Aquarius Halts Everest Mine Due to Low Platinum Prices
AQUARIUS Platinum Ltd. halted its second mine in a month, on account of low prices, a signal that miners of the precious metal will continue to struggle to remain profitable amid weakening demand and rising costs. The move to place South Africa’s Everest mine ‘on care and maintenance’ comes less than two weeks after Aquarius stopped operations at its Marikana mine, citing sustained weak platinum group metal prices. Analysts at JP Morgan said larger platinum mines would have to close to influence the price of the metal, which is scarcer and more expensive to extract than gold and traditionally trades at a higher price.
Weak industrial demand and worries that the euro-zone debt crisis will sap global growth have pressured platinum below the price of gold and below the cost of production for a growing segment of the industry. Adding to demand concerns, Aquarius said the South African sector – the world’s largest producer of platinum – is being hit by costs that are up more than the rate of domestic inflation, and increased labor disruptions that are causing output losses.
South Africa’s mining sector contracted 16.8% in the first three months of 2012 due to worker strikes at platinum mines, safety stoppages at gold mines and slower demand from Asia, the Reserve Bank said. Many platinum miners face a dismal outlook. The largest producer, Anglo American Platinum Ltd, has already cut capital spending plans at its South African mines, saying it wants to prioritize less capital-intensive projects in the near term given pricing volatility and escalating costs.