Platinum prices made gains on Tuesday, climbing to $1,525 per ounce. Platinum’s current low point for 2010 came early in February when prices fell to $1,470. Since then, the metal made considerable gains through February, March and April with prices climbing as high as $1,731 per ounce before falling again in May.  Despite those losses, the metal has been trading between $1,500 and $1,600 per once since and is still up 5 percent since the start of the year, an impressive feat given the lingering fears  that the European debt crisis could still trigger a double-dip recession.

New York-based commodity consultant CPM Group thinks platinum’s outlook is strong. In its 2010 Platinum Group of Metals Yearbook, CPM Group said the platinum market will see a narrower market surplus in 2010 on the back of strong investment interest during the launch of U.S. platinum-backed exchange traded funds and a recovering auto industry.

“Investors are expected to remain attracted to platinum because of the potential for price appreciation based on the metal’s positive supply and demand fundamentals,” the report said.

CPM’s report echoes statements from Johnson Matthey’s Platinum report released in May, which also suggested platinum’s supply-demand fundamentals would improve as automotive sales and other industries picked up. Johnson Matthey predicted these improved fundamentals, combined with increased investment, could drive platinum prices over $2,000 an ounce before the end of the year.

However, CPM also says higher prices will to lead to South Africa increasing production by 6 percent in 2010, which would leave the platinum market in surplus for another year.

China and India Driving Auto Sales

Platinum demand is largely reliant on growing auto sectors in China and India. The metal is primarily used as an auto catalyst to clean vehicle emissions and these two countries continue to drive worldwide auto sales while markets in North America and Europe recover.

China’s auto sales rose 30 percent in the first half of 2010, moving 7.18 million units, and remains the world’s largest auto market. Auto production jumped in China too, up nearly 45 percent over the same period in 2009.

And even though auto sales dropped 5 percent in June from a year ago, analysts are expecting a rebound in the fourth quarter. The Chinese government decided to extend an auto replacement subsidy program until December 31 this year and it is expected consumers will wait until the last minute to buy a new car before the incentives expire.

In India, sales continued to boom in June, riding on high domestic demand. Tata Motors posted the largest jump in passenger car sales for June, up 63 percent and selling close to 28,000 vehicles. This increase places Tata as the second-largest player in India’s domestic market, surpassing Hyundai Motors who reported a 19 percent increase in domestic sales for June. The country’s largest car-maker Maruti Suzuki posted 18 percent growth in June.

Zimplants’ announcement includes the finalization of their Ngezi Phase II expansion project. The project is a total of $445 million strategy. The project is set to include the development an underground mine which will come up with a two million tonnes-per-year and a two million tonnes-per-year concentrator module.

Click here to access the entire Press Release

Pursuant to the 2009 Stock Option Plan, Northern Platinum Ltd. has granted a total of 1,000,000 incentive stock options to directors and consultants of the company.

The press release is quoted as saying:

“The Company also plans to continue exploratory drilling in the newly discovered eastern extension of the mineralised peridotite later in the fall and each incentive stock option is exercisable to purchase one common share of the Company at a price of $0.40 per share for a period of four years. On behalf of NORTHERN PLATINUM LTD.”

To view the entire press release click here.

Jim Rogers, the renowned investor, has been quoted as saying, “Buy value, wait for a catalyst, sell hysteria.”

This sage advice perfectly describes the present investment opportunities in platinum.

After the Halloween week-end, the first day of the new week did not have much of an auspicious opening for platinum, like some other precious metals.

On Monday, in the US markets as the dollar fell, platinum declined to $1,322/oz. December platinum rose $11.80 to $1,334.90 an ounce.

On Tuesday, platinum struggled higher to reach $1,340/oz. Base metals remained at roughly the same levels with copper holding steady at $2.27/pound and zinc fluctuating around $0.98/pound. Nickel inched lower, moving down to $8.19/pound.

The dollar fell on Monday, after stronger-than-expected reports on housing and manufacturing drove investors to re-invest in stocks and the commodities market.

