The decline in SA's mining sector will be less dire this year than was feared at the start of the lockdown, with export earnings bouncing back in June.
But production volumes are still expected to be well down on last year, and the Minerals Council this week expressed concern that logistics problems in rail and at ports, as well as congestion at border posts, could continue to weigh on SA's export performance.
The sector is now projected to decline by 7% in nominal terms this year, compared with an earlier projection of a 12% decline, Minerals Council chief economist Henk Langenhoven said in a briefing on Friday.
In volume terms, production will be 11% lower than last year, though in a worst-case scenario this could reach 15% against an earlier projection of a 21% decline.
"But at least we're bouncing back," Langenhoven said. June export earnings were up 13% on May figures, and almost 19% better than those of the previous 12 months, due mainly to strong rand commodity prices.
With dollar gold prices at record highs on global uncertainty, and a weaker rand exchange rate providing a further boost, SA's gold export earnings in June were 62% up on the average for the previous 12 months and tonnage also increased.
Other commodities benefited more from higher prices than higher volumes - notably platinum exports, which were up 26% in June even though output was down, and chrome, up 31%. Overall, commodity prices in rand terms were 14%-15% better in June than the average for the previous 12 months.
"Export volumes are not actually going that great," said Langenhoven, noting that SA's production had been severely affected by the lockdown, at a time when in rand terms miners were able to get much more for every ton produced.
Official June production data from Stats SA is due on Thursday, but May's mining production was still 28% down on May last year, despite a strong bounceback compared with the hard lockdown month of April.
Langenhoven credits mineral resources & energy minister Gwede Mantashe with trying to keep mining to at least 50% production from early in the lockdown, and even for April the mining production index was just below 50 - compared with 100 in January. It is now back at 72 , with some commodities restarting faster than others. About 75% of staff are back at work, and most mining companies continued to pay workers through the lockdown.
Langenhoven said logistical issues in SA made it difficult for miners to respond to good commodity prices, with congestion at ports and borders a major issue that had weighed on exports during the lockdown.
Covid-related disruptions at the Saldanha port had affected iron ore exports while at the Lebombo border post, through which trucks carrying the bulk of SA's chrome exports travel to the Maputo port, there had on occasion been 350 trucks waiting to get through, though this has now improved.
Lebombo is now handling 300% more chrome export tonnage than it was five years ago, with little expansion in its capacity, Langehoven said. Eskom's reliability of electricity supply also remained a major cause for concern, he added.
Minerals Council CEO Roger Baxter this week called for a "new deal" to generate accelerated economic growth for SA, reiterating the Business for SA call last month.
Baxter urged action to revitalise the mining sector, particularly to make SA an attractive destination for investment in mining exploration.
