The Sunday News
Nkosilathi Sibanda, Business Correspondent
THE demand for platinum will remain depressed throughout the year worldwide, but set to make a rebound of two percent in 2021, according to the the World Platinum Investment Council (WPIC) report.
This is likely to ignite hope in the platinum mining industry locally, which has for months been affected by the continued block out of markets brought by the Covid-19 plague. The investment body said platinum supplies for this year were forecast to decline sharply by 18 percent.
Since the beginning of the year, global markets that extend even to other metal and mineral extracts have either shut down or recorded low business. However, the depressed environment is changing for the better.
The WPIC has positioned the supply and demand of the platinum metal to improve as the year ends, spelling a huge leap from the depressed figures recorded in the second quarter of the year.
“Demand in 2021 is expected to recover to two percent above 2020 pandemic-impacted levels,” stated the WPIC last Thursday.
Platinum production in Zimbabwe was targeted to reach 69 350 tonnes this year driven by expansion of existing capacities and new investments. It is predicted by the WPIC that the automotive sector will back the platinum market strongly as mining anticipates recovery in the coming year.
“In particular, automotive demand is projected to recover strongly, by 24 percent, taking demand to four percent above the level in 2019.”
The WPIC said while it anticipates an annual deficit in the market, it forecasts demand in the automotive, jewellery and industrial sector.
“Indeed, demand from the automotive, jewellery, and industrial categories is forecast to rise by 17 percent, countering the lower forecast investment demand and resulting in a third consecutive annual deficit for the platinum market.”
The platinum market council was clear in its projections and interpretations of the Covid-19 period.
“As the negative effects of the Covid-19 pandemic begin to dissipate, platinum’s demand growth potential is likely to strengthen due to its increasingly important role in combating climate change, addressing the imbalance between the platinum and palladium markets and because of its increased attractiveness as a physical, industrial and precious metal investment,” said WPIC.
Stimulus packages from governments seem to have hugely assisted the platinum value chain to remain afloat, noted the WPIC.
In Zimbabwe, the Government timely put a stimulus package of Z$18 billion (US$360 million) in May from which mining was set to benefit, together with other sectors. From such state funded injections, the platinum mining sector managed to pull through the adversities presented by the shutdown or partial closure of markets.
“Platinum supply and demand picked up significantly through the quarter, with mines ramping back towards full capacity. The negative Covid-19 pandemic effects continued through the third quarter, but widespread easing of restrictive pandemic control measures, combined with Government stimulus measures, saw economic activity accelerate globally compared to activity levels in the second quarter,” the WPIC noted.
But, caution was raised as WPIC said the second wave of the Covid-19 lockdown in Europe presented a bad forecast.
“However, forecasts of supply and demand not just for 2020, but also for 2021, are likely to continue to be subject to change due to the ongoing impacts of the pandemic. Parts of the Western world, notably in Europe, have been pitched back into strict lockdowns to combat a second wave of Covid-19 infections.
“This increases near-term uncertainty regarding levels of economic activity in the fourth quarter of the year and in early 2021.”
Locally, platinum leads in the mineral receipts to the country followed by gold. As the Government launched the National Development Strategy 1 (NDS1), the anticipated improvements in both production and market prices of platinum, will place the economic blueprint in good stead in the next year. The National Development Strategy is planned to kick start in 2021 to end in 2025.
Government’s confidence to have the sector achieve the US$12 billion mark in the next three years was driven from the improved production and sale of Platinum Group of Metals (PGM). Recently, the Minister of Finance and Economic Development Professor Mthuli Ncube told Sunday Business that mining was the backbone of the country’s preceding economic blueprint, the Transitional Stabilisation Programme (TSP). Mining is expected to reach a US$12 billion economy by 2023.