November mining production up 5.2% y/y

South Africa's mining output exceeded market expectations in November, with a 5.2% year-on-year increase, fueled by robust performances in platinum group metals (PGMs) and iron ore. However, coal production experienced a notable decline of nearly 8%, impacting overall output numbers. Shirley Weber, Managing Principal and Coverage Head for Resources and Energy at Absa CIB, provided insights into the factors influencing the industry's performance. Weber explained that the strong production levels of PGMs and iron ore were anticipated due to their demand and pricing dynamics. The global push for greener technologies and sustainable practices has elevated the need for these 'energy minerals and metals.' While expectations were high for battery minerals, the focus on platinum and iron ore in South Africa remained steady. The surge in mining production can be attributed to heightened demand for commodities amid the transition towards clean energy solutions worldwide. Weber emphasized the significant impact of the greener transition on driving the industry's performance, highlighting the key role played by South Africa in supplying essential minerals. Despite challenges such as the discovery of the Omicron variant, material shortages, and weather disruptions, the mining sector managed to demonstrate resilience. However, coal production faced pressures stemming from shifts towards greener power sources and weather-related issues, impacting output levels. Weber noted that while coal production decreased, sales contributions increased due to rising demand and export activities. The price factor played a crucial role in driving sales, especially for thermal coal and metallurgical coal. The dynamics of the coal market were influenced by a mix of price trends and demand patterns. Looking ahead, the mining industry's overall contribution to South Africa's GDP in 2021 is expected to be substantial. The favorable commodity prices throughout the year have set the stage for a positive impact on the country's economic performance. The surge in mining production is likely to bolster GDP figures, although the full extent of the contribution will also depend on the December numbers. Weber projected that the mining sector's performance in 2022 would continue to be influenced by energy minerals, particularly nickel, palladium, iron ore, and copper. These metals, essential for the greener transition and battery production, are expected to play a significant role in driving the sector forward. In closing, Shirley Weber reiterated the importance of sustainable practices and the role of South Africa's mining industry in supplying vital minerals for global energy needs. The industry's resilience and adaptability in navigating challenges while harnessing opportunities bode well for its future growth and contribution to the country's economy.