Gold and Coal Shine Amidst Mining Sector’s Recovery in 2023

  • South Africa’s mining industry, which had been experiencing a year-on-year decline for 14 consecutive months, saw a 2.3% increase in production in April 2023. This was largely driven by significant growth in the gold and coal sectors.
  • Despite the overall growth, certain sectors such as diamonds, Platinum Group Metals (PGMs), and manganese ore experienced a downturn, negatively impacting the industry’s recovery.
  • While production saw an increase, mineral sales at current prices decreased by 25.6% year-on-year in April 2023, with PGMs, coal, and gold being the largest negative contributors. However, chromium ore emerged as a significant positive contributor to sales.

South Africa’s mining industry, which has been grappling with a year-on-year decline for 14 consecutive months, has finally seen a glimmer of hope. According to the latest report, P2041 – Mining: Production and sales, April 2023, mining production increased by 2.3% in April 2023. This upturn has been largely driven by significant contributions from the gold and coal sectors.

A Golden Boost

Gold mining emerged as the most significant positive contributor, with a substantial increase of 27.4%, contributing 3.5 percentage points to the overall growth. This surge in gold production comes as a breath of fresh air for the industry, which has been battling a prolonged slump.

Coal Holds Strong

Coal, another cornerstone of South Africa’s mining industry, also played a pivotal role in this recovery. The sector saw a robust growth of 12.5%, contributing 3.1 percentage points to the overall increase in mining production.

The Downside: Diamonds, PGMs, and Manganese Ore

However, not all sectors shared in this growth story. Diamonds, Platinum Group Metals (PGMs), and manganese ore were the largest negative contributors. The diamond sector suffered the most, with a steep decline of 41.1%, contributing -2.0 percentage points. PGMs and manganese ore also saw a downturn, contributing -1.1 and -1.0 percentage points, respectively.

A Closer Look at the Numbers

When adjusted for seasonal factors, mining production increased by 1.8% in April 2023 compared with March 2023. This follows month-on-month changes of 6.9% in March 2023 and -7.0% in February 2023.

Over the three months ended April 2023, seasonally adjusted mining production increased by 0.4% compared with the previous three months. Gold and PGMs were the largest positive contributors during this period.

Mineral Sales Take a Hit

While production saw a positive turn, mineral sales at current prices took a hit, decreasing by 25.6% year-on-year in April 2023. PGMs, coal, and gold were the largest negative contributors to this decline.

However, chromium ore emerged as a significant positive contributor, with a substantial increase of 61.5%, contributing 2.2 percentage points to the overall sales.

The Bigger Picture

Seasonally adjusted mineral sales at current prices decreased by 10.1% in April 2023 compared with March 2023. This followed month-on-month changes of -2.9% in March 2023 and -1.7% in February 2023.

In the three months ended April 2023, the seasonally adjusted value of mineral sales at current prices was 5.0% lower compared with the previous three months.

Table 1: Mining Production Contributors in April 2023

SectorPercentage ChangeContribution to Overall Growth (Percentage Points)
Gold27.4%3.5
Coal12.5%3.1
Diamonds-41.1%-2.0
PGMs-4.6%-1.1
Manganese Ore-12.1%-1.0
Caption: Table 1 shows the percentage change in production and their contribution to overall growth for different sectors in the mining industry in April 2023.

Table 2: Mineral Sales Contributors in April 2023

SectorPercentage ChangeContribution to Overall Sales (Percentage Points)
PGMs-41.7%-15.2
Coal-22.9%-6.2
Gold-45.7%-3.5
Chromium Ore61.5%2.2
Caption: Table 2 illustrates the percentage change in mineral sales and their contribution to overall sales for different sectors in the mining industry in April 2023.

Looking Ahead

While the uptick in mining production offers a glimmer of hope, the decline in mineral sales underscores the challenges that still lie ahead for South Africa’s mining industry. The sector’s resilience in the face of these challenges will be crucial in determining its path to recovery in the coming months.