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Minerals Council’s Pienaar on the state of SA mining
CNBC Africa is joined by Hugo Pienaar, Chief Economist, Minerals Council South Africa for more.
Thu, 14 Mar 2024 10:41:15 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- The mining sector in South Africa experienced a more than 3% year-on-year decline in production in January 2024, marking the third consecutive year of contraction.
- Market conditions and pricing factors are contributing to the challenges faced by the mining industry, with volatility impacting overall performance.
- The Platinum Group Metals sector is also witnessing declining output, with reduced production guidance from major players affecting growth prospects for 2024.
The South African mining sector continues to face challenges as production declines persist, according to the latest data shared by Hugo Pienaar, Chief Economist at Minerals Council South Africa. Pienaar highlighted the disappointing trend in mining output, with a 3% year-on-year decline in production in January 2024. This marks the third consecutive year of contraction in real terms for the sector. The lingering effects of the COVID-19 pandemic are evident, as the mining industry is still grappling with a 3.5% lower overall output compared to pre-pandemic levels in December 2019.
Key Points:
1. Declining Production: The mining sector in South Africa experienced a more than 3% year-on-year decline in production in January 2024, continuing the downward trend that has persisted for the past three years. Key commodities such as manganese, gold, and diamonds contributed negatively to the overall output, while iron ore showed a positive trend in the short term.
2. Market Conditions and Pricing: While mineral sales saw a 5.7% year-on-year increase, primarily driven by a significant surge in gold sales due to record-high prices, Pienaar noted that the mining sector is facing challenges despite some commodities performing well. The volatility in pricing factors and market conditions are influencing the sector's performance.
3. Platinum Group Metals (PGM): PGM output declined by more than 6% year-on-year in January 2024, aligning with the reduced production guidance from major platinum producers in the country. The challenges in the PGM sector are expected to persist throughout the year, with limited growth prospects for 2024.
Pienaar also discussed the impact of public-private partnerships on the mining sector, particularly in addressing issues such as the energy crisis and transport challenges. While collaborations are underway to enhance operational efficiency, he emphasized that significant reforms, such as the concessioning for greater private participation in railway lines, will take time to yield results.
In conclusion, despite the efforts to navigate the prevailing challenges, the South African mining sector is still facing headwinds that are impeding growth and recovery. As stakeholders work towards fostering partnerships and implementing reforms, the industry remains cautiously optimistic about the prospects for improved operational efficiency and sustainability in the long term.
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