Platinum industry seeks ways to stay in business
ONE of the options open to the platinum sector is to copy the beleaguered ferrochrome industry and sell its power back to Eskom as a way to save jobs and keep companies in business.
The platinum sector, labour and the Department of Mineral Resources have set up a task team to investigate options for easing the burden on producers, battling low prices, rising costs and operational difficulties in an oversupplied market. A number of miners have suspended shafts and expansion programmes.
The Mining Industry Growth and Development Task Team (Migdett), which represents the Chamber of Mines, the department and labour, has conceded that the sector is in serious trouble and is looking for ways to ameliorate the effects of market conditions. The price of platinum has been weighed down by uncertainties and weaknesses in European economies, which are a major buyer of platinum to make catalysts for diesel-powered vehicles.
The interventions proposed by the task team indicate that there are few actions that can be taken immediately on the demand side to improve off-take and boost prices.
The key action of trimming supply to restore the market, which is estimated to have an oversupply of up to 500,000oz of platinum, was noticeably absent from the four interventions released yesterday..
The short-to medium-term interventions included finding ways to reduce costs, exploring alternative applications and demand drivers for platinum, increasing domestic use of the metal to underpin demand and, finally, to ensure that there are no compromises on health and safety in cost-reduction efforts.
"In the long term, the parties have further committed to a programme that will investigate strategies for sustainable growth in the PGM (platinum group metals) industry to support growth and job creation through competitiveness interventions, skills development, increased levels of PGM beneficiation and the diversification of PGM application and demand drivers," Migdett said.
Among the key cost drivers identified by platinum companies are soaring electricity costs and above-inflation wage increases for labour, which makes up a substantial portion of their operating costs. "We are going to go to Eskom and say, 'Hey, we are drowning in terms of input costs, what can we do?'," said Vusi Mabena of the Chamber of Mines.
Anglo American is looking at building a 450MW coal-fired power plant to supply its 80%-owned subsidiary Anglo American Platinum, the world's largest platinum miner.
One of the most difficult agreements to secure will be labour's commitment to moderate wage and benefits demands, given the rise of inter-union rivalry at platinum mines.
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