Platinum Flash Update

Worst Bout of Electricity Shutdown in South Africa Forecast in 2021

Directly Effecting Mining Production

Dr David Davis

24th January 2021

One of the most respected Platinum Group Metals (PGMs) researchers in the world Dr David Davis is a researcher for Auctus Metal Portfolios on the ground in South Africa (where circa.75% of PGMs are mined).

Dr Davis has generated several ground-breaking conclusions that support our price outlook for Platinum over the next few years.

Flash Update

The risk to South African PGM (platinum group metals) mine supply has heightened. There have been numerous reports in the news lately that South Africa must brace itself for what could be the worst bout of load shedding in Eskom’s (largest electricity utility company in SA supplying 98% of the country’s energy) 97-year history. Energy analyst Ted Blom, addressing a Free-Market Foundation webinar this week, said the “corruption, incompetence and ineptitude” (Comins, 20 January 2021. The Mercury) had plagued Eskom since the early 2000’s and had led to the current state of disrepair of the power utility. According to Blom’s detailed analysis of the SOE’s own official power generation and maintenance data, Stage 5 to 8 load shedding could be on the cards this year. Stage 8 load shedding means that the utility would need to cut 8,000 MegaWatts from the system, which would result in some suburbs and towns being in the dark for up to 12 hours per day. Eskom has warned that its maintenance plan must be supported by the government, failing which South Africa can expect regular blackouts of 8,000 megawatts by mid-2021, a move that will most likely cripple the economy in particular the mining industry. In my view, the risk to South African PGM and gold mine supply will most likely increase exponentially should Stage 5 to 8 load shedding be implemented. This risk is, of course, in addition to the short-term disruptions from the direct and unrelenting impact of the Covid pandemic on mine production. Furthermore, the PGM supply from South Africa was adversely affected in 2020 because of the pandemic and Amplats’ ACP outages respectively. Amplats expects the release of the work-in-progress inventory built up in 2020 to take up to 24 months. A continuous increase in load shedding will likely tighten PGM supply further and as a result put upward pressure on PGM prices, particularly the platinum price.

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