- Mining production lifted in February 2018, with growth rising to 3.1% y/y, after 2.9% y/y (revised upwards from 2.4% y/y) in January (see figure 2). This was above consensus expectations of 2.6% y/y.
- An analysis of the data indicates that the diamond and iron ore sectors yielded the largest positive contributions to the headline outcome of 2.0% and 1.5% respectively, on the back of growth of 42.9% and 10.5%. The PGMS category was the largest negative contributor, detracting 1.6% from the total. (see figure 1).
- Iron ore has made the largest contribution to the topline growth since the beginning of 2018, with PGMS, which hold the second largest weighting in the basket, disappointing.
- Miners have been supported by robust commodity prices, with the Economist metals index averaging highs over the last few months, last seen several years ago(see figure 3), shielding them to some extent from the strong rand.
- Policy and regulatory uncertainty, have detracted from investment into the sector, however Mineral Resources Minister Mr Mantashe confirmed recently that “(t)alks on a new Mining Charter are about 80% completed and the new document guiding transformation of the South African mining sector will be ready and gazetted in May, giving the industry greater policy confidence”.
- 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 SA and the platinum sector is experiencing hardships.