Net long-term position for platinum however stayed at a record high, even though the price retreated a bit on Monday. Part of the optimism on platinum prices in the months to come will continue with its upward trend, feel technical analysts. The single reason: it is based on the steadily rising gold prices.

Don’t be fooled by the fact that Barrick Gold confirmed on October 29, that it has dropped plans to develop the Sedibelo platinum project in South Africa.

The world’s largest gold producer currently holds a ten per cent stake in the site, but was widely expected to secure a $106 million deal to increase its interest to 65 per cent. The story for the metal has only just begun.

The metal is used to a great extent in the automobile and jewellery sector. Platinum closed the July-September 2009 quarter in the US up by 5 per cent at $1,230 per PGM ounce.

Platinum has now traded above $1,200 per ounce since August 2, trading at a quarterly high of $1,339 per ounce on September 16.

Strong jewellery demand in China continues to mitigate reduced demand from the auto industry.

Strong optimism

As if to further underline this optimism, early morning trade in this metal on the FTSE 100 on November 3, opened on the positive.

News agency Bloomberg reported that while gold had jumped to within 0.4 per cent of its peak after the International Monetary Fund (IMF) sold the metal for the first time in nine years, platinum advanced.

Gold, silver and platinum prices have surged in tandem over the past month.

Zimbabwe calling

Touted to host the second largest platinum reserves in the world, Zimbabwe is set to attract up to US$16 billion in exploration and mining investment.

The country’s mining sector is set to see better days ahead with its slowly, stabilising political environment.

It may be recalled that the opposition Movement for Democratic Change and Robert Mugabe’s Zimbabwean African National Union-Patriotic Front formed a new coalition government in the middle of February 2009.

In September 2009, there was a renewed focus on mining on the part of the government.

Addressing the annual meeting of Zimbabwe’s chamber of mines, Prime Minister Morgan Tsvangirai said the country could attract large scale investment, provided it corrects policies that have deterred foreign investment.

The premier said that the government should use the next 12 months to come up with a policy environment more conducive to mining investment, so the country can receive higher inward investment over the coming decade.

Of the 40 known metals and minerals that it is home to, gold, platinum and chrome form the principal endowments. The country’s gold reserves are among the largest in Africa. Recently, there has been a discovery of a number of significant kimberlites.  So, could diamonds be the future?

Company news

News agency Reuters reported on Monday that the Australia-based precious metals producer Sylvania Resources Ltd (SLV.AX) and South-Africa firm Jubilee Platinum Plc (JLP.L) have decided to enter into a partnership for the processing of platinum group metals (PGM).

The two companies said the strategic alliance would provide Sylvania with access to Jubilee’s smelting technology and would allow Jubilee to benefit from Sylvania’s secondary PGM recovery skill.

The alliance would also help fast track operations and save research and development costs for the two firms, the companies said.

Following the announcement and immediately afterwards, Jubilee’s shares rose 2.4 per cent to 32.5 pence, while Sylvania fell 2.9 per cent to 50.5 pence by 0946 GMT on Monday on the London Stock Exchange.

Impala Platinum Holdings Ltd, the producer of more than a quarter of the world’s supply of the metal, was downgraded to “reduce” at Nomura International, as a strengthening rand hurt the company’s profits.

The Illovo, South Africa-based company’s shares fell 6.40 rand, or 3.7 per cent, to 164.60 rand in Johannesburg on Tuesday, giving the company a market value at 104.2 billion rand (US$ 13.1 billion).

Platmin Limited (TSX/AIM:PPN) has announced changes to its board of directors recently.

Following the announcement dated October 12, 2009, of the retirement of Ian Watson as the chief executive officer and executive director, Platmin has appointed  Tom Dale as CEO, with effect from December 1, 2009.

Dale has had a long and successful career in the South African mining industry, and has held various senior positions, including managing director of Gencor’s gold division and of Gold Fields Limited.

Subsequently, he was CEO of Mopani Copper Mines in Zambia and thereafter CEO of Sallies Limited.

The company further said Brian Gilbertson has been appointed the new non-executive chairman of Platmin with effect from December 1, 2009. Gilbertson has held various senior positions in global mining, including managing director of Rustenburg Platinum Holdings Limited (now Anglo Platinum Limited) and chairman of Impala Platinum Holdings Limited.

