SA mine closures to weigh down global platinum supply | Fin24

SA mine closures to weigh down global platinum supply

Mar 08 2018 17:04
Memory Mataranyika

Harare - Mine closures in South Africa are expected to weigh down global platinum output this year, with the World Platinum Investment Council saying on Thursday that combined supply from Zimbabwe, South Africa and Russia will decline by 2% to 7.815 k ounces this year.

South Africa has the world's largest platinum reserves, followed by Zimbabwe and Russia. Local producers Anglo American Platinum (Amplats) [JSE:AMS], Impala Platinum (Implats) [JSE:IMP] and Sibanye-Stillwater [JSE:SGL] are among the top producers of the precious metal. 

However, mine closures in South Africa owing to spiking costs and persistently lower metal prices are expected to put a strain on production this year.

"Global platinum supply is forecast to be 7 815 koz this year, a contraction of 2% from 2017.

"Total mining supply is expected to decline by 4% to 5 850 koz mostly owing to reduced output from South Africa following some mine closures in 2017 and lower production in Russia," the World Platinum Investment Council said in a quarterly report on the platinum mining and investment industry on Thursday.

There are prospects that some shafts at Implats mines in South Africa may be closed while job losses are looming at Lonmin [JSE:LON], a situation which would affect output. Amplats has disposed of its Rustenburg mines as well as its Union mine, while in Zimbabwe little new production is coming on board.

Lower production is also expected from Russia although Zimplats, the Implats unit in Zimbabwe, could recover some production as it prepares to bring on board the larger Bimha mine that has not been operational after it collapsed.

There is also stockpiled output expected to be processed this year from Amplats' Unki mine in Zimbabwe. But all this is expected not to be of major significance in averting a supply decline this year.

Supply from South African mines will as a result likely be 4% lower at 4 175koz this year. The mine closures of 2017 will mean South Africa has lost more than 50koz of supply in platinum.

"Supply from North America and Zimbabwe should remain stable in 2018, at 370 koz and 450 koz respectively, while production from Russia could fall by around 4% to 685 koz as further refinery upgrade work may result in a small pipeline lock-up," added the report.

Government officials in Zimbabwe are expecting new investment to flow into platinum and other mining projects, following the exit of Robert Mugabe as leader in November 2017.

However, investors appear to be waiting on the sidelines until after elections, with Amplats saying the country needs to fix its regulatory and operating framework to enable it to attract new investments.

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