Platinum fails to fill breach left by gold in South Africa – by Ed Stoddard (Reuters U.K. – October 21, 2015)

http://uk.reuters.com/

BRITS, South Africa, Oct 21 (Reuters) – When South African miner Papi Soke went from gold to platinum, he thought he was trading a sunset industry for one with a brighter future.

This month, the National Union of Mineworkers (NUM) shop steward was one of over 800 workers laid off at the Eland platinum mine, closed by Glencore.

“I don’t know what to do now. I am thinking of maybe going to a diamond mine,” the 34-year-old father of two, whose wife is expecting in December, told Reuters as he sipped juice in a mall in the mining town of Brits north of Johannesburg.

Glencore is not alone. Platinum producers Lonmin and Anglo American Platinum are also planning to cut jobs and the government has held meetings with companies and unions to try and prevent widespread lay-offs.

Impala Platinum is closing operations that will affect 1,600 jobs but it has said it hopes to absorb many of those workers elsewhere in its business.

As South Africa’s gold industry – which has produced a third of the bullion ever mined – began a steady slide in the 1990s, platinum was expected to fill part of the gap. But platinum’s prospects are now as dire as that of gold.

The local industry is still recovering from a five-month strike last year, and an oversupply and low demand has pushed the price of the metal used in autocatalysts and jewellery down almost 40 percent from 2014’s peak.

This month it slid to seven-year lows below $900 an ounce on worries about a drop in demand for diesel cars after carmaker Volkswagen admitted rigging diesel emissions tests.

Diesel autocatalysts account for 40 percent of global platinum consumption, so weaker demand for diesel cars will further hurt the metal’s price. It’s now trading over $1,000, but is still less than half the $2,290 peak it hit in 2008 and the outlook remains bleak.

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