Anglo American Platinum CEO, Chris Griffith said the best way for South Africa’s platinum industry to save itself from prolonged difficulties, is to switch focus to intensive marketing rather than trying to lower costs and mining more metal.
Two-thirds of the mines in South Africa’s platinum sector are either marginal or unprofitable. The sector has also experienced the loss of thousands of jobs in recent years.
Lonmin has cut 8,000 jobs since 2015 and is considering cutting up to 12,600 more, while Impala Platinum has spoken of cutting 13,000 jobs as it shuts old mines.
According to Griffith, “many of our peers still think of the business as a volume industry and getting costs down by producing more, and that volume will always be there rather than investing in creating demand. Frankly what you should do is cut back on other spending to invest in marketing to create a future for your metals. You cannot blindly expand into a market where there is no demand”.
The CEO noted that “we understand the business of investment because we do this all the time, but I don’t think there’s an equal understanding among all our peers that the first thing we should invest in is market demand to have something to sell into rather than being the last thing you do with leftover money”.
Platinum, which comes mainly from South Africa and a small number of companies, has three applications- it is used in autocatalytic converters for diesel engines, to make jewellery and used for industrial devices. Companies have come under pressure from low and stagnant prices for the metal as mining costs have risen sharply.
As part of a core strategy, Anglo American Platinum, the world’s leading producer of platinum, is planning the development and encouragement of alternative markets and uses of platinum.
Griffith said “in a commodity where you can create additional demand, if you miss that opportunity you miss the potential for a huge increase in demand. If you don’t do that, and you face headwinds in other portions of your business you could materially impact your business by not cultivating other opportunities”.
He said platinum is a relatively young metal in the global economy and there is research to be done into its unique properties that are yet to be discovered.