HARARE - Zimbabwe is expected to contribute 360 000 platinum ounces (oz)  —  a six percent increase from last year — to the total 5,8 million oz of global platinum production forecasted this year, refiner Johnson Matthey (JM) said in its Platinum 2012 Interim Review.

The southern African country has the second- largest known platinum reserves in the world after South Africa (SA).

SA is projected to register a 12 percent decline to 4 250 000 oz, due to mining industry labour unrest which negatively affected production, JM said.

JM said the situation in SA was expected to plunge the platinum market into a 400 000 ounce deficit this year from a 430 000 ounce surplus in 2011, largely due to a 605 000-ounce drop in sales from the country.

“Strikes, stoppages and closure of marginal operations will affect Platinum Group Metal (PGM) sales from SA this year.

Our full-year forecast includes production losses due to strikes and stoppages to the end of September, but does not make allowances for disruptions thereafter,” JM said.

According to JM, conditions in SA are likely to keep supply at similar levels next year.

“Some operations remain cash negative on an operating expenditure basis. Capex is being squeezed.

“Cost pressures on the supply side continue due to wage and electricity cost inflation, weak PGM prices for much of the year and exchange rate fluctuations,” the report said.

Platinum demand for autocatalyst use is also expected to slow down by one percent to three million oz while industrial use will decline by 13 percent.

Jewellery demand for the metal however, will close the year 10 percent up.

“Opening of new retail stores in China in 2012 has spurred manufacturing of platinum jewellery,” JM said.

The refiner expects to see platinum prices in a range of $1 400-$1 800 an ounce in the next six months, with an average of $1 625 an ounce, less than four percent above current levels.

Zimbabwe is expected to close the year as the only country with a positive six percent increase in palladium supply to 280 000 oz.

The metal is however expected to swing from two million ounces surplus to a 68 percent deficit due to lower sales of Russian state stocks, of 250 000 oz.

“Falling supply from South Africa impacted by recent disruptions and contraction of underlying output in Russia will impact on palladium,” the report said.

JM says autocatalyst demand for palladium is expected to reach a record high of 6,48 million ounces
“Physical investment demand is to move by over 900 000 oz from net negative to net positive demand while industrial demand is to weaken due to thrifting in electrical and dental applications.”

JM expects palladium to trade in a $550-$750 range next year, with an average of $650 an ounce.

JM also predicted a tight market next year for rhodium.

Zimbabwe has three major platinum producers, namely Impala Platinum’s Zimbabwe Platinum Mines, Mimosa Platinum and Anglo Platinum’s Unki Mine in Shurugwi. - Roadwin Chirara