Report shows positive growth in the mining and manufacturing industry as both sectors show slight figures of recovery in third quarter
South Africa’s mining and manufacturing industry shows slight growth in production and sales, but could decline in the near future.
The October 2018, StatsSA report shows both sectors have had figures of recovery from the start of the first quarter.
The mining production overturned a three-month decline with a 0,5% year-on-year growth in the third quarter, with gold being the lowest contributor.
Senior economist, Elize Kruger from NKC African economics, says despite growth in the mining sector there is nothing to be excited about.
Protest action that started on gold mines in mid-November added to the pressure that the sector has been under over the past months.
A protected wage strike at Sibanye-Stillwater’s gold operations started when The Association of Mineworkers & Construction Union (AMCU) made a demand of R1,000 annual increases in wages for mine workers.
The National Union of Mineworkers, Solidarity and United Association of SouthAfrica on the other hand accepted R700 in the first two years and R825 in the third for most of their members.
The Johanessburg based mine urged striking workers to return to work by December 15, 2018.
“Novemember and December could be impacted by the strike action that we see in the gold mining industry. The fourth quarter data is likely to remain depressed despite the October numbers,” she says.
Gold is the largest negative contributor at -15,1% thus contributing -2,3%percentage points to the overall figures.
Furthermore, increases in electricity prices that will take effect early 2019, will tighten the pressure on the industry adding to headwins faced on a global scale.
“Alluminum sector is impacted by the US import tarrifs increases and the threat of electricity price increases in the order of 15% ,” says Kruger.
The 15% increase is a strategy put in place by the electricity public utility, Eskom, to settle financial constraints.
The request made to the National Energy Regulator of South Africa will be effective for three years if approved.
The manufacturing industry grew by 3,0% with eight out of 10 sectors showing positive growth rates over the last three months.
According to Kruger, the strong levels of the rand exchange rate put in a helping hand in the manufacturing production and sales sector.