Although the platinum price already reflects the pressure the platinum industry is under, the reality is that the situation is even worse than it looks, says PwC in its latest report on South African mining. This is because most platinum producers are now mining the less profitable upper group two (UG2) reef, or deeper Merensky reef, because of the depletion of the more-sought-after shallow Merensky. The result is a decrease in revenue for the same tons mined in the 12 months to June this year, compared with the 12 months ended June 2008. The production fall and cost rise in the five-year period worsen platinum’s face-value problems, PwC says. Also see page 7 of this edition of Mining Weekly on the South African mining industry’s growing impairment threats and the falling market capitalisations of South African mining stocks.

In addition, South Africa’s platinum investment has been so poor in the last few years that it is not even keeping pace with the replacement of production capacity, as reported on page 18 of this edition of Mining Weekly. As a consequence, security of platinum supply is worrying platinum end-users, who need certainty of platinum production in order to match auto- catalyst design to the various upcoming phases of emissions legislation. “It’s not an industry that can change quickly in terms of its design of catalysts and they are stressing a little bit about security of supply going forward,” Johnson Matthey GM research Peter Duncan tells Mining Weekly in a video interview that can be accessed using the barcode at the foot of the article on page 18 of this edition of Mining Weekly.

As a result of capital expenditure cutbacks and labour unrest, the South African platinum industry is unable to take full advantage of the excellent business opportunities that are arising. For instance, poised to boost platinum demand in 2014 are the scheduled introduction of not only the Euro VI vehicle-exhaust emission standards in Europe, but also the equivalent of the Euro IV emissions standards in China, Thailand and Russia. Read on page 18 of this edition of Mining Weekly of Euro VI tightening nitrogen oxide (NOx) limits for diesel vehicles, which forces the application of new catalysts on diesel cars. A large proportion of these will be platinum- and rhodium-based catalysts to control the NOx output. Moreover, batches of long- awaited fuel cell cars, which provide range and quick refuelling, will be commercialised ahead of 2015, the previously indicated date.