| CAPE TOWN
CAPE TOWN Feb 4 An electricity supply crisis
that has forced South African mines to cut production has the
potential to push the price of platinum well above $2,000 an
ounce, a mining analyst said on Monday.
South African mines, which produce four-fifths of the
world's platinum, have reported slow progress in ramping up
output after state power firm Eskom allowed them only limited
increases in their electricity consumption.
The country has suffered weeks of rolling blackouts.
"This (power crisis) can place very high pressure on
platinum, well above $2,000 an ounce," Stephen Forrest, director
of SFA Oxford, said in a presentation to the Indaba African
mining conference in Cape Town.
Platinum roared to a record high on Monday due to the South
African power concerns, touching a high of $1,789 an ounce
before falling to $1,782/1,787 at 1424 GMT, against $1,752/1,759
late in New York on Friday.
Palladium rose to a six-year high of $420.50 an ounce and
was last quoted at $418/422, against $410/413 in New York,
tracking gains in platinum prices.
The two metals are used in jewellery and in vehicle
catalysts, where they help clean exhaust gases.
Forrest also said labour problems in South Africa, which has
a powerful trade union movement, could help bolster platinum
prices. South African miners have staged job stoppages in the
past year to press demands for higher wages and benefits.
He forecast, however, that platinum would likely come down
to an average of $1,350 over the long term, due in part to
rising fuel costs, which threaten to hit the auto industry.
Worldwide supply of platinum will peak in 2013 and then
decline, Forrest said, adding that mining projects in Zimbabwe
could add to platinum supply if they were given the green light
Zimbabwe's mining sector was once one of the most attractive
in southern Africa, but a deep economic crisis and meddling by
the government in the sector has eroded investor confidence and
prompted investors to look elsewhere for mining projects.
(Editing by Michael Roddy)