JSE-listed Northam Platinum, which operates the deepest platinum mine globally, said on Wednesday that prices for the metal could surge to levels as high as $2 200 /oz by mid year, and that sister metal rhodium could hit $9 000/oz, as supply worries plagued the market.

Platinum hit new record highs for nine consecutive days this month, after the power supply crisis in South Africa led miners to cut production forecasts in a market that was already in deficit.

The metal, used in diesel engine emission-curbing devices, was trading at $1 922,50/oz by 13:00 on Wednesday.

Northam marketing manager Jerry White said he believed that the firm would sell its platinum at levels between $1 750/oz and $2 200/oz in the first half of calendar year 2008, with rhodium fetching from $7 000/oz to a huge $9 000/oz.

Producers of these two metals were not managing to supply enough to meet demand, and this situation would continue for the foreseeable future, he added.

Even the price outlook for palladium, which had lagged behind the other platinum-group metals over the past couple of years, was looking more positive, White said, forecasting it to trade between $400/oz and $500/oz during the first half of the year.

He pegged the nickel price to hit $30 000/t during the same period.

Lucrative UG2

In the six months ended December 31, Northam scored 27% of its revenue from rhodium and 53% from platinum.

But if you split this into the two reefs that Northam was mining, it is interesting to note that 40% of the UG2 revenue came from rhodium, also used in autocatalysts.

“At the current high rhodium prices and increase in UG2 production, it’s going to be quite lucrative,” CEO Glyn Lewis told a results presentation in Johannesburg.

In fact, over the half-year period Northam received 16% more from its UG2 basket price, at R439 000/kg, than its Merensky basket price of R377 000/kg, he showed.

“On a cubic metre basis, taking account of grade and density, the UG2 remains the better mining target at current metal prices,” stated Lewis.

“It’s a UG2 story,” he said.

Northam had struggled during the period with “difficult” mining conditions on the platinum-bearing Merensky reef at what is currently its only mine.

The firm was hoping to conclude a bankable feasibility study on the Booysendal project, which it was in the process of acquiring, Lewis said.

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