Dec. 17 (Bloomberg) -- Platinum miners in South Africa, accounting for almost 80 percent of world supply, are reducing production as prices slump, according to David Brown, chief executive officer of Impala Platinum Holdings Ltd.
Impala, the world’s second-biggest platinum company, is already reducing capital expenditure and “looking closely” at production, Brown said in an interview from his mobile phone today. Bigger rival Anglo Platinum Ltd. today said 2009 output would match this year’s production of about 2.4 million ounces. Brown and analysts at London-based Liberum Capital and Johannesburg-based Credit Suisse Standard Securities said that represented a cut in planned output.
“There’s been quite a lot of metal coming out of the market,” Brown said, adding that his company would probably detail its plans in January.
The announcement by Johannesburg-based Anglo Platinum, which accounts for about two-fifths of world supply, will reduce output from what it planned to refine by about 11 percent, Liberum said in an e-mailed statement. Aquarius Platinum Ltd. has shut its Everest mine in South Africa for at least six months, Impala’s Zimbabwean operations are reducing output and Lonmin Plc has said it will shut a mine and eliminate about 6,000 jobs.
In November, Anglo Platinum said a fire at its Polokwane smelter would stop it from processing ore containing as much as 200,000 ounces of platinum this year. Trevor Raymond, a spokesman for the company, declined to say what its 2009 target was before today’s announcement.
‘Not Enough’
“If you look at their production losses that occurred during the year, they have announced a reduction,” David Davis, a Johannesburg-based analyst at Credit Suisse Standard Securities, said in an interview. “In my view, it’s not enough.”
Platinum for immediate delivery fell $0.50, or less than 0.1 percent, to $862.50 an ounce as of 2:58 p.m. London time, extending this year’s decline to 44 percent. The metal, used in autocatalysts and jewelry, has plunged 62 percent since reaching a record in March as car sales slide.
Industrywide vehicle demand has dropped most in the U.S., forcing General Motors Corp. and Chrysler LLC to seek emergency government loans to avoid running out of cash.
European car sales slid 26 percent in November, the biggest monthly drop since 1999, the European Automobile Manufacturers’ Association said yesterday. Honda Motor Co., Japan’s second- largest automaker, today cut its profit forecast and delayed several projects beyond 2010.
Reaction Time
Automakers account for about half of global platinum consumption, according to estimates by Johnson Matthey Plc, a London-based metals refiner, trader and researcher. The figures take recycling into account.
“Given the low metal price and supply and demand dynamics we believe the industry should reduce South African platinum output by at least 10 to 18 percent” between now and 2011, Davis said.
Anglo Platinum, Impala and Lonmin produce almost all of South Africa’s platinum.
“If you look at the producers, platinum is one of the most concentrated,” Johan de Kock, head of research at Metropolitan Asset Managers, which manages about 57 billion rand ($5.7 billion), said from Cape Town. “Anglo, Impala and Lonmin ought to react a lot quicker -- that’s what investors expect.”
Rio Cuts
Iron-ore producers have moved “fairly quickly to reduce output, he said. Rio Tinto Group, the world’s second-biggest producer, has announced a 10 percent cut for this year.
Anglo Platinum rose 6.4 percent to 510 rand in Johannesburg, and Impala gained 7.4 percent to 130 rand.
Mining companies elsewhere have reined in operations. In October, North American Palladium Ltd., which includes platinum among the metals it produces, said it would temporarily close the Lac des Iles mine in Ontario, Canada.
Prices should strengthen if there are further cuts, Afshin Nabavi, a senior vice president at MKS Finance SA, one of Switzerland’s four bullion refiners, said from Geneva.
“The car manufacturers continue to put pressure on the price of platinum and if mines shut down because of low prices, the prices could go higher again,” he said.
To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.netRon Derby in Johannesburg at Rderby1@bloomberg.net
