SA’s platinum output will see only a modest increase next year as the industry is expected again to be constrained by strikes and safety stoppages, dealing a potential blow to the government’s hopes of creating thousands of new jobs in a rejuvenated mining sector.
The government has identified mineral resources as one of the key industries to drive employment creation. Planning Minister Trevor Manuel said in his National Development Plan last week that SA was well endowed with platinum and other minerals, but had not taken advantage of high prices because infrastructure constraints and regulatory frameworks were curtailing investment.
The National Development Plan says: "Stimulating mining investment and production - is urgent, given SA’s substantial unrealised opportunity and global market dominance in deposits."
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Platinum is SA’s top mineral export and overtook gold in 2000 as the leading foreign exchange earner. Citigroup calculated that SA had mineral wealth, excluding coal and uranium, worth $2,5-trillion - the richest deposits in the world. SA contributes nearly 80% of platinum used in the world’s automotive catalysts to scrub noxious gases from vehicle emissions, as well as in jewellery and other products like televisions and petrol refinery parts.
Johnson Matthey said in its 2011 Interim Review, released yesterday, that global supplies of platinum were forecast to rise 6% this year to 6,4-million ounces, with the major contributions coming from North America and Zimbabwe - not SA.
"Mine output in SA in the first half of the year was disrupted by illegal strikes, poor productivity and a higher than usual number of safety stoppages at some operations," Johnson Matthey said. Mines in SA would increase platinum output by a "modest" 3% or 140000oz this year, to 4,7-million ounces, Johnson Matthey’s Jeremy Coombes said yesterday.
The US and Zimbabwe would grow production by 160000oz and 45000oz respectively next year, Johnson Matthey predicted. The 20% growth in Zimbabwe would happen despite uncertainty about its empowerment law .
South African companies were relying on stockpiles of refined metal and releases out of production pipelines to keep up sales.
George Glynos, MD of Econometrix Treasury Management, said yesterday that labour policies in SA were among the least flexible in the world. "A subdued performance in SA’s mineral exports keeps us dependent on foreign inflows to keep our current account deficit financed.
"It doesn’t help that we can’t take advantage of higher commodity prices and that, again, is the function of the rigidities the South African economy has to deal with."
Johnson Matthey said supplies of platinum from SA could rise modestly next year through improved production. "Although the industry still faces possible disruption, recent developments give grounds for cautious optimism," it said, pointing to wage settlements by two major platinum miners.
Ian Farmer, CEO of Lonmin , the world’s third-largest platinum miner, said on Monday that the company was conservatively forecasting sales of 750000oz of platinum next year, despite having the capacity to produce 800000oz.
Lonmin shed 43000oz of metal in the year to September due to enforced safety stoppages, illegal strikes and two shutdowns by management after a spate of fatal accidents left six people dead in seven months.
The company is locked in wage talks with the National Union of Mineworkers, which yesterday threatened industrial action.