Jason Muscat | FNB

September mining production contracted by -0.9% y/y and -7.1% m/m, contrary to our expectations of a moderate expansion. The worse than anticipated number was largely the result of a -7.5% y/y decrease in iron ore output, and a -8.3%  and -2.0% drop in PGM and coal production respectively.

Harmony Gold narrows quarterly loss
SA Mining output shrinks by 0.9% in Q3. Photo: Pixabay.

Gold, manganese and other non-metallic minerals added 0.4pps, 1.1pps and 1.3pps respectively to offset some of the sharp losses. Nevertheless, we expect a bounce back in the fourth quarter given that each month in 4Q16 delivered a contraction, providing a lower base. Despite the disappointing performance, the sector will still provide a good boost to 3Q17 GDP, having expanded 2.0% q/q in the three months to September. On the basis of today’s print, we are penciling in a 4% y/y expansion in the quarter, which should add approximately 0.3pps to overall GDP.