JOHANNESBURG - Mining production stalled in August, highlighting the sector’s vulnerability to both global uncertainty and local structural challenges.
According to Statistics South Africa, mining output contracted by 0.2% year-on-year, well below the Bloomberg consensus of a 1.7% increase. This followed a strong 5.1% year-on-year rise in July (revised from 4.4%).
On a seasonally adjusted monthly basis, production declined by 1.2%, reversing July’s gains. Seven of the 12 mineral categories in the mining basket recorded annual declines, with the largest coming from platinum group metals (PGMs) and gold. Combined, these two sectors subtracted 1.3 percentage points from the top-line figure.
“The August figures represent a setback for the mining sector, particularly after a few months of positive momentum,” said Thanda Sithole, senior economist at FNB. “The weakness in PGMs and gold remains a concern, especially given the global demand environment. Still, the quarterly uptick shows the sector is not without resilience. Continued reforms in logistics and infrastructure will be crucial in unlocking mining’s full potential.”
PGM output fell 3.0% year-on-year, following a strong 6.2% rise in July. Gold production dropped 3.6%, marking a second consecutive monthly decline. These deep-level mining operations have been particularly hard-hit by rising input costs, noted the Minerals Council SA, citing electricity, water and labour as key cost pressures.
Lara Hodes, economist at Investec, added: “Mining production essentially stalled in August. PGMs and gold were again the key drags. These sectors are highly cost-sensitive and remain exposed to both operational and logistical pressures.”
Despite the slump in output, global factors provided a silver lining. The World Bank’s Precious Metals Index rose 36% year-on-year in August, with gold, platinum and silver all seeing strong price gains. Investor demand for safe-haven assets amid global uncertainty continues to support prices.
Coal output, which accounts for nearly 22% of the mining basket, rose 4.1% year-on-year, contributing 0.8 percentage points to overall output and helping to prevent a deeper contraction. However, export potential remains constrained by rail and port inefficiencies.
Looking ahead, continued global volatility and domestic bottlenecks may limit the sector’s recovery. Nonetheless, rising commodity prices and strategic policy support could provide selective tailwinds in the months to come.