Platinum supply set to lose momentum this year
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JOHANNESBURG - Platinum-mining supply was expected to lose its momentum this year due to the shutdowns to control the Covid-19 spread and repairs to the converter plant owned by Anglo American Platinum (Amplats), the World Platinum Investment Council (WPIC) said in a report published on Friday.
WPIC chief executive Paul Wilson said domestic platinum-mining supply would likely fall by 753 000 ounces this year, with at least 500 000 ounces of the reduction due to repair downtime at the Amplats converter plant, and the balance due to Covid-19- related mining industry shutdowns.
“Mining shutdowns to prevent the spread of Covid-19 are expected to reduce platinum-mine supply by 253 000 ounces in 2020, yet this reduction will be eclipsed by the smelting outage, reducing refined platinum production in 2020 by 500 000 ounces,” Wilson said, adding that primary platinum mining and primary smelting was not affected by the outage.
Wilson said mining output built up during the converter-repair downtime was expected to take nearly two years to be processed at existing facilities.
“These unexpected reductions in supply come after a five-year period where South African platinum mines struggled to maintain production at about the same average annual level of 4.4 million ounces,” he said.
JSE-listed Amplats had no choice but to close its Phase A of the converter plant at the Waterval smelter in Rustenburg for repairs, following a coal-dust explosion in February.
Phase B of the plant was also closed for repairs after a water leak, resulting in the company declaring force majeure with its suppliers.
Amplats announced that it had completed the repair of the Phase B unit, and processing operations were fully operational from last Wednesday.
Wilson said global refined mine production would fall by 13 percent this year to 5.2 million ounces, from 6.09 million ounces last year.
He said the global platinum supply in the first quarter of this year was 6 percent lower than it was last year due to the effects of the Amplats converter plant outage and the mining shutdown in South Africa.
The council expects platinum supply to fall 13 percent in 2020 to 7.19 million ounces, reflecting a decline in refined production and in recycling supply.
Demand in the March quarter fell by 38 percent year-on-year, primarily due to the whopping 90 percent fall in investment demand.
Lower demand for platinum investment, jewellery, automotive and industrial products due to the Covid-19 pandemic would likely result in an 18 percent fall in demand.
“Despite forecast total investment demand in 2020 being 51 percent lower than in 2019, bar and coin demand is expected to be up 115 percent at 605 000 ounces due to the flight to hard assets associated with significantly increased global risk,” said Wilson.