SA’s mining output falls further below pre-pandemic levels

South Africa’s mining output has fallen further below pre-pandemic levels due to persistent electricity outages and rail disruptions, industry data shows, threatening dividend payouts to investors.

South Africa is the world’s biggest producer of platinum and chrome and a leading producer of gold and diamonds. But the industry has been shrinking for years as ore grades decline and output was disrupted in 2020 when Covid-19 lockdowns impacted operations.

Now severe power cuts since the end of 2022 are affecting output, while state-owned freight rail firm Transnet is struggling to haul minerals to port due to cable theft and vandalism of infrastructure.

As a result, mine output and sales for the 12 months to May 2023 were down 4.6% and 4.2%, respectively, compared to the same period a year earlier, new data from the Minerals Council of South Africa figures showed.

Output in May was down 7.8% from pre-pandemic levels, the council’s chief economist Henk Langenhoven said.

“It’s been very hard to get back to 2019 production levels. We’re really struggling,” Langenhoven said. “Although we sort of recovered at the beginning of 2021, we’ve faltered since then.”

South Africa produces 70-75% of mined platinum supply, for example, and lower production in the country has helped spur a surge in prices of the metal.

Diversified miner Sibanye Stillwater has said South Africa’s platinum group metal (PGM) output could decline by as much as 20% this year as erratic power supplies hit processing capacity.

Freight rail capacity problems have forced coal and iron ore miners to cut output as they struggle to haul minerals to ports and stocks pile up at mines.

South Africa’s biggest thermal coal exporter Thungela Resources said rail problems prevented it from exporting 300 000 metric tonnes of coal in the first half of 2023.