Mining production increased by 2.6 percent for the three months ended November 2010 compared with the three months ended August 2010, Statistics SA said on Tuesday.

The main contributor to the 2.6 percent increase was platinum group metals (PGMs), contributing 1.8 percentage points.

Actual mining production rose by 9.5 percent for the three months ended November 2010 compared with the three months ended November 2009.

A year-on-year increase of 9.6 percent was recorded for November 2010 compared with a 6.5 percent increase in October 2010, indicating recovery in the sector.

"Excluding gold, mining production increased by 10.6 percent year on year, an indication that gold production remains weak despite the high gold price," said Investic Group economist Kgotso Radira in a statement.

"Manganese production recovered strongly in 2010 in line with improved demand and rising world prices," he said.

"Commodity prices were elevated in 2010 but total production in South Africa was only up 5.8 percent year on year in the 11 months to November.

"This could be due to rand strength, high production costs (water, electricity and wages) and fatalities which affected production," he said.

Radira said the outlook for mining production was "moderately positive", supported by rising commodity prices and improving economic conditions.

"... but key will be whether SA can take advantage this."

Radira said jewellery demand was picking up globally, with Asia being the key region.

"Industrial demand will be a key driver of PGM demand as they are used in the motor vehicle sector."