Boosted by signs of a new commodity price super-cycle, South Africa’s mineral sales keep on moving into higher gear, with a new record level having been attained for the first two months of the year.
After a dismal start to the year in 2018, when the value of mineral sales for January & February declined by 3.2% (year-on-year), the fortunes of the country’s mining industry changed dramatically, with increases of 14.4% and 20.8% in the first two months of 2019 and 2020, respectively. The local mining sector clearly ignored the "year of the pandemic".
So far this year, mineral sales have become even more rampant, with a further increase of more than 25% over the 2020 figure. To put the value of mineral sales of R120-billion during January and February in perspective, it is equal to the total output of the agricultural sector in 2020.
A direct consequence of the sterling performance of the mining sector is a handsome cumulative trade surplus for January and February, namely more than R41-billion. An indirect consequence that has an important bearing on the future direction of monetary policy is the impact on the value of the rand exchange rate.
Although exporters are probably frustrated at the sustained (albeit volatile) strengthening of the rand/US dollar exchange rate since April 2020, importers and consumers are enjoying a field day, with inflation remaining in check and dipping below the bottom end of the Reserve Bank’s target range for the consumer price index (CPI) in February.