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JOHANNESBURG - South Africa's mining production recorded a surprising year-on-year growth in September on higher iron ore output.

Statistics South Africa (StatsSA) said yesterday that the mining output rose a marginal 0.2percent from a 3percent decline in August.

The September output beat market expectations of a 2.2percent decline in an industry troubled by regulatory uncertainty, lack of investment and power disruptions.

Iron ore, which is a key ingredient in the production of steel, recorded an 8.2percent increase and boosted the headline result by 0.9percent, followed by the other non-metallic minerals category, which added 0.8percent.

Non-metallic minerals jumped 13.6percent while metallics contributed 38 percent.

However, declines in other key mineral groups, including diamonds, manganese and Platinum Group Metals (PGM) hurt output.

Diamonds were the biggest negative contributor with a 15.7percent contraction followed by manganese ore which was 7.3percent lower and PGM which fell 2percent, StatsSA said.

It said mining production had gone up 1.5percent, rebounding from a flat reading in August.

Investec economist Lara Hodes said that the September print was a clearer indication of the mining and quarrying sector’s likely contribution to third-quarter 2019 gross domestic product (GDP).

“Specifically, on a quarter on quarter seasonally adjusted annualised basis, which is the measure used to calculate GDP growth, production slid by 6.4percent, implying that mining should reduce top line economic growth in the third quarter. This, following its notable 1percent contribution to the headline outcome in the second quarter of 2019,” Hodes said.

The Minerals Council SA, formerly known as the Chamber of Mines, has previously said that the mining industry had the potential to make a sustainable, positive contribution to growth and development in South Africa.

The council said mining contributed R351billion or 7.3percent to GDP during 2018 and contributed R91bn to fixed investment, which was 17percent total private sector investment.

Coal is the most important sector of South Africa’s mining industry and accounts for the bulk of sales and output, followed by PGM, bulk metals, gold and iron ore.

However, the council insisted that the sector needed to attract and keep investment on a stable, predictable and competitive investment environment.

Hodes said that the mining sector, however, remained susceptible to the weakening global economic backdrop, with both global growth and global trade momentum slowing to the weakest rate since the global financial crisis.

“Specifically, softening global growth and investment continue to hinder commodity demand, with exports of resources a key driver of economic growth in South Africa,” Hodes said.

BUSINESS REPORT