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Harare - Planned platinum output in South Africa is expected to rise by 3% in 2016, provided there is limited disruption to production, a report has said.
According to the latest quarterly report from the World Platinum Investment Council, South African platinum production in 2016 is projected to rise by 3% to 4 535 thousand ounces (koz), with ramp-up of new production capacity contributing to a net 120 koz increase in supply from Western Limb and tailings operations.
The report however said disruption to production will see South African coming out slightly lower year-on-year at 4 310 koz, a 2% decrease.
The report cited industrial action related to wage negotiations, safety stoppages and shaft closure due to fire as some of the reasons that might cause disruptions.
The report however said any reduction in output will be “partly offset by expected sales from producer refined working inventories of 100 koz in 2016”.
Zim to be biggest contributor to growth in 2016
The world’s total platinum supply in 2016 is forecast to grow by 3% to 8 030 koz, with Zimbabwe expected to be the biggest contributor to the growth.
“Completion of an expansion project sees output from Zimbabwe increase to 430 koz (+12%),” said the report.
“Production from Russia is anticipated to drop by 35 koz year-on-year (-5%) to 675 koz this year, because a lock-up of around 55 koz is expected in the pipeline owing to a reconfiguration of processing facilities."
The reported added that recycled platinum is forecast to expand by 235 koz (+14%) to 1 960 koz this year.
In 2015 total platinum supply expanded by 8% to 7 825 koz, as the recovery in South African output to pre-strike levels more than made up for a 15% decline in recycling, caused by lower jewellery demand in China and weaker steel and platinum group metal prices.
Meanwhile, global demand is expected to dip by 40 koz from 8 205 koz in 2015 to 8 165 koz in 2016, leaving the market with a deficit of 135 koz, smaller than the deficits in the prior three years.
The reported also forecast “a modest recovery in the price of PGMs (platinum group metals)”.
