SA’s platinum supply to hit 11-year low in 2012

13th November 2012

By: Idéle Esterhuizen


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JOHANNESBURG ( – Platinum supply from the world’s largest producer of the metal, South Africa, is expected to fall to its lowest level in more than a decade, dropping by 12% to 4.25-million ounces in 2012, the latest Johnson Matthey platinum report has revealed.

In its ‘Platinum 2012 Interim Review’, Johnson Matthey attributed the 11-year supply low to strikes and safety stoppages in the South African platinum sector during the first three quarters of the year, which led to production losses estimated at about 300 000 oz.

The closure of marginal operations by some junior producers and below-plan performance at other mines would also account for some reduction in supply this year.

Publications manager Jonathan Butler told a media briefing, in Johannesburg however, that the industrial action and stoppages in the fourth quarter were not taken into account, but could result in supply forecasts being revised downwards.

He stated that ongoing disruption and possible restructuring of the industry made it difficult to expect an increase in supplies from South Africa. Platinum output and sales from other producing regions, such as North America, were also expected to remain broadly flat.

“The only true growth is in the ‘others’ sector, which includes Zimbabwe where the new Unki mine has ramped up to production ahead of schedule and the Mimosa mine is now running at full capacity,” Butler said.

He stated that strikes at producers, such as Impala Platinum and Anglo American Platinum, would impact on platinum prices for the year.

Principal analyst Alison Cowley indicated that operational challenges in the sector had contributed to the higher platinum price forecast for the next six months of between $1 400/oz and $1 800/oz. An ounce of platinum fetched around $1 587 on Tuesday.

"Even if the strikes are resolved, the mining sector here [South Africa] is in a difficult situation and have been for some time with the safety stoppages, illegal strikes and rising costs. So, we do not see a prospect of platinum or palladium supplies from South Africa increasing next year," Cowley told Mining Weekly Online.

The global platinum market was expected to shift from a surplus to deficit of 400 000 oz in 2012, with gross demand remaining firm at 8.07-million ounces, while supplies and autocatalyst recycling volumes were falling.

Severe disruption to platinum-group metals (PGMs) mining was expected to reduce sales from South Africa and result in a 10% drop in worldwide platinum supplies to 5.84-million ounces.

Platinum recycling was forecast to fall by 11% to 1.83-million ounces in 2012. However, Cowley said that recycling could be a key factor in the platinum market balance in 2013 and that sustainably higher prices could drive higher recycling of autcatalyst scrap.

While, gross platinum demand in autocatalysts was predicted to soften by 1% to 3.07-million ounces, greater demand was expected from the light-duty diesel sector in India.

Platinum demand in the jewellery sector was forecast to reach a three-year high of 2.73-million ounces, driven mostly by China and India.

However, industrial demand for platinum was forecast to subside by 13% to 1.79-million ounces in 2012. Demand in the glass manufacturing and electrical sectors was expected to soften, but purchasing of platinum for nonroad emissions control applications was expected to rise.

Investment demand for platinum would remain positive, at 490 000 oz, with investment in physically-backed exchange traded funds (ETFs) largely following the price during 2012, with net investment during periods of higher prices.

Despite a slow start, investors started pouring their money into the market as prices increased in the third quarter. “We expect good ETFs investment for the year,” he noted.


Platinum’s sister metal, palladium, would also swing from a surplus to a deficit of 915 000 oz in 2012, weighed down by lower supplies, higher gross demand and less recycling.

Cowley said supplies were foreseen to contract to a nine-year low of 6.57-million ounces, mainly owing to falling Russian State stocks sales, while recycling would be constrained by subdued PGM prices.

She added that newly refined palladium supplies from Russia were expected to decrease, owing to a change in the ore mix and falling average grades. Sales of Russian State stocks were forecast to drop by over half a million ounces compared with last year, to 250 000 oz.

Meanwhile, palladium supplies from South Africa were forecast to fall by 6% this year, to 2.40-million ounces, in line with lower underlying platinum output.

However, gross palladium demand was predicted to rise to 9.73-million ounces, driven by a return to positive net physical investment and higher autocatalyst purchasing.

The palladium price, which currently stood at $615/oz, was anticipated to be between $750/oz and $550/oz over the next six months.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online


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