SOUTH AFRICA, May 25 -- Platinum prices may "spike" next month as the soccer World Cup in South Africa potentially disrupts power supplies to mines, said ETF Securities Ltd.
Mines in South Africa, the world's biggest producer of platinum, were stopped for about five days in 2008 because of blackouts by state-owned utility Eskom Holdings Ltd., which generates and distributes about 95 percent of the country's power. The World Cup runs from June 11 to July 11, with most of the matches played next month.
"With the World Cup being held during the South African winter, the use of electricity is likely to exceed the previous winter peak," said Shamim Mansoor, head of ETF Securities' precious metals sales. "To ensure there is an uninterrupted supply of electricity during the FIFA World Cup, load shedding is likely to be enforced again, and therefore there is a risk we will see another price spike."
Eskom is "confident" it can provide enough power supply during the tournament, the utility said in a statement on its website yesterday. There has been no load shedding, or rolling blackouts, since May 2008, Eskom said. The company started a 460 billion rand ($57.6 billion) expansion plan.
Platinum for immediate delivery dropped 12 percent last week, the most since October. The metal traded at $1,491.75 an ounce at 8:23 a.m. in London.