The platinum industry is experiencing a difficult time, owing to the rising cost base and relatively depressed platinum group metals (PGMs) dollar prices being assisted by movements in the rand:dollar exchange rate, states British multinational chemicals and precious metals company Johnson Matthey principal analyst Alison Cowley.

“Looking ahead, we continue to see good prospects for growth in demand,” she says, adding that good prospects for demand in the world’s vehicle and jewellery markets will aid the growth of the industry.

Cowley adds that more PGMs will be required, as the industry is under severe pressure from operations facing the threat of closure.

“Industry needs to focus on where future production will come from and what the shape of the South African platinum industry will be in the future,” she says.

Further, Cowley highlights that there are several important challenges facing the industry, the most obvious being arising prospects means.

“Many mines are not making sufficient returns on investments for their future. Mines should invest in their future continually to ensure productive capacity. This has been difficult to implement in the South African industry in recent years, as margins are poor at some of the mines, which puts pressure on the industry,” she notes.

Cowley adds that another challenge facing the industry is that mines are starting to mine deeper underground to reach the more technically difficult deposits.

“This puts pressure on costs and leads to mines being less productive, as they need more people to produce the same number of ounces.

“Other challenges facing the industry include social difficulties such as recruiting skilled workers and addressing inadequate housing facilities in the platinum belt,” she states.

She notes that ongoing strikes in the platinum sector reduce production, which puts further pressure on platinum miners, as they still have certain fixed costs. The South African supply of platinum fell to its lowest output since 2001 last year, owing to strikes, safety stoppages and mine closures.

“If costs continue to rise, more mines will be under severe financial pressure, which threatens not only the production of platinum but also the sustainability of the industry,” Cowley points out.

She states that mining in South Africa uses fairly intensive production methods and that it is not necessary to have highly skilled and educated employees in all positions.

“It is important, in South Africa, to focus on training, education and improving the skills base in the industry. Trained employees are safer employees,” she notes.

Cowley points out that several platinum projects in the country point to potential future growth for the industry.

“The Wesizwe Bakubang platinum mine, near Rustenburg, in the North West, is currently under construction. It has a deep shaft that is going to take several years to build and it will take even more time for the mine to start production,” she says.

Bakubung is expected to have a life span of 35 years to produce 350 000 oz/y of PGMs from the underground mine, which will be accessed through a twin independent vertical shaft system, comprising a main shaft for mineworkers and materials. The shaft is envisaged to reach 1 000 m below ground.

Cowley adds that new entrants to the industry include plati- num miners Platinum Group Metals Limited and Northern Platinum’s Booysendal project, which is close to completion.

Booysendal is Northam’s second mine and remains the company’s primary vehicle for growth. Located on the eastern limb of South Africa’s Bushveld Complex, near Mashishing, in Mpumalanga, the property covers an extensive undeveloped Merensky reef mineral resource.

The mine is planned to produce 2 250 000 t/y of ore at steady state, generating about 160 000 oz of metals in concentrate, together with associated precious and base-metal by-products.

“There are several mothballed platinum mines in the platinum industry that can be brought back into production. The upswing in demand from the European automotive industry, which will recover in the coming years, will increase the demand for platinum. There has also been a strong demand for platinum in Chinese jewellery,” she concludes.