Price of platinum increased in South Africa
The price of platinum has risen in South Africa with a concern of potential shortage of the metal. Power outages in the country have led to a reduction in output, with miners predicting up to a 15% contraction.
This has caused investors to forecast shortages of the material and pushed the price of platinum to a 13-month high. Analysts predict that the platinum market will face serial deficits this year due to the ongoing mining issues in South Africa.
Shortfall in generation capacity
The power outages in South Africa are due to a shortfall in generation capacity, which has caused routine blackouts in recent months. These blackouts greatly affect mining firms as deep platinum mines require constant light and temperature regulation. Additionally, power fluctuations can put vital equipment under stress, leading many mines to run smelters at reduced levels to reduce stress on the fragile power grid.
Mining giant Anglo American has cited all these reasons in explaining a 25% reduction in its year-on-year platinum production in 2022. The company also reduced its production estimations for 2023 and 2024 by similar levels, indicating an expectation for this reduction in platinum production to be a sustained trend.
Furthermore, the national rail operator Transnet SOC has faced internal strife hampering mineral exports, with a strike in October forcing the company to declare force majeure on its Kumba mine transport link. Anglo American estimated the productive cost of the 11-day strike at 800,000 tonnes of ore and further estimated an impact to exports of 120,000 tonnes a day over the course of the strike. In total, the company said it lost more than $540m from the subsequent stockpile. This has caused the firm to revise down its projected production of all minerals in the country for 2023.
