SA mining production shrinks for 12th consecutive month as power curtailments weigh

POWER curtailments implemented by state-owned utility Eskom was mostly behind a 1.9% year-on-year decline in South African mining production in January, said BusinessLive.

Platinum group metals (PGMs) and diamonds were the main drags on the overall output, the publication said citing a Stats SA statement on Tuesday.

This was the 12th consecutive month of year-on-year decline in the mining sector which is a critical foreign exchange earner for South Africa and a major employer.

PGMs and diamonds fell 15.2% and 15.5% respectively.

Energy-intensive users such as miners have an arrangement with Eskom to reduce electricity usage through the implementation of load curtailment.

Iron ore and coal output rose 12% and 4% respectively over the same period although there must be questions over whether the increase in coal production resulted in higher exports during the month.

Transnet Freight Rail, a division of another state-owned company, Transnet, has struggled to meet contractual obligations owing to a combination of inefficiency, vandalism and sabotage. The Minerals Council which represents the majority of producers in South Africa, has set up joint committees with Transnet on its main bulk exports in an effort to lift utilisation of the rail and ports.

Asked earlier this month about the negotiations underway between the mining industry and Transnet, Patrice Motsepe, executive chairman of African Rainbow Minerals replied: “Behind closed doors there are very hard and serious discussions taking place and that’s why in the public domain it is critically important to overemphasise the commitment for results.”

“We have found over the years you don’t solve the problem by making pronouncements in public which may be factually correct in relation to deficiencies and poor performance in parastatals,” he said.

Month on month, mining production rose 4.4% in January compared with December, when output was up 1.3%, said BusinessLive.