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Bleak prospects for platinum - report

Harare - South Africa’s platinum production is likely to remain subdued after falling to its lowest since 2001 last year, according to a survey.

Johnson Mathey's Platinum 2013 report states that there are no definite prospects of significant recovery in output in 2013.

The report said many of the mines remain under serious cost pressure.

“Double digit inflation in labour and energy costs has become a norm for South African mines,” said the report, adding that rand platinum group metals prices have not been rising enough to compensate for costs.

But the picture looks brighter for Zimbabwe, with an increase in output on the cards despite a challenging political environment.

“There is no sign of any intent by the mines’ South African parent companies to alter their production plans in this relatively low-cost mining area,” said the report.

However, the platinum market may not need additional supply this year: “Gross demand for platinum in autocatalysts does not appear likely to grow in 2013.”

“If our supply and demand assumptions are correct, little price stimulus is likely from fundamental factors,” said the report, adding that the challenging operating environment in South Africa among other factors will produce volatility in platinum in 2013.

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