Gold production plunges to its worst level since 2012
Economy / 15 February 2019, 10:30am / Kabelo Khumalo
JOHANNESBURG – The ramifications of the nearly four-month-long strike at Sibanye-Stillwater’s gold division by the Association of Mineworkers and Construction Union (Amcu) were yesterday laid bare with gold production in December plunging to its worst level since October 2012.
Data from Statistics South Africa showed that gold output tanked 31percent year-on-year in December.
Production in the mining sector as a whole fell 4.8 percent year-on-year in December. Full mining production decreased 1.6 percent.
FNB chief economist Mamello Matikinca-Ngwenya said the plunge in gold production had detracted 4.6percentage points from the headline reading.
“This can likely be ascribed to the Amcu strike at the Sibanye-Stillwater gold operation,” Matinkica-Ngwenya asserted.
“We are concerned about the outlook for 2019, despite the relatively weak 2018 base as rising input costs, low commodity prices, electrical generation and slowing Chinese growth present material downside risks to the mining sector,” he added.
About 15000 Amcu members at Sibanye downed tools in November last year, demanding an R1000 annual wage increase for the next three years.
They have clashed with colleagues from the rival National Union of Mineworkers, which, alongside other unions, signed a deal with Sibanye, and whose members have returned to work.
Professor Francis Petersen of the University of the Free State said that production output from South African gold mines had been declining over the past seven years.
“South Africa’s gold production accounts for only 4 percent of the global gold production and new investment in this sector is highly unlikely in South Africa,” Petersen said.
Other data from StatsSA also showed that iron ore output fell 14.3percent on an annualised basis, while production of other metallic minerals plunged 18.4percent on a yearly basis.
With December’s official activity data now all in, the figures indicate a soft end to 2018.
Retail sales in December also decreased by 1.4percent year-on-year, the worst figure since January 2017, while manufacturing output inched up just 0.1 percent on an annualised basis - its weakest increase since September.
Capital Economics economist John Ashbourne said that the data was more positive when looked at in the quarter-on-quarter, seasonally-adjusted annualised rate that aligns with official gross domestic product.
“Mining output was actually stronger over the quarter as a whole than it had been in quarter three, while the slowdowns in manufacturing and retail were modest,” said Ashbourne.