South Africa has had more than two weeks without loadshedding and, if this can be sustained, it could push mining production for the full year into positive terrain, says Minerals Council South Africa chief economist Hugo Pienaar.

He points out that, following two calendar years of decline and a poor start to this year, Statistics South Africa has reported that, in real terms, total mining production surged by 9.9% year-on-year in February.

"This was the fastest annual rate of increase since July 2021 when annual mining output was rebounding from the depressed levels in 2020 caused by the Covid-19 lockdown.

"The strong February print came after mining production declined by 2.8% year-on-year in January. The cumulative increase in mining production so far in 2024 is 3.3% year-on-year.

"Notwithstanding the improvement, mining production in the first two months of 2024 was still 3.9% below the pre-Covid level in 2019," Pienaar points out.

He says the strong rise in output in February was driven by two main developments, one of which should be faded as it will be less of a support in coming months.

"This relates to a low base, or a very weak mining production figure, in February 2023. In that month, production declined by 6.4% month-on-month and 6.2% year-on-year.

"This low base partly explains the strong annual production growth rate in February 2024. Importantly, February last year was the weakest month for production in 2023, implying that annual production growth in the rest of 2024 will not continue to be boosted to the same extent as experienced in February. This is illustrated by an exercise that assumes mining output remains at the February 2024 level for the rest of the year.

"In this scenario, output growth for the entire year does not come out at 9.9% as was the case in February, but rather 3% year-on-year. If achieved, even this would be a welcome improvement on the previous two years," Pienaar comments.

He adds that, while the low base in February 2023 will not provide a sustained boost to growth this year, this was not the only driver of the strong year-on-year increase in output in February this year.

"Production rose by a robust 5% month-on-month, the biggest monthly gain since March 2023.

"Given the volatility in the monthly data, it is not clear that these strong increases will continue. This is especially the case for iron-ore, where we know that the major producer has guided towards lower production in 2024. On the other hand, diamond production is likely to ramp up further throughout the year," he says.