SOUTH Africa’s mining sector drove the country’s economic growth in the second quarter after soaring precious metal prices helped the industry rebound from a sharp first-quarter contraction, said Business Day in an article on Thursday.
Following a 4.1% decline in the opening three months of the year, South Africa’s mining GDP jumped 3.7% quarter-on-quarter to end-June, contributing 0.2 percentage points to the economy’s 0.8% real GDP growth, said the newspaper citing data from Statistics South Africa.
The sector’s outperformance was driven primarily by surging gold and platinum group metal prices, which helped shelter miners from geopolitical uncertainty affecting other economic areas. Gold prices rose 5.73% during the period, supported by risk-off sentiment stemming from conflicts in Europe and the Middle East.
Platinum group metals enjoyed an even stronger rally, with platinum prices surging more than 36% during the quarter as South Africa’s shrinking supply and growing demand for hybrid electric vehicles influenced markets. Production data showed platinum group metal output jumped 9% whilst gold production climbed 4.7%, said Business Day.
The strong performance may help restore faith in the local mining sector as industry players urgently seek to arrest declining foreign investment. Capital expenditure in mining plunged 9.6% last year, prompting the Minerals Council to label 2024’s fixed investment data a “horror show.”
“While mining registered positive growth, structural constraints affecting the sector remain,” said Minerals Council South Africa acting chief economist Bongani Motsa. Despite being “highly endowed in minerals of all sorts,” South Africa continues struggling to attract investment into new mines.
