Mining sector shows signs of recovery with significant rise in iron ore output
Image: Supplied
Mining activity in South Africa rebounded slightly in May and ended a six-month streak of contraction, buoyed by a double-digit production expansion of iron ore.
Data from Statistics South Africa (Stats SA) on Tuesday revealed that mining production rose by 0.2% year-on-year in May, rebounding slightly after a sharp 7.7% decline in April.
Stats SA's principal service statistician, Jean-Pierre Terblanche, said the rise was mainly driven by iron ore, which expanded by 12.5%, adding 1.7 percentage points to overall mining growth.
The increase in platinum group metals (PGMs) output in May is more a base effect, following production disruptions in April.
Moreover, gold, chromium ore, nickel and other metallic minerals added a further 0.8 of a percentage point (combined) to the headline number.
'Nickel, diamonds, chromium ore, cobalt, and gold also reported positive year-on-year growth rates in May. Several minerals were weaker, including manganese ore, coal and platinum group metals,' Terblanche said.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
Ad loading
The positive overall mining growth performance in May augurs well for quarterly production of the mining sector.
On a month-on-month basis, seasonally adjusted mining production increased by 3.7% in May compared with April, following a revised flat reading in the previous month.
In the three months ended May, mining production increased by 2.6% compared with the previous three months.
Investec economist Lara Hodes said manufacturing conditions globally picked up in June, according to the results of the JP Morgan Global Manufacturing PMI survey, which is supportive of industrial demand going forward.
According to S&P Global, elevated uncertainty around the extent and effect of tariffs on global growth persists and remains a downside risk.
'Bulk mineral exports continue to be impacted by the country's logistical challenges, including port and rail inefficiencies, leading to billions of rands in lost revenue. Creating a world-class logistics system to drive export growth remains a key priority of the government,' Hodes said.
'Dealing with the other challenges that impede the country's competitive position remains imperative. Specifically, according to the President of the Minerals Council 'South Africa's mining industry remains a cornerstone of economic stability and progress' and it 'continues to play a pivotal role in job creation, foreign exchange earnings and industrial growth'.
Meanwhile, minerals sales earnings measured in current prices soared by 18.8% in May compared to twelve months ago. Leading the surge was gold sales which increased by a mammoth 338.7%. This is explained by a 40% increase in the gold price when compared to a year ago
The gold price has reached record levels this year as a safe haven investment amid a global environment faced with elevated geopolitical and trade tensions.
Gold sales earnings increased by an eye-catching 338.7% (year-on-year), from R4.9 billion to R21.3bn.
Minerals Council senior economist, Bongani Motsa, said continued volatility in global markets emanating from the US tariff regime continue to affect demand for minerals, impacting prices.
'In such an environment the gold price should remain well supported. Gold is viewed as a safe haven investment instrument. Most of South Africa's mineral exports to the US are currently exempt from the tariffs, except for diamonds and iron ore,' Motsa said.
'The tariffs are likely to increase auto prices in the US, resulting in risking lower total demand. If realised, the decline in demand for autos in the US will likely affect PGMs production in the short- to medium term via a reduced demand for autocatalytic converters.'
