address the electricity crisis and inefficiencies at ports and rail.”
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