(Bloomberg) -- South African mining production rebounded in the final three months of last year, a bright spot for the industry which saw overall output in 2023 drop on an annualized basis.
Production grew 2.5% in the fourth quarter after a 0.9% slump in the prior period, according to data released by Statistics South Africa on Tuesday.
Output increased just 0.6% year-on-year in December, well below the 4.9% median estimate of five economists surveyed by Bloomberg. The largest positive contributors were platinum-group metals, coal and chromium ore. Gold production fell 3.4%.
Total mining production was 0.4% lower in 2023, compared with a year earlier.
The relatively upbeat data in the three months through December is a positive sign for the sector that buckled under the weight of mixed commodity prices, strike action and major operational headaches due to logistical and energy-supply constraints.
The mining industry suffered “unprecedented electricity load curtailment, debilitating rail and port failures, and pervasive criminal activities” last year, Minerals Council South Africa Chief Executive Officer Mzila Mthenjane said in a statement last week, noting a drop in the sector’s direct contribution to gross domestic product from 7.3% to 6.2%.
The advocacy group added that trucks were used to move an estimated 26 million tons of coal to various ports due to logistical challenges — the highest level of road transport in the sector to date. Overall mining exports declined 11%, he said.
Without those domestic challenges it would have performed better, said Investec Bank Ltd. Economist Lara Hodes.
“Costs can be significantly reduced, and operational efficiencies improved by urgently resolving the electricity supply and logistics crises,” she said.
Meaningful improvement is only expected in a few quarters as positive movement on the policy front and willingness from government to boost private sector participation begin to take hold, said Oxford Economics Africa senior economist, Jee-A van der Linde.
Separate data last week showed manufacturing — whose share of the economy is more than twice that of mining — saw production rise just 0.1% in the fourth quarter after a sharper—than-expected slump in December offset gains in the prior two months.
The data are expected to contribute to the economy growing last year. Van der Linde is predicting expansion of 0.5%, while warning that erratic power supply this year “forebodes an uncertain outlook” for mining and the economy as a whole.
(Updates with economist comment in paragraph eight)
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