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WPIC forecasts yet another platinum deficit in 2018

JOHANNESBURG (miningweekly.com) – A global platinum deficit of 275 000 oz is expected in 2018, further reducing the availability of above ground stocks of the metal, which have contributed about 2.5-million ounces in the last year, the World Platinum Investment Council (WPIC) said on Monday.

“[This] represents the sixth year that we will have had a deficit in the global platinum market,” WPIC research director Trevor Raymond told Mining Weekly Online during a telephone interview ahead of Tuesday’s release of the council’s ‘Platinum Quarterly’ report for the third quarter.

He explained that supply seemed constrained this year, and as it started to annualise in 2018, an impact would take place, with the WPIC forecasting mining supply will come down by about 115 000 oz.

In South Africa, output is predicted to fall by 1% to 4.23-milion ounces for this year. A handful of operations in South Africa and Zimbabwe are currently under review for possible closure if they are unable to make a profit.

Supply is thus expected to drop by about 2% in 2018, to 4.15-million ounces, compounded by closures in the second half of 2017.

However, South Africa’s Chamber of Mines has warned that, should parastatal Eskom hike its tariffs by the proposed 19.9%, it could render the local mining industry powerless, with around 66% of all gold and platinum mines being unsustainable, resulting in around 48 000 additional job losses in the country.

“From a supply point of view, it is just looking a little tough to get the metal out of the ground,” said Raymond.

On the demand side, he noted that it was surprising that automotive demand only fell 1% this year, or by around 30 000 oz. “[This] is very surprising, given the massive negative sentiment around diesel[-powered vehicles],” he pointed out.

Although there has also been a recent focus on the electric vehicle market, with hopes that it would further bolster the platinum industry through the use of fuel cells, Raymond lamented that these vehicles’ market share was still only at 1%.

“Tesla needs [to sell] a million vehicles a year to have a successful business. Battery cars just aren’t selling and equally, hybrids aren’t selling. The Prius has been around for 19 years and we don’t all drive them.

“Electric vehicles will have a place, they will grow, but whether it grows from 1% to 10% or 20% over the next ten years, is the debate. In ten years’ time, the assumption is also that either battery will win, or fuel cells will win. All we need, is 6% of the vehicles to be fuel cells and that will use more platinum than what is currently going into autocatalysis,” Raymond pointed out.

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