A conveyor belt carries ore extracted at a platinum mine. File picture: Philimon Bulawayo, Reuters

Johannesburg - South Africa’s platinum sector needed to develop local industries such as jewellery production to counter falling global prices which steepened after Volkswagen (VW) admitted rigging diesel emissions tests, the Trade and Industry Minister, Rob Davies, said yesterday.

Platinum posted its biggest weekly drop since July last week on fears that the VW emissions scandal could hurt demand for diesel cars, which use platinum autocatalysts to make cars more environmentally friendly.

The platinum price has fallen 22 percent this year, piling pressure on mining firms to sell assets and cut production. About two-thirds of the industry, which is still recovering from a five-month strike last year, is loss-making at prices below $1 000 (R14 086) an ounce. It was around $916 an ounce yesterday.

“If we are going to smelter platinum and nothing much else, we are going to be at the mercy of global markets, we are going to be hanging around, waiting for some recovery in the price,” Davies said.

“I don’t know directly what impact the VW issue will have, we will have to wait and see where that goes,” Davies said.

He said the government was working towards a programme in the platinum belt to create industries such as jewellery production and fuel cell technology. He did not elaborate.

Fuel cells generate electric power by combining hydrogen and oxygen over a catalyst such as platinum.

Davies spoke after the launch of a R150 million 4.3 megawatt thermal energy project at Anglo Platinum’s (Amplats) Waterval smelter complex in the North West.

Davies said that his department was willing to provide incentives and grants, such as the R30m given to Amplats, for power production.

“We don’t offer all the money that is required but there are incentives and grants,” he said.