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platinum miners stand to lose R3bn

By unknown | May 20, 2008 | COMMENTS [ 0 ]

South Africa's platinum miners could lose more than R3billion in income this year due to the power crisis.

South Africa's platinum miners could lose more than R3billion in income this year due to the power crisis.

Leading refiner Johnson Matthey said in yearlyreport yesterday that load shedding could slash platinum output by 200 000 ounces this year and other operational hiccups might crimp production further.

The metal is currently trading at about R16 000 an ounce.

South Africa is the world's biggest platinum producer and accounts for over three-quarters of global platinum supply. In 2007, production fell 260000ounces to 5,04millionounces, metal refiner JM said

A new approach to safety by the government, including the temporary closure of shafts where fatal accidents occur, and other operational challenges had weighed on production, it said.

Global supply fell 4,1percent to 6,55millionounces, largely due to lower output from South African producers.

Though the power situation has stabilised, with mines receiving about 90percent of their normal electricity requirements, power utility Eskom has warned that the country could still face further power cuts.

Platinum powered to an all-time high of $2290 an ounce on March 4 after a five-day power cut in January forced mines to shut down operations, sparking supply fears and sending prices to record peaks. That is on top of a rise of more than 30percent in 2007.

"Assuming electricity supply can be maintained through the South African winter and power is available for new and expanding operations, the overall effect on South African [platinum group metals] production in 2008 is estimated to be a shortfall of under 200000 ounces of platinum, less than initially feared," JM said in its report.

The company also forecast "a substantial deficit" in the overall world platinum market for 2008.

Platinum is in high demand for its use in auto-catalytic converters that remove pollutants from exhausts, as well as in jewellery.

Record-high prices have scared off jewellery buyers in many parts of the world, but Chinese demand might still be resilient due to strong economic growth, said the JM report. - Reuters


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