Despite second-quarter growth of 14.4 per cent, mining output in the first half of the year was still 3.3 per cent lower than in the first half of 2018, South Africa’s medium-term budget policy statement (MTBPS) revealed.
South Africa’s Finance Minister Tito Mboweni delivered the MTBPS in Cape Town on 30 October.
The MTBPS stated that production in mining is expected to decline again in 2019, despite higher precious metals prices, as weak global demand and strikes weigh on production.
“The medium-term production outlook is constrained by lingering domestic regulatory uncertainty and slowing global economic growth, particularly in China, which is a large commodity importer.”
Meanwhile, real manufacturing output in the first half of 2019 was 0.5 per cent higher than in the corresponding period of 2018. However, monthly production contracted in May and June 2019, and the seasonally adjusted Absa Purchasing Managers’ Index declined to 45.7 index points in August 2019. All sub-indices in the index are below the neutral 50 mark, including business conditions expected in six months.
“Weaker growth in sub-Saharan Africa and Europe, together with rising competition and limited improvements in domestic competitiveness, are expected to weigh on demand over the medium term,” the MTBPS stated.
In terms of the electricity sector, output rose 3.2% in the second quarter, suggesting some recovery, but is 0.9% lower than a year ago.
“The energy availability factor from coal-fired power stations has continued to decline from 70.2 in September 2018 to 67.3 in September 2019. Looking ahead, continued maintenance problems, cost overruns and delays at Eskom pose risks to the outlook for electricity generation.
“Other sources of generation continue to grow: of the 91 active renewable energy independent power producer (IPP) projects, 64 were in operation as at March 2019, adding 3 976 megawatts of power to the national grid. Once completed, the 27 IPP projects that are currently under construction are expected to add nearly 2.4 gigawatts to the grid,” the MTBPS stated.