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Commodity rout hits home as SA records output drop

May 12 2016 15:41
Kevin Crowley

Johannesburg - South Africa’s mining production fell the most since at least 1980 after the country’s biggest gold and platinum mines halted unprofitable output.

Production declined 18% in March from a year earlier, accelerating February’s revised contraction of 8.3%, Statistics SA spokesperson Juan-Pierre Terblanche said by phone Thursday.

Expectations were for a drop of 12%, according to a Bloomberg survey of eight analysts.

“This is a radical structural shift for South Africa”, said Mike Schüssler, chief economist at economists dotcoza. “The commodities bust is coming home to roost. These are the worst numbers South Africa has ever had.”

The retreat was led by platinum-group metals, which plunged 24%, and coal, which was 16% lower. Producers of these commodities have been cutting output and spending in South Africa as they seek to remain in business amid plunging prices. Coal has fallen 56% since the beginning of 2011 while platinum is down 40%. About 30 000 jobs are at risk in the nation’s mining industry, the Solidarity labour union said last month.

Production of iron ore fell 21%, contributing 3.7 percentage points to March’s mining-output decline.

Safety stoppages have also hurt production at SA’s biggest precious metals miners including Anglo American Platinum, Impala Platinum and AngloGold Ashanti. SA is the world’s biggest platinum producer.

While mining makes up only 7.5% of South Africa’s economy, it represents about 40% of the country’s exports, affecting the current and trade accounts, Schüssler said.
 
With R500bn spent on equipment and wages, mining has “a very strong multiplier effect” on the economy, he said.

stats sa  |  mike schussler  |  commodities  |  mining  |  sa ecnomy
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