South African Mine Production Drops Most Since March 2008
Total mining output retreated 14.5 percent from a year earlier, the most since March 2008, Pretoria-based Statistics South Africa said in a statement today. Mines produced 48 percent less platinum-group metals because of a strike at the world’s biggest platinum mine and safety-related shaft closures.
“Such a decline in production from South Africa has a material impact on the global supply-demand balance, which could be positive for near-term PGM prices,” Edward Sterck, analyst at BMO Capital Markets, wrote in an e-mailed note. South Africa produced about 75 percent of global primary platinum supply last year, according to BMO.
Workers at Impala Platinum Ltd. (IMP)’s Rustenburg operation downed tools on Jan. 20 in a dispute over pay. The mine restarted on March 5 and is still ramping up to full production.
“The biggest reason for the decline was the strike at Implats,” Juan-Pierre Terblanche, a spokesman for the statistics office, said by phone. “We’re expecting the figures for March will also be low,” he said. Safety stoppages also contributed to the drop in platinum and gold output, he said.
Gold production slumped 11.5 percent, Statistics South Africa said.
Mines in Africa’s biggest economy are facing increasing safety inspections and work stoppages as the Department of Mineral Resources works to cut fatalities, which stood at 123 last year. The platinum industry lost an estimated 300,000 ounces of production last year because of safety stoppages, Anglo American Plc (AAL) said Feb. 17.
Platinum fell 9.1 percent to an average of $1,658.86 an ounce in February, from a year earlier. Platinum-group metals are typically found and mined together and consist of platinum, palladium, rhodium, iridium, osmium and ruthenium.
Gold rose 27 percent to an average of $1,741.43 an ounce in the month from a year earlier.
The retreat in platinum-group metals production contributed 12.6 percentage points to the decline in total mining output, Statistics South Africa said in the report.
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