BUSINESS REPORT
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Daily Maverick
5 hours ago
- Daily Maverick
CPI inches up to 3% as meat prices continue to push up food inflation
South Africa's inflation inched up to 3% in June while meat and vegetable prices added strain to household budgets. South Africa's consumer price index (CPI) accelerated to a 3% year-on-year increase in June, up from 2.8% in May. While the increase is modest and still comfortably at the rock bottom end of the South African Reserve Bank's (SARB) 3% to 6% target range, it underscores the strain of rising food prices, especially meat. This marks the first increase after two months of stability and comes ahead of the SARB's Monetary Policy Committee (MPC) meeting on 31 July 2025, where the prospect of a rate cut remains in focus. Food costs climb Food prices climbed to a 4.7% year-on-year increase in June, up from a 4.4% increase in May. 'Meat — particularly beef — continues to be the main driver of food inflation. Beef prices spiked for a third successive month, with high annual and monthly increases recorded for stewing beef, mince and steak,' Statistics South Africa (Stats SA) said. Stewing beef prices alone rose by an annual 21.2%, the fastest pace on record since the current CPI series began in January 2017. Why are meat prices so high? Wandile Sihlobo, chief economist at the Agricultural Business Chamber, said the surge was driven by two shocks, both easing now. First, an avian flu outbreak in Brazil led South Africa to halt poultry imports from that country, causing panic in the market, he said. Those restrictions had since been lifted, and imports should recover soon. Second, an outbreak of foot-and-mouth disease hit South Africa's beef sector, triggering concerns about supply and panic buying, Sihlobo noted. 'Slaughtering has now resumed in the major feedlots, and we are seeing some easing in red meat prices, which should be reflected in the inflation figures of the coming months.' He added that temporary export restrictions during disease outbreaks eventually increased domestic meat supply, which should further ease prices. Fruits and vegetables also climb Other food categories also saw steep increases, with fruits and nuts up 13.2% and vegetables up 13.6% annually for the second consecutive month. Items such as beetroot, lettuce and carrots saw sharp price increases, while peanuts were slightly cheaper. 'We also view the recent increases in vegetable prices as a temporary blip due to weather issues, and expect supplies of various vegetable products to recover significantly in the second half of the year,' Sihlobo said. Some relief in the trolley Not everything is pricier. Cereal prices cooled in June, helped by cheaper white rice and hot cereals. Dairy also provided some relief. 'Several dairy products are also cheaper than a year ago. Lower prices were recorded for fresh full-cream milk, fresh low-fat milk and eggs,' Stats SA said. Even maize meal, a staple that has seen persistent increases, slowed to a monthly change of 0.4% in June, the lowest since November 2024. Fuel keeps a lid on inflation According to Stats SA, fuel is on average 11.2% cheaper than a year ago. Although still significant, this decline is less steep than May's 14.9% year-on-year drop. 'The fuel price fell by a marginal 5c per litre, essentially not contributing to the inflation outcome, and supporting the low nature of inflation in the second quarter of the year, along with weak economic demand,' Annabel Bishop, the chief economist at Investec, said in a CPI update. The transport category shaved 0.5 percentage points off headline CPI in June, said Stats SA, offsetting some of the upwards pressure from the food category. What this means for you Rising meat prices are making weekend braais more expensive, although this may change in the months ahead. Higher prices for staples like carrots and lettuce are stretching grocery budgets. Cheaper milk, eggs and cereal provide a small offset. If the SARB cuts interest rates, loan and credit repayments could get cheaper. Prices are rising at a slower pace than last year, meaning wages may stretch further. Food price increases are anticipated to be temporary, so as local supply improves, expect some easing in the coming months. How inflation hits your budget For now, inflation remains low by historical standards, but rising food and meat prices are hitting household budgets. With inflation still at the lower end of the SARB's range, economists argue that the bank has room to cut rates. 'Such low inflation provides considerable support for consumers given that most wage increases are higher than this low prevailing rate of inflation. It also, arguably, supports the case for the Reserve Bank to cut interest rates further,' said Dr Elna Moolman, Standard Bank's head of macroeconomic research in South Africa. Relief ahead for food prices Despite the June spike, the trend of rising food prices looks set to moderate. 'We expect food price inflation to moderate in the coming months, as the benefits of ample domestic grains and an expected decent fruit harvest continue to enter the market. We also believe that the worries about meat prices will ease soon as supplies recover,' Sihlobo said. Investec forecasts CPI climbing slightly in the second half of the year due to base effects, potentially reaching 4% by year's end, but still 'reasonably benign'. The bank expects at least one more rate cut this year and possibly another in 2026. DM
IOL News
6 hours ago
- IOL News
Sarb poised for rates cut despite inflation tickin up to 4-month high
