SA gold production plunges, total mining output down 0.7% – by Natasha Odendaal ( – July 11, 2013)

JOHANNESBURG ( – Statistics South Africa (Stats SA) on Thursday said that mining output during May decreased 0.7%, after a 0.7% revised year-on-year improvement in April.

Gold production emerged as the highest contributor, at -2.4 percentage points, to the decline, while manganese ore, contributing 1.5 percentage points, was a significant positive contributor.

Investment bank Investec’s Kamilla Kaplan commented: “There was a continuation of the trend in gold production that has been in place for much of the last decade. Specifically, that production remained in contractionary territory”.

Gold output, which has been falling since May 2011, plunged 14.6% year-on-year during the month under review, compared with a 3% year-on-year decline reported in April. The gold sector remained a key mineral export, accounting for 8.8% of total export revenues in the first five months of this year.

“At the prevailing gold price, gold miners are already under pressure to sustain operations and will struggle to grant double-digit wage increases sought by the unions [in this year’s wage negotiations],” Kaplan pointed out.

As recently as 2007, South Africa was still the world’s number-one gold producer, but has now slipped to number six, with China, Australia, the US, Russia and Peru now producing more of the yellow metal.

Excluding gold, mining production increased 1.9% year-on-year, after a 1.4% year-on-year rise in April.

Platinum-group metals (PGMs) production increased 1.1% year-on-year, after declining by 13.2% in April. Coal output increased 1.2% during May, compared with the 7.4% year-on-year hike reported in April.

Stats SA reported that, besides gold, ‘other’ metallic minerals, at -32.3% and diamonds, at -19.7%, recorded the largest negative growth rates for the month.

“The latest numbers continue to reflect the tough business conditions in a sector beset by labour instability, falling commodity prices and rising production costs. Prospects for the mining sector remain poor as global demand conditions will remain unfavourable for the foreseeable future,” Nedbank said in a flash comment to investors.

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