On a monthly basis, mining production rose 3.4percent after a 6.8percent drop the previous month.
William Jackson, a senior emerging-markets economist at Capital Economics, said yesterday that the mining output figures provided the first solid sign that the economy retained momentum as it entered the fourth quarter.
“Combined with strong survey results, including business confidence figures released on Tuesday, are the early signs that South Africa’s economy remained strong going into the fourth quarter,” Jackson said.
The biggest contributors to the increase were iron ore and coal, which expanded 17.9percent year-on-year and 6percent, respectively. Platinum group metal output also recovered, expanding 2.7percent on a yearly basis and a hefty 10.1percent month-on-month.
It wasn’t all good news, however, as gold output contracted on an annual and monthly basis, and there were also hefty drops for nickel and diamond production.
Yesterday’s figure will add to a growing sense of optimism over South Africa’s economy.
The gross domestic product (GDP) figures released on Monday showed that the economy expanded 2percent quarter-on-quarter in the third quarter.
Statistics SA said agriculture, mining and manufacturing were the main drivers of the expansion in GDP. Increased gold and platinum production saw the industry grow 6.6percent in the third quarter.
Measured at the quarter- on-quarter rate that aligns with official GDP, mining output rose 2.3percent in the three months to October. This was a touch weaker than the 2.5percent recorded in the third quarter.
Jason Muscat, a senior economic analyst at First National Bank, said the industry could gather even further momentum if the impasse over the new mining charter is resolved.
"Overall, the global environment remains largely supportive of continued growth in the industry, despite a moderate softening of commodity prices, and we expect positive full-year output growth for the sector,” Muscat said.
The growing global economies have supported a recovery in commodity prices. The rise in commodity prices is linked to stronger industrial demand and mine supply constraints.
In the first two quarters of this year, mining companies have disposed of excess inventory, with the result that mining production was slowly increasing.
Kamilla Kaplan, an economist at Investec, said growth in the mining sector had been aided by higher commodity prices, relative to decade lows reached in early 2016.
“In the first 10 months of the year, mining production rose 4percent year-on-year compared to a decline of 4.1percent year-on-year in the same period last year.
“The improved performance so far in 2017 is attributable to higher contributions from iron ore, manganese ore, diamonds and other non-metallic minerals,” Kaplan said.
- BUSINESS REPORT