South Africa: Power Crisis Fires Up Platinum, Coal Prices

SA’s electricity supply crisis is playing itself out on global markets, with the prices of platinum, palladium and coal hit ting record levels yesterday on fears that Eskom’s power cuts to mines would disrupt supplies.

Platinum roared to a record high yesterday, with an analyst saying it could breach $2000/oz, while palladium hit a six-year peak. SA produces four-fifths of the world’s platinum and is a big palladium suppler. The two metals are used in jewellery and in catalytic converters in vehicles.
Gold and silver lagged after setting new peaks on Friday, as the metals consolidated gains before resuming their march to new highs, analysts said.

“The platinum price has been driven to record levels by flooding and power shortages in SA. This has seen strong investor buying,” said Tom Kendall, precious metals strategist at Mitsubishi Corporation.

“Although 90% of power has been restored to the mines, the impact on production has yet to be fully determined.”

“This power crisis can place very high pressure on platinum, well above $2000/oz,” Stephen Forrest, director of SFA Oxford, said at the Indaba African mining conference in Cape Town.

Worldwide supply of platinum will peak in 2013 and then decline, Forrest said, adding that mining projects in Zimbabwe could add to platinum supply if they were given the green light to proceed.

AllAfrica