Platmin is a mineral exploration, development and operating company. The company has developed the Pilanesberg Project into the Pilanesberg Platinum Mine (PPM) and is exploring for PGEs on its other three key projects: Mphahlele, Grootboom and Loskop.

South Africa-focused miner Aquarius Platinum has smashed production and earnings records, posting a 365 per cent leap in comparable net quarterly profit to $A45.9 million for the September quarter, released on October 27.

The positive result, driven by an 8 per cent increase in total platinum group metals production of 140,227 PGM ounces, was enough for chief executive Stuart Murray to declare full fiscal year production was on target.

“Already, at the end of the first quarter, I believe that we are on track to deliver our annual target of 600,000oz, a third up on last year’s production,” he said.

Aquarius’ attributable production at Kroondal was a record 60,856oz, with the operation generating a gross cash margin of 65 per cent. Marikana produced 15,432oz for Aquarius, and Everest produced 41,717oz.

The Mimosa Platinum Mine in which Acquarius owns 50 per cent stock, increased its underground production by 3 per cent to 539,475 tonnes in the same quarter.

By Leia Michele Toovey- Exclusive to Platinum Investing News

As platinum just start down the road to recovery, analysts are already warning that supply threats are likely to boost the metals price to new highs. Platinum prices may climb above $1,500 an ounce “in the next couple of years” as demand recovers amid supply constraints in South Africa, the world’s biggest producer, according to Banc of America Securities- Merrill Lynch.

The world’s largest platinum supply comes from the Bushveld Igneous Complex (BIC) in South Africa. Platinum and palladium production from the BIC represents 72% and 34% of annual global production respectively.  In the past power shortages in the region have left platinum in short supply- and this is partially responsible for the precious metal hitting last year’s high of $2,301.50 an ounce.  Platinum’s record high was short lived. As the economic crisis spread around the globe, the price of the metal plummeted, declining 39 per cent last year, the steepest loss since 1988.  So far this year the metal has rebounded 28 per cent, outpacing silver and gold as signs of an economic rebound spurred demand. Platinum October platinum gained $3.4, or 0.3%, to $1,191.4 an ounce, while September palladium rose $1.25, or 0.5%, to $261.45 an ounce. Gains in platinum are in part being driven by the threat of strikes in South Africa

Company News

The largest producer of platinum in the world, Anglo Platinum Ltd, has received a funding boost by parent company Anglo American Plc. Anglo American, 80 per cent owner of the unit, made available to the platinum miner an additional $913 million USD. Anglo American has been struggling with skyrocketing debt after the crash of platinum prices. Anglo Platinum is currently reviewing all expenditures and financing requirements in order to be able to move into profitability. Chief Executive Officer Neville Nicolau is cutting more than 10,000 jobs and may suspend more output in South Africa to slow the rate at which Anglo Platinum’s debt rises amid falling demand for the metal. The funding review is aimed at “restructuring its existing borrowings,” Anglo Platinum said today. Net debt was 17.96 billion rand at June 30, up threefold from a year earlier. Labor costs are likely to rise as Anglo Platinum negotiates an annual wage increase with unions in South Africa, where yearly inflation was 8 percent in May. The company’s last offer was for an 8 percent increase. Employee and contractor wages comprise almost 55 percent of Anglo Platinum’s costs, according to a June 5 note by Anglo Platinum plans to produce more of the metal with fewer employees, helping to keep costs below 2008 levels for the next three years.  A July 23 note by Liberum Capital brought to the forefront how the miner was faring in this tough economic climate. The England bases research and Investment Company noted “Anglo Platinum is saddled with debt and in “imminent need of recapitalization, most likely via rights issues.”

Workers at Impala Platinum Holdings Ltd. have agreed for a lower wage increase of 15 per cent, down from the 17 per cent demanded last week, according to the National Union of Mineworkers. The labor union will meet with the company tomorrow, said union spokesman Lesiba Seshoka. If Impala doesn’t improve its offer to raise wages by 8.5 per cent, the union may go on strike.

