Platinum producer Impala Platinum (Implats) reports that the strong rand and the underperforming automotive industry have posed significant challenges to the platinum industry during the second half of 2009.

The dollar uptick in commodity prices has been neutralised by the strong rand, which has negatively impacted on revenues, says Implats group executive for marketing Derek Engelbrecht.

He explains that the automotive indus- try absorbs about two-thirds of global plati- num-group metals output for use in autocatalysts. The significant drop in automotive sales in 2009, owing to the global economic downturn, has, therefore, greatly impacted on the platinum industry. This situation has led to Implats and other platinum pro- ducers deferring a number of projects like Implats’ Marula Merensky and Leeuwkop projects.

“Cash preservation is currently a top priority. However, any project that has been completed beyond halfway, will be continued,” says Engelbrecht.

Meanwhile, the Chinese jewellery industry has brought some relief to the platinum industry, with Chinese platinum consumption doubling from last year. Engelbrecht points out that this softened the blow for platinum producers. It is expected that China will import between 35% and 40% of the world’s platinum this year. Engelbrecht attributes this to the high disposable income of the Chinese, and the fact that the Chinese like the purity of platinum.
He points out that investor interest also helped the platinum industry during 2009, as the lower-price environment for platinum proved an ideal buying opportunity for investors.

“If investment interest exists, the expectation of a rise in the industry also exists. This optimism has caused platinum producers to remain quite bullish. Uncertainty in the automotive industry is the only factor holding the platinum industry back,” Engelbrecht adds.

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