Business Maverick

Business Maverick

South Africa mining output plunged over 47% in April

A pedestrian walks along a street as the Impala Platinum Holdings Ltd., also known as Implats, shaft 9 mine tower stands beyond in Rustenburg, South Africa, on Wednesday, April 22, 2020. (Photo:: Waldo Swiegers/Bloomberg via Getty Images)

April was a full month of lockdown 5 in South Africa and so economic data from that month is going to be very bad. Fresh data is starting to show just how bad, with mining output falling 47.3% year-on-year during the month Stats SA said on Thursday, 11 June.

The numbers would certainly have been worse if coal mines that supply Eskom had not been allowed to operate in April, as well as some mechanised and open-pit operations in other sectors. And April’s dismal performance followed an 18% decline in March, as mining companies began winding down and the first days of the lockdown kicked in. 

“The April mining figures show the devastating impact that lockdown restrictions have had on South African industry,” NKC African Economics said in a note about the data. 

Production of platinum group metals (PGMs) was 62% lower while iron ore output slid almost 69%. Coal production was down 7.7% presumably because of the closure of mines that do not feed Eskom. 

The data is both shocking and at the same time not surprising, given the fact that so many mines were not producing during the month. But it begins to give a picture of the extent of the GDP meltdown that can be expected. 

Mining accounts for about 8% of South Africa’s GDP, so 4% right there was lost in April. And a key source of hard currency earned from exports was also lost in April, not to mention a source of economic activity for mining communities, many of which are already impoverished. 

StatsSA also published March manufacturing data on Thursday. It showed that production in this key sector fell 5.4% that month, while for the first quarter of 2020, output was 2.1% down compared to the fourth quarter of 2019. 

On a monthly basis, far larger contraction can be expected for April. About 13% of South Africa’s GDP derives from manufacturing, so we can see where all of this is headed, and it’s over a cliff. BM/DM

 

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