South Africa’s mining industry is bracing for a challenging year ahead following an unforeseen slump in productivity at the end of 2024.

Data from Statistics South Africa (Stats SA) on Thursday showed that the industry “unexpectedly” slumped by 2.4% year-on-year in December, following a 0.9% decrease in November.

“Platinum group metals and gold were the largest negative contributors,” said Jean-Pierre Terblanche, principal service statistician at StatsSA.

Seasonally adjusted mining production decreased by 0.3% in the fourth quarter of 2024 compared with the third quarter of 2024, dragged by manganese ore and iron ore.

The mining industry now hoping that robust mining productivity this year will be hinged on improved local government performance, a vibrant rail and port logistics sector.

Hugo Pienaar, chief economist for the Minerals Council said “real mining production disappointed” in December 2024.

“The large monthly month on month decline pushed the annual performance into negative territory, with the real level of production 2.4% lower in December 2024 than during the corresponding month in 2023,” he said.

“In 2025, mining sector hopes for a more robust recovery will again be tied by progress on electricity, rail and port logistics, as well as improved water provision and local government performance. This is a tall order to correct over the short term,” said Pienaar.

The weak end in productivity for 2024 year means that the mining sector “will contribute negatively” to the forth quarter real gross domestic product (GDP), despite mining output strengthening by 0.4% for the 2024 calendar year compared with 2023.

However, the Minerals Council expects Transnet rail volumes to increase to beyond 170 million tons, from an estimated 160 to 165 million tons in 2024/25.

Thanda Sithole, FNB senior economist said South Africa’s slight mineral productivity had come against the backdrop of “domestic and external demand” challenges.

“While the continued suspension of load-shedding and gradually stabilising logistics should support mining output recovery, risks remain. A challenging global trade environment, subdued commodity prices, and slowing growth in China pose significant headwind,” said Sithole.

In December, production of platinum group metals by SA producers declined sharply by 7.1% compared to the same period a year earlier.

Despite this weakness, PGM output increased by 1.4% in 2024, reflecting a modest acceleration from 1.1% in 2023, added Sithole.

In spite of elevated gold prices, gold output contracted once by 8.4% year on year in December. This was on the back of stubborn challenges for the sector related to higher operating costs due to ageing and ultra-deep mines as well as declining ore grades that continue to weigh on output.

South Africa’s coal output, however, increased by 2.5% year on year after contracting by 1.6% in November.

On a seasonally adjusted basis, coal output expanded by 2.9% compared to the previous month, maintaining the momentum after increasing by 2.4% in the prior month.

Manganese ore output expanded strongly by 8.7%, reflecting an acceleration from the 1.6% growth in November although iron ore output increased marginally by 1.1% year on year after declining by 4.4% in November.

On a month on month basis, iron ore production experienced a sharp monthly decline of 16.0%, with Kumba Iron Ore recently citing logistics challenges.

BUSINESS REPORT