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Zim platinum production to slide 7%, as global demand weakens

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Zim platinum production to slide 7%, as global demand weakens

HARARE –  Zimbabwe’s platinum production is estimated to drop 7% in 2017 to 445 koz as output normalises at one of the operations, the World Platinum Investment Council said in its Q4 2016 report.

Zimbabwe has three platinum producers, namely Zimplats, Unki and Mimosa, whose production reached 475 koz in 2016. The three companiesare largely owned by South African platinum companies.The country is estimated to hold the world’s second biggest known deposits of platinum, after South Africa.

WPI chief executive officer, Paul Wilson, said global total platinum supply is forecasted to fall by 4% to 7,660 koz in 2017, with both refined production and secondary supply projected to decline.

Refined production is expected to decrease by 2%, to 5,920 koz, whilst total mining supply is set to drop by 3%, to 5,900 koz.

“All regions are forecast to see reductions in refined output, with the largest falls likely in South Africa and Zimbabwe. Supply in South Africa is expected to be 1% lower year-on-year owing to the closure of loss-making production and depletion at various operations,” he said.

The report says that global refined supply is forecast to fall by 2% to 5,920 koz in 2017. South African supply is estimated to decrease by 1% to 4,185 koz; this is attributable to the closure of loss-making production and depletion at a handful of small-scale UG2 operations on both the Western and Eastern limbs.

North American supply will decrease 2% to 400 koz and depletion in the Sudbury region may result in a small reduction in output year-on-year (-10 koz), but production should remain stable at other mines. Supply from Russia is also expected to remain at similar levels to last year at 710 koz.

“Following two years of net sales from stock, a slight build-up of producer inventories (+20 koz) is forecast for 2017. Total mining supply is estimated at 5,900 koz for the year, which is a reduction of 3% compared to 2016,” Wilson said.

He said secondary supply is predicted to decline by 6% to 1,760 koz, largely owing to the anticipated 20% drop in jewellery recycling to 500 koz (-125 koz), which should outweigh the anticipated 2% growth in platinum recovered from autocatalysts (+20 koz).

On other hand, global demand is also projected to decrease by 6% to 7,780 koz this year , primarily owing to lower forecast investment demand (-255 koz), and lower net requirements for the petroleum sector (-120 koz).

Automotive demand is forecast to fall marginally to 3,390 koz (-15 koz), whilst jewellery demand is predicted to decline by 1% (-35 koz) to 2,530 koz, as forecast growth in India and other regions almost offsets the expected decline in China.

Meanwhile,during Q4 2016, Wilson said demand grew by 17% year-on-year to 2,160 koz in Q4’16 primarily as a result of greater investment in bar and coin purchases and ETF holdings. Growth in investment demand (+315 koz) dwarfed lower requirements for industrial applications (-20 koz), whilst autocatalyst and jewellery demand both improved slightly.

Wilson said supply of refined production dipped below 1,500 koz in Q4’16 owing to a smelter outage in South Africa. South African supply decreased by 11% year-on-year to 1,065 koz, accounting for 70% of global supply, and fell by 9% compared to Q3’16.

Supply from all other regions remained fairly stable compared to Q4’15 at +2% owing to a 10 koz increase in Russia and Q3’16 -2% attributable to a 10 koz reduction in Zimbabwe.

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