JOHANNESBURG - Mining production output declined 8.4percent in March this year, compared to the comparative period in 2017, putting a damper on the country's first quarter growth.
This was the sector's worst performance in two years and missed market consensus of a 2.6percent drop.
Statistics South Africa said the decline in mining production was led by a huge drop in gold and diamond production.
Gold output tanked 18percent in the period, while diamond production went down 24.7percent.
Tsitsi Hatendi-Matika, the head of retail investment at Absa Wealth and Investment Management, said: “This print was largely disappointing, as it not only came out lower than expected, but will also be a detractor to the first-quarter gross domestic product (GDP) at -2.5percent quarter-on-quarter when compared to the previous quarter.”
On a monthly basis, mining output went down 3.4percent, after a 0.5percent rise in February. The stats agency said production for coal declined 2.1percent, while iron ore was down 8.9percent and platinum group metals dropped 6.1percent.
Lara Hodes, an economist at Investec, said on a quarter-on-quarter basis, mining production fell by 9.7percent in the first quarter indicates that the mining sector detracted significantly from the first quarter GDP.
“Notwithstanding the drop in production, which was exacerbated by high base effects, 2018’s robust global growth and strong commodity prices should lend support to the mining sector,” Hodes said.
The Chamber of Mines said mining contribution to the country’s GDP last year had improved by 3.7percent year-on-year to R312billion.
The chamber also said that the industry exported R307bn worth of produce, 27percent of the country’s R1.1trillion export book.
The sector has endured a torrid few years, starting with the slow down in the Chinese economy in 2015 which pushed commodity prices down, followed by the ill-fated mining charter introduced last year by the Department of Mineral Resources.