South Africa's Iron Production Could Slow as Political Crisis Deepens

Summary: South Africa has been hit by widespread violent protesting this week, after the arrest of former president Jacob Zuma. Zuma just began a 15-month prison sentence for contempt of court after skipping out of an anti-corruption inquiry. He is accused of bribery and fraud, yet denies any wrongdoing. The country's largest oil refinery has been temporarily shuttered due to the protests. As of this writing, no reputable news sources or industry associations have reported disruptions to mining operations. The Minerals Council of South Africa released a statement condemning the violence and advocated the deployment of military resources to protect assets which are essential to mining. According to the US Geological Survey, South Africa is the sixth largest producer of iron ore in the world.

AEGIS Thoughts & Strategies: The most recent data on South African iron ore production and exports has been mixed. According to Steel Orbis, production in May was up 48.4% y/y, yet down 4.7% from April of this year. Iron ore exports for last week were 378,000 mt, the third-lowest amount so far this year. Exports in the prior week were the lowest since October 2019. The strife that is currently taking place only began this week, so current data will not reflect any possible disruptions. However, protests are becoming more widespread. Any potential shutdowns on iron ore production or exports could strain an already tight market.