Picture: THINKSTOCK
Picture: THINKSTOCK

PLATINUM supply from SA is unlikely to grow "meaningfully" between now and 2021 because of a range of difficulties in SA, says a report commissioned by the World Platinum Investment Council.

Dr David Jollie said in the report that primary platinum supply from SA, the world’s leading source of the metal used to make jewellery and autocatalysts in vehicle exhausts, was unlikely to exceed the level of output last year.

Enormous investments made in mines and expansion had little to show for it, and the older mines were "showing their age", he said.

"Together with constraints on power and water availability, labour issues and other problems facing the industry, this makes it clear that, even in a positive economic environment ( that is, if prices were to rally strongly and/or the rand were to further weaken significantly), there is no realistic likelihood of South African mine supply growing meaningfully over the next six-year period."

The six-year weakness in platinum group metal prices meant producers reduced capital expenditure and further cuts were likely if the platinum price remained below $1,000 an ounce for an extended period, he said.

Dr Jollie said Zimbabwe was unlikely to realise its potential as a significant source of platinum because of a "complex political and operating environment".

Johnson Matthey, a major user of platinum and a source of market intelligence, said in November the supply of recycled platinum from old autocatalysts had risen to 2-million ounces in recent years from 1.83-million ounces in 2010.

"However, with recycling set to grow as a percentage of overall supply, there is a reasonable likelihood that overall platinum supply will edge higher over this period," he said.

Gross platinum consumption peaked at more than 4-million ounces in 2007 and recoveries of this metal would be realised in the next five years, adding another 500,000 ounces to the recycled supply of platinum by 2021, Dr Jollie said.

He forecast the market would be in an annual deficit of about 250,000 ounces between now and 2021 and that this shortfall would push prices higher over that period.

He did not give an outlook on prices for platinum or its sister metals.

The World Platinum Investment Council was established by South African platinum miners to generate intelligence on the market and foster investment in it.