South Africa’s year-on-year mining output spikes in November 2021, but dips on monthly basis
South African mining production and sales spiked year on year in November but declined on a monthly basis. The bottom line is that the sector is still generating lots of money, which is good news for Treasury and the wider economy.
Data released by Statistics South Africa (Stats SA) on Tuesday showed that mining production rose 5.2% in November of 2021 compared with the same month in 2020. Platinum group metals (PGMs) lead the way, with production surging 38.1% over that period.
Mineral sales had a bigger spike, increasing by 22.2% year on year. This means a big boost in revenue, which will flow to the bottom line of many companies with spin-offs that include more taxes paid to Treasury and more hard currency flowing into the economy from exports.
But the overall picture is mixed.
On a monthly level, there was a wobble, with production in the sector declining 2.2%. Mineral sales at current prices still rose 7.5% month on month, but this number has been volatile, a reflection of turbulence in commodity markets and up-and-down production on a monthly basis.
In the three months to November, mineral sales were down 15.3% compared with the previous three-month period, while production was down 1.6%. This means the sector is likely to be a drag on the fourth quarter (Q4) and full-year gross domestic product (GDP) data, adding to the growing view that official forecasts of more than 5% growth for 2021 are optimistic.
“Extrapolating from the recent outcome and historical trends, our preliminary estimate is for the mining sector to have detracted from 4Q21 quarterly GDP growth,” Thanda Sithole, FNB senior economist, said in a note on the data. DM/BM