JOHANNESBURG (I-Net Bridge) -- Brad Mills, chief executive of Lonmin, the world's third largest platinum producer, says that while there are a number of production up ticks expected from juniors on South Africa's Bushveld Complex, it is costs to produce final product that will keep platinum prices high.
Mills says that the price would need to stay high, not only to support the new mines that come on stream but also to support the processing costs to convert metal in concentrate into refined platinum.
Mills says this would add at least "a couple of hundred dollars" to the price required to maintain production at the mines themselves.
According to the Johnson Matthey interim review of its Platinum 2006 survey released yesterday, South Africa is expected to produce 5.43 million or 77.6% of the world's platinum supplies this year, demonstrating its influence in that industry.
Currently the only smelters and refineries on the Bushveld are owned by the big three producers, Anglo Platinum [JSE:AMS], Implats [JSE:IMP] and Lonmin [LSE:LMI; JSE:LOR].
Lonmin's processing facilities are running at full capacity just from its own operations and the company is spending $148 million to upgrade to 1.4 million ounces from the current 1 million platinum ounces by 2012, in line with its forecast growth in production.
The company is also studying the potential for a further increase to 2 million ounces of refined platinum production beyond that, but this is also in line with its own production and does not include toll-treating ore from outside parties.
Johnson Matthey expects the platinum price to range between $980/oz and $1,200/oz over the next six months, as the market for the fourth successive year comes close to being in balance.
Lonmin announced a bid for AfriOre last night for C$8.75 (US$7.74) per AfriOre share, valued at around C$500 million (US$441 million). And today, The company announced profits of $827 million for the year.
More on both developments by Resource Investor later today.
(c) 2006 I-Net Bridge. All rights reserved. I-Net Bridge, Tel: +27-11-280-0644 newsdesk@inet.co.za.
