The six-week illegal strike at Impala Platinum's mines in January and February 2012 resulted in a 32.5% monthly plunge in platinum group metal (PGM) production, which pulled PGM production down 47.6% from its year ago level.
Total mining production fell by 14.5% year on year (y/y) in February.
Statistics SA said the February y/y drop was the largest y/y decrease since March 2008 (-16.8%) and in both instances PGMs made the largest contribution, with -9.8 percentage points in March 2008 and -12.6 percentage points in February 2012.
The annual change for total mining production in 2011 was a 0.6% decline after a 6.2% increase in 2010 following a 6.6% drop in 2009. Gold production declined by 11.5% y/y in February, while nickel production dropped by 33.6% y/y.
Absa Capital said the sharp fall in February production was no surprise given the significant amount of industrial action which took place at one of the country's largest platinum mines in the month.
"This is likely to once again leave the mining sector as one of the largest drags to headline GDP growth in the economy when production-side GDP figures are released in late May," Absa said.
Nedbank said that total mining production was likely to remain weak in the coming months, constrained by poor growth prospects globally and the slow domestic expansion.
"Mining sector output was weak at the start of the year and this is likely to be the case over the next few months. These numbers indicate that mining will probably make a negative contribution to the GDP numbers for the first quarter. However, this is unlikely to have much impact on the outlook for interest rates. The MPC's focus will remain on the outlook for inflation and domestic demand. Inflation will remain elevated, but economic activity is expected to remain subdued. As a result, we expect the SARB's MPC to leave interest rates unchanged at current levels until November 2012," Nedbank said.
Standard Bank said weak global demand for SA's mining products was likely to weigh heavily on production.
"Given the adverse global economic environment, in particular the expectation of a recession in the eurozone, and tepid growth for the US, we expect growth momentum in the mining sector to remain subdued. Also, China's import demand is also moderating with imports moderating to 5.3% y/y in March, from 39.6% y/y in February," Standard said.
Original Article Posted On: http://www.businesslive.co.za