Mining production for June contracted by a steep 28.2%, far worse than market expectations of a 15% drop.

Mining production data for June released by Stats SA showed a decline of 28.2% year-on-year, far worse than market expectations of a 15% drop

Mining production for June contracted by a steep 28.2%, far worse than market expectations of a 15% drop.

Lameez OmarjeeTwo workers in an underground mine.Getty ImagesMining production data for June released by Stats SA on Thursday showed a decline of 28.2% year-on-year, far worse than market expectations of a 15% drop. Analysts had expected the June print to improve from May’s contraction, on the back of improved demand from some key export markets. This month’s contraction was larger than May’s year-on-year, revised decline of 27.6%.

Key contributors to June’s decline were platinum group metals, followed by iron ore, coal and other non-metallic minerals.June mineral sales, meanwhile, decreased by 14.2% year-on-year. The biggest declines were seen in gold, followed by coal, other non-metallic minerals and platinum group metals.

According to Stats SA, all miners experienced a slump in the second quarter of the year, with overall mining production falling by 30.2% compared to the first quarter of 2020.FNB, in a note issued ahead of the release, said it expected production to contract at a”more moderate pace” than in May on the back of mining companies scaling up capacity alongside the easing lockdown restrictions.

“‘Despite the gradual opening up of economies among South Africa’s main trading partners, we anticipate external demand to have remained relatively lacklustre which would adversely affect domestic production prospects.”We suspect that corporates offshore may have delayed, halted or even withdrawn commodity-intensive projects on the back of a highly uncertain operating environment,” it said.