Aquarium Platinum Ltd. is preparing to restart production at its Everest mine in South Africa.  Bermuda based Aquarius closed the mine just 7 months ago; after subsidence made part of the mine unstable. It will take approximately 10 months to restart production. Aquarius has estimated that it will cost $31 million USD to restart production. The company, which also has operations in Zimbabwe, will build two new shafts to access rock containing platinum at Everest. Aquarius is “quite comfortable” with an insurance settlement agreed in response to a claim made by the company for subsidence and loss of earnings, Aquarius spokesman  Willi Boehm said by phone.

Platinum prices, already on the positive track, got a boost this week from the declining greenback and the announcement of GM’s Bankruptcy.  GM’s bankruptcy is by no means a positive for platinum, as the auto industry accounts for approximately half of global platinum demand; however, platinum’s price has been reflecting the impending bankruptcy for many weeks. Once the inevitable was announced, sentiment switched focus to other economic indicators.  

Platinum suffered major setbacks last year, as auto sales grinded to a halt.  However, as shrinking auto demand sent prices on a downward spiral, the market got an unexpected boost from bullish investors and jewellers.  In 2008, 47 per cent of platinum demand came from the auto sector, a 49 per cent decline in comparison to 2007.  Although jewellery and investment have lifted the metal, a full recovery is expected only when carmakers experience a turnaround. According to Johnson Matthey, platinum prices may rise as high as $1,350 an ounce in the next half year. A secondary reason for strength in platinum is general strength in precious metals led by gold. Gold is responding to weakness in the U. S. dollar relative to other major world currencies. Platinum, palladium and silver prices have been tagging along.

Company News

Norilsk Nickel announced that it has increased its platinum and palladium production estimates for 2009. The Russian miner, which is the world’s largest nickel and palladium producer, has decided to raise its platinum output forecast from 600,000 to 620,000 ounces to 615,000-640,000 ounces. As reported by nickel investing news, Norilsk’s profits have plunged as metals prices have collapsed. While the company announced increased palladium and platinum production, Norilsk now expects to produce between 285,000 and 300,000 tonnes of nickel this year – down from a previous estimate of 290,000 to 305,000 tonnes. The company also revealed that it is changing its copper output prediction slightly at the upper end, moving from 380,000-405,000 tonnes to 385,000 to 400,000 tonnes.

Canada’s Platinum Group Metals Ltd plans to raise C$35 million through an offering of units.  Proceeds from the sale will mainly be used to pay Anglo Platinum Ltd amounts due related to the restructuring of a joint venture; the total owed to Anglo Platinum presently stands at about C$28 million. Each unit would consist of one common share in the capital of Platinum Group and one-half of one common share purchase warranted. The company expects the offering to close on or about June 19.

Jubilee Platinum Plc said it would proceed to a feasibility study of the Tjate project in South Africa after a report indicated that the project could possibly contain a 4 million ounces of platinum-group metals and gold. “The company calculates an attributable value at prevailing market prices of $30 billion to the aforementioned possible metal, for which the viability of its recovery has yet to be established in future studies as the project develops,” Jubilee said on Thursday. Based on the resource data, the company believes an exploration target of some 368 million tonnes, before geological losses, is possible for the three farms of its 63 per cent-owned Tjate project.

Mvelaphanda Resources announced on Thursday it would de-list by early next year and spin-off its stake in Northam Platinum, a platinum miner in which it holds a majority stake. Mvela’s de-listing means it would not achieve its hopes of becoming a mining operator from a holding company, but will hold a substantial stake in a large platinum miner, ending up with a direct shareholding of 27 per cent in Northam. Under Johannesburg stock exchange rules, Mvela was required to either buy a mining asset to become a mining operator itself or de-list, because the rules seek to prevent pyramid companies from remaining listed on the bourse. The rules bar a listed firm from generating more than half of its earnings from an investment in another listed firm, or having more than three quarters of its net asset value tied in another listed company. Mvela derives the lion’s share of its earnings from Northam, and has most of its net asset value tied in the platinum miner.

