THE SOUTH African Reserve Bank (SARB) said yesterday that the value of mining exports increased strongly in the second quarter of 2021, boosted by platinum group metals (PGMs), which continued to benefit from the surge in the prices of these commodities.
In its Quarterly Bulletin for September 2021, the SARB said mining exports were boosted by PGMs, mineral products as well as base metals in the second quarter of 2021.
The SARB said PGM exports continued to benefit from the surge in the prices of these commodities as well as increased refining ability following the successful startup of a converting plant towards the end of 2020.
“Rhodium accounted for 53 percent of total PGM exports in the second quarter of 2021, which was mainly destined for the US and the UK.
“Minerals reflected higher exports of iron ore, chromium, and coal, with the latter boosted by an increase in the average realised rand price as logistical disruptions constrained physical quantities,” said the SARB.
Record commodity prices and rising global demand have been good for the economy, particularly the mining sector. The SARB said in the first quarter of fiscal 2021/22, the increase in corporate income tax collection was most pronounced, driven by mining companies in particular.
The SARB said mining imports reflected continued demand for mineral products, particularly refined petroleum products, as some local refineries shut down for maintenance and others closed permanently.
Imports of articles of iron and steel also increased notably as the domestic steel shortage experienced since the start of the Covid-19 pandemic continued. Real mining production continued to be supported by higher international commodity prices and improved global economic activity.
“However, unreliable electricity supply, inefficiencies in rail infrastructure, the resurgence of Covid-19 infections, rising domestic cost pressures and an uncertain policy environment still weighed on the sector’s activity levels in the second quarter of 2021,” said the SARB.
It said despite the slower growth in real mining output, the level of real output was 53.5 percent higher in the second quarter of 2021 than in the corresponding quarter in 2020 – mostly due to the low Covid-19-induced base a year earlier. Also, the seasonally adjusted level of real mining production in the second quarter of 2021 was slightly higher than in the fourth quarter of 2019 before the onset of the Covid-19 pandemic.
Commenting on the Quarterly Bulletin, Investec’s chief economist, Annabel Bishop, said the mining sector, now at 7.1 percent of gross domestic product (GDP) is significant, and the substantial production growth in the sector this year on the global commodity boom had also added to tax revenues this fiscal year.
“The GDP breakdown for mining shows 1.2 percent of GDP is accounted for by coal production, 0.9 percent by gold production, 1.3 percent by PGMs, 3.1 percent by other metal ores and 0.6 percent by other mining and quarrying activities which includes the informal sector,” she said.