SOUTH AFRICA October 10 2013 10:39 AM
 
JOHANNESBURG (Scrap Register): Analysts often cite supply obstacles in key producer South Africa as a factor supportive for platinum group metals. Besides labor and profitability issues, now there is another – water, said HSBC in a research note.

According to Platinum operations around the South African mining city of Rustenburg will face water use restrictions because of a drought, the Department of Water Affairs recently reported.

“The world's three largest platinum producers, Anglo American Platinum, Impala Platinum and Lonmin, all have operations in the area although Amplats' mines are not producing at the moment because of a week-long strike,” HSBC added.

“Producers have already reduced water intake and it is unclear how much of an impediment the restrictions will be to production. The South African labor union AMCU (Association of Mine Workers and Construction Union) warned earlier in the week its strike at Anglo American Platinum could be prolonged and has the potential to spread to other major platinum producers. This leads us to look for PGMs to remain firm, even if gold prices ease,” they concluded.