Demand for autos must increase in order for platinum to rebound

By Leia Michele Toovey- Exclusive to Platinum Investing News

Platinum rebounded early in 2009, and came back into the four digits, the metal’s highest value in over 12 weeks.

In 2008, the metal went on a wild ride, hitting a peak of $2,290 per ounce, and then came crashing down to a three digit value. Despite the metal starting the year on a good note, RBC Capital Markets has cut its platinum price forecast for the next two years. Platinum was previously predicted to be valued at $1150 per ounce in 2009.  The 2010 forecast is of $1300 per ounce.  The re-evaluation is for the metal to be worth $1100 per ounce in 2009, and $1200 per ounce in 2010.

Platinum for immediate delivery climbed as much as US$34.50, or 3.6 per cent to US$1,002.50 an ounce and traded at US$994.25. It has gained in the past five sessions and is up 6.4 per cent this year. In the near term analysts claim that the metal may extend its rally toward US$1,040-$1,085 an ounce.

Arguably, platinum was the most oversold metal commodity in the market collapse.  Platinum’s early 2009 rebound is not a reflection of changing fundamentals; it is a combination of the reset of the commodities indexes, and the sentiment that more output cutbacks are on there way.  Much of the world’s platinum production is uneconomic at current price levels and many mines are starving for higher PGM prices to survive the current economic downturn. In the short and long term, in order for platinum prices to increase, auto demand has to rise.  This will take some time. Although the credit crunch has loosened, a high level of job insecurity at this time is likely to trump increased access to a loan. Fear will prevent buyers from acquiring new cars, or at least delay their decision to do so, until the economic environment improves. The lack of demand for autos at this time is likely to push down the prices of platinum in the near future.

When it comes to the auto industry, in the near future the amount of platinum used in car manufacturing will likely decline.  This is a result of Japan Motor Corp announcing that it will be rolling out a new technology that will reduce the amount of platinum used in catalytic convertors.  The new technology will be used on the company’s Mazda 3 model, and will reduce the amount of platinum required 70 per cent.  In the future, Mazda may roll out this technology globally.

Company news

Impala Platinum Holdings Ltd., the world’s second-largest producer of the metal, said it is still in takeover talks with two rivals in South Africa. Due diligence of the acquisition of Mvelaphanda Resources Ltd. and Northam Platinum Ltd. is complete and Impala is looking at the relative valuations. While the 39 per cent drop in the London platinum price last year made takeovers cheaper, tightening credit saw planned deals being abandoned, including Xstrata Plc’s bid for Lonmin Plc.

Investec Securities has cut its earning target for Aquarius Platinum Ltd., by 70 per cent. Investec Securities expects output to be lower next year than previously estimated after the Everest mine was suspended. If platinum prices fail to recover, the company will be operating at loss in 2009. In order to be cash flow positive, Platinum has to sell above $1000 an ounce.

Citigroup has downgraded Johnson Matthey from “buy” to “hold”.  However, they maintained their earnings per share forecast. The reason for the downgrade is that Citigroup believes the global demand outlook for platinum products remains uncertain.

By Leia Michele Toovey- Exclusive to Platinum Investing News

Platinum has shed 45 per cent of its value in just nine months. 

In March 2008, the metal used chiefly as a component of auto catalysts topped out at $2301.50 per oz.  Last Friday, the spot price of platinum hit a low of $812.75 per oz. Now, for this first time in 12 years gold has surpassed platinum in value.

As investors have fled the platinum market, they have flocked to gold as a safe haven. Last Thursday, the momentous occasion of gold surpassing platinum occurred as gold purchases gained extra impetus as the U.S. dollar tumbled and oil rallied. Platinum demand has been fundamentally, and psychologically, influenced by a stalling world auto market. Automakers account for about a half of global platinum consumption. The difficulties faced by U.S. automakers may worsen the demand outlook; however, according to an analyst with Johannesburg based Standard Bank, a rebound in platinum prices may not happen even if the pending bailout is approved. Even if General Motors gets a bailout, they still need to sell cars and the demand is simply not there.

