WHAT IT MEANS

owhere is the crisis in the SA mining industry clearer than in the platinum sector. Following the lengthy strike at the beginning of last year, the three major platinum producers — Anglo American Platinum (Amplats), Impala Platinum (Implats) and Lonmin — have not only taken a knock in their profits but have also had to confront the hard realities facing the sector and the mining industry in general. These include a rapidly evolving situation on the labour front, depressed prices and above-inflation cost increases. And the situation has led to some serious introspection and a review of their operations and business philosophies.

The three producers, nevertheless, share a sanguine view of the mediumterm prospects for platinum group metals (PGM), based on solid fundamentals.

“Demand remains strong for platinum, palladium and rhodium against the backdrop of both increased automotive sales and tightening emission legislation,” says Implats CEO Terence Goodlace. “This, combined with constrained supply, should be positive for the market in the future. In general, platinum, palladium and rhodium markets are expected to be in deficit for the next three to five years. However, there is continued uncertainty regarding the remaining above-ground inventories of our metals and how long these will continue to cap prices.”

He says last year’s crippling five-month strike came on top of a subdued global PGM market, an ongoing rise in unit production costs and a further reduction in margins and productivity.

“We face continuing challenges around access to skills, infrastructure and certain resources, such as electricity and water, as well as growing expectations from a demanding set of disparate stakeholders. Our focus is on quality/profitability, with a