Minerals Council South Africa just publishes the report and that said, following two consecutive Month-on-Month (MoM) contractions in May and June, in July 2024, seasonally adjusted total mining production declined by a further 0.9% MoM.
In May and June, production declined by 0.9% and 1.7%, respectively. Three sub industries were responsible for the drop in overall output during July, including PGMs. Together, these commodities account for 65% of total mining production. Only four of the 12 main commodity sectors recorded MoM production increases, and these are including gold (5.5%), and diamonds (17.5%).
On a Year-on-Year (YoY) seasonally adjusted basis (i.e. comparing July 2024 to July 2023) total mining production declined by 2.3%. This follows a drop of 2.6% in June 2024 (YoY). The YoY decline in production for July was largely attributed to decreases in the gold, PGMs, and iron ore industries. Notably, gold production played a significant role in this decline and warrants special attention.
Notwithstanding a record high nominal gold price, South African gold miners continue to face structural headwinds including the fact that four of the top five deepest gold mines in the world are found in South Africa. The shallowest of these mines extends to a depth of 2.2 kilometres, while the deepest, Mponeng (operated by Harmony Gold), reaches over 4 kilometres below the surface.
The cost of production, including labour costs, in these mines is very high compared to the world average. Further to this is the fact that the country has been struggling with inadequate electricity supply and above inflation annual power tariff increases since 2008.
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