SA platinum output to remain flat

[miningmx.com] — SOUTH Africa’s platinum supply may rise a touch next year after falling slightly in 2010 on safety-related stoppages and wage strikes in the world’s top source of the precious metal, Johnson Matthey said on Tuesday.

The producer of four fifths of the world’s platinum will see supply fall by 1% in 2010 from last year to 4.59 million ounces, the refiner said.

“We’re fairly confident that supply in South Africa will be modestly up next year,” said Jonathan Butler, publications manager at Johnson Matthey. “A lot depends on the strength of the rand… we are starting to see perhaps a slowdown in new investment because of that.”

The rand, up nearly 27% since the start of 2009, has been eating into profits of South African miners who sell their metals in dollars and pay their costs in rand.

“But overall we see in the near future that no mines are being closed down,” Butler added. “In the next six months, (there will) certainly be a more positive supply situation for South Africa.”

South African palladium supplies are expected to rise to 2.49 million ounces in 2010, from 2.37 million, while supplies of rhodium are expected to drop to 612,000 oz from 663,000 oz.

A recovery in global platinum demand and rising prices have boosted producers, but South African have been battling with electricity shortages, rising power and wage costs, a strong rand and stricter safety rules.

“It’s been a very difficult year for the industry, with disruptions due to strikes, safety stoppages, smelter incidents and some mines have also reported lower output this year due to the shaft closures that we saw in 2009,” said Alison Cowley, an analyst at JM.

Cowley said, however, there was optimism for 2011.

“Costs are coming under control. We do expect a little bit of growth in production in South Africa, mainly on the back of recovery at some of the longer established mines,” she said.

Global supply of platinum, used in auto catalytic converters to remove pollutants from exhausts and in jewellery, is expected to remain almost flat at 6.01 million ounces, JM said.

UNREFINED PLATINUM STOCKS

For this year, Anglo American Plc’s platinum unit Anglo Platinum (Angloplat) – the world’s number one producer of the precious metal – is expected to meet its production target of 2.5 million oz of refined platinum.

“South African production of platinum is likely to be strongly weighted towards the second half of 2010, particularly for two of the major producers, Anglo Platinum and Lonmin, as stocks of unrefined platinum are processed,” JM said.

Output of platinum in concentrate at Lonmin’s Marikana mines rose 9% to 318,000 oz in the first six months of the year. The company’s total output is expected to improve further in the second half, boosted by production from new shafts and the recently reopened Merensky open pit.

Production at Impala Platinum (Implats) has slowed following a major accident in 2009, but it forecasts output from its lease area to recover to one million oz within five years.