SA’s January mining output slumps, but manufacturing grows
South Africa’s mining sector got off to a faltering start for 2024, with production falling 3.3% year-on-year in January and 0.8% on a monthly basis.
The diamond sector remained in the rough, with output plunging over 41% on a year-on-year basis.
In a commentary earlier this week, Oxford Economics Africa noted that the diamond trade has been under pressure but looked set for a tentative rebound.
“Following a rough year for southern African diamond exports, marred by a global supply glut and the uncertainty over stricter bans on the trade of diamonds of Russian origin, the worst of the diamond price slump seems to be over. Southern African producers are still likely to either maintain or slightly cut diamond production amid the phased implementation of broader sanctions and a tentative recovery in global diamond demand,” it said.
Gold production fell, dropping 12.7% year-on-year. But red-hot prices which have been in record territory this year were reflected in gold sales, which soared over 113% on an annual basis in January despite the fall in output.
Platinum group metals (PGM) sales slumped 25.3% over the same period, a reflection of the sector’s unfolding price dive.
Meanwhile, manufacturing output in January increased 2.6% year-on-year and 0.8% on a monthly basis. Petroleum, chemical products, rubber and plastic products lead the way with a 13.6% rise in output for that broad sub-sector.
The bottom line is that the industrial engines of South Africa’s economy have gotten off to a very uneven start for 2024 after the country’s overall gross domestic product (GDP) grew a tepid 0.6% in 2023. A recession was averted in the last quarter of 2023 by the thinnest of margins.
The mining sector in January was a drag on GDP while manufacturing gave it a boost. Both still face significant headwinds, including the power and logistics crises and a lack of meaningful new investment to lift production and create jobs. The mining sector may well contract again this year — production cuts and lay-offs are looming — and the manufacturing industry is unlikely going to shoot the lights out. DM
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