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South Africa’s mining production increased by 3.1% year-on-year in February, bolstered by a strong contribution from diamonds and iron-ore, according to the latest figures published by Statistics South Africa (Stats SA) on Wednesday.
The February production growth, which exceeded consensus expectations of 2.6%, follows production growth of 2.9% year-on-year in January.
The main contributors to the positive growth were the 42.9% increase in diamond production, contributing 2 percentage points, the 10.5% increase in iron-ore output, which contributed 1.5 percentage points and the 24.3% growth in manganese ore production, adding one percentage point.
Platinum group metals (PGMs) production, which fell by 1.6% year-on-year, was the largest negative contributor, detracting 1.6 percentage points.
In its commentary on the Stats SA figures, Investec stated that iron-ore had made the largest contribution to the topline growth since the beginning of the year, while the performance of PGMs, which hold the second largest weighting in the basket, had been disappointing.
On a seasonally adjusted basis, mining production increased by 0.9% month-on-month in February and declined by 2.4% quarter-on-quarter for the three months to February.
Investec commented that, while policy and regulatory uncertainty had detracted from investment in South Africa’s mining industry, it believed that Mineral Resources Minister Gwede Mantashe’s recent comments that a new MiningCharter would be finalised next month, should restore confidence to the sector.
“This should hopefully reassure industry participants and bring some positive momentum back to the sector, at a time when large players in the gold mining space are reducing their exposure to South Africa and the platinum sector is experiencing hardships,” Investec stated.
Nedbank noted that stronger global demand and firmer international commodity prices were expected to support production and exports in 2018.
“The upside will still be tempered by a generally difficult operating environment,” Nedbank stated.source:miningweekly.com