Nedbank: Mining production

09 Feb.

Nedbank Economic Commentary: Mining production.

Some rebound in December but levels remain weak.

• Mining production rose by 3,5% m-o-m on a seasonally adjusted basis in December, taking output growth to 0,9% y-o-y after a 4,4% contraction was recorded in November. For the fourth quarter, total mining production rose by a seasonally adjusted and annualised 1,7% q-o-q, but was down by 5,1% y-o-y.
• Non-gold output rose by 2,2% y-o-y after falling by 4,4% in the previous month, while gold production remained under pressure, contracting by 8,2% y-o-y in December, its eighth consecutive monthly decline.
• Total mining production is likely to remain weak in the coming months, constrained by poor growth prospects globally and domestic factors.
• These figures suggest that activity in the mining sector remained under pressure in the fourth quarter. However, they are unlikely to have much impact on the outlook for interest rates. The MPC’s focus will remain on the outlook for inflation and economic growth. Inflation will remain elevated, while economic activity will be subdued. As a result, we expect the SARB’s MPC to leave interest rates unchanged at current levels until November 2012.

Comment

Mining production continued to recover in December, rising by 3,5% m-o-m on a seasonally adjusted basis following the 12,2% increase in November. On a y-o-y basis output increased by 0,9% after a 4,4% contraction was recorded in November.

Total output was up by 3,5% m-o-m on a seasonally adjusted basis, after increasing by 12,2% in November. Gold production fell by 3,2% m-o-m, while that of platinum group metals remained strong at 9,3% m-o-m from 25,5% in November, reflecting continued recovery from the sharp falls recorded in the previous two months.

Non-gold output rose by 2,2% y-o-y after falling by 4,4% in the previous month, while gold production remained under pressure, contracting by 8,2% y-o-y in December, its eighth consecutive annual decline. Output of platinum group metals contracted by 0,9% y-o-y, the sixth annual decline.

For the fourth quarter, total mining production rose by a seasonally adjusted and annualised 1,7% q-o-q after contracting in the previous three quarters. Gold output expanded by 19,5% q-o-q, while non-gold output fell by 0,4% q-o-q. Production of platinum group metals plunged by 22% q-o-q, while that of coal expanded by 28,1% q-o-q. …

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