Harare – Southern Africa’s refined platinum production will rise by 24,5 percent to 4,6 million ounces this year as South African mines ramp up output in the aftermath of Covid-19 lockdowns, the World Platinum Investment Council (WPIC) said this week.
Refined platinum production from the region totalled 3,7 million ounces last year after being affected by lockdowns and erratic power supplies.
They are ranked second and third respectively after Russia, in term of global resource endowment.
Because of this, the southern African neighbours have a huge say in the global supply and demand matrix, as well as pricing trends.
Other major platinum production mines are in North America and Russsia.
“South African refined supply was 26 percent lower due to COVID-19 driven mine closures and the ACP (Anglo Converter Plant) outages in March and November,” said WPIC. “South Africa accounts for the majority of the forecast refined production recovery due to mines returning to full operation after 2020’s COVID-19 driven closures, and the December 2020 recommissioning of the ACP Phase A unit.
“However, risks to South African supply do remain in the form of potential electricity supply disruption as power supplier Eskom undertakes major maintenance programmes through the year.”
In South Africa, refined production output is projected to rise to 4,2 million oz this year from 3,2 million oz in 2020, while Zimbabwe will see refined production fall to 463,000oz this year from 476,000oz in 2020.
The slowdown in Zimbabwe will not be enough to pull down regional output as the South African, Anglo, Sibanye and Impala Platinum, which also largely control Harare’s mines, have bigger influence.
Global refined production will rise to 5,8 million oz this year, from 4,9 million oz last year, driven by higher demand in Chinese and European automotive manufacturers that have been returning to operations under strict World Health Organisation guidelines.
“Automotive demand in 2021 is expected to rebound by 25 percent above the 2020 level,” said the report. “Key to this growth are the higher catalyst loading implications of the full implementation of light-duty vehicle Euro 6d and China 6b emissions regulations, and China VI for heavy-duty vehicles. In addition to rising catalyst loadings, additional demand is expected from some platinum for palladium substitution in the three major auto markets of China, North America and Europe.
“(In South Africa) total platinum mining supply reduced by 1,2 million in 2020 year on year, the lowest level for 21 years, due to COVID-19 related mine closures and the major converter (ACP) outages. Although mining supply is forecast to recover by 18 percent in 2021 to 5,8 million ounces, it remains three percent below the level in 2019 and is vulnerable to South African power supply disruption and the ACP plant operating without its usual, full volume back-up plant.
“These short-term supply concerns are interesting to investors, but the recent wider recognition of the longer-term supply issues appears to be more compelling. South African refined mine supply over the past decade has averaged 4,2 million ounces, the same level forecast for 2021. This largely flat production level was accompanied by weak prices and declining margins which depressed available cashflow and mining capital expenditure.
“Major platinum miners, Sibanye Stillwater and Anglo American Platinum, both projected relatively flat PGM production profiles over the next three to four years, in their results presentations in February 2021. In Zimbabwe, miners were allowed to continue through the country’s lockdown, with only one mine impacted,” the WPIC said.
“Production from Zimbabwe kept to levels similar to the previous few quarters. The year on year increase was due to the prior year period having been impacted by a furnace rebuild.”