Breaking news on South African Mining and Precious Metals

January 29th, 2008

Reported by Kimberly Birkland

Power and Platinum:  Will Their be a Shift to Palladium?

Gold Continues to Rise to all Time Highs as The Dollar Continually Weakens and US Recession Dicks in, Causing Traders to Invest in the Precious Metals

Shortage of power in South Africa along with the demand in mines calls for Eskom Holdings Ltd., the South African state utility to implement more power, which might only accrue enough power for "maintenance and care."

De Beers, Impala Platinum Holdings Ltd., AngloGold Ashanti Ltd. and Gold Fields Ltd. are restarting production after depletion of power supplies shut down their mines for a fifth day and raised precious metals to record highs.

Eskom Holdings, the South Afraican state utility power source, will raise power supply to 80 percent of mine needs today and reported they will raise that power supply to 90 percent by Jan. 21.  Eskom can currently supply 93 percent of normal demand across the nation.

On another note, it was reported that Eskom Holdings Ltd. as of 7:25 PM on January 29th could only resume 70 percent of the power required by mines, and most of that is required for "care and maintenance" they were told by major producers in the country.

State utility Eskom Holdings Ltd. told mining companies today it could only provide enough power for maintenance and safety procedures.

Eskom is at a crunch time.  They can't meet demands after South Africa delayed a decision on expansion by four whole years. 

These power cuts may prompt carmakers to switch to alternative metals other than platinum as their main source of assembly.  Other metals such as palladium, used to filter out noxious emissions, might seem more cost-effective.

Analysts suspect that once the alternative metal is developed, and is sustainable plus economical, the shift from platinum to palladium would be very rapid. 

The platinum market may have a supply shortfall of more than 700,000 ounces a year for the next three years, said UBS AG analyst John Reade in an e-mail yesterday.

The economic recession still continues to plague the US, with the housing market declines, and the dollar becoming steadily weakened.  The dollar has declined against 13 of the 16 most-active currencies since the Federal Reserve reduced rates last week in an attempt to prevent credit-market losses from causing a recession.  Most futures traders are predicting that the Fed will agree on a further cut at a January 30th meeting. 

"The market is looking for any reason to buy; it is moving at the moment on the U.S. dollar,"" Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in an interview from Melbourne on Bloomberg Television today.  Adding, "a rate cut would put downward pressure on the dollar, and that is always good for gold prices."  (www.bloombergnews.com)

Johnson Matthey Plc., the world's largest distributor of platinum group metals, rose .5 percent to 1, 770 pence as of 3:09 PM today.  Rhodium also advanced as a result of the mine closures in South Africa, the biggest supplier of the demand for the metal used in auto catalysts.

South Africa accounts for about 84 percent of global supplies of rhodium, which is usually mined with platinum.  south Africa is the world's biggest platinum producer, and ranks second, after China, for gold output.  (www.bloombergnews.com)