JOHANNESBURG, Jan 21 — South Africa’s mining output fell by 0.4 per cent in November on an annual basis, reports Statistic South Africa (Stats SA).
It’s not yet clear to what extent load-shedding by power utility Eskom which began in the same month, affected output. The main drag on overall production was platinum group metals as output in that segment fell by 14.3 per cent.
Platinum producers were among the Energy Intensive User Group members who were requested by Eskom to reduce output by 10 per cent when it resumed load-shedding in November.
Wessel Badenhorst, a partner in the mining sector of international law firm Hogan Lovells, said: “The moment Eskom said ‘please cut back your power consumption’ — that has an effect on what the output can be — and by natural implication it will have an effect on the industry.
“One cannot avoid it and there isn’t necessarily a ready-made alternative to make up that deficit in power supply that there is to the industry.”
The value of mineral sales decreased 1.4 per cent as prices across the global commodities complex continued to take a beating; with oil battered the hardest because of surplus supply.
Econometrix Managing Director Azar Jammine said: “Part of the reason for oil prices coming down is that global demand has been low and that has resulted in a fall in commodity prices of many minerals that South Africa exports.”
This is bad news for South Africa’s terms of trade as the size of the country’s current account deficit remains a big issue on international ratings agencies’ radar. With mineral producers receiving lesser revenues, there are worries that job security for some workers may be under threat, which could result in higher unemployment and further dent South Africa’s economic growth potential.