SHARES in mining exploration company Wesizwe Platinum fell as much as 8,75% to an intraday low of 73c yesterday. They later recovered to close flat at 80c.
China-Africa Development Fund acquired 45% of Wesizwe for R1,86 a share at the end of 2010 - two-and-a-half times yesterday's 73c low, which was Wesizwe's lowest price since listing in 2006. Yesterday's price gave the platinum mine developer a market capitalisation of about R1,2bn.
The JSE's platinum miners have experienced significant cost increases in electricity and labour, while producers had flooded the market, Drikus Combrinck, an analyst at PSG Konsult, said.
"Today, we are sitting with overcapacity of platinum, cost of production per ounce has jumped significantly in the past few years ... Europe is the biggest market for the metal and, at the moment, with all the problems in that region, things are difficult for business."
Another analyst, from Thebe Stockbrokers, also cited the depressed world economy and market for the metal as the major reasons for Wesizwe's demise.
"Platinum is under pressure globally. There is an oversupply and small market for the metal," he said.
Wesizwe joins other midcap platinum miners that have been squeezed by the platinum woes. Aquarius recently shut Everest Mine in Mpumalanga, which followed Marikana in North West.
SA is the world leader in platinum production, accounting for 75% of global supply. From its peak in March 2008, the price of the metal has fallen 37%. Platinum traded at about $1424/oz yesterday
Problems in the platinum sector have led to Aquarius closing its Blue Ridge mine, while Eastern Platinum has cancelled funding for its Mareesburg projects and called off a $100m financing package.
Anglo American is reviewing the operations of its platinum unit, Anglo American Platinum, the world's biggest platinum miner.
The JSE platinum mining index fell 1,07% yesterday, led by Royal Bafokeng, which lost 2% to R48, followed by Anglo American Platinum, which fell 1,63% to R423, and Impala Platinum, down 1,13% to R126,65.