Analysts are claiming that with gold higher in value than platinum; platinum is a great buy. As the economy starts to get traction, platinum prices are bound to take off, as historically platinum is rarely ranked below gold in value.  The two metals have zero overlap when it comes to use and physical demand.  Looking forward, one key factor to consider is that platinum supply is plagued with disruptions. Primary producing region South Africa continues to have problems supplying platinum, due to labour disputes and power shortages.  These are problems that have yet to be fixed, and in fact the attention has been turned away from those issues in the recent commodity collapse.  South Africa’s woes have meant volatile price swings for platinum. Many analysts anticipate that there will be an influx of investors in the market keen on playing the ratio between gold and platinum from a trading point of view.

Company news

Metals miner Aquarius Platinum has suspended operations at its Everest mine as subsidence had occurred over an upper decline area of the mine. High rainfalls might have contributed to the accident. Chief Executive Stuart Murray said the company had opted on the suspension rather than rushing into a short-term high-risk decline rehabilitation project. The mine will remain shut for at least six months; Aquarius also said as a result it would lay off 1,950 people, the majority of the Everest workforce. ”The suspension of operations also places the least strain on the South African business as a whole at a time of low platinum group metals prices,” Murray said in a statement. Aquarius said based on production for October and November and estimates for December, platinum or PGM production at its Roundel and Marikana mines would rise 6 per cent in the quarter on the previous one, and on-mine unit costs would drop by around 8 percent.  

Zimbabwe’s biggest platinum mine Zimplats on Tuesday warned its survival was under threat and expected significant losses due to the fall of metals on the international market. “Shareholders are advised that due to the significant fall in metal prices since mid-July, your company’s short term viability and survival are under serious threat,” Alex Mhembere, Zimplats Chief Executive Officer said in a statement to shareholders. Mhembere added that unless there was a “significant and dramatic recovery in metal prices, the same would apply for the year to June 2009. Due to rough market conditions, Zimplats has been unable to raise enough funds for the Ngezi Phase 1 expansion project which was now at a critical stage.

Anglo American Plc, the world’s biggest platinum producer, is now in cash preservation mode. The company has cut spending plans for next year by more than 40 per cent, reduced platinum output and delayed iron- ore projects as metals prices sink. The company may cut fiscal 2009 capital expenditure by $4 billion, deferring its Minas-Rio iron ore project in Brazil, Los Bronces copper mine expansion in Chile and Quellaveco base metals development in Peru.

The sharp retreat of the stock market, combined with a higher US dollar has triggered a broad sell-off in the precious metals.

Spot platinum slipped to a session low of $794.50 an ounce, down 8.8 per cent from $871.50 an ounce late on Friday. Gold and silver took a big hit; both metals are at 10-day lows. Platinum is trading at its lowest price relative to gold in about 11 years.  

Moving forward, there is some optimism that with everyone cutting their output and work force, shrinking supply may rebound prices. Poor economic conditions for platinum were cemented by weak auto sales data coming out of Asia and Europe. The metal dived as figures from Japan, South Korea and Europe showed another plunge in car sales in November.

Platinum producer Lonmin, down 18 per cent, is in uncharted waters.  On the back of years of high platinum prices, the company had a few years in which it struggled with production problems.  Now, Lonmin needs to repay a $230 million debt towards the end of next year, but at the present spot price of platinum the miner will be loss-making and cash flow will be negative. The hope that Xstrata, the former predator, which has built a 25 per cent stake in Lonmin, might bid again when its lockout expires in March is rapidly diminishing. Xstrata is faced with bringing down its own debt, and worried that Glencore, its main shareholder, may be forced to sell down its stake.

Platinum junior Wesizwe Platinum has amended the project structure and financing for its core PGM Frischgewaagd-Ledig project. The company’s board of directors has split its R5, 6-billion capital expenditure plans to turn the platinum prospector into a platinum producer into a series of smaller contracts. This is part of Resize’s strategic imperative to technically and financially lower the risk of the project in terms of current market conditions and the long-term viability of the project. Wesizwe wants the market to understand that the company has not cut corners and has not underestimated its capital expenditure, “Wesizwe’s original plan has changed very little. All it has done is shuffle a few options around to mitigate shareholder losses and survive the current economic situation.

