Zim to cash in on global platinum short supply

Zim to cash in on global platinum short supply 
The price of platinum on the international markets continues to rebound, as traders worry about the projected platinum supply deficit in the second half of this year. (File Picture)

Tapiwanashe Mangwiro

Senior Business Reporter

ZIMBABWE is expected to be the biggest beneficiary of platinum shortage later this year, with the global market projected to suffer a short supply of 983 000 ounces, the largest deficit since the 1970s, the World Platinum Investment Council (WPIC).

Analysts see the supply deficit in supply shortage as a way to shore up prices, a development that could work in favour of Zimbabwe, the world’s third-largest producer after Russia and South Africa, which anticipates increased output this year.

The price of platinum on the international markets continues to rebound, as traders worry about the projected deficit in the second half of this year.

WIPC has cited a number of market developments during the first quarter of 2023, which in aggregate, the council contends will have a significant negative impact on market balances, hence its deficit outlook for the year.

“Starting with supply, mine supply was significantly curtailed in South Africa by the worsening electricity shortage there. This led to increased work-in-progress concentrate at the major producers, the unwinding of which is uncertain from a timing perspective as utilising excess smelting capacity is dependent upon the availability of electricity,” the report reads.

Platinum traded at US$1 075 per ounce at the time of writing yesterday, according to Morgan Stanley. “If platinum climbs above the US$1 080 level, it will head towards the next resistance at US$1 100. We see it moving higher as demand outpaces supply in the next 24 months.”

Suki Cooper, analyst for Standard Chartered UK, said, “We think this is the first year of serial deficits in the platinum market”.

This comes as Zimbabwe’s platinum output is forecasted to hit 502 000 ounces in 2023, representing a 2 percent increase from the previous year’s production, as the three active mines increase production while new projects come online, the WIPC said.

“Output from Zimbabwe is also expected to continue incremental growth as additional volumes from expansion projects are realised,” the WPIC said in its report for the 2023 first quarter.

According to GlobalData, over the five years to 2021, production from Zimbabwe decreased by a compound annual growth rate (CAGR) of 0,05 percent and is expected to rise by a CAGR of 3 percent between 2022 and 2026.

Zimbabwe’s platinum output in the first quarter of this year increased by 3 percent to 121 000oz compared to 116 000 ounces in the same period last year.

The country has the world’s second-largest platinum group metals (PGMs) resource, after South Africa, situated mostly on the Great Dyke. It has three platinum-producing mines namely Zimplats, Mimosa and Unki.

This comes as the Government has been encouraging foreign investment in the mining industry to boost production and generate much-needed forex revenue for the country.

Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa recently told a post-Cabinet media briefing that nine mining projects were at different stages of development, which is critical towards realising the Government’s target of growing mining into US$12 billion industry by year end.

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