South Africa’s Platinum Supply Projected to Decline by 2% in 2024

South Africa’s Platinum Supply Projected to Decline by 2% in 2024

South Africa’s platinum supply to global markets is projected to fall by 2% this year due to shaft closures, reduced investment, and layoffs, according to the World Platinum Investment Council (WPIC). This decline is expected to affect the ramp-up output from some expansion projects.

With the world’s largest platinum reserves, South Africa’s platinum group metals (PGM) sector has struggled for viability and profitability in recent months. Persistently low PGM prices have significantly impacted the industry, with Sibanye-Stillwater recording a $2.58 billion (R47.7 billion) loss for 2023. Impala Platinum is also considering shutting some shafts after half-year profits for the period ending December 2023 dropped to R1.7 billion from R14.8 billion the previous year.

The WPIC’s quarterly report for the first quarter of 2024 indicates that capital and production cuts by South African PGM miners will impact the country’s platinum supply. “South African supply is projected to decline by 2% due to cost-driven infrastructure closures offsetting increases from some expansion projects,” the WPIC stated. The report also noted that platinum output from Russia is expected to decrease significantly by 9% to a multi-decade low due to planned maintenance and the impact of Western sanctions.

Despite these challenges, refined mine production rose 4% year-on-year in the quarter ending March 2024 to 1.2 million ounces. This rebound was primarily driven by a 5% year-on-year increase in South African production and a similar 5% increase in output from Zimbabwe, where Implats, Sibanye-Stillwater, and Anglo American Platinum operate.

WPIC CEO Trevor Raymond noted that world platinum production for the full year of 2024 is projected to slump by 2% to 5.4 million ounces. “Continuing challenges present downside risks to supply into next year, not least as miners look to reassess production plans and restructure operations to manage the negative impact of the significant decrease in the PGM basket price on mining profitability,” Raymond said. He added that ongoing supply rationalization plans would have a short-term downside effect and severely constrain any near-term supply response to demand growth or higher platinum prices.

In the March quarter, platinum supply was the second lowest in WPIC’s time series, with full-year 2024 also forecast to be near-record low. Above-ground stocks are expected to decline for the second consecutive year, with a further 12% drop to 3.6 million ounces, hitting a four-year low.

Global demand for platinum rose to nearly 2 million ounces quarter-on-quarter, driven by an upswing in jewelry demand and steady growth in the automotive sector. icon

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