Mines closing, labour conditions volatile and metal prices dropping.
Platinum mines in South Africa are struggling against a swathe of problems, says Platinum Investing News, following the announcement that the Marikana mine will be placed on “care and maintenance” due to the low PGM price.
The platinum industry has been busy trying to adapt to issues such as rising costs, volatile labour conditions and dropping prices for PGM metals meaning that the market could potentially be in surplus this year.
On Monday, representatives of the South African government met with platinum producers for “a frank and open discussion” on the challenges facing the industry.
According to a statement released after the meeting, all parties agreed on a short- and medium- to long-term plan to address the challenges.
The Platinum Investing News report stated that metal producers Anglo American and Lonmin have had to resort to using low-grade mining to cope with issues such as rising labour costs, while the closure of the Marikana mine is thought to be a sign that “conditions are becoming unbearable”.
In May, Eastern Platinum announced that it would suspend funding the development of the Mareesburg mine and construction of the Kennedy Vale concentrator plant, only nine months after deciding to embark on that project.
Since then, say PIN, the dynamics had changed so drastically that the company concluded that the financial risk of continuing was too great.
Eastplats said prices that platinum prices have declined dramatically, with little or no fundamental demand recovery or supply reduction forecast in the near to medium term.
The company also cited adverse currency exchange rates and heightened concerns with respect to reliable power sources at the mines and unplanned, unlawful labour actions.
The current operating conditions prompted Eastplats to conduct a full review of its operations, from which it says that it plans to reduce costs and improve efficiencies.
However development stage mining company Platinum Group Metals sees opportunity and is ploughing full steam ahead into the business of mining platinum in South Africa and plans to work with Wesizwe Platinum to finance the WBJV project 1 mine.
Platinum Group Metals’ president R. Michael Jones said: “The WBJV Project 1 mine is near surface and has excellent grade. The competitive nature of this project is highlighted at this time of increasing costs and mine closures.
“We have solid confidence in the platinum market in the medium and long term and solid confidence of our position in that market as we drive towards first production in mid 2014.”