The Minerals Council said yesterday that the big slump in South Africa’s iron ore production for the month of October can be attributed to Transnet’s shutdown of the iron ore railway line linking Sishen and Saldanha port.
South Africa’s iron ore production dipped 14.3% in October while manganese output was also slower by 14.9%, dragging the country’s overall mining output for the month by sagged by 3% compared to the previous month. Nickel production was also subdued by 22%, with analysts attributing this to logistical challenges.
Hugo Pienaar, chief economist for the Minerals Council said yesterday that Transnet’s annual maintenance shutdown of the iron ore railway line between Sishen and the Port of Saldanha was to blame for the slump in production of the commodity during the month of October.
However, iron ore miners had ramped up exports in the previous month to cover for the annual maintenance shutdown in October.
“To frontload the shutdown, iron ore output and exports surged in September. Therefore, the production decline in October reflects a normalisation rather than a concerning development,” said Pienaar.
Nonetheless, South Africa’s iron ore industry “continues to be adversely impacted by Transnet rail and port” inefficiencies.
“On top of this, iron ore prices have been volatile and generally trended lower so far in 2024 amid concern about the health of the Chinese economy and, at times, disappointment about a lack of meaningful stimulus announcements from Chinese policymakers to boost the economy,” explained Pienaar.
There has been some respite though recently, with iron ore prices receiving some support this week after Chinese authorities signalled more aggressive stimulus measures for 2025.
The Minerals Council also said that the decline in manganese production for the month of October was also likely also linked to commodity price developments.
Earlier this year, manganese prices crept up following output disruptions in Australia as a consequence of severe weather.This saw SA manganese producers ramping up.
“Manganese producers in South Africa increased output, with the additional manganese being transported by road for export,” Pienaar said.
“However, as the production facilities in Australia were repaired and amid signs of softer demand from China, the major consumer of South African manganese, prices dropped in recent months. This may help to explain lower manganese production in October.”
Despite the production slump in October, the Minerals Council has projected that South Africa’s real mining production for 2024 will remain “on track for the best performance” since 2021.
“Assuming a continued absence of power cuts and sustained (slow) progress on Transnet rail performance, the mining industry could build on the modest recent growth in 2025,” said Pienaar.
However, key risks to this outlook include global macro instability, in particular the prospect of trade tensions as US President-elect Donald Trump who has leaned towards protectionism and import tariffs starts a new term in the new year.
BUSINESS REPORT