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Platinum mining has strongest outlook

Platinum “’ an
exciting outlook
Cape Town, South Africa — MININGREVIEW.COM — 16 September 2009 – With over 1 billion ounces in reserves, South Africa’s platinum mining industry has probably the strongest outlook of any mining sector in the country.

Revealing this here in a new analysis entitled “A Strategic Review of South Africa’s Platinum Group Metals Mining Industry,” Frost & Sullivan said that despite the sharp decline in platinum prices since September 2008, the demand for platinum was rising in a range of industrial applications, meaning that global demand would continue to outstrip supply.

The analysis found that the country’s platinum production had declined sharply from the 5.22 million ounces produced in 2007 to 4.53 million ounces in 2008. However, output was expected to climb to an estimated 5.70 million ounces by 2014.

“The country’s platinum production will face more declines in the short term due to operational, resource and other constraints,” said Frost & Sullivan research analyst Wonder Nyanjowa. "However, the industry is set to experience exceptional growth once the global economy recovers.”

Despite the limited upside potential for platinum prices in the short to medium term, South Africa’s platinum mining industry is poised to enjoy phenomenal growth once the effects of the global economic slowdown start lifting.

“South Africa’s platinum mining companies need to position themselves to be able to respond swiftly to changes in the global economy,” advises Nyanjowa. “Although the immediate concern for most executives is securing the future of their companies, it is also important that platinum mining companies are able to respond swiftly to an upturn.”

Frost & Sullivan believes that small and medium-sized platinum mining companies will contribute significantly to South Africa’s platinum production output over the next five years. They will achieve this by entering into strategic alliances with major companies to exploit the resources in their ownership.

One of the most significant challenges facing South Africa’s platinum mining companies is that of contributing to government’s efforts towards ensuring sustainable development among communities that are affected by mining activities.

“Platinum mining companies in South Africa are facing the need to balance production and cost control targets with managing sophisticated relationships involving the environment, safety, community and stakeholder involvement, explains Nyanjowa.