The project will be completed in phases or modules, which will give the project the flexibility it needs to, proceed with as few delays as possible.  The Frischgewaagd-Ledig project has been split into three phases: shaft sinking, site preparation, and ramp-up to full production. Total capital expenditure remains the same, but the money will be needed in phases. Over ten years, the total amount will be spent, and therefore it is not necessary for the entire amount to be raised at this point. The company currently has R340-million in cash, which it will use to begin the construction of its critical path items. Sequential tranches of capital will be raised as needed to fund the phases of the project, which will prevent the underlying value of the shares from decreasing. The completion of the first phase will lower the project’s debt risk, enabling the company to plot its financial course and raise further capital for the next phases.  Capital expenditure on the second and third phases is undetermined; however it will amount to about R3, 8-billion. The mine will begin producing in 2013 and will build up to a steady production of 350 000 ounces per year in 2016, at which time platinum demand is forecast to peak.

Struggling economies push platinum lower

By Leia Michele Toovey- Exclusive to Platinum Investing News

Platinum has been on a steady downgrade, falling since trading at a record $2,301.50 an ounce in March.

The metal was at $821 an ounce in London on Tuesday, platinum futures for January delivery tumbled $24.50, or 2.7 per cent, to $820.60 an ounce on the Nymex. Palladium, often a mirror for platinum on the markets rose $1.05, or 0.5 per cent, to $217.70 an ounce. A poor economic outlook eroding demand for jewelry and cars is causing the metal to flop.  Miners who banked on high platinum prices are struggling to adjust business operations in light of the new lows.

Platinum refiner Johnson Matthey expects the price of platinum to range between $700/oz and $1,400/oz in the next six months, with the outlook for the market more uncertain than it has been for many years. “The dramatic fall in the platinum price in the third quarter of the year could yet pose significant challenges to the primary producers and make expansion less attractive,” Johnson Matthey said. Looking forward, Matthey said it expected that most major national economies would suffer a recession, or slowdown in growth, and this would impact industrial demand for the metal.

Company news

Lonmin Plc, the world’s lowest cost PGM producer, will cut at least 50,000 ounces of annual output, halt expansion and eliminate a third of jobs at its London headquarters due to the metal’s plunge. Lonmin will suspend open-pit mining at Marikana in South Africa by December 31 and may close its only other fully owned mine, Limpopo. All Development projects have also been put on hold. Due to the shedding of 73 per cent of share value in 2008, the company is currently valued at US $2 billion. Lonmin is not holding its breath for a price revival of the metal; in fact the company does not anticipate any comeback in the metal’s price until 2010. For now, the company is operating in “survival mode”. Lonmin will move its business development and exploration activities to South Africa from London, where the headcount will drop to 22 from 35.

Zimbabwe is forecasted to lift platinum output this year, despite regional political crisis and global economic malaise. The country holds the second largest reserves of platinum after South Africa, and is expected to lift platinum production by 5.9 per cent this year to 180,000 ounces, outperforming its earlier predictions.

Platinum demand by jewelry makers in China is forecast to fall 22 per cent to 610,000 ounces in 2008. Even though platinum is currently trading at lows, high prices in the first quarter of 2008 dented demand. China is the world’s main consumer of platinum and palladium jewellery; Chinese jewellery manufacturers are forecast to purchase 610,000 ounces of new platinum metal in 2008, a fall of 21.8 per cent from the previous year. The high prices witnessed in the first quarter have driven the use of large amounts of recycled metal and have also impacted upon manufacturing volumes. Very large amounts of old, second hand jewelry have been returned by consumers for recycling, offsetting manufacturers’ purchases of new metal. The flow of scrap material peaked in the first half of 2008 and has since decreased due to lower prices. Therefore, demand is likely to rise in the future despite the fact that for the end of 2008  demand from the Japanese jewelry industry for the whole year was predicted to fall to 40,000 ounces in 2008 from 180,000 ounces in 2007.