Johnson Matthey forecasts 240,000 ounce platinum supply deficit this year

Johnson Matthey says there are a number of positives for next year’s platinum production from South Africa, but warns against too high expectations for price increases.

JOHANNESBURG - 

South Africa which produces the bulk of the world's platinum production will probably see output increase "modestly" next year as a number of positives such as first significant production from new platinum mines and established mines' recovery from operating problems come into play.

Johnson Matthey said after forecasting a platinum deficit of 240,000 ounces for 2008 today, there would be a number of positives for South African platinum production next year, including three new mines, Blue Ridge, Pilanesberg and Smokey Hills that will deliver its first significant production.

The organisation's David Jollie said there were a number of other operations in the ramp up phase, such as Anglo Platinum's open pit expansion at PPRust and established mines such as Amandelbult that experienced operating difficulties this year.

However, Johnson Matthey also believed that constraining factors such as skills shortages and safety stoppages would continue in the platinum industry in 2009.

It expected a difficult operating environment to continue next year, warning that the market should be careful regarding its expectations of new production next year.

"Platinum production will in all probability increase modestly," he said.

Jollie elaborated that there was still potential for expansion of platinum mines and projects at current prices but it would be "nothing like we expected a year ago".

The market has seen producers reviewing their capital expenditure plans and there was no doubt that more expansions would be delayed. Eastplats has for example put its Crocodile River Mine on care and maintenance and rescheduled new projects at the same time.

Johnson Matthey forecast a platinum price ranging between $700 and $1 400 over the next six months and a palladium price of between $125 and $300.

It said platinum could trade as low as $700/ounce if the current economic crisis continued and investors shunned commodities, but the price would move to the high end of the forecast, reflecting fundamentals, if appetite for risk returned.

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