South Africa’s role in shaping the platinum market wanes – by Allan Seccombe (Business Day – November 20, 2013)

http://www.bdlive.co.za/ [South Africa]

SOUTH Africa, the world’s largest source of primary platinum, does not exert the influence it once did over the platinum market as alternative supplies become more available, and the country needs to address cost reductions for its production as a matter of urgency.

Speaking at a recent mining conference, Stephen Forrest, a director and chairman of SFA Oxford, warned of growing metal supply from recycling and countries with excess inventory.

Johnson Matthey said South African platinum supplies would rise less than 1% to 4.12-million ounces this year because of industrial action and safety stoppages. Zimbabwe, while a long way behind South Africa, was showing rapid growth, with output shooting up 15% this year to 400,000oz, a record high, it said.

South Africa provides three-quarters of the world’s platinum, but its role in shaping the market is diminishing, Mr Forrest said. “You’d think such concentrated supply would be enough to secure a significant influence on price, but look closer and it’s clear that South Africa’s mighty market grasp is slipping.”

South Africa’s platinum supply as a percentage of demand has fallen from the 1980s when it supplied nearly all end-user demand for the metal in autocatalysts and jewellery.

“Since 2009, South Africa’s platinum supply has fallen from more than 70% of demand to just 50% of demand in 2013. A significant drop indeed,” Mr Forrest said.

“In that time, supply has sprouted up in other places around the world,” he said. “South Africa has been caught short. However you slice it, its influence on price, whether as a result of supply disruptions or higher costs, is reducing.”

The supply of platinum from recycling of spent autocatalysts, which are devices in motor vehicle exhausts designed to scrub out noxious gases, and jewellery has quadrupled in little more than a decade. Recycling puts more than 2-million ounces of platinum back into the market every year, up from 500,000oz in 2000, Mr Forrest said.

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