Picture: THINKSTOCK
Picture: THINKSTOCK

PLATINUM prices, up 21% from their low last August, will extend gains as production cuts squeeze supply and consumption climbs, according to South African miner Wesizwe Platinum.

"You’ve got challenging supply issues and a market that’s recovering in terms of demand," new chief operating officer Paul Smith said in an interview. "The platinum sector as a whole is going to come off quite a low base quite aggressively."

Strikes that began in August in South Africa, source of three-quarters of the world’s platinum, led to mine stoppages that drove up prices from a $1,383.75/oz low. They have since fluctuated, rising this month on a plan by Anglo American Platinum (Amplats) to cut 400,000/oz a year to curb costs.

Amplats’s plan, which would remove about 7% of global output and may result in as many as 14,000 job losses, was criticised as "less than helpful" by Finance Minister Pravin Gordhan.

"Certainly recent events haven’t done South Africa any good in terms of its labour issues," Mr Smith said last week. He was previously director of new business at Aquarius Platinum, and became chief operating officer of Johannesburg-based Wesizwe this month.

Wesizwe, 45% held by China’s Jinchuan Group and the China-Africa Development Fund, said last week it got a $650m loan from China Development Bank Corporation to develop its Bakubung mine in North West province. The mine will produce about 350,000oz of platinum group metals a year for about 35 years, according to the company.

"It’s a large, long-term production phase, close to five years of development, but also has a long mine life," Mr Smith said. "We will start ramping up production from 2018. The market is quite aware this is a long-term project."

The loan gave Wesizwe the medium and longer-term funding it needed to develop Bakubung, he said.

Bloomberg