Stats SA chief director of price statistics, Patrick Kelly, said the annual rate for food and non-alcoholic beverages has notably surged to a 15-month high of 5.1%, with meat prices—especially beef—being the primary culprit behind this uptick. Image: Simphiwe Mbokazi/Independent Newspapers The South African Reserve Bank (Sarb) may once again loosen its monetary policy before the year draws to a close despite recent data revealing an uptick in consumer price inflation. This comes as the Sarb's Monetary Policy Committee (MPC) will announce its decision on the policy rate next week after cutting the repo rate by 25 basis points to 7.25% per annum in May. Data from Statistics South Africa (Stats SA) on Wednesday showed that the headline consumer price index (CPI) edged higher to 3.0% in June after holding steady at 2.8% in April and May. This was the 11th consecutive month in which inflation remained below the 4.5% midpoint of the Sarb's 3-6% target range. Stats SA chief director of price statistics, Patrick Kelly, said the annual rate for food and non-alcoholic beverages has notably surged to a 15-month high of 5.1%, with meat prices—especially beef—being the primary culprit behind this uptick. The price of beef significantly rose on the back of the food and mouth disease outbreak in meat producing provinces, reducing the supply of red meat more than the demand in the market. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading "Meat – particularly beef – continues to be the main driver of food inflation," Kelly said. "Beef prices spiked for a third successive month, with high annual and monthly increases recorded for stewing beef, mince and steak. Stewing beef rose by an annual 21.2%, the fastest pace on record since the current CPI series began in January 2017." Analysts are closely watching the Sarb's next moves as they navigate the complexities of a fluctuating economic landscape. Dr Elna Moolman, Standard Bank Group head of South Africa Macroeconomic Research, said consumer inflation re-entered the Sarb's target range again in June after falling below the 3-6% target range for three consecutive months. 'Such low inflation provides considerable support for consumers, given that most wage increases are higher than this low prevailing rate of inflation. It also arguably supports the case for the Reserve Bank to cut interest rates further at the upcoming MPC meeting next week,'Moolman said. 'We do expect inflation to continue trending higher in the coming months, but it should remain reasonably benign.' On a monthly basis, the CPI increased 0.3% following a 0.2% rise in May. Meanwhile, the annual core inflation rate edged down to 2.9% in June, the lowest since April 2021, from 3% in each of the previous two months. David Omojomolo, Africa economist at Capital Economics, noted that the slowdown in core inflation has set a favourable backdrop for potential interest rate cuts, reinforcing the Sarb's stance against excessive underlying price pressures. Omojomolo projects considerable relief for consumers, forecasting further cuts by year-end 'We expect rates to be lowered by more than most currently anticipate by the end of next year. The outturn was a touch stronger than our forecast that inflation would stay unchanged at 2.9% year-on-year, but in line with the LSEG consensus,' Omojomolo said. 'We expect a 25 basis points cut to 7.00% at the MPC meeting next week. And we think the Sarb will cut interest rates by another 125 basis points to 5.75% by end-26, further than most expect – even if the inflation target is lowered.' In a recent statement, Sarb Governor Lesetja Kganyago hinted at a potential shift in the bank's inflation target, considering a lower objective of 3% in light of internal and external analyses indicating that its current target may be unusually high. Nedbank economist Busisiwe Nkonki fforesees ongoing upward pressure on inflation during the second half of the year, primarily driven by food and fuel costs. The ongoing foot-and-mouth disease outbreak is expected to result in soaring meat prices, compounded by unpredictable geopolitical developments impacting the global price of Brent crude oil. 'We believe that the benign inflation outlook and muted domestic demand, amongst other factors, will convince the MPC to cut interest rates by 25 basis points next week,'she said. 'However, the MPC's decision will also be influenced by the US Fed's decision in the same week. Therefore, there is a chance that the MPC could delay the cut to September.' BUSINESS REPORT
The Herald
12 hours ago
- The Herald
Food inflation, notably price of beef, leads in pushing CPI upward: Stats SA
Stats SA announced on Wednesday that annual consumer price inflation was 3.0% in June, up from 2.8% in May. The consumer price index (CPI) showed an increase by 0.3% month-on-month in June, with food inflation experiencing specially pronounced rises. Patrick Kelly, chief director of price statistics at Stats SA, said among other categories of inflation, the annual inflation rate for food and non-alcoholic beverages recorded its highest levels in more than a year. 'After holding steady at 2.8% in April and May, consumer inflation edged higher to 3% in June. The month-on-month change in the CPI was 0.3%. The annual rate for food and non-alcoholic beverages reached a 15-month high of 5.1% in June. 'Meat, particularly beef, continues to be the main driver of food inflation. Beef prices spiked for a third successive month, with high annual and monthly increases recorded for stewing beef, mince and steak.' Conversely, Kelly said, fuel prices continued a downward trajectory and declined for a fourth consecutive month.
