South Africa’s mining production has rebounded following a challenging start to the year.
Statistics SA’s latest data released this week shows that mining activity improved by much more than expected in February, according to the Bureau for Economic Research’s (BER) Weekly Review.
According to the data, mining production rose by a solid 9.9% year-on-year (y-o-y) from an upwardly revised 2.8% y-o-y contraction in January.
“This is the strongest growth in mining output since mid-2021, surpassing market expectations of a 3.5% year-on-year expansion,” the BER said.
More than half the growth in annual production came from iron ore (up 42.9% y-o-y, adding 5.1% points) with coal (up 14.6%, adding 3.7% points) also making a sizeable contribution. Seasonally adjusted mining production rose by 5% month-on-month (m-o-m) in February after an upwardly revised 0.4% decline in January.
“More positive news was that annual manufacturing production expanded by more than expected and at the fastest pace since June 2023. Output was up 4.1% y-o-y in February, from an upwardly revised 2.9% rise in January. This marks a fifth straight month of growth in manufacturing activity,” the BER said.
The largest positive contribution came from wood, paper and paper products, which rose 14.9% y-o-y.
In contrast, the production of vehicle parts and accessories declined 16.5% and was the biggest drag on annual output. Compared to January, factory production declined by 0.3% m-o-m in February.
“On balance, March will determine whether the manufacturing sector adds to or subtracts from GDP in Q1, but barring an unexpectedly large drop in March, mining is set to contribute positively to growth,” the BER said.
According to the SA Reserve Bank, gross gold and foreign exchange reserves increased to $62.3 billion in March, up from $61.7bn in the prior month.
“This increase largely came from gold reserves rising to $8.9bn (compared to $8.2bn in February), reflecting the strong 8.9% monthly increase in the gold price. In contrast, foreign exchange reserves declined to $47.2bn from $47.3bn,” the BER noted.
