The Minerals Council of South Africa has put together a national platinum strategy in a bid to revive the sector in the country.
The Minerals Council of South Africa has launched a national platinum strategy with the hopes it will sustain close to a million jobs and contribute roughly R8.20 trillion to South Africa’s economy by 2050.
On Wednesday (February 6), the council said that the sector is in crisis and has struggled with an oversupplied market for the last five years. Minerals Council CEO Roger Baxter noted that at current prices, more than 60 percent of the platinum mining industry is loss-making or marginal.
“Over the past five years, [the sector] has struggled with an oversupplied market — a function of structural changes in global supply and demand fundamentals, including increased growth in recycling, flat new-mine supply and weaker demand, domestic labor strife, declining productivity and rapidly escalating costs,” the council noted in a press release.
Speaking at the media conference of Investing in African Mining Indaba on Wednesday, Baxter explained that although 87 percent of the 253 tonnes of platinum group metals (PGMs) produced last year were exported, the remaining 13 percent was sold to local fabricators, who produced 9 percent of the world’s platinum catalytic converters.
This downstream fabrication industry proceeded to earn R90-billion in revenues, employ 167,000 people directly, pay more than R40-billion in salaries and wages and more than R1-billion in royalties and various other taxes.
Despite these numbers, Baxter revealed that the PGMs industry has been in crisis for quite some time and was only now emerging from the situation.
Because of this, the Minerals Council has developed a national platinum strategy, where various members of the council will work together to address the current situation of the platinum sector in South Africa and how to stop further economic erosion of the industry to ensure that the world’s largest PGMs resource realizes its full value.
But to achieve its potential, effective strategy and bold action is required from all key stakeholders involved.
For that reason, the Minerals Council has spoken to Mineral Resources Minister Gwede Mantashe to create a small leadership team with the goal of seeking a co-matching funding to finance both the Platinum Guild International and the World Platinum Investment Council.
The aspiration the council holds for the PGMs industry in the country is that it will establish collaborative partnerships, which will drive demand at industrial, catalytic converter, jewelry and investment levels, with the hopes of increasing yearly revenues to US$50-billion.
“That would be a significant game-changer for the economy as a whole. By growing the global demand base, we could see a significant change in fortunes,” Baxter said.
As of 1:51 p.m. EST on Wednesday, platinum was down 1.10 percent, trading at US$803.00 per ounce.
Don’t forget to follow us @INN_Resource for real-time news updates!
Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.