Commodity boom poised to transform fortunes of the mining industry

By Almot Maqolo
– Prices have started to rise, and businesses are starting to consider what will happen next and where possibilities may be found. The mining sector performed positively during the quarter under consideration as most mineral output levels were above the same period in 2021. Substantial output expansion was recorded on gold, diamonds and coal output

 Higher mineral production also benefited from firming international mineral prices, on the back of geopolitical tensions. As a result, the mining sector, except gold, realised US$925.1 million through export receipts, a 2% increase relative to the same period in 2021.  During the period January to March 2022, a total output of 3 530.5 kgs of platinum was produced, an increase of 4.8% compared to the same period in 2021. Similarly, palladium production. increased by 8.8% compared to the same period last year. The increase is on account of expansion programmes in the sector.
A total of 4 127.6 tonnes of nickel was produced during the period from January to March 2022 compared to the same period last year when 3 283.8 tonnes produced, an increase of 25.6%, driven by ongoing investments as well as the re- deepening of the shaft at one of the major producers. Diamond output during the first quarter of 2022 stood at 1.1million carats, an increase of 50.5% relative to the first quarter of 2021, on account of new investments in the sector   Notwithstanding the increase in production, diamond sales decreased by 10.6% in value terms for the period January to March 2022 to US$58,739 million compared to US$65,729 million realised during the same period in 2021.
Coal output stood at 813 608 tonnes during the period January to March 2022, compared to the same period in 2021 when a total of 672 862 tonnes was produced showing an increase of 73,8%. The increased production was attributable to entrance of new players in the subsector.The international mineral commodity prices have improved substantially during the first quarter of 2022 as compared to the same period in 2021. Crude oil Brent price increased by an average of 62.18%, with soybean oil 43%, while coal price registered a staggering 153%.
This exorbitant increase in oil and energy prices is explained by the geopolitical tensions between Ukraine and Russia, which are major producers of natural gas and crude oil. Fertiliser prices rose by nearly 119% in the first quarter of 2022 relative to the first quarter of 2021, to an all-time high in nominal terms. This increase is due to supply disruptions, soaring input costs, trade restrictions in China and Russia as well as the geopolitical crises which is threatening further disruptions, as Russia and Belarus are major producers and exporters of fertilizers including the main input, natural gas.
Gold output in the first quarter of 2022 surged by 87% to 8 tonnes, compared to the same period in The increase in output was largely driven by small scale producers who contributed more than 61% whilst large scale producers contributed 34% and the remainder by the secondary producers. The surge is also attributed to the gold incentive, which is attracting more players to deliver their gold output to Fidelity Gold Refiners.
Small scale producers are contributing a large portion of the gold deliveries as compared to large scale producers and secondary counterparts. On precious minerals, gold prices increased by 4% in first quarter 2022 as compared to first quarter 2021, driven by higher investment demands in the face of rising inflation as well as rising safe-haven buying of gold in the face of the geopolitical developments. However, platinum prices decreased on average by- 11%.

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