The Chamber of Mines of South Africa is looking forward to the years when a platinum Mandela coin gains pre-eminence globally, emulating South Africa’s great success with gold coinage.
Last month’s launch by the UK’s Royal Mint of its first-ever platinum bullion products has rekindled hopes that the South African Mint will wipe the dust off its plans for a platinum coin that bears the image of the late, great and iconic South African hero, Nelson Mandela.
More than 50-million Krugerrands have sold since their launch 50 years ago, making this gold coin the most successful bullion coinage in the history of humankind – more than double any other bullion coin in modern history – Chamber CEO Roger Baxter commented at the chamber’s latest annual general meeting (AGM).
The Krugerrand was the brainchild in 1967 of the Chamber of Mines, the South African Reserve Bank, the Finance Ministry and the South African Mint.
“I look forward to the years when a platinum Mandela coin will gain pre-eminence and prominence in the global market place,” Baxter said.
In response to Mining Weekly at question time, the chamber CEO revealed that platinum leadership is engaged in constructive discussion on ways of boosting platinum demand, at a time when 50% of the platinum sector is lossmaking at current prices.
“The key is the creation of demand and the partnerships around demand, and that’s why even at the chamber we’ve installed our first platinum fuel cell,” he added.
The 100 MW baseload platinum fuel cell, Africa’s first, is proof that the technology works.
It makes use of gas from Mozambique’s Pande gasfields to generate electricity for the chamber and Baxter made the point that greater methane gas and shale gas activity in South Africa would increase the chances of a platinum-using hydrogen economy developing in this country.
Ironically, chamber members have always turned a blind eye to the gas potential of the Free State, where blinkered gold mining companies drilled for gold alone and bypassed the province’s methane and helium endowments.
South Africa’s State-owned Industrial Development Corporation has just provided R218-million in loan finance to support the further development of a natural gas resource in the Free State, through the establishment of a 107-km pipeline network and gas processing facilities.
Meanwhile, the 1 000-year-old Royal Mint has stolen a march with the launch of 500 g and kilo platinum bars as investment-grade precious metal and is now scheduled to bring out a 1 oz ‘Queen’s Beasts Lion of England’ coin, the first platinum coin to be launched in the popular heraldic series.
A platinum mining and refining major revealed to Mining Weekly as long ago as September 2015 that it was providing full technical support to the South African Mint on the development of a platinum coin and, in a separate initiative, on the feasibility of platinum being held as a reserve asset by the South African Reserve Bank and potentially other global central banks.
On platinum’s supply and demand fundamentals, Baxter said there had been a lowering of output in South Africa over the last five years, with data on platinum’s deficit position available on the website of the World Platinum Investment Council.
“The fact is the industry is struggling because it’s been affected by community protests and in particular last year, many inappropriate Section 54 safety stoppages and we’re dealing with those and engaging with government and we’ve made progress in those areas,” he added.
As noted at the chamber AGM, mining’s many linkages have enabled South Africa to become Africa’s most industrialised economy by far.
The industry is also a major contributor to government coffers, last year contributing R304-billion towards South Africa’s gross domestic product (GDP), representing 7.3% of overall GDP.
“We’re starting to see some green shoots,” Baxter said.
In 2015, the industry made an aggregate loss of more than R30-billion as it grappled with cost pressures, falling global prices, and production challenges, including the negative impact of inappropriate Section 54 safety stoppages.
In 2016/17, the green shoots of recovery, spurred by an improvement in some mineral prices has helped provide some recovery to the sector, although some components are struggling. At current prices, over half of the platinum sector is marginal or lossmaking, which is a significant challenge for the country.
If the indirect multipliers and induced effects are considered, the overall contribution to GDP is about 18%.
Mining directly contributed R93.3-billion to fixed capital investment last year.
“Unfortunately, in the last two years we’ve seen slight dips in growth in investment – in other words, declines overall in aggregate investment levels, and that’s been because, in our view, there are certain outstanding issues, specifically around investor confidence, legislation and the Mining Charter, that have been holding back investments and that need to be resolved,” he said.