South Africa’s Platinum Mining Industry Faces Irreversible Decline, Northam CEO Warns
South Africa’s once-thriving platinum mining industry is entering a phase of terminal decline, according to Northam Platinum CEO Paul Dunne. Speaking on Friday, Dunne attributed the downturn to persistently low prices and a decreasing demand for platinum, driven by the rise of battery electric vehicles.
Platinum prices, which once soared above $2,000 per ounce, have plummeted by 13% since the start of 2023, currently trading at $939 per ounce. Northam Platinum has felt the impact, with its headline earnings per share plummeting by 81.6% in the year ending June 2024, down to 4.45 rand ($0.25) from 24.15 rand previously.
The decline is not limited to platinum. Palladium, another key metal in the industry, saw its price drop by 40% in 2023, with an additional 10% decline this year. Rhodium, once valued at nearly $30,000 per ounce in 2021, now trades at just $4,750 per ounce.
Dunne forecasts that South Africa’s platinum output, which has been on a downward trajectory since peaking at 5.3 million ounces in 2006, will decrease by 10% over the next five years, falling from the current 3.9 million ounces to around 3.5 million ounces.
Despite the bleak outlook for the industry, Northam Platinum aims to stabilize its output at around 1 million ounces annually, with efforts focused on ramping up production at its Eland mine, acquired in 2017.
The broader industry, however, is grappling with aging and depleting assets. Years of under-investment in new mines, coupled with the transition to electric vehicles, have exacerbated the natural depletion of South Africa’s mining shafts.
Impala Platinum CEO Nico Muller echoed Dunne’s concerns, stating that the construction of new mines in South Africa is “highly improbable” given the current economic challenges. South Africa’s platinum mines, among the deepest and costliest to operate globally, now face an uncertain future.
The decline in platinum mining mirrors the fate of South Africa’s gold mining industry, which has fallen from being the world’s largest producer to ranking 12th globally. With over 181,000 workers employed in the sector, the ongoing downturn in platinum mining represents a significant challenge for South Africa’s economy.
Source: CNBC AFRICA
