Flash Notes
Mining output lifted more than expected at the start of 4Q23
Total mining output (not seasonally adjusted) expanded by 3.9% y/y in October, following a 1.9% y/y contraction in September. This was the strongest annual increase since November 2021 when output expanded by 6.5% y/y. The outturn was above Bloomberg consensus prediction of a muted 1.2% expansion. Seasonally adjusted mining output, critical for the calculation of quarterly GDP growth, expanded by 2.1% m/m, rebounding from an upwardly revised 0.1% monthly contraction (previously -0.3%) in September. While it is still early to conclude on the sector's likely contribution to 4Q23 GDP growth, today's outcome is encouraging. It aligns with our view that the mining sector's gross value added likely rebounded in the fourth quarter following a 1.1% quarterly decline in the third quarter.
Outlook
Mining output is down by 1.3% y/y YTD (January to October), consistent with our view of weak performance, albeit less severe compared to the 7.1% decline last year. The lingering impact of load-shedding, as well as rail and ports infrastructure inefficiencies, is expected to continue to disproportionately weigh on the sector's activity. Slowing global growth, including in China, bodes ill for South Africa's major mineral exports.
Selected sector analysis
Amongst the five major mining divisions, output in the platinum group metals expanded enormously by 16.9% y/y in October from 3.8% y/y in September and by a seasonally adjusted 2.7% m/m. Manganese ore output increased by 8.9% y/y, reflecting a rebound from 2.8% y/y contraction in September, with seasonally adjusted monthly output expanding by 6.5%. Gold output expanded by 2.2% y/y from a 0.2% y/y decline in the prior month and increased by a seasonally adjusted 4.7% m/m. Coal output was flat (0%) compared to the corresponding month last year but reflected a 0.4% seasonally adjusted monthly decline. Iron ore output shrank by 3.7% y/y after expanding by 3.2% in September, curbing growth in total mining production.
Growth in minor mining divisions was mixed, with chromium ore expanding strongly by 13.8% y/y, from 12.3% y/y in September; nickel output was up by 16.6% y/y, from 8.9% y/y; and copper increased mildly by 1.0% y/y, from -0.8%. Meanwhile, output declined in the following divisions:
