How strikes can hit mining transport

Outputs plunge

Workers' strikes can cause major headaches for the mining transportation sectors.
Mining output plunged

Mining output plunged in October, reflecting the effect of prolonged mining strikes during the month and the impact it can have on the economy, including the specialised mining transport sector which suffered from its own internal strike during the month before.

Statistics SA revealed yesterday that mining output fell 7.7% year on year during October after a contraction of 7.2% in September.

Although the transport sector is not much affected by it, gold production dropped 45.7% year-on-year and was responsible for 8.6 percentage points of the decline in October mining production.

But rail and road transporters were affected by lower iron-ore output, which fell by 22.8%, contributing four percentage points to the decline. 

Other drops in yearly production were recorded for chrome (-19.0%), manganese (-2.9%), other metallic minerals (-26.9%), copper (-56.4%), diamonds (-12.1%) and building materials (-4.5%).

Platinum-group metals (PGMs) production increased by 17.6% in October, after falling by 17.9% in September.

Seasonally adjusted mining production decreased by 7.9% in October compared with September. This followed month-on-month changes of -7% in September and -2.4% in August.

Mineral sales decreased by 12.9% year-on-year in September with the largest negative growth rates recorded for copper (-42.5%), followed by other metallic minerals (-33.7%) and chromium ore (-27.5%).

Mining only accounts for about 5% of economic output, but the sector accounts for more than half of South Africa’s exports.

The trade deficit widened to a record R21.1bn in October, partly due to a sharp fall in platinum and gold exports.

"Our view on the mining sector is largely negative. South Africa’s mines are faced with weak commodity prices and slowing global demand," Standard Bank said in a research note..

Sharp increases in electricity prices are expected to burden mining companies, which also face the possibility of further taxes mooted by the African National Congress, which are due to be decided at its conference next week.

Analysts also suggests that economic growth may continue to slow during the fourth quarter, after weakening to 1.2% in the third quarter — its lowest pace since the recession in 2009.


Manufacturing production rose 1.2% in October after shrinking 2.8% the previous month, Statistics SA said.  Compared with the same month last year, output rose 2.5% after falling 1.7% in September.

The figures showed that production in food and beverages; basic iron and steel; metal products and machinery; and motor vehicles and parts all contracted. But wood, paper, publishing and printing, as well as petroleum, chemical products, rubber and plastic products continued to show growth in output.

Analysts said underlying conditions remained unfavourable and would continue to take a toll on the sector in the months ahead.

The rand has weakened by more than 6% against a trade-weighted basket of currencies so far this year, according to data from Bloomberg. This bodes well for exports but, Standard Bank said, local manufacturers found it difficult to remain competitive at a time when administered prices were being cut in competing markets.

"The outlook for 2013 is not promising," it said.


Growth in retail sales fell unexpectedly by 1.7% during October after a 0.3% dip in September, well below consensus forecasts for a 0.4% increase, the figures from Statistics South Africa showed. Compared with the same month last year, retail sales growth slowed to 1% from 4.7% in September — which was its lowest increase in almost two years.

The poor performance largely stemmed from slower growth in sales of hardware, paint and glass; clothing and textiles; and food, beverages and tobacco from specialised stores.

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