South Africa’s platinum sector needs to develop local industries such as jewellery production to counter falling global prices which steepened after Volkswagen admitted rigging diesel emissions tests, the industry minister said on Monday.
Platinum posted its biggest weekly drop since July last week on fears that the Volkswagen emissions scandal could hurt demand for diesel cars, which use platinum autocatalysts to make cars more environmentally friendly.
The platinum price has fallen 22 percent this year, piling pressure on miners to sell assets and cut production. Around two-thirds of the industry, which is still recovering from a five-month strike last year, is loss-making at prices below $1,000 an ounce. It was around $916 an ounce on Monday.
“If we are going to smelter platinum and nothing much else, we are going to be at the mercy of global markets, we are going to be hanging around, waiting for some recovery in the price,” Trade and Industry minister Rob Davies told Reuters.
“I don’t know directly what impact the VW issue will have, we will have to wait and see where that goes,” Davies said.
He said the government was working towards a programme in the platinum belt to create industries such as jewellery production and fuel cell technology. He did not elaborate.
Fuel cells generate electric power by combining hydrogen and oxygen over a catalyst such as platinum. In a country struggling with electricity blackouts and shortages, fuel cell technology could offer an alternative energy source.
Davies spoke after the launch of a 150 million rand ($11 million) 4.3 megawatt thermal energy project at Anglo Platinum’s Waterval smelter complex in North West province.
Davies said his department was willing to provide incentives and grants, such as the 30 million rand ($2.14 million) given to Amplats, for power production.
“We don’t offer all the money that is required but there are incentives and grants,” he said.
Amplats’ project is the first in the world to convert waste heat in a platinum smelter into electricity. It will marginally reduce electricity consumption at Waterval, which uses 64 MW to run two smelters.