Mining Weekly quotes a report by Statistics South Africa according to which the country’s mining production dropped by 15.9% in September and by 7.5% in the third quarter of 2009.

Following seasonal adjustments, third-quarter mining production in South Africa decreased by 1.8% compared to the previous quarter.

Platinum group metals (PGMs) output was the main contributor to the overall decrease in mining production, with a 4.6% decline. PGM production was mainly affected by strikes and mine accidents in August and September.

Gold production decreased by 0.3% and copper production by 0.1%.

The sole mineral that yielded a substantial positive contribution was iron-ore, which increased by 3% or R2/5-billion.

Investec noted that the diamond sector was the hardest hit by the lower demand, with diamond production plummeting by 57.7%. As consumer demand for luxury goods is still weak, the forecast is for demand for diamonds to remain flat until consumer confidence improves.

The company noted that when it comes to demand for gold and platinum, an improvement in household financial positions and confidence is the key for recovery.

Investec summarized: “We only expect a recovery in the sector in the latter part of the first half of 2010 and for it to gain momentum in 2011.”