Gold strike behind mining production annual fall for six successive quarter in April

SOUTH African mining production contracted for the sixth successive month in April with the latest bad news blamed on a gold strike at the operations of Sibanye-Stillwater, among other factors affecting the sector including weak global growth.

Production contracted 1.5% year-on-year with gold output falling by almost 19.7% year-on-year, said BusinessLive citing data from from Stats SA. Mining production fell 2.3% in April compared with March. The latter figure is almost five times the 0.5% contraction expected in the Bloomberg consensus, said BusinessLive.

The gold sector strike was led by the Association of Mineworkers and Construction Union (AMCU) which is due to table wage demands for the platinum group metals sector later this month.

Despite the slow start to the second quarter the data is expected to improve in May and June, said FNB economist Matlhodi Matsei.

Factors likely to support recovery include improved electricity supply compared to the first quarter, as well as some normalisation in gold mining production following the end of the protracted strike at Sibanye-Stillwater, Matsei said in a note cited by BusinessLive.

“Nevertheless, the backdrop of cooling global activity and ongoing trade tensions presents downside risks to this potential recovery,” said Matsei.