South Africa’s Annual Platinum Output Down By 12%, Lowest In 11 Years

South African strikes

VENTURES AFRICA – A 400,000 ounce platinum deficit will be felt across the global market in 2012, fuelled by a 12 percent fall in South African output.

In an interim review report released on Tuesday, British-based specialists Johnson Matthey predicts that South African platinum output will fall to its lowest level in 11 years – the world’s largest platinum producing country taking a massive 12 per cent hit to production as a result of the on-going mining strikes across the sector.

Johnson Matthey expects South African platinum production for 2012 to level out at a weak 4.25 million ounces; playing a key role in the predicted 10 per cent decline in global output, which they expect to total 5.84 million ounces.

As such, Johnson Matthey revealed its forecast that global output for the year will see a 600,000 ounce drop in platinum supplies.

Of the predicted drop in supplies, Johnson Matthey explains that approximately 300,000 ounces will be lost as a direct consequence of stoppages caused by the illegal mining strikes that have plagued the South African sector over the past months.

However, while supply is substantially down as a result of South African challenges, the interim report reveals that demand has not stagnated or diminished, with demand for the year predicted at 8.07 million ounces – as such significant demands will not be met.

Publications Manager for Johnson Matthey Jonathan Butler told Mineweb that a short-term recovery in South Africa is unlikely, as the real knock-on effects of the strike actions are to be felt over the coming months extending into 2013.

As strike actions begin to subside, and miners begin to resume operation, wage agreements have forced a huge increase in costs which some producers are already reacting to, with talk of dismissals and downsizing of operations to improve financial efficiencies.

Butler identified the problem of increased costs as serious, and noted that trouble is still on the horizon for the platinum industry.

“Of course the problems on the supply side still continue with labour disruption. We’ve also seen in the past year a number of operations close as a result of high costs and weak prices. We may indeed see further closures of marginal operations unless conditions improve and of course we are expecting the full impact of the supply disruptions from strikes this year to be felt into